§ 10.41 p.m.
§ Lord Beaverbrook rose to move, That the draft order laid before the House on 30th November be approved [8th Report from the Joint Committee.]
§ The noble Lord said: My Lords, the draft order provides for the dissolution of the British Film Fund 1038 Agency (BFFA) once it has completed its outstanding business and, following dissolution, for the application of any surplus monies of the agency for purposes connected with the British film industry.
§ The BFFA is the body responsible for distributing the proceeds of the Eady levy on cinema admissions. As noble Lords may know, that levy has already been abolished. This draft order, therefore, is simply a consequential piece of legislation which ties up the resultant loose ends.
§ The purpose of the levy was to recycle money from cinema exhibition to British film production. By 1984, it was recognised within the industry, most notably within the exhibition sector, that the levy was no longer serving the purpose for which it had been created. It had become a financial burden on what was then a struggling and declining cinema exhibition industry and was providing very little money for film-makers. In view of this, the Government announced their intention, in the 1984 Film Policy White Paper, to abolish the levy. The levy was terminated from 25th May 1985, almost immediately after the passing of the Films Act 1985 which embodied the main aspects of the White Paper. In normal circumstances the levy period would have continued until October 1985.
§ The Government recognised, however, that the ending of the levy represented a loss of income to recipients of the levy's funds and, accordingly, provision was made to deal with the impact of abolition on those bodies. Arrangements were made for the National Film and Television School, which received about £0.5 million a year from the levy funds, to receive £0.6 million annually for five years from the cinemas, the BBC and the independent television companies. Special additional support was also approved for the British Film Institute (BFI) Production Board from the final, shortened, Eady levy period.
§ The other film body which received money from levy funds was the National Film Finance Corporation (NFFC). As noble Lords will recall, the intention to transfer to the private sector the highly-valued work of the NFFC, whose primary function was to provide support for low and medium budget British films, was another of the major strands of the Government's film policy announced in the 1984 White Paper. The Films Act 1985 provided for the dissolution of the NFFC, which took place later that year, and also for the provision of annual financial assistance of £2 million for 5 years to its private sector successor, British Screen Finance Limited. As the NFFC never received from levy funds more than the £1.5 million per annum minimum stipulated in the Film Levy Finance Act 1981, the Government's annual contribution to British Screen presently amounts to some 33 per cent. more than the total external funding that was available to the company's predecessor. With private sector finance in addition to the Government's funding, British Screen has now been operating successfully for two years.
§ The remaining recipients of Eady levy monies were the makers of those British films which qualified to receive payment under the terms of the Films (Distribution of Levy) Regulation 1982. Each 1039 producer received a proportion of the residue of funds available for disbursement in a particular distribution period once the sums to be paid to the NFFC, the BFI and the school had been subtracted. As the order which terminated the levy reduced the final distribution and levy collection periods from the normal 52 weeks to only 32 weeks, the Government recognised that those producers who qualified to receive payment in respect of that period would clearly suffer a loss of income as a result of the timing of abolition. It was decided, therefore, that the net assets of the NFFC, after meeting the costs of dissolution, should be passed to the BFFA for distribution to those producers. Following this the BFFA itself would be dissolved. Accordingly, Section 3(3)(a) of the Films Act enabled the Secretary of State for Trade and Industry to transfer the surplus monies of the NFFC to the BFFA, while Section 4 provided for the mechanics of disbursement by the BFFA.
§ The NFFC was dissolved on 30th December 1985. Winding up the affairs of the corporation raised a number of difficult legal and financial issues and these delayed the transfer of its surplus monies to the BFFA. However, these monies were passed to the BFFA towards the end of last year and have been added to those already held by the agency in respect of the final distribution period. The agency has already made an interim distribution to eligible producers and will complete its final distribution by the end of this month.
§ During the Report and Third Reading of the Films Bill, the then Minister of State for Industry announced that it was the Government's intention that payment would have to be taken up within two months of the final distribution being made. Accordingly, the Government have decided on a cutoff date of 31st March 1988. This will be widely publicised to ensure that those who are eligible to receive payment know that they will forfeit the money if they do not cash their cheques by that date. No problems are anticipated on this front as the deadline for submitting claims for payment has passed and the procedures for verifying claims have been completed.
§ Once the cut-off date has passed, the BFFA will pass over to the Secretary of State any monies which have not been cashed, together with any of the monies set aside to meet the agency's administrative expenses which have not been spent. Section 3 of the 1985 Films Act provides that these monies shall be used for any purpose connected with the British film industry. At present it is not possible to say how large or small that sum may be, and I therefore cannot give any indication as to how it will be used, although, no doubt, a number of interested parties will stake their respective claims.
§ Finally, I should like to take this opportunity to pay tribute to the BFFA members and staff. Under their careful stewardship and reliable management the agency has performed its functions smoothly and effectively. I am sure that your Lordships will join me in wishing them well for the future. I beg to move.1040
§ Moved, That the draft order laid before the House on 30th November be approved [8th Report from the Joint Committee].—[Lord Beaverbrook.]
§ 10.45 p.m.
§ Lord Williams of Elvel
My Lords, I am grateful to the noble Lord for explaining the order, and for giving us a certain amount of detail on the background. We have no objection to the order as such and we join the noble Lord in congratulating the staff of the BFFA and in wishing them well in the future. Clearly after the passage of the Films Act 1985 and the cessation of the Eady levy on cinema admissions, the whole mechanism of film finance changed and the order, as the noble Lord said, simply wraps up what was a transitional arrangement and as such we have no complaint as the BFFA now has no function of any importance.
There are two points on the order about which I should like to ask the noble Lord and I should like to make a further short comment. The first point is connected with the liquidation accounts which the order specifies are to be:in such form as the Secretary of State with the approval of the Treasury may direct".Is there any specific format for these liquidation accounts? Is there a precedent? Are they laid down in any Treasury formula which is appropriate to bodies such as this which are wound up? Are they audited at all by an outside body? Can the noble Lord enlighten me on that?
Secondly, the noble Lord explained that the surplus monies would be used for purposes connected with the British film industry. He said that he was unable to say at this time how much would be involved. Can he enlarge on what the order means and what he meant in his introduction bypurposes connected with the British film industry"?Does this mean for the production of British films? Does this mean for the distribution of British films or does it mean that somebody who is a non-executive director of some film company may benefit? I should be grateful if the noble Lord could answer those two questions.
As regards the order as a whole, I think that it would be wrong for us to let it through without a small bleat—if I may put it in that way—about the Government's withdrawal from the financing of the British film production industry. The National Film Finance Corporation is now defunct and there are no more capital allowances because those were withdrawn by the Finance (No. 2) Act 1984. The Government have been gradually withdrawing from the film production industry, which has been a considerable source of artistic prestige to the United Kingdom.
We should like to reverse that withdrawal. I should like to draw the Minister's attention to the formula put forward by the Association of Cinematograph, Television and Allied Technicians. That union organises within the film and television industries and, through its members, has a great deal of experience. It can and does put forward suggestions which should be regarded not simply as more money for those who work in the industry but as a serious 1041 attempt to encourage the British film production industry. It has put forward a whole series of suggestions such as being able to have 30 per cent. written off during the first year of release; 10 per cent. during the second year of release, and 60 per cent. from the commencement of production to first release. It has put forward a whole range of packages which would stimulate British film production.
The ACTT proposals may fall entirely on deaf ears because the Government seem to be committed to withdrawal. Although the ACTT proposals may fall entirely on deaf ears because of the Government's commitment to withdrawal, I hope that second thoughts may come to the minds of the Government. I hope that in due course, when the British Screen Finance Corporation shows itself able to regain for the United Kingdom the proportion of feature film starts which we had in 1979—or indeed in 1986—the Government will feel that the measures proposed by ACTT are sensible and desirable.
Having said that, we have no objection to the order as such. I hope that the noble Lord, having answered my two points, will accept that we join with him in wishing well the staff of the BFAA in whatever future career they may find themselves.
§ Lord Beaverbrook
My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, for his reception of the order. I take note of what he said as regards the ACTT proposal, but the British Screen Finance Corporation has substantially more funds than were available to its predecessor, the National Film Finance Corporation, which invested in 18 feature films and 13 shorts. In addition, 19 projects have received loans under the project development scheme. I am sure that the noble Lord will agree that that represents an impressive level of activity, considering that the British Screen Finance Corporation has been operational for only two years.
Turning to the two specific points raised by the noble Lord, first, as regards the liquidation accounts, I understand that they will be audited by Deloitte Haskins and Sells and will be laid before Parliament. Secondly, as regards the surplus money, I should imagine that that will be used for production. However, no doubt proposals will be put forward, and we hope the money will be used in the most advantageous way. However, at this stage it is impossible for me to say exactly what it will be used for, but it will be for the benefit of the industry.
§ Lord Williams of Elvel
Before the noble Lord sits down, when he says that he "imagines" that it will be used for the benefit of the film industry, is that his own or governmental imagination?
§ Lord Beaverbrook
Speaking from a governmental point of view, we will be looking at the various proposals that come forward. I cannot say that it will be used for production but I believe that a number of proposals will be put to us.
§ On Question, Motion agreed to.