New Clause. — (Repeal of Entertainments Duty.)

– in the House of Commons at 12:00 am on 10th June 1959.

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(1) Entertainments duty shall not be chargeable in respect of payments (whenever made) for admission to entertainments given after the thirty-first day of July, nineteen hundred and fifty-nine.

(2) Where entertainments duty has been charged on any payment made before the first day of August, nineteen hundred and fifty-nine, and by virtue of this section no duty should have been charged, the person by whom the duty was paid shall be entitled to repayment of the overcharge.

(3) On and after the first day of August, nineteen hundred and fifty-nine, the Entertainments Duty Act, 1958, shall no longer have effect.—[Mrs. White.]

Brought up, and read the First time.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

I beg to move, That the Clause be read a Second time.

Photo of Mr Gordon Touche Mr Gordon Touche , Dorking

I think that with this proposed new Clause it will be convenient to discuss the new Clause—"Reduction of entertainments duty"—standing in the name of the right hon. Member for Blackpool, North (Sir T. Low) and other hon. Members, which reads: The amount of entertainments duty chargeable on payments for admission to entertainment given after the eleventh day of April, nineteen hundred and fifty-nine, under the Entertainments Duty Act, 1958, shall be reduced by the sum of twenty pounds per week in respect of each place of entertainment; and if, before the date of the passing of this Act duty has been chargeable without regard to the aforesaid reduction and by virtue of this section a less amount of duty or no duty should have been charged, the person by whom the duty was paid shall be entitled to repayment of the overcharge.

Photo of Mrs Eirene White Mrs Eirene White , Flintshire East

Agreeable as it is for anyone who normally sits on the back benches to have the opportunity of appearing at the Dispatch Box, nevertheless I would have been most happy if, on this Finance Bill, it had not been necessary for me to do so on this occasion. Had the Chancellor of the Exchequer in his Budget proposals taken the step which those of us who are concerned with the film industry fully expected he would take this year and abolished the Entertainments Duty, or rather the cinema tax as we should call it, it would not have been necessary to have any discussion this evening at all. Unfortunately, in his Budget speech, the Chancellor did not even mention the matter. In the speech with which he opened our Second Reading debate on the Finance Bill, the Financial Secretary did not even mention the matter. In his winding-up speech at the end of the Second Reading debate, the Chancellor confined himself to three very brief sentences. We are obliged, therefore, to return to the subject.

As the Committee will appreciate from the new Clause which we have tabled, we are asking for the total abolition of the tax. It has been discussed at length fairly recently, and I do not wish to weary the Committee by going in very great detail into arguments which appear to us on this side to be incontrovertible. I will merely remind the Committee of the reasons why we think that it is unwise and unjust to continue to tax the cinema industry at all. When I was looking at one of the trade newspapers on Friday of last week, I was interested to see that, during the present week, the cinemas in four of the main provinces of Italy are closed altogether in protest against their very heavy entertainments tax. Clearly, we are not alone in having a Chancellor of the Exchequer who is unable to recognise the real needs of the cinema industry.

Anyone who looks at the present situation in the industry cannot possibly remain unpersuaded of the futility of taxing an industry which is having such clear financial difficulties. In 1958, admissions to cinemas totalled 752 million, in round figures, as compared with 925 million in 1957, a drop of 150 million attendances in one year. The box office takings dropped by approximately £10 million in one year. While the figures given for cinemas which have been closed vary slightly—those given to us in answer to Parliamentary Questions do not entirely coincide with the trade figures—I reckon that about 800 cinemas have closed in the last five years.

for this year, one has provisional figures only, of course, but I am told that for the first quarter of 1959 there was a further fall in admissions of 20 per cent. by comparison with the corresponding quarter in 1958. That was a very heavy drop indeed, as I am sure the Committee will agree. Usually, in the spring, one expects a slightly better attendance than one expects in the Christmas quarter. This year that did not happen the figures were worse than usual. I am told that this is the only year since the war in which the figures for the first quarter have been lower than those for the preceding Christmas quarter. Although there are no firm figures for the current quarter, I am told that attendances in the current quarter are running at approximately 15 per cent. below those for the corresponding quarter of last year.

It seems perfectly clear that the industry is not in a position to bear a tax which is still, in spite of concessions made last year, running at a very heavy rate. It is calculated that the tax which it is likely to bring in this year, unless the rate of decreased attendances accelerates even faster than was estimated, is about £9 million. When one considers the Chancellor's Budget, that is a very small sum, but for the industry it is a very considerable sum indeed. We cannot help thinking that the Chancellor would be ill-advised not to abolish this tax once and for all this year.

9.15 p.m.

I do not want to say much about the other new Clause which has a quite distinguished backing. I do not think that the right hon. Member for Blackpool, North (Sir T. Low) is present, but other hon. Members who support the new Clause are here. Various calculations have been made in the Press about the probable effect of the new Clause. They vary between a remission of £2 million and £2¾ million a year, but, whatever the precise figure may be, it would be a very small remission compared with the total abolition of the tax, which we on this side think is the only sensible thing to do.

We cannot see the point of having a small nibble at the tax this year and then having to come back again next year, as we should undoubtedly do, and ask for further concessions. This would leave the industry in a state of considerable uncertainty. It has already been subjected to uncertainty for a long time. We are very much concerned with the effect of this prolonged uncertainty upon the owners of the cinemas. It is true that the smaller cinema owners may consider that they get some slight help by a partial remission—obviously they do—but I think that the industry would be in a far healthier state if it could know precisely where it stands and if it were not left in a state of uncertainty as it will be if it gets only a token remission.

This matter is extremely important not merely for the exhibitors but for British film production. It is, and has been for a long time, one of the main concerns of the House that we should sustain the production of British films at a level which does us credit, both in quality and quantity. I emphasise particularly that at present British film producers are making special efforts to ensure that our films are shown not only in this country but also abroad. It is true to say that half the earnings of film producers come from exports, which is a quite remarkable achievement when one considers their great difficulties in obtaining permission and getting over quota barriers in other countries.

A very strong delegation from the film industry is waiting to ask the President of the Board of Trade for further assistance in this matter, but I think that it is clear to all that the very desirable and extremely important export industry of British films cannot expand much further if it is left in doubt about the exhibition situation at home. If it feels that it is seriously contracting and is subject to uncertainty and anxiety, it would clearly be much more difficult for British film producers to continue this quite remarkable effort in export expansion. I think, therefore, that we in this House have a duty to help the industry on the producing side as well as on the exhibiting side, because it is clear that the producers are making a very strong effort to help themselves.

Furthermore, the representatives of the industry have pointed out, and with reason, that although they are at present suffering severely from the competition of television, they have reasonable expectation that within the next couple of years—possibly by 1960–61 and in any case by 1961–62—the effect of television will have stabilised itself. Experience in the United States has shown that one can expect a certain steadying in the decline of cinema attendances and it is calculated that in this country that will probably be reached at a figure of about 600 million attendances a year. Therefore, say the representatives of the industry, they should be allowed to survive at least that long, and in order to do so they should have a complete remission of tax. I do not think that a partial remission this year is the answer.

One of the obvious technical points to be discussed on the second of the two new Clauses is that its proposal would have the effect of helping not merely the exhibitor, but also the renter, because unless some agreement were reached in the trade—and so far, I understand, no such agreement has ever been discussed—the effect of this method of dealing with the matter under the ordinary arrangements current to the trade would be that this proposed remission would be shared between the exhibitor and the renter. We need to know a little bit more about that. Also, it would have the effect of a rebate which hitherto we have always been told has been impossible on this form of tax, because the theory has always been that the tax was upon the person who bought the ticket and not upon the exhibitor. We might, perhaps, have a word about that as the Clause is being discussed, because it is quite new in principle to anything which has been done hitherto in this direction.

Those are important details which we can discuss later. The real issue is whether there is any wisdom in continuing a punitive tax—for that is what it is—in the present state of the cinema industry and whether it is not our duty to say that the time has come when this tax, which is discriminatory against one form of entertainment only and at a time when it is undergoing great difficulty, ought not to be removed altogether. What is the sense of allowing an industry which is facing difficulties, but which is making a great effort to help itself, to be starved? If the patient is suffering from malnutrition, as one might say is the case with the cinema industry, what is the sense of keeping nourishment from it or of allowing it just a spoonful or two when it could be allowed to have the full £9 million?

We on this side are unrepentant in saying that the time has come to remit the tax altogether, to end any uncertainty that may exist and not to continue it year after year. We therefore ask that our new Clause should be accepted.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

In recent years, I have probably made nearly as many speeches on this subject as the hon. Lady the Member for Flint, East (Mrs. White.) I have certainly had the pleasure of following her on numerous occasions and I trust that she will accept it in the sense and with the graciousness which I intend when I compliment her on her performance tonight at the Dispatch Box. Although I have made a number of speeches on this subject, however, I have not yet done so from the Dispatch Box. That, I might add, is not an invitation.

If I cannot go quite as far in commending to my right hon. Friend the Chancellor and to the Committee the new Clause introduced by the hon. Lady as I can the second Clause in the names of my hon. Friends and myself, I hope to make my reasons clear.

I should not on this occasion be fair to the memory of my own speeches if I did not say that I see a great deal of the substance and accept a great deal of the case which the hon. Lady has presented to the Committee. I think it is almost true to say that today the cinema tax, as it is known, is getting almost as out of date as the Window Tax of some years ago.

The film industry, to be fair, does not of course pretend that its only trouble is the Entertainments Duty and that if it were completely removed the industry would be anywhere near out of the wood. I do not think there is any virtue in exaggeration, credit however should be given where it is due. I think that a rather large degree of exaggeration once existed, it has now gone, and in the last two years the case has been well presented. The Committee cannot be unmindful of the fact that recent events indicate that the case presented year after year, certainly since 1957, has been substantially borne out by events.

Therefore, there is some substance in it but it is also true that we must be mindful that the Conservative Government have taken action on no fewer than three occasions, and in a very substantial way last year. We must not underestimate that. A substantial amount of tax was remitted last year, in a year when there were no other very great remissions. Something like half was remitted; £14 million it was meant to be, and if it turned out to be less, it was because of the lower admissions. Nevertheless, it was a considerable sum. Moreover, there are other claimants to tax remissions, and no Member of the Committee can be unmindful of his responsibilities to the large number of people with a large number of claims, and it cannot always be possible for any Chancellor of the Exchequer, so to say, to nibble away a large amount of tax from the same source every single year.

The need, however, is undeniably great. The hon. Lady has drawn attention to the fall in admissions. The figures, of course, are astounding, if one goes through the whole ambit since the reorganisation after the war. Even more impressive, they have been halved since 1948, and there has been a drop of about 50 per cent. since as late as 1956. There is no argument, I think, in any part of the Committee on the matter of the great fall in admissions, but, of course, that is not to say—and I want to present the case as fairly as I know how—that the fall in admissions can be corrected entirely by remission of entertainments tax or cinema tax, largely because it does not go into seat prices, though it does have certain other effects, as I shall indicate in a second or two.

There are a lot of causes for this fall in admissions. Obviously—and the industry accepts the fact, which is perfectly clear—television is the premier one. That was, of course, the start of the great fall in attendances in the United States. After a time it levelled off a bit. Certainly, here it has had its effect and it is not complete yet. Then there has been some change in habits. Of course, this is due to wider consumer choice. I think we must recognise that the rising standard of living which Conservative policies have brought about, not least in the increase in the use and in the numbers of owners of motor cars, has at least contributed to some of the difficulties of the cinema industry, but television is on the up and up in claiming the attention of our people. About 10 million licences will be issued in a very few months from now.

There is the other side, and I want to put the matter in all aspects, that while admissions have fallen, as has been made perfectly clear by statistics, overheads have increased, the cost of operating, the cost of wages, of film transport, heating, lighting. That has to be set against the background of falling admissions and, therefore, of the fall in gross takings.

I understand that the trade has to meet serious losses at the moment, and this year no less than 28 per cent. of cinemas run at a serious loss. If nothing is done this year, it will be about 60 per cent. by next year. I have had the opportunity of speaking with somebody who is well-informed on this matter, and I gather that those figures are slightly optimistic. Be that as it may, they are quite serious. They are so serious that there is something to be said for trying to step in once again, if my right hon. Friend the Chancellor feels he can do so, to minimise something of that loss. That, I would claim, our Clause will do. Certainly figures of loss of that character, involving a large number of closures, represent a major crisis in the industry.

9.30 p.m.

The industry is more vulnerable, for reasons obvious to all, than is the American industry. The hon. Lady the Member for Flint, East mentioned exports, quite rightly. I should like to add one other fact. Although the figures are yet small, measured in millions, against those for many other industries, the increase in exports has been really phenomenal. If a large number of industries in this country had been able to increase their exports proportionately to those of the film industry in the last three or four years, we should now have a better, more sound and less dangerous economic situation in the matter of the need for exports. The industry has done a magnificent job. Although the number of millions of pounds is small in relation to other industries, these are a high grade of exports in that they involve practically no material and, therefore, are net exports from which we derive the greatest advantage.

Again, there is the political and social importance of British films which cannot be over-stressed. These films help to display Britain and British ways on the screens of the world. This is a vital and incalculable contribution which can play its part in "hotting-up", if I can put it that way, our retaliation in the cold war by presenting Britain in a British way, which these films do so well. There is also the humanitarian point of view in that those employed in it have a great stake in the industry and are naturally somewhat nervous of the way things are going.

I do not think that it would be quite in keeping with one's responsibilities to overstress a case of this nature unless one felt that the industry had been trying to do something to help itself. I want to make that claim for it. Within the limits of its resources it has gone in for a considerable number of new methods of production and techniques. One has only to go to some of the leading houses to see what is being done in that direction. Exhibiting houses have used wisely the remissions of taxation which we have been able to make to put their houses in better shape, to renovate them and to install modern techniques. Provided that there are good films to show, this is the only way in which the public can be brought back in sufficient numbers to the cinemas.

The industry claims that the tax is discriminatory against it because no other industry is now taxed in the same way. It feels that it is being made an outcast, and it claims that the tax is unreasonable because it has to be paid even if a loss has been incurred, though it is not quite alone in that category.

In spite of all these strong arguments, I might have hesitated to press the case so strongly if I were not quite confident—and I am sure that I speak for many of my right hon. and hon. Frinds—that this type of help might be the best and most helpful thing that the Chancellor can do this year, within the framework of a Budget which has reduced the levels of taxation so much in so many other directions that it has obviously limited the extent to which, twice running, he can help the industry in this way.

The proposed Clause which I particularly commend—"Reduction of Entertainments Duty"—is, I think, very clear in its purpose and does not upset the existing machinery by which Entertainments Duty is collected or the machinery whereby the production levy is collected. It only means that the sum is worked out according to the rules and regulations of Customs and Excise and that in the event of £20 or more becoming payable the £20 can be deducted before the sum of money for Entertainments Duty is handed over to the Inland Revenue, and where the sum is less then to the extent to which that sum is payable.

I agree with the hon. Lady when she says that that will not all go to the exhibitor. That is perfectly true. We have to look at it more broadly than that. What we surely all have in mind is the need of the industry as a whole. It is impossible to separate film production from film distribution or film exhibition. It is all part and parcel of the same thing. It does not mainly go to the rentier.

I do not think it is up to us as a Committee or the Chancellor of the Exchequer himself in these matters to go into these niceties. It is a matter of organisation within the industry how it can best use the money that this Parliament can give to it. I would myself say that it would be extremely unwise if it did in fact use it entirely in a parochial sense. It must be used for the benefit of the whole industry because we shall not fill exhibition houses, whatever we do about Entertainments Duty unless we have good films and vice versa.

I trust that the Chancellor will feel that he can go possibly as far as the new Clause, and accept the intent which is perfectly implicit in it. I wish to draw his attention to the second and concluding part of it, because those words are borrowed from the Finance Act, 1958, and are merely following out in this instance precisely the same thoughtful and reasonable form of justice that was given to the industry by the reduction last year in a similar context.

It would be breaking what I believe is now thought to be a just way of handling this matter if the second part were not included in the intent of the Clause. It may be that in our amateurishness we have not quite achieved the practical in this Clause, and I have heard one or two little difficulties mentioned to me concerning its operation. I am not too worried about that, provided the intent and purpose and roughly the amount, which I imagine is about the figure mentioned by the hon. Lady or probably higher, can be made available on this occasion.

If there is any possibility of that intent being accepted broadly, I would be happy to accept my right hon. Friend's assurance. If he can find some words to carry out approximately this intent, as I earnestly hope he can, and can give me that assurance tonight, before the Report stage, I would not find it necessary to move the Clause when it comes up for consideration.

Photo of Mr Frank Hayman Mr Frank Hayman , Falmouth and Camborne

I rise to support this Motion, because, as I have said in the Chamber before, and as recently as April, I consider this tax to be unjust and inequitable. It involved the closing of a cinema in my own town, Redruth, on 30th April, and the Chancellor was reminded of this fact when he spoke in Camborne two or three weeks ago. I was reminded of it when I saw outside this closed cinema the effigy of an undertaker with, beside it, the notice, "Strangled by the Chancellor of the Exchequer".

As was pointed out to the Chancellor himself, this cinema circuit of four cinemas in the area paid no less than £27,000 in tax last year. That is an atrocious tax on an industry which, as the Committee know, has been struggling for existence in recent years. Therefore, I ask the Chancellor, even at this late hour, to reconsider this hit at the cinemas which, in counties like Cornwall, provide for people in the towns and the rural parishes. I ask him to think again, to accept this Clause, and not to be intolerant in pursuit of the last penny from this industry.

Photo of Miss Irene Ward Miss Irene Ward , Tynemouth

I want to ask only one or two questions. All the time I have been in the House of Commons I have not spoken on this kind of Clause and I am only doing so new because I seem to recollect that some time ago a member of the Treasury Bench stated that he had no individual figures. When I consider all the speeches that are made, it occurs to me that very few individual figures are given. Generally, we put our case in an overall way, and though I think that that is important I am rather more interested in detail and I want the answer to the figures that I shall give.

I am one of the supporters of the proposed new Clause in the name of my hon. Friend the Member for Blackpool, North (Sir T. Low). In the town where I live, Gosforth—it is really a village, though it is growing into a town—lives a well-known figure in the cinema world who is a member of another place, Lord Westwood. He has connections with the Globe Cinema in Gosforth, which has been there for a long time and, on the whole, shows quite good films. Gosforth has a great affection for the cinema. I asked Lord Westwood if he would give me the figures in connection with that cinema for the last year and he has informed me that the loss on the year's working was £1,620, that he paid £1,932 in Entertainments Duty, and that the film levy paid was £563; that is to say, he paid £2,495 and the loss was £1,620.

It may be that Lord Westwood has a lot of cinemas and may have recouped his losses in some others. I do not know. That is what I am asking my right hon. Friend to deal with, because I have always understood—perhaps incorrectly, because I do not regard myself as having a great knowledge of figures—that one does not pay tax if one does not earn. That has always been the principle, that one cannot pay on a loss.

9.45 p.m.

I try to be a practical person and if these figures are correct, all I have to say to my right hon. Friend is that I think the Treasury is "plumb silly". I do not understand how my right hon. Friend can go on asking anybody who owns a cinema to pay more in tax than he earns. This particular cinema, as I have said, has carried a loss and no one can go on doing that for very long. I do not think that my right hon. Friend wants to do the cinemas down, or wishes to close the cinemas for some reason or other. I do not suspect for one moment that he wishes to do that; because I think that when he has the time, and can get away from yachting, he goes to the cinema. But if he does wish to do so, he need not take any notice of this proposed new Clause.

I am sure that the figures I have quoted are accurate, because Lord Westwood would not give me inaccurate figures. He is well known and highly respected in the industry. If these figures reflect the position, surely, on the basis of equity and justice, my right hon. Friend ought to do something about it. As a supporter of the Government, I do not particularly like being asked to do something which seems to me to be "plumb silly" and I hope, therefore, that my right hon. Friend will accept this Clause.

Photo of Mrs Jean Mann Mrs Jean Mann , Coatbridge and Airdrie

I did not intend to intervene in the debate on this Clause, because in this Committee we have so many experts on the question of losses and profits. Some time ago hon. Members were invited to Westminster Hall to meet a good many of the film stars. I was impressed by a graph which was shown on a blackboard which indicated that even though the Chancellor gave us what is asked for in this Clause the cinemas would still be well "in the red".

I do not understand why the Chancellor, be it the present Chancellor or the one we are likely soon to have—provided the Prime Minister takes him along by the hand and speaks to him close to his heart—does not consider that he owes the cinema a rebate for what was extracted by way of tax from the industry during the last year. In my opinion, the industry is owed a rebate, just as individuals expect a rebate of Income Tax when their incomes have been reduced.

A number of years ago it could have been said that the cinemas were not doing their best. Recently I have been visiting the cinema to see whether the film producers are making an effort to do better. I saw "Bridge on the River Kwai". I saw "The Inn of the Sixth Happiness". I saw "The Horse's Mouth" and I saw "Indiscreet", "Separate Tables", and a good many others, including "Dunkirk" and "A Night to Remember". I may add, if hon. Members are interested, that there was nothing at all of importance that I should remember on that particular night beyond the fact that the film "A Night to Remember" is, as most hon. Members will know, the story of the sinking of the "Titanic". It is well worth preserving. To give us that film was a splendid work, and the same could be said of "Dunkirk", which was a most historical memento of the valiant bravery of this nation in its darkest hour. The others deserved the adjective which is often a superlative, for some of them were "stupendous" productions.

I was very sorry to know that I could have been offered any seat at any time. So sparsely were those productions attended that on one occasion when I had dropped my purse on the floor in walking out I went back and picked it up, in the dark, without any difficulty. On another occasion I dropped my glove and again in the dark I went back and picked it up, in a lonely quietness which was appalling and depressing. One felt very sorry for the people who were trying to start a movement to draw us away from our television screens. We should give the television screens a rest. Although I am very fond of television I am a selective viewer.

It is also very worrying in the cinemas when the heat is forced on. There have been letters to editors about the high temperature in cinemas. They have asked, "Why is the cinema always so hot?" The reason is that the proprietors want to encourage the sale of ice-cream. In my constituency cinemas the heat is turned on whether I am there or not in an effort to push the sale of the ice cream. The proprietors are also compelled to run competitions to attract people to see what they ought to go to see without inducement.

I do not know how any Chancellor of the Exchequer can continue any longer extracting money from an industry which is making so valiant an effort to recover. Give them time. If money comes along in two, three or five years' time, start the system up again. I do not think there is the slightest justification for taking anything further from our cinema trade now and for a long time to come.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

The cinema industry has all-party support tonight. There was great disappointment in the industry when it became known that the Chancellor had decided not to abolish this tax in his Budget. Sooner or later this tax will be repealed. The danger is that repeal will come too late, or too late for many cinemas.

The cinemas have been having a difficult time as a result of competition from television. That does not alter the fact that the tax is not only onerous but is impossible to justify on any ground of principle. It is a tax, as the Chancellor must admit, on turnover and not on profits, and might make all the difference between paying and not paying. The hon. Member for Tynemouth (Dame Irene Ward) said that it was useful to have precise examples. I propose to give an example. The case has already been well argued and may be illustrated by examples of what is happening.

Among my correspondence I have a letter from a Mr. W. A. Newton, of Huddersfield. He refers to three cinemas in Huddersfield and district in a letter which was written before the Budget and when he had not heard the disappointing news. In his letter he said: I would like to point that the above three cinemas have been kept up to date.… They have not been neglected in decoration and comfort. It is with these things in mind that it would be a great tragedy to have to think of closing any of these cinemas which, I am afraid, will happen if the Tax is not abolished. He has been good enough to give me some figures which I am permitted to quote. I think these figures bring out clearly the problem facing many cinemas as a result of Entertainments Duty.

Cinema No. 1 in 1958 had gross takings of £4,701; Entertainments Duty £1,065; loss £1,287. In that case the loss is slightly more than the Entertainments Duty. Therefore, there would have been a small loss if there had been no tax. In the second case, gross takings were £6,895; Entertainments Duty £1,478; loss £478. It is quite clear that there would have been no loss but for the tax. The third cinema, which is well known to me, is a larger one. The figures there were: Gross takings, £22,351; Entertainments Duty £7,163; British Film Production Fund £359; loss £878. It is quite clear from those figures that that cinema would have paid its way reasonably comfortably if it had not been for the effect of the Entertainments Duty which is turning a reasonable profit into an annual loss.

Obviously, cinemas cannot go on indefinitely losing money in this way. In my view, the only possible course to take—and one which I hope the Chancellor will take—is to repeal this tax. In the long run the Chancellor probably would benefit, because it is better to receive tax on profits which are made and which will continue than to receive Entertainments Duty for a short period on cinemas which very soon will have to close.

Photo of Sir Harold Roper Sir Harold Roper , North Cornwall

; I should like to add my voice in favour of one or other of these two Clauses, I am grateful to the Chancellor for the concessions that he has made in past years, but I hope that he will be able to go one step further this evening.

I was talking recently to the proprietor of a couple of cinemas in a West Country holiday town. He told me that over past years overall he had made a loss of £5,000. During the period in which he made that loss, he paid in Entertainments Duty no less than £80,000. We have been given figures showing the decline in attendances. I have recently been given figures showing the net number of closures of cinemas, taking into account some which have come into operation again. Over the past three years the number of closures has averaged just on 200 a year. In the first four months of this year, however, the rate of closures has doubled; it has been at the rate of 400 closures a year.

We all know that there are other causes, apart from Entertainments Duty, which lead to this result, but I do not think there can be any doubt that the incidence of Entertainments Duty is a contributory cause. It is contributing to the decline in the cinema industry. I hope that if the Chancellor cannot agree to the total abolition of the duty, at least he will be able to accept the new Clause in the name of my right hon. Friend the Member for Blackpool, North (Sir T. Low), to which, also, I subscribed my name.

10.0 p.m.

Photo of Mr Jon Rankin Mr Jon Rankin , Glasgow Govan

It can be clearly said that on both sides of the Committee we are agreed that something must be done to help the cinemas. That has been the mind of the House for a long time. It has been impressed on the Chancellor repeatedly by hon. Members from both sides. Last year, something was done, and we were grateful for it, as was the cinema industry, but it was not sufficient, and tonight the Chancellor is being subjected to two pulls in a contrariwise direction. From behind him he is being pulled backwards to a sum of about £2½ million, or possibly £3 million. From this side of the House we are pulling him forward towards a sum of about £9 million.

Hon. Members on both sides want to help the cinema industry, but our view is that the sum suggested by the hon. Member for Shipley (Mr. Hirst) will not meet the case. We on this side of the Committee always listen with great interest to what the hon. Member says. I am sure that he recollects the Friday three years ago last February, when, for the only time since the end of the war, we had the opportunity of a full discussion on the state of the cinema industry. On that occasion t moved a Motion calling for an inquiry into the state of the industry, and I think it can be said that I was supported on both sides of the House. The Government did not accede to the wish of the House.

We said then—and we were not prophesying—that the cinema admissions would steadily fall, that closures would become widespread and that the amount taken in taxation from the industry would slowly and steadily diminish. All that has happened, and it shows no signs of stopping. I feel that, however helpful the £2 million or so may be to some sections of the industry, it will not be sufficient to arrest the decline so apparent to hon. Members on both sides of the Committee. I hope that when he takes the decision which he must take, the Chancellor will decide to abolish the tax altogether.

May I remind the Chancellor of something he said during the Budget debate last year? The thought has crept into the minds of a good many people that the refusal of the Chancellor to abolish the duty altogether is because of a decision which has been taken that this industry ought to rationalised, and the tax is being used as the weapon of that purpose.

In his Budget speech in 1958 the Chancellor of the Exchequer said: … it cannot possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public. If people prefer to occupy more of their leisure time in other forms of entertainment and less in film-going, some reduction in the number of cinemas seems inevitable."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 69.] I have no objection to the words themselves. It is an observation which many people can make, but it was very widely interpreted in the Press at the time as meaning that if the tax was abolished we might delay, in the estimation of the Chancellor's advisers, the concentration of the film industry which seemed to be necessary. I hope that the Chancellor will make it clear that that was not his view and that he is not using the tax for this purpose.

I want the right hon. Gentleman to look at some happenings since. It would appear that the right hon. Gentleman has given assistance in the present Budget to those industries which are competitive with the film industry while at the same time denying help to the film industry. He has taken 2d. off the beer duty. Those who drink beer are not quarrelling with that, but the net result is that brewers are now able to advertise more widely on television than they were before, to the detriment of the cinema exhibitor.

That is a real point. At least, it is one that appeals to the industry. I hope that the Chancellor will make it clear that, if he does believe that the film industry must find its own competitive level, he will not give assistance in his Budget to some of its competitors, as he has done, and deny to the cinema industry the assistance which it has been seeking for so long in the form of abolition of the Entertainments Duty.

The right hon. Gentleman must know that he is doing this at a time when on both sides of the Committee we agree that the industry is on a decline. The decline is shown by the fact that just a year ago we were discussing whether the Chancellor could afford £29 million for the abolition of the Duty. This year we are asking, not for £29 million to attain abolition, but for £9 million. Surely these are most significant figures. To me they are arresting figures, because they prove the tremendous decline which has taken place in this industry over one single year.

It would seem that if the Chancellor does not face up to a situation that is now nation wide, abolition will not he necessary. The tax will have practically disappeared. He will be collecting it only from the major circuits, some of which, such as Granada and A.B.C. do not need to bother about the tax as they are getting budgetary help for their television interests. They are making enormous profits, but they alone cannot sustain the demands of the quota, and the demand of the statutory levy which, by Government decree, has been placed on the industry as a whole.

The situation has been recognised so clearly by Government supporters that they have put down a new Clause which seeks abolition for the small men, because, were it accepted, nobody in the industry who is paying less than £20 in tax would be called upon to pay it. That new Clause would free every small cinema exhibitor of the tax liability. On the other hand, there would be left out a very important part of the industry—the independent exhibitors, whose status must be preserved if the industry is to continue to be run on its present lines——

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I he hon. Gentleman's point is a very fair one, but I think that for the general public and for the cinema exhibitor, his £20 would be more clearly stated as £1,000 a year—£20 a week for each week of the year.

Photo of Mr Jon Rankin Mr Jon Rankin , Glasgow Govan

I cannot interfere with the terms of the new Clause, but the very fact that it is £20 a week would create a sort of continuing irregularity that would be disconcerting for exhibitors. In one week, the tax may be £18, and the exhibitor would not pay anything. In the following week, the tax might be £22 or £23, in which case the exhibitor would keep £20 and pay £2 or £3. That would go on week after week.

That is not a very tidy operation, and I suggest the adoption of another method which would affect every cinema. My suggestion is—and it is based on Questions I asked of the Chancellor some time ago—that we raise the tax-free allowance from the present 1s. 6d. to 2s. That method is tidy, it is in keeping with what is now being done, and would not cost the Chancellor any more than the suggestion contained in the new Clause put forward from the other side of the Committee.

I understand that there are about 2,300 cinemas that are taxed more than £20 a week, and 1,000 that pay less than that amount. If the Chancellor were to forgo that, the cost to him would be about £3 million, plus a few hundred thousands of pounds that Chancellors do not really worry about—a little over £3 million. Were he to adopt my suggestion the cost would be practically the same, but the method is much better.

10.15 p.m.

However, I am not arguing for that. I am merely stating that if the Chancellor is thinking along the lines suggested by his hon. Friends he would be far better guided by taking the advice that I am giving him now. If he believes that advice is good, I want to offer him still better advice. It is that as a result of the series of debates that we have had on this industry and the series of demands that have been presented to him and his predecessors in the Chancellorship, it has been made abundantly clear that tampering with the tax is no solution.

While, as the hon. Member for Shipley said, it may be true that this will not take the cinema people out of the wood, and will not increase admissions, still it will remove a grievance that they ought not to have. It will right something that is wrong, and it will allow the industry to be free altogether of Government demands, and enable it, without the tax to worry it, to set itself on its feet towards what I am certain is a better and brighter future than faces it if the tax is not abolished.

Photo of Captain James Duncan Captain James Duncan , South Angus

A minister of religion in Perth the other day explained why people did not go to church. He said that if the weather is fine they get into their motor cars and go out to enjoy the beauties of the countryside, and that if it is very wet they decide to stay at home and watch the television. That is what is happening in the cinema trade today. If it is fine, as my hon. Friend the Member for Shipley (Mr. Hirst) said, there are so many other activities and methods of enjoyment that the cinema loses. If it is very wet people will not put on their mackintoshes and spread their umbrellas in order to go out to the cinema; they will stay at home and watch the television.

In supporting my hon. Friend the Member for Shipley, I suggest that the cinema still has a part to play in holiday times. I have known cinemas closed in holiday times and I have heard despairing pleas from the managers of those that have remained open because they were losing money. The hon. Member for Huddersfield, West (Mr. Wade) quoted some figures, as did my hon. Friend the Member for Tynemouth (Dame Irene Ward). Such figures have been supplied regularly to the Chancellor for some years. Year by year audited accounts have been produced showing the losses of these cinemas.

I believe there is a real need in holiday times for cinemas, and in comparatively small towns this sort of Clause would probably do more than anything else to keep these cinemas alive. It would not get them out of the wood but it would mean that they would continue in operation and would not have to he sold for other purposes. Therefore, I support my hon. Friend the Member for Shipley, without raising the wider problems referred to by the hon. Member for Flint, East (Mrs. White).

It is a little ironical that in this Budget we have done so much for so many people. We have reduced the Income Tax by 9d. We have increased the investment allowances. Of course, when one says, "Look what we have done for you", the cinema man says that that is no good for him. He is not making profits, so a reduction in Income Tax means nothing. He cannot afford to put new equipment into his cinema and, therefore, the investment allowance is no good to him. But, he will say, a reduction of Entertainments Duty in some form or other is the only way in which he can be helped to weather the storm through which he is going. Therefore, I add my plea to the plea made by my hon. Friend the Member for Shipley and by the hon. Member for Glasgow, Govan (Mr. Rankin) that something should be done.

We have three proposals. There is the proposal made by the hon. Lady the Member for Flint, East for complete abolition. We have my hon. Friend's proposal that the first £20 a week be excluded. We have the suggestion made by the hon. Member for Glasgow, Govan, which I have just heard and have not had time to study, that the limit be raised from 1s. 6d. to 2s.

Photo of Mr Jon Rankin Mr Jon Rankin , Glasgow Govan

No. The hon. Gentleman must not misrepresent what I said. I asked for abolition. But, I said, if the Chancellor has to choose between two methods, there was one which I thought was better.

Photo of Captain James Duncan Captain James Duncan , South Angus

That is exactly what I was saying, I do not honestly mind which it is. From my own constituency point of view, I think that the proposal of my hon. Friend the Member for Shipley would meet the case and, therefore, I support that. Having put my name to the new Clause, I hope that the Government will do something to meet the needs of what I believe is still an important part of entertainment in a holiday town, so that at least some cinemas will be kept in operation for the benefit of holidaymakers, whether they come from England, from abroad, or from other parts of Scotland, to visit my beautiful coast.

Photo of Mr George Jeger Mr George Jeger , Goole

Various speakers have presented to us figures showing that certain cinema owners have been paying more in taxation as a result of this iniquitous and unfair tax than the losses they have incurred during the year. In many cases, this has gone on for a period, at the end of which the cinemas have had no alternative but to close. This is why cinemas all over the country have closed.

From one's own constituency, of course, one has had practical experience of these things. In Goole, which formerly had three cinemas, there are now two. One closed at the beginning of the year. In two other small towns in my constituency, where there is one small cinema struggling to keep alive in each, I have had representations made to me by the cinema managers to the effect that, if the present situation continues and there is no remission of taxation, both will have to close in due course.

Undoubtedly, the social effects of closing cinemas in small towns is terrific. But it has an economic effect as well. One of those towns happens to be a mining community. The miners who work various shifts at different times go to the cinema when they feel like it and when there is a film worth seeing. If the cinema closes, they will have to travel ten or twelve miles to the cinema in the nearest large town.

Some of them are doing this already. I have definite evidence that those who go to a cinema in a neighbouring town ten or twelve miles away, having a drink or some refreshment afterwards and catching the late bus back, return home late to bed and miss the early shift next morning. Then we have talk of absenteeism in the pits and a decline in production. There are economic as well as social consequences in this matter.

There is the economic effect on the industry itself. There is the general effect on those employed in the film industry, the many thousands of cinema workers, the technicians the electricians, the artistes, the actors and the actresses. There is already severe unemployment among artistes. If more cinemas close, these people who have been trained carefully for their jobs, who have practised them carefully throughout the years, will, as skilled workers, be thrown on to the unskilled market. That will create a great deal of trouble for them and for the industry generally.

A little while ago we abolished, with general consent, the Entertainments Duty on theatres. In many cases, it came too late to save theatres in provincial towns. Many of them were forced to close because of the accumulated losses which they had incurred, in spite of the remission of Entertainments Duty which was crippling them over the years.

I ask the Chancellor to accept the new Clause and the appeals made to him on both sides of the Committee to save the cinema industry before it is too late. We know very well that, in spite of a remission of tax, some cinemas are bound to close because of the change in fashion and social habits and perhaps because the cinemas themselves are old-fashioned and unsuitable. But the industry itself is a much greater thing, as has been eloquently pointed out by hon. Members opposite, from the point of view of exports and the presentation of the British way of life and our artistry. I think that the Chancellor is sympathetic to appeals of this kind and I hope that he will accept the new Clause and abolish this tax entirely.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

We have had a very interesting debate. I want to say bluntly to my right hon. Friend that I think that in the conditions that exist in the industry today this tax is immoral. The Conservative Party has a good record in this matter. We have reduced the tax in two Budgets. This tax now brings in a total of £9 million a year, but I do not think that it is the amount of tax which is important. Would any Chancellor in his right mind have considered taxing the stage-coach to subsidise the construction of the railways in the nineteenth century? One has only to pose the question in that way to realise the absurdity of it.

I do not think that the tax has a great deal to do with the closing of cinemas. I listened with great interest to the hon. Member for Goole (Mr. G. Jeger), but I wonder whether he has thought out his argument. In the villages about which he spoke cinemas are losing money, because some of the people in those villages are going ten miles to cinemas in other towns, which are also losing money. We are faced with the fact that there is a change in the entertainment habits of the nation, and, indeed, of the world.

My own view about the cinema is that in the years to come cinemas will have to produce films like "A Night to Remember," which the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) found such pleasure in visiting. I thought that when she said that that was the only thing that she had to remember she was being a little unfair to her pair on that occasion. When we consider the hours which we spend in the House I should have thought that she would have a kind feeling in her heart for the person who allowed her to go and see that film. Those are the sort of epics which the cinema industry will have to produce in the days ahead. The domestic drama, the sort of film which can be produced equally on television, obviously will not have the pull with the public that it had in the days when television did not exist. Great epics like "The Bridge on the River Kwai" and "A Night to Remember" still draw audiences in the modern cinemas with wide screens in the large cities. I think that they will continue to draw an audience for many years to come.

That will not apply, I regret to say, to the small village cinemas. Because of increased facilities for transportation—another ten years there will probably be almost 10 million private motor cars on the road—am afraid, although I deplore it, that, irrespective of the tax, a lot of small cinemas, like so many other things in our history, will disappear when they have served their useful purpose.

10.30 p.m.

Having said that, I repeat to my right hon. Friend the Chancellor that it is not the policy of the country, or I have never understood it to be, to tax people on their losses. My right hon. Friend has been featured in the newspapers this week as a great life saver. He nearly lost his own life. Let me put it to him this way. Would he consider that it was a proper mode of conduct to go to some-body who was bleeding to death and ask him to be a blood donor? That is exactly what this tax means.

After the charge of the Light Brigade, at Balaclava, would my right hon. Friend have considered it a good thing to go over the stricken field asking the dying to become blood donors for the remainder of the army? That is exactly the situation facing the cinema industry. We are extracting money for the benefit of the nation from an industry which, very largely, is losing money.

I have been persuaded to support the new Clause to which my hon. Friend the Member for Shipley (Mr. Hirst) has spoken. I support it this year because I think that it will do good where it is most required, in the smaller cinemas. There is, however, no doubt that a Chancellor of the Exchequer in the very near future must face the fact that this tax must go. It has lasted too long and it is no longer a good tax.

Photo of Mr Tudor Watkins Mr Tudor Watkins , Breconshire and Radnorshire

My experience of the Chancellor of the Exchequer when he was Minister of Agriculture was that if one appealed to the softness of his heart he was more inclined to give way than if one produced a great deal of facts and figures on the economic side of the argument.

I represent constituents who are dependent for their entertainment on travelling long distances to cinemas in market towns, because they are part of that 2 per cent. of the population who cannot get television. They cannot even get electricity to their areas to get any other kind of entertainment, not even sound broadcasting. For the reasons which have been put to him, I appeal to the Chancellor to keep the cinemas in those districts open.

This afternoon, I have been writing a letter, for the fourth time, to some people who wish to sponsor a film on pony trekking in Wales. What is the use of having the film, however, if there will be no cinemas in which to show it? If, tonight, the Chancellor asks for the new Clause to be withdrawn and says that he will produce one of his own to safeguard the industry, his action will be welcomed. If that were to happen, I would get the pony trekking association in Wales, particularly in my constituency, to ask him to ride Foxhunter as part of the pony trekking.

I add my voice on behalf of those cinemas which are struggling in various parts of Wales. If the Chancellor does not carry out my suggestion, I hope that he will at least consider doing something about this tax, which is crippling the industry.

Mr. Amory:

I have listened with great interest and a good deal of sympathy to the arguments advanced with persuasive eloquence by hon. Members on both sides of the Committee. My hon. Friend the Member for Shipley (Mr. Hirst) put the position very fairly indeed. There can be no dispute about the facts which have moved hon. and right hon. Members on both sides of the Committee to move or suggest new Clauses. There is no doubt that the number of people going to the cinema has fallen substantially and that as a result many cinemas have difficulty in making both ends meet and a number have been forced to close.

I think my hon. Friend the Member for Tynemouth (Dame Irene Ward) was a little confused between the tax on profits and this tax, which, of course, is quite different. This is a tax on admissions, on the attendance, on the patrons of the cinema primarily, and only indirectly in its effects on the cinema proprietors. The cinema proprietors in that sense are the collectors of the tax, in the same way as traders who collect Purchase Tax or retailers who collect the tobacco tax.

Last time we debated the Finance Bill my hon. Friend the Member for Tyne-mouth invited me to go to sea with her in a pea-green boat. I am not sure, after my performance last week-end, whether she would still wish to go with me. This evening I understood her to invite me to the pictures instead.

The hon. Lady the Member for Flint, East (Mrs. White) and my hon. Friend the Member for Shipley mentioned the position of the film production industry. This is, of course, a matter which we watch very closely and in which we take a great interest because, as the Committee well knows, the maintenance of a healthy film production industry is an accepted aim of Government policy. Statutory assistance to the industry there is provided in three ways—by the quota system for a minimum showing of British films, by the financial facilities offered by the National Film Finance Corporation, and by the arrangement for a levy collected from exhibitors and paid into a fund for the assistance of British producers.

No one would dispute that these measures have been effective in helping to keep the production side of the industry on a sound footing. I agree with my hon. Friend the Member for Shipley that the film producers have been over recent years, and are today, putting up a very good performance in the export market. Obviously, when attendance at the cinemas is falling there must be some effect on the demand for and the profitability of new films, but, after studying such figures as I have been able to get, I am satisfied that the production side of the industry is facing its problems of re-adjustment with some success and is not in serious difficulties, still less facing a crisis.

The real problem is that of the exhibitors in those cinemas which are finding it hard to pay their way. There is, however, room for argument as to what it is justifiable to do further to help the cinema industry because the industry is undergoing financial difficulties arising from competition from other amenities. That is not an automatic reason for relieving patrons of that industry from taxation entirely. One has to look at it much more closely than that.

The decline in cinema-going is due primarily not to economic causes but, as has been said by several hon. Members, rather to changes in social habits. I do not think we have come to the end of those changes yet. In this, I suppose, there is no dispute that the growth of television is the biggest single factor, though it is not the only one. That fact is recognised by the levy on the television licence duty and by the Purchase Tax of 50 per cent. on television sets.

It would be unrealistic to suppose that this change in social habits will be reversed or the new pattern of leisure activity significantly influenced by the abolition of the Entertainments Duty which amounts on the average to 13½ per cent., or 4d. in an admission price of 2s. 6d. This would be true even were admission prices to be reduced by the amount of the duty; but in fact it is almost certain that they would not be if the duty were taken off, any more than that was done last year.

The fact is that because of the change in the way people spend their leisure time we have rather too many cinemas, and no fiscal action can obscure this fundamental problem. In the words, the closing down of cinemas which has occurred was, I think, inevitable, and I judge that whatever is done, some more cinemas must close.

There is one special aspect of the problem which I admit causes me particular concern, and one or two hon. Members have mentioned it. I refer to the position of the small rural cinemas, and cinemas serving small market towns where there is only one cinema. The profits from many such cinemas have fallen substantially, and in some cases have been converted into losses. Many of them are finding it difficult to stay open. There the social implications are more serious than in the towns. If a cinema in a large town is closed, there is almost certain to be another cinema fairly close at hand, although it may not be so convenient for everyone. But if an isolated country cinema closes down there may be no alternative within practicable reach, and I own that I am rather concerned about this section of the industry.

To get the matter in perspective, one must remember what the Government have already done. In 1957, my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), when he was Chancellor, proposed a reduction in the duty of about one-fifth, and last year I proposed a reduction of rather more than half of the remaining duty. That amounts to a very substantial relief. The Clause in the name of the right hon. Member for Huyton (Mr. H. Wilson) does not seem to me well designed to meet what I consider to be the most important part of the problem, though I agree that if I felt I could afford to propose such a considerable sum in relief it would bring a broad measure of help to the industry. But it would be expensive. It would cost between £9 million and £10 million in a full year, and I regret that I have to decide that that is more than I can recommend to the Committee in the way of relief in the light of other very considerable reliefs which have been made as a result of the recent Budget.

Were it done, it would relieve entirely from indirect taxation about £80 million worth of consumer expenditure of a kind which is neither on basic essentials nor deserving of special encouragement on social grounds, and which, in the long run, I should think, would be able to support a moderate rate of duty along with other analogous expenditure. Therefore, I do not feel that on the present evidence it would be justifiable to relieve this form of entertainment entirely from taxation. The rate of taxation that it will bear will be a good deal lower, far lower, than is the case with many other forms of consumer expenditure on entertainment in other forms.

Furthermore, the Clause would relieve from duty admissions not only to those cinemas which are finding it hard to survive but also admissions to the large number of cinemas which are still operating at, I think, a satisfactory profit. Since the latter are not likely to pass on the duty reduction by lowering their prices, a large part of the relief would go neither to the needy cinemas nor to the public, but to the proprietors of profitable cinemas who, I think, have no strong case for the abolition of the duty at present. I must, therefore, advise the Committee against acceptance of that Clause.

10.45 p.m.

Turning now to the Clause in the name of my right hon. Friend the Member for Blackpool, North (Sir T. Low), I think that would go a lot further in the direction of giving a useful measure of help where it is most needed. The cost, of course, would be a great deal more modest—about £2½ million in a full year—and the greatest benefit proportionately would accrue to just those small cinemas we are most anxious to help.

The hon. Member for Glasgow, Govan (Mr. Rankin) suggested that I was being too hard on the cinema industry because in this Budget certain reliefs were being given to competitors of the industry. I would ask him, taking the last two or three years together, to accept the fact that the measure of relief we have afforded the cinema industry is considerably greater than that afforded to any of its competitors. He asked me whether I was intending to force the rationalisation of the industry by maintaining the tax. I should say no; it is not my intention to force the rationalisation of the industry; but I think that whatever is done on tax the rationalisation of the industry will take effect. He suggested that another way would be better than the way suggested in the Clause proposed by my right hon. Friend the Member for Blackpool, North. He suggested that that way would be by increasing the tax-free limit. I did consider that alternative carefully, but I came to the conclusion that it would not help the smaller cinemas, which I desire particularly to help, so much as the Clause in the name of my right hon. Friend.

I do not think the Clause in its present form will quite do. It is defective in that it does not provide for cases in which two or more independent proprietors would have to pay Entertainments Duty for separate shows held at the same cinema in the same week. I am told that that does sometimes happen and there are instances in which the show on Sunday is separate from that on weekdays. Recently there was a case in which one proprietor occupied a cinema in the afternoons and another in the evenings. Clearly it would be inappropriate that they both should get a £20 relief, and some provision for apportionment would be required.

This Clause also proposes to make the change in taxation retrospective to 12th April. I do not think that would be right in principle, and it would very much complicate the administrative machine. I am, however, sympathetic to the principle of this Clause, and I want to make some response to the appeals which have been made by hon. Members in all quarters of the Committee. I shall be willing on Report to move a Government new Clause which would embody the principle and general effect of the Clause tabled by my right hon. Friend the Member for Blackpool, North, but not open to the objections I have mentioned.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

I am very grateful for what my right hon. Friend has been saying, but he referred to the last part of the new Clause dealing with dating back a rebate. I respectfully draw his attention to the fact that that was extracted completely arid entirely, word for word, from the Finance Act, 1958, in relation to the same subject last year. It is nothing new.

Mr. Amory:

It sounds very painful for me if I have to reject something which I included in the Finance Act last year, and I will look into the point. My personal feeling is that it would be wrong to make the change which I propose retrospective to 12th April. If the Committee will accept the general proposal which my right hon. Friend has made in the new Clause, it will mean a further reduction of about 25 per cent. in the current rate of duty, and I believe that the 25 per cent. reduction would be directed to the assistance of a section of the industry which every hon. Member would like particularly to help.

I do not know what effect my speech will have on the right hon. Member for Huyton, but I hope that it will lead my right hon. Friend the Member for Blackpool, North and my hon. Friend the Member for Shipley to feel that in the circumstances they can withdraw the Motion and the new Clause, relying on my assurance that I will introduce a new Clause later giving effect to the proposals which they have made, subject to the points which I have mentioned.

Mr. H. Wilson:

I rise not with the idea of helping to bring the debate immediately to a close or to suggest to my hon. Friends that they should let the matter go at this stage to a Division or whatever other determination we may reach. I rise for the one purpose of putting a point to the Chancellor.

We do not regard his proposal as in any way adequate to meet the situation which has been put from both sides of the Committee. It does not deal with the problem at all. It is surprising that he feels that he can go on like this, accepting the arguments which have been made from both sides of the Committee—as he has accepted them—and then rejecting the only new Clause on the Order Paper which helps to make this industry viable.

Some of us are all the more concerned because he used words which suggest that in his view the cinema industry always should be taxed. He did not say merely that he could not afford to make the concession this year and that he would offer on behalf of himself or his successor, from which ever party, to look at the matter next year. He suggested that in the long run this industry could always bear a reasonable share of taxation on the basis of a small percentage Purchase Tax. We do not accept that.

Mr. Amory:

I think that the right hon. Gentleman is not quoting me quite accurately. I said that in existing circumstances I did not see that it was justifiable to relieve this industry entirely from tax.

Mr. Wilson:

The Chancellor must look at the report of what he said. He made the comment which he has just repeated, but he also said that in the long run there was no reason why this industry should not bear its fair share of taxation. That was taken by hon. Members in all parts of the Committee as a suggestion that this is a permanent part of the sales tax about which we have heard so much from various hon. Members at different times.

I do not want to re-start the argument tonight. He will be aware that what he said will start the debate all over again. He must also recognise that by accepting, in principle at any rate, the new Clause moved by the hon. Member for Shipley (Mr. Hirst), he has thrown it into the debate. We did not spend time on it ourselves because we thought that it was not adequate to the situation. There are grave practical arguments against it, apart from its inadequacy. I do not want to begin rehearsing them now, but as the Chancellor has accepted it in principle the propositions contained in the new Clause will have to be considered more seriously than has been done so far in the debate. Since there are a number of hon. Members who have important points to contribute, drawn from the experience of their own constituents in this matter—and I have a lot of letters from all parts of the country, particularly the West Country—I should like to ask the Chancellor if he would agree to report Progress so that the debate can continue tomorrow rather than that we should press it to a Division tonight. My reason for that is that we do not regard the Chancellor's speech as in any way adequate and that we believe the problem can only be solved by the acceptance of our new Clause; but that, I think, will require too much continuation of the debate to make it worth while embarking on it at this late hour.

Mr. Amory:

I would not wish to damp down a debate if a number of hon. Members wish to speak on this important matter, although I am rather disappointed that we have not managed to get this Clause behind us. However, I feel that by and large we have made very satisfactory progress today, and every speech that has been made so far on this subject has been entirely relevant to the Clauses.

Therefore, I beg to move, That the Chairman do report Progress and ask leave to sit again.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.