Film Industry: Assistance (Hansard, 7 July 1994)

§ Baroness Trumpington
My Lords, of course we regret this decision by Paramount. However, British production studios have busy schedules during 1994, with several foreign productions having been attracted here. My right honourable friend the Secretary of State for National Heritage is considering what can be done to improve the level of investment in British film production still further and will make an announcement in due course.

§ Lord Goold
My Lords, I thank my noble friend for her reply. Is she aware that since the Irish Government introduced a favourable tax regime for film production in May 1993 an estimated £100 million has been attracted into Ireland? Bearing in mind the Irish experience, have the Government made any assessment of what might be attracted into this country by way of investment if the UK had a similar tax policy?

§ Baroness Trumpington
My Lords, the Government are fully aware of the tax measures introduced in Ireland last year. It remains our view that low tax rates and a broad tax base with few special reliefs provide the best framework for sustainable long-term economic growth. We have, however, introduced a number of measures to assist the film industry.

§ Lord Donoughue
My Lords, we can all understand anyone being attracted into going to Ireland but Britain and the British film industry have unsurpassed creative and technical skills. Does the Minister agree that what we lack is a positive investment environment in which the British film industry and film production can flourish? The industry, through the Impact Report, has made a number of specific proposals to achieve that. When will the Government respond to those specific proposals and when will we have a White Paper on this important question?

§ Baroness Trumpington
My Lords, last year my right honourable friend the Secretary of State for National Heritage held a series of consultations with all sectors of the film industry. He heard their views on what can be done to encourage greater activity in the British film production sector. He will take account of 1378 all the proposals put to him at that time and through the Impact campaign and make an announcement in due course. The Government certainly realise the cultural significance and export earning potential of British films. That is why my right honourable friend has been engaged in the conversations. The noble Lord will appreciate that it is a matter of horses for courses.

§ Baroness Seccombe
My Lords, does my noble friend agree that although in Britain we have a very strong entrepreneurial film industry raising investment in tough international markets, it is still disadvantaged because many of its leading competitors benefit from much more favourable tax regimes?

§ Baroness Trumpington
My Lords, the leading competitor is the US film industry from where most of the international investment in the British industry comes. There are no tax incentives for the film industry in the US.

§ Lord Jenkins of Putney
My Lords, does the noble Baroness agree that it is not desirable to enter the complicated field of film finance in question and answer? One welcomes the fact that the Government are about to introduce a proposal whereby they will give the kind of financial support to the industry which is enjoyed in many other countries. In advance of seeing that proposal and discovering whether it is worthy of approval, one welcomes the idea.

§ Baroness Trumpington
My Lords, I am grateful to the noble Lord for his remarks. Sometimes to my horror, and sometimes to my pleasure, my right honourable friend the Secretary of State reads everything that goes on in this House. I feel sure that he will read the noble Lord's remarks with pleasure.

§ Lord Birkett
My Lords, are the Government aware that not only Ireland but many other countries make special efforts through subsidies and tax concessions to attract film investment? Does the noble Baroness agree that the loss of an investment of the kind mentioned in the Question is not only damaging to the film industry but also to the economy of this country in general?

§ Baroness Trumpington
My Lords, other countries provide a range of support schemes, as the noble Lord implies. Many are based on levies which recycle industry money into the production sector but those schemes are subject to change. I fear that comprehen-sive details are not held centrally but, as I have said several times, my right honourable friend is looking into all these matters and will be reporting.

§ Lord Lyell
My Lords, can my noble friend give any indication about the tax treatment of individual entertainers, which is a little different from the investment and corporation tax treatment referred to by my noble friend, especially with regard to withholding tax? I believe that the United Kingdom tax regime is pretty well unique.

§ Baroness Trumpington
My Lords, it is a well established internationally agreed principle that income derived from a performance should be taxed in the 1379 country where the performance occurs. As in many other countries, the UK system of withholding tax is no more than a collection mechanism to secure at least some of the tax rightfully due. Any tax paid may normally be set against home liability under a double taxation agreement.

§ Lord Ewing of Kirkford
My Lords, is the Minister aware that there is considerable interest in making a film of the book of the noble Baroness, Lady Thatcher, The Downing Street Years? Would the Government be prepared to subsidise the production of such a film; and if they were, what certificate would they give it?

§ Baroness Trumpington
My Lords, I wonder whether the Irish Government would be prepared to lend 1,600 soldiers.

§ Lord Clark of Kempston
My Lords, does my noble friend agree that if special fiscal incentives were given to the film industry, other equally deserving industries, particularly those in the export field, would feel that they had been badly treated and would press the Government for tax concessions for their industries?

§ Baroness Trumpington
My Lords, whenever there is any question of one industry benefiting in any tax field one can well imagine that every other industry is watching like a hawk to see what is going on.

§ Lord Aberdare
My Lords, can my noble friend say how it is that Ireland, which is a member of the European Community, is able to give extra incentives to its film industry?

§ Baroness Trumpington
My Lords, European countries are still allowed to make their own laws.

§ Lord Hailsham of Saint Marylebone
Some of them are.

§ Lord Stoddart of Swindon
Read the Maastricht Treaty!

§ Lord Annan
My Lords, is it perhaps the case that labour costs are more favourable in Ireland? Can the Minister say how far restrictive practices in our country are responsible for this change of policy?

§ Baroness Trumpington
My Lords, it is not for me to answer for the Irish tax situation. British film production costs are deemed to be of a revenue nature. Tax relief is available either through the income matching or cost recovery method. Further relief may be available through the capital allowances system or through the special rules introduced in 1992.