Cinematograph Films (Levy)

– in the House of Commons at 12:00 am on 22nd July 1970.

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10.16 p.m.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I beg to move, That the Cinematograph Films (Collection of Levy) (Amendment) Regulations 1970, a draft of which was laid before this House on 2nd July, be approved.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I think that it might be for the convenience of the House if with those Regulations we discuss the other Regulations: That the Cinematograph Films (Distribution of Levy) Regulations 1970, a draft of which was laid before this House on 2nd July, be approved.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

The Films Act, 1970, which received the Royal Assent at the conclusion of the last Parliament, extended the period of time during which a levy is to be imposed on exhibitors of cinematograph films to the public, the proceeds of which are distributed mainly to makers of British films. Section 4 of that Act provided that the levy shall be imposed for a further ten periods of 52 weeks. It is necessary to refer in this context to "periods of fifty-two weeks", rather than a year because the levy is calculated on the basis of periods which consist of complete weeks ending on Saturdays, to fit in with the normal cinema booking practice. The operation of the relevant provisions of the Cinematograph Films Act, 1957 was extended by the Films Act 1966 until 3rd October 1970; the 1970 Act continues in force for a further 10 years until September, 1980. The statute charges the Board of Trade with the duty of making Regulations governing collection and distribution of the levy and such Regulations must be laid in draft before each House of Parliament, and require the approval of both houses. Until the Regulations are operative the levy cannot be collected or distributed; the Regulations at present in force will expire on 3rd October; and the draft Regulations now before us take their place. The House will appreciate that that is why it is rather urgent that they should obtain approval before the House rises. For the most part, these Regulations are a repetition of those at present in operation. There are some purely formal and drafting changes, and I shall draw the attention of the House to the only two amendments of substance.

I will, if I may, deal first with the Collection of Levy Regulations. All that these do is to extend for the ten consecutive periods of 52 weeks the operation of the corresponding Regulations of 1968. No change is proposed either as regards the rate of levy or as regards the detailed arrangements. These matters were fully investigated when the 1968 Regulations were under consideration. We feel that the 1968 Regulations represented a fair settlement between the needs of exhibitors and producers and that there is no case at present for upsetting the balance then achieved.

I hope that the House will share this view and will accept the draft Collection of Levy (Amendment) Regulations which, as I have explained, are essential to ensure the continued operation of the levy scheme provided for by the Act.

I turn to the Distribution of Levy Regulations, and I am afraid that this is rather heavier reading. We are concerned here with the payments to makers of British films. These Regulations are much more lengthy than the Collection Regulations, and the draft before us is, I fear, a somewhat formidable-looking affair. But I can assure the House that, except for one or two changes necessary to bring the Regulations into line with the Act of 1970, and except as regards the two amendments which I have just mentioned, it does no more than repeat the existing Regulations. These latter Regulations are contained in Statutory Instrument 1963, No. 1376, and three succeeding amending Regulations, which are listed in Schedule 2 of the Regulations before us. The opportunity has been taken to consolidate the Regulations into one document.

The principal effect of this new document, like that of the Collection Regulations, is to extend for a further ten periods of 52 weeks the operation of the present Distribution of Levy Regulations. All sections of the industry are agreed that the levy arrangements, which amount to no more than a partial redistribution of the industry's own income, have assisted in the development of British film production, and I think that the proposed continuance of the arrangements will meet with general approval. This is the substance of Regulation 4.

One important change is contained in sub-paragraph (h) of Regulation 3(1) in page 2. The effect of this variation in the definition of an eligible film will be that in future the studio, if any, used in making a British film must, if the film is to qualify for levy earnings, be in the United Kingdom. British films made in Commonwealth studios or in studios in the Republic of Ireland will continue to be eligible for registration as British quota films. This is an arrangement of many years' standing, and the Films Act made no change. There is no evidence that the arrangement gives rise to serious threat to the industry in the United Kingdom. Although most Commonwealth countries do not have screen quota arrangements, those that do accord us reciprocal treatment.

The levy, however, is different, being an arrangement for partial re-distribution of the box office takings in Great Britain alone. The purpose of the levy is to encourage film production in this country, and there is no comparable arrangement either in the Republic of Ireland or in any Commonwealth country.

There is provision in the film legislation whereby an applicant for the registration of a film is entitled, if he so desires, to require the Board of Trade, when it is determining whether a film is to be registered as a British film, to leave out of account a designated portion of a film, such portion not to exceed 7½ per cent. of the total playing time of the film. A similar concession will also apply under the new levy Regulations in respect of films which use Commonwealth or Irish Republic studios to a limited extent.

If, for example, a film is being made on location mainly in a Commonwealth country or in the Republic of Ireland, the maker will still be able to make limited use of a studio in that country without forfeiting his right to levy earnings. The deciding factor is that when the film is finished, the playing time of the material shot in a studio outside the United Kingdom must not, if the film is to be eligible for levy earnings, exceed 7½ per cent. of the total playing time of the film.

There will, I think, be general agreement that if the film consists of any appreciable degree of photographs of studio scenes, then, bearing in mind the purpose of the levy it is reasonable to require that the studio should be in the United Kingdom.

The second change made by these Regulations concerns low-cost films. That is, a film which at present earns two-and-a-half times the normal rate, and it will continue to do so. The reason for this enhanced rate of levy for low cost films is to encourage makers of films who do not have access to the large sums of money to continue to make films.

The production of less costly films offers scope for the development of young talent. In the existing Regulations, a "low-cost film" is defined as follows: a long film the labour costs of which do not exceed £20,000 in the case of a film registered before 6 October, 1968, and £25,000 in any other case". The purpose of the amendment is to lift that £20,000 to £50,000 as a result of experience of increasing costs and so on.

I should explain that under the existing Regulations the enhanced rate of levy earning applies only in respect of box-office earnings up to the total labour costs of £18,750—£15,000 in the case of a film registered before 6th October, 1968. Earnings above those amounts count for levy purposes only at the standard rate. The draft Regulation now before us makes no change in this respect. The 1957 Act requires the Board of Trade to consult the Cinematograph Films Council before making Regulations which concern collection or distribution of levy. The regulations now before us are in accord with the Council's recommendations.

I ask the House to approve both the Collection of Levy and the Distribution of Levy Regulations.

10.26 p.m.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

Those of us who travelled through the Committee stage of the rather complex Measure, the Films Bill which became the Films Act, towards the end of the last Session, will recognise that the measures now before the House stem in very large part from decisions which were come to in that Act. The Minister of State was entirely correct in saying that these measures are unlikely to cause any considerable controversy. I think I am right in saying that the two instruments before the House come to us with the unanimous approval of the Cinematograph Films Council. That is an added recommendation which will commend them, I hope, to hon. Members who might have found it a little difficult to follow the rather complex technicalities which always seem to accompany legislation to do with films.

I welcome the Instrument which simply extends the levy Regulations for a period of 10 years. They are simply a straight-forward extension of existing legislation. As the hon. Gentleman said, the other Regulations vary the situation in two important respects. They redefine what constitutes a low-cost film. The object of that exercise is mainly to take account of changes in the value of money and they vary the Regulations with advantage in that respect.

The other proposal contained in the Regulations has a considerable effect. A practical consequence will be that films made outside the United Kingdom will no longer qualify, except as provided in the Regulations, for the benefits of the United Kingdom levy provisions. The practical effect is most likely to be seen in the Republic of Ireland where films made at the Ardmore Studios which hitherto have qualified and benefited by the Regulations, will no longer qualify. The effect is likely to be that more films will be made in United Kingdom studios than has been the case. Films will still be made in the Republic of Ireland, but they will not qualify for United Kingdom levy provisions. This will have an incidental beneficial effect on the British film industry. I should like to say a word or two about that.

There is a popular idea that the British film industry is once again in a state of crisis. Personally, I do not share that view. If one looks back over the last 10 years one finds that the number of major feature films made in this country has settled down to about 70, and I hope that something of that order is likely to be made in the years immediately ahead. I do not think, therefore, that a critical situation exists, and in so far as these Regulations will perhaps cause to be made in this country a few films which otherwise would not be made here, they will help to maintain the level of film production. I therefore welcome them.

However, if we are to maintain the level, we need studios in which to make those films, and what is particularly disquieting is the tendency, which is not directly related to the question of film production, to reduce the amount of studio facility in this country. This afternoon there was reference to the decision to close Boreham Wood studios. One has also heard rumours that Shepperton and Twickenham studios are under threat. How far these rumours are baseless, in an industry which is particularly prone to rumour of a rather gloomy sort, I do not know, but there is possibly no smoke without fire. I think there is rather a tendency to feel that studio space is nothing that we need worry about. This feeling is strongly to be resisted, and so far as these Regulations enable us to encourage British film production, we also have to take the other side of the coin and not allow British film studio space to disappear, because once a film studio is lost, it has gone for all time. If Boreham Wood and Shepperton were to go, the British film industry would be in a very bad way indeed.

I think, Mr. Deputy Speaker, I see a slightly apprehensive look upon your face, and I should reassure you that I have no intention of straying too far beyond the bounds of order. I appreciate that I must not develop an argument about the whole future of the British film industry, and I shall refrain from doing so.

Photo of Mr Charles Loughlin Mr Charles Loughlin , Gloucestershire West

Refer to it in passing, at length!

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

I should like to make two points which are directly relevant to these Regulations. If we are to take full advantage of the fresh opportunity for British production which arises from the Regulations, we must have places in which the films can be made. The suggestion was made this afternoon that the National Film Finance Corporation has no power to acquire film studio space. I questioned that suggestion at the time, and I question it now. I am told that the National Film Finance Corporation already owns a small percentage of Shepperton studios. If it owns a small percentage of Shepperton studios, there is no reason why it should not own a larger percentage, and a percentage of Boreham Wood studios as well; or create a corporation, as has been suggested, in order to do that.

On another occasion, possibly on the Adjournment if I am successful, I should like to develop this point more fully. I believe that it is necessary and desirable to do everything we can to retain British film studio space so that we can take full advantage of the opportunities—they may be marginal but they are important—which are given to the industry by these Regulations which I warmly welcome.

10.35 p.m.

Photo of Mr John Hay Mr John Hay , Henley

I am very tempted to follow the hon. Member for Putney (Mr. Hugh Jenkins) in what I thought at once stage would be a far-reaching discussion of the woes of the British film industry. I will, however, simply say that I agree with him whole-heartedly that the British industry is not facing a crisis. It is in a difficult situation but it has not reached crisis level yet. Everybody in the industry has a different solution for and diagnosis of the problems facing the industry. Tonight we are limited to discussing these Regulations.

I want to raise three points. The first concerns what is an eligible film under the Regulations. I speak particularly of television films. According to page 2 of the Regulations, certain classes of film are not eligible. One of those classes is a television film, as defined at the top of page 3. I refer also to Regulation 7(3)(i) on page 5. Does my hon. Friend agree that my reading of the effect of those three provisions is correct, that a film which is made for the commercial cinema and which benefits by the payment of a subsidy through the Fund supported at the box office can be shown on television after 12 months have elapsed?

If this is so—I believe it to be so—it is not entirely welcomed by the British exhibition interests. They are organised in two main bodies. The principal and best known is the Cinematograph Exhibitors' Association. On several occasions in the last few years this body, with some of its important members dissenting and disagreeing, have said that films made with the aid of a subsidy paid by the cinema-going public through the levy at the box office should not be made available subsequently to be shown in competition indirectly with the cinema. The Association's Annual Report for 1967 states: It seems illogical, inequitable and unreasonable that one section of the industry —that is, the exhibition side— should subsidise another section of the industry —that is, the production side— and that the subsidised section should then use the product produced with the subsidy to damage the section of the industry providing the subsidy. That puts the situation clearly and succinctly.

I realise that we cannot amend Regulations. My hon. Friend comes new to this complicated and sometimes infuriating industry. He has my sympathy. I assure him that this is a point that is very seriously considered by the British exhibiting interests. I hope that he and his advisers will consider extending the period of one year referred to in Regulation 3(1)(b) on page 3.

Second, Section 6(1) of the recent Films Act enables money to be paid out of the production fund fed by the levy towards the film production activities of the British Film Institute and also in a subsidy to a national film school. The enabling power is given by Section 6 of that Act. The Regulations do not deal with that. If the Government wish to exercise the power, they will, I suppose, have to lay other regulations or in some other way bring the Section into effect.

I remind my hon. Friend that those of us who were then in opposition vigorously opposed the proposal that the levy on receipts at the box-office which feed the Fund should be siphoned off to the production activities of the British Film Institute and be used to provide a subsidy for a British Film School. It was our view, supported almost unanimously, I think, by the rest of the film industry, that this levy money has always been regarded as "industry money". Although there was a concession made some years in respect of payments to the Children's Film Foundation, we felt, as did the interests outside, that the last Government in that piece of legislation, brought in without general agreement, had gone far beyond what had always been regarded as fair.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

I believe that Section 6 is complete in itself and requires no further regulation to come before the House. I do not believe that the hon. Gentleman can effectively question a decision made by Parliament and in existence now when discussing Regulations which flow from another Section of the Act altogether.

Photo of Mr John Hay Mr John Hay , Henley

I have pointed out that the Section gives enabling powers. I have said that one would not expect these Regulations to activate those powers. But I am reminding my hon. Friend of these matters and I ask him to consider, if this proposal comes before him and his Department, that it was something not agreed by the industry as a whole, and which the Opposition at that time vigorously fought and pressed to several Divisions in Committee. I hope that he and his Department will not exercise those powers in the future notwithstanding that they are in the Act—and certainly not without the fullest and widest consultation.

Now, a point about the collection Regulations. They are simple in themselves, but I make again a plea that the form which the ordinary cinema manager has to complete be simplified. I have not a copy with me tonight, but it is no mere form; it is a book. One has to fill it in day by day and week by week, showing all manner of matters relating to the films being played in one's cinema, the hours of performance, the time when the performance begins and stops, when an individual feature film begins and stops—all manner of things—and, what is more, the document has to be sworn. Even a minor inaccuracy may lay the cinema manager open to prosecution.

Will my hon. Friend and his Department look again at the form with a view to removing some of the onerous burden falling upon the ordinary cinema manager? I realise that a great deal of information has to be obtained if some of the highly complicated drafting of these Regulations is to be adequately complied with, but I hope nevertheless that my hon. Friend has entered upon his new appointment with a desire to cut out red tape and get rid of restrictions wherever possible, and I urge him to look at this book with that object in mind. If he wishes, I will try to obtain a copy and send it to him so that he can see for himself just how tough the job of the ordinary cinema manager is.

Those are my only observations on these Regulations, which, as the hon. Member for Putney and my hon. Friend have said, are uncontroversial.

10.45 p.m.

Photo of Mr Goronwy Roberts Mr Goronwy Roberts , Caernarvon

I intervene very briefly merely to indicate the Opposition's full approval of the Regulations. But for a psephological aberration I might very well be presenting them myself in very much the same terms.

They flow from a Statute which demonstrated, when discussed in the House as a Bill, the confidence which the Government and the Opposition of the day felt, and feel, in the industry. I join hon. Members on both sides who have decried a recent tendency to cry "Wolf!" about the prospects of the British film industry. I regard the Regulations as a further proof that we in the House look forward to a successful and expanding future for the industry, given certain conditions—that the industry itself should become ever more flexible in the face of differing tastes and markets, and in developing techniques and technologies, and above all should become more and more cost-conscious.

The Regulations, with the National Film Finance Corporation, which lends money to the industry, and the quota system, provide a tripartite support for the industry on which both sides of the House are fully agreed. The levies provide fairly substantial financial aid for the industry, but the bulk of the capital must continue to be sought from other sources, and it still is a very big capital demand. There is some indication that the flow of American capital into the British industry may momentarily be less than it was. I hope that no one will go from this short debate with any impression that this will be a continuing phenomenon. Informed opinion in the industry is convinced that American participation in the British industry will ultimately recover its appropriate place, and that we can look forward to assistance from that source. But more gratifying than that is that British capital is increasingly showing interest in the potentials of the industry. The interest shown recently by E.M.I., for example, is something that we all welcome. Then there is the possibility of Continental financial interest in the facilities and the talent which Britain can provide.

All these are facts pointing to a confident future for the industry, and the Regulations bear out this belief, which is common to us all. They do not, as the Minister indicated, depart substantially from the 1963 Regulations, but it is worth noting that the two main amendments, relating to distribution, fortify our confidence in the industry. The amendment which extends the period during which the proceeds of the levy will be distributed to the makers of eligible films for a further 10 years takes us to September, 1980, and is in itself an indication of confidence.

Then there is the amendment which confidently defines an eligible film as one which is British if the playing time of scenes photographed or sound recordings made in the United Kingdom is not less than 92·5 per cent. of the whole. I am turning the hon. Gentleman's figures the other way round to show that this is an indication that we are supporting in the Regulations, and by these levels, a very substantial British participation in the making of films.

I join the hon. Gentleman in the intention not to extend the benefits of the levy beyond the United Kingdom. I do not want to stress this point, but there are anomalies which even this country cannot bear indefinitely.

I have only one question. Can the Minister tell us whether the N.F.F.C. is now fully constituted? If not, will the Minister indicate his plans about this important matter?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

By leave of the House; I appreciate the welcome which hon. Members have given to the regulations. I am glad that hon. Members have decried the message of crisis which we have had from some quarters.

It is difficult to find any reference in the regulations to studios, but I understand that the legal advice which I gave to the hon. Member for Putney (Mr. Hugh Jenkins) this afternoon was completely sound. I doubt whether the film industry is facing a shortage of studios rather than a shortage of money. The tendency has been more and more for films to be made on location, thereby cutting the proportionate use of studios. This is a trend which is not necessarily doing any harm to the industry. As the hon. Member himself pointed out, the number of British films has kept fairly level, and that level looks like being maintained over this year, which is an encouraging sign.

Photo of Mr Hugh Jenkins Mr Hugh Jenkins , Wandsworth Putney

The reason that I propose to pursue this matter on a more appropriate occasion and to engage the Minister's attention is that I believe that if we once lose the film studio space which we now enjoy, the whole future of the British film industry will be prejudiced.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I am always willing to listen to the hon. Member's arguments. My present impression is that he is unduly pessimistic.

I cannot remember off hand whether the gentlemen concerned have actually been notified of the intention to appoint them to the N.F.F.C. and whether they have accepted the assignment, but certainly they have been selected. It is constituted and if the continuity is not yet assured, it will be shortly.

I should like to consider what my hon. Friend the Member for Henley (Mr. Hay) said about the TV film. The general spirit of the scheme is to encourage people to produce successful commercial films. If having achieved sufficient commercial success they are attracted to the television circuit, I should hesitate before introducing a penalty for that element of success, and this was the effect of what my hon. Friend suggested. I appreciate the argument of the Cinematograph Exhibitors Association that there is a degree of anomaly in that one section of the viewing public in effect is subsidising the other, but I should hesitate to introduce any form of penalty.

Photo of Mr John Hay Mr John Hay , Henley

My hon. Friend is turning the argument on its head. The whole point is that if there is a subsidy for film production, it should be for films to be shown in cinemas and not for films to be shown on television. There are perfectly adequate methods whereby films may be made and are made on all kinds of media for television directly, but it is only in respect of the commercial cinema that the subsidy is created and is siphoned off in the way we have described.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I appreciate that, but as I understand it—and I do not profess to be an expert—most television films made specifically for television are made on tape, and I should have thought that they fell into a rather different category from that of a film which started to be made as a cinema film and subsequently obtained a contract for use on televsion. I will look into that, but, on the face of it, I think that there is as much in my argument as there is in that of my hon. Friend.

The question of Section 6 of the Act about the use of the levy for the production activities of the Film Institute or the Film School does not come within these Regulations. The Board of Trade has power to approve a request by the Agency to use money for these purposes. I can assure my hon. Friend that if there is such a request and our approval is required the request will be looked at very carefully. Any films produced by either of these organisations which obtained commercial showing would be British quota films and would be entitled to levy; so that there is probably a case for ensuring that they are not paid for twice. However, I will bear the point in mind.

I am given to understand that no information is asked for on the forms which is not essential to the working of the scheme. But I will look at the forms to see whether they can be simplified. However, it is essential that the forms on which people draw money—and if they overdraw it is at the expense of other people who are entitled to the money—must be accurate, and there is a case for some degree of sanction which is obtained by people swearing to the accuracy of the forms and the clear understanding that a false statement may lead to prosecution.

I am grateful to the House for dealing with the Regulations with the minimum of controversy.

Question put and agreed to.

Resolved,That the Cinematograph Films (Collection of Levy) (Amendment) Regulations 1970, a draft of which was laid before this House on 2nd July, be approved.

Resolved,

That the Cinematograph Films (Distribution of Levy) Regulations 1970, a draft of which was laid before this House on 2nd July, be approved.—[Mr. Corfield]