I beg to move, That the Bill be now read a Second time.
It is now four months to the day since my right hon. Friend the Member for Mole Valley (Mr. Baker) appeared at the Dispatch Box to announce the Government's review of the film industry. The review's conclusions were set out in the White Paper on film policy published on that day. The Bill before the House is essentially concerned with providing the legislative framework to implement the decisions that were announced then.
It is important to remember the impressive strength of the British film industry. I have noticed that there has been a campaign to suggest otherwise by certain groups interested in obtaining tax concessions and more money. However, in the past few years the industry has seen a surge of activity. Production has increased. Studios are full. We have been able to attract some internationally mobile productions. That is largely because of the wealth of talents and skills that are found in this country.
In addition, we have also become a centre of expertise in certain technical areas and that has led to highly successful major international productions such as the "Star Wars" films and, more recently, "Indiana Jones and the Temple of Doom". More technicians are in work now than for many years and last year 34 full-length British feature films were made here, and there were some notable successes—"Local Hero", "Educating Rita" and "The Dresser". [AN HON. MEMBER: "Have you seen them?"] I have seen them. If that list is not impressive enough by itself I know that some people have sought to argue that the number of films does not necessarily show a great deal—the budget for the film and television activity here in 1983 was some £210 million, of which one third was funded from United Kingdom sources. That £210 million compares with £160 million in the previous year. There are two encouraging things about that—first, the United Kingdom percentage has been growing and, secondly, the growth has been not just among the major pictures but at all budget levels.
We have also seen some notable examples of fundraising by companies for investment in films. Thorn EMI, one of our major production companies, is investing up to £25 million in new films this year. Goldcrest has recently been able to raise more than £20 million for investment in films. There are newcomers also. Virgin Records, diversifying into films as well as air travel, has produced some exciting new films. There was the impressive production of Orwell's "1984", although I have not yet had the benefit of seeing it.
The growth of the independent television sector, substantially stimulated by the work for Channel 4, has also given a boost to low-budget feature films. Channel 4 alone has invested some £8 million this year in independently made feature films. Estimates put the additional jobs in the London area alone at 4,000. Again, there is growing public interest in the British film industry because of the industry's own efforts to launch British Film Year next year, to which the Government are subscribing £250,000.
I know that people have been anxious about the tax changes that have been made, but I believe that there is evidence of a high level of activity. There have been some notable successes and with the market opening up there are increasing opportunities.
It would be wrong not to mention other sections of the industry. The number of commercial advertising films, for example, is about 3,000 a year, and an entirely new segment of the industry—pop videos—has shown strong growth and was worth about £10 million last year.
Another feature that has been much commented upon is the high quality of British films. Many commentators remarked on the outstanding quality of British films at Cannes this year, which enhanced our reputation in world markets. Other European countries may make more films, and although many of their films are doubtless of great merit, they have not all had the same international appeal or been on the same scale.
Overall, in our view, the industry is in a healthy enough state to take advantage of the increased opportunities that are becoming available through video, cable and DBS. These are massive changes, and they are not all so far away. DBS is due to start in 1987. These changes, which will open up the market for films, pose the problem as to whether we can create enough films, and cause me to refuse to believe that the future is bleak.
I believe that there are tremendous new opportunities. I do not think that with these growing sectors it is an appropriate response to say, "Levy everywhere. Take a growing and successful sector and impose a levy on it, to recycle money to an industry which will face growing markets and growing opportunities for its products."
For that reason, we started with the presumption that the time had come to sweep away the archaic legislative framework of the industry, under which my Department still registers every film for public exhibition and licences every distributor and every exhibitor showing registered films at a cinema. In my view, the modern industry will be better off without those tiresome bureaucratic restraints.
Another major consideration—I think that it is recognised by both sides of the House—has been the state of the cinema industry itself. In contrast to the general buoyancy of the production sector, cinemas have been in decline. For 30 years, there has been an almost unbroken decline in cinema admissions as social habits have changed and different forms of visual entertainment have entered the market—first television, then the video. In that period, annual admissions to cinemas have fallen from over 1·25 billion to about 66 million, and I regret that the figures for the first four months of 1984 show that admissions are down by 25 per cent. on the same period last year.
These are undoubtedly hard times for cinema proprietors, and cinemas continue to close at the rate of three or four a month. I think that it is widely accepted that that is a reason why we must take action to help the cinema industry. It is still important to the film industry. It is often in cinemas that a film makes its reputation. I very much hope that cinema is an industry that can thrive and survive, because the decline of cinema in this country has been very much greater than in other countries. Seeing films on the large screen is different from seeing them on the small screen. One wants that experience to continue. One motive for wanting to get rid of the levy is to help the cinema industry itself.
The levy has declined in importance as cinema has declined. Therefore, one should not exaggerate the importance of the levy to film producers. I am afraid to say, extrapolating forward from where we are, with cinema attendances where they are now and the further decline that is likely, that the significance of the levy to producers is not all that great.
It was against that background that we came to the conclusions announced in the White Paper. Our first and most important decision was that the Eady levy on cinema receipts must be ended. Introduced in the heyday of cinema, it was designed as a means of recycling money from a prosperous sector into the weaker British film production industry. Now the position has reversed: the levy has become a penalty for cinema owners. For too many of them, it represents the difference between survival and extinction. So the levy must go. It has always had an uncertain future. It has always been subject to renewal every five years. Now, in our view, it should go entirely.
As a consequence of getting rid of the levy, it is necessary to consider the future of the various bodies that depend to a greater or lesser extent on the proceeds of the levy. I am sure that Opposition Members will ask why we should interfere with institutions such as the National Film Finance Corporation. Once we had taken the step of deciding to get rid of the levy, the first body that we had to consider was the NFFC, because it has been dependent on the levy, which has been becoming dramatically less valuable. As the White Paper explained, we were impressed by those who argued that the work of the NFFC should be allowed to continue. I believe and genuinely hope that the arrangements now being discussed with the private sector will make that possible. I shall return to that point.
The other bodies that receive a share of the Eady levy are the National Film and Television School and the British Film Institute production board. The school is a highly respected institution that produces a steady stream of talented young people, well trained and skilled to fill professional places straight away, whether as technicians, directors or producers. The Government have negotiated agreements for the school to receive £600,000 a year for five years from a mixture of sources within both the film and television industries. This will be the first time that the British Broadcasting Corporation and the independent television companies have made a major contribution to that body, from which they receive such significant benefit. The new funding is limited to five years, but I hope that in due course further arrangements can be made.
Having secured a temporary financial future for the National Film and Television School, has the Minister also been able to secure the school's educational policy independence? Will he give the House an assurance that it will not become a television school in which the needs of the funding bodies predominate over the educational needs of the industry?
I shall address that point further. The hon. Gentleman and the House will understand if I say frankly that I have been looking after the industry for a mere six weeks, during which time, with my right hon. Friend the Secretary of State being away, I have had many problems to occupy my mind. The film industry has been a significant problem.
The issue raised by the hon. Gentleman is important. It is the same as the issue raised by some people in relation to the NFFC, with its private shareholders. I think that we have found a way of getting the assurances that the hon. Gentleman wants, but I shall consider the matter and see whether there are ways in which we can tighten the arrangements to secure that independence.
My hon. Friend mentioned the NFFC and the arrangements that are being made to help finance the new organisation that is to take its place. In the White Paper a sum is mentioned, but there is no mention of any sum in the Bill. Will my hon. Friend give an assurance that we can expect the new private organisation that is to be formed to be funded at least to the tune of £1·5 million?
I shall deal with that point in some detail.
I should like to revert to the subject mentioned by the hon. Member for Stoke-on-Trent, Central (Mr. Fisher). I said that we had secured the funding for five years, which is a relatively long time. As I observed, in the past the Eady levy was limited to a lifetime of only five years at a time. I am glad to be able to tell the House that the Government intend to contribute up to £250,000 next year to improve the facilities of the school—that is, over and above the other sums of money that I mentioned.
With regard to the National Film and Television School, I welcome the agreement that the Government have been able to secure, as the school is in my constituency. It recognises the value of the work done at the school. However, I wonder whether there should be some reference to the agreement in the Bill. Will the future of the school be secure just on the basis of the White Paper, with no reference in the Bill?
The agreement does not need to be covered by the Bill. The school has been the beneficiary of the proceeds of the levy but I think that I am right in saying that it is not specifically mentioned. However, I do not think that my hon. Friend needs to have any fears that the arrangements are other than secure—I believe that they are.
I am grateful to the Minister for giving way, as he has been interrupted a great deal, but this is a vital point. He is doing away with the only guaranteed form of support for production in this country and is making no effort to provide any alternative guarantee for exhibitors or producers, or indeed for the National Film and Television School. Where does the Bill state that funds will continue to be provided for those institutions?
I have made it perfectly clear that the Bill does not provide any such guarantee.
The British Film Institute production board has also benefited from a small payment out of the Eady levy. We intend to make a normal grant of £125,000 to it from the Eady levy in the levy year 1984–85 and a special final supplement of £250,000.
The termination of the Eady levy will pave the way for the winding up of the public body which distributes the proceeds of the levy—the British Film Fund Agency. In addition, the way becomes clear to abolish the statutory advisory body—the Cinematograph Films Council—whose function in recent years has largely been to advise on regulatory matters.
As the hon. Lady will recall, another body is to be set up, based on the interim action committee but on a wider basis. I was not party to the consultations, but I understand that there was a feeling that the Cinematograph Films Council was too circumscribed by statutory obligations and that a different more broadly based body was needed. We are in the process of considering that new body and I shall, of course, pay close attention to representations made by Members, by the industry and by other interested parties as to what its basis should be.
I wish to set out the main provisions of the Bill before dealing with the question raised by my hon. Friend the Member for Wealden (Sir G. Johnson Smith).
Clause 1 repeals the Films Acts 1960 to 1980—six statutes in all. The first effect of this is the abolition of the quota system, which required cinemas to show a certain minimum proportion of British films. This protectionist measure was a feature of the original films legislation of 1927 and, like most measures of that kind, was never, in our view, a satisfactory means of ensuring the long-term health of the domestic industry. Because the system was both ineffective and irrelevant, the quota was suspended from January 1983.
Secondly, the repeal of the Films Acts brings to an end the requirement to register films for public exhibition and to have a licence for the distribution or exhibition of films. These provisions were originally designed to underpin the quota and to make it possible to police the scheme. I hasten to add that they had and have nothing to do with the moral or artistic values of the films in question. Since the 1950s, the registration system has also provided the basis for distributing the Eady levy to British film makers. More recently, it has also provided a means of identifying those films which qualify for tax purposes.
The third effect of repealing the Films Acts is to remove the restrictions on blind and advance booking. These were a prominent feature of the original Cinematograph Films Act 1927 and were designed to protect exhibitors from distributors who might otherwise oblige them to contract to take a film more than six months in advance or to take a film that had not been trade shown. Today these provisions seem paternalistic and outmoded in a world of international film festivals and trade fairs where cinema exhibitors are vying with the new video and cable markets to acquire saleable products. We have received virtually no representations for the retention of those restrictions, although I shall, of course, be interested to hear the views of the House and of other interested parties.
Does the Minister agree that this is very much a re-run of the argument that we heard on the Cable and Broadcasting Bill? In taking away all protection from the British cinema industry in terms of distribution one opens the way for the American industry, with its vast resources, to flood and dominate the British distribution industry, to the great detriment of the British film industry.
I recognise the hon. Gentleman's point, but I believe that the whole structure of the industry is changing. The duopoly of the market is changing and there are now new opportunities. I shall, of course, listen to what people have to say about this, but I have told the House what my views now are and what we have heard from the industry. One would have expected the film production industry to make that point if it felt that there was a serious threat, but I believe that it too feels that the market is changing.
Clause 2 is concerned with the Eady levy. Under the existing law the levy is due to terminate on 12 October next year. This clause makes it possible to terminate the levy earlier, but at the same time it provides a mechanism for ensuring that the National Film Finance Corporation is properly funded for the remainder of its existence and is thus able to continue its work. Power to dissolve the British Film Fund Agency already exists in the Film Levy Finance Act 1981 and it is our intention to do that as soon as the agency has completed its work.
Clause 3 deals with the NFFC. First, it enables the Secretary of State, with the approval of the Treasury, to dissolve the NFFC at any time after the Eady levy is terminated. Secondly, it provides that upon dissolution any of the corporation's property or rights may be vested in the Secretary of State, who may deal with them in such manner as he thinks fit for any purpose connected with the British film industry. I shall go on to describe more precisely the arrangements that we have in mind for the disposal of those assets, as that is an important aspect.
That is clearly a matter for the cinema owners, and I should not anticipate what they are likely to do. The economics of their business is pretty difficult already and many cinemas, need refurbishment and further investment. It is not for me to say, but I certainly do not predict that abolition of the levy will lead to a fall in seat prices. If the levy were not abolished, however, I believe that more cinemas would disappear even more quickly in view of the current difficult situation.
With regard to NFFC assets, the White Paper makes it clear that one of the assets—the NFFC's portfolio of rights and interests in films—will be made available to the son of NFFC, the successor body, but on the important condition that the company uses its best endeavours to encourage the production of British films.
Clause 4 is particularly important. It contains the Secretary of State's new powers to give the industry direct financial assistance. This will take two forms. First, there is the provision of £1·5 million per year to the private successor to the NFFC for the purposes of co-financing film production. Secondly, as my right hon. Friend the Secretary of State has said before, £500,000 per year will be set aside for project development work.
As the White Paper shows, we have been given assurances by three leading companies in the industry that they are prepared to contribute jointly £850,000 a year for three years to finance feature film production. The organisations concerned are Channel 4, Rank and Thorn-EMI. In addition, several member companies in the video sector, represented by the British Videogram Association, have shown interest in the new venture. The association expects that £250,000, possibly more, will be raised from an aggregate of smaller individual investments for at least three years and possibly for longer.
What is envisaged is that the three companies and the association's participating members will jointly invest in a new company. Details have yet to be settled, but I can say that neither those four organisations nor the Government wish the new company to be a closed shop. We all hope that other companies will be prepared to join in, and swell the volume of investment in British films.
I have heard concern expressed in some quarters that the new company will be dominated excessively by the interests of its principal shareholders, to the detriment, it is alleged, of the NFFC's traditional role. I take that anxiety seriously, and in Committee I will seriously consider whatever is said on that point.
To those of us whose memories of the activities of the British film industry stretch back 20 years to the problems of British Lion, the scale of three years, to which my hon. Friend has referred, is a very short one in the history of the film industry. Is it not possible that assurances which appear to be binding may be of very little value if they are to last for only three years? Does my hon. Friend intend to introduce another films Bill in three years' time, perhaps, or his successor in six or seven years' time, as that appears to be the average length of time between Bills?
The company will be a Companies Act company, and the three companies which are to invest in it will be shareholders in it. Having talked to those companies, I believe that they are serious about their long-term intentions. I believe that they want to continue the traditions of the National Film Finance Corporation and the work that it has done.
It is not clear why major companies should allow their money to be used to support independent productions, or offer seed money for new productions as the NFFC used to do. Surely they will have a vested interest in making sure that their own cash goes towards their own productions? Does the Minister intend to defend the position of the independent producers?
I fear that I am giving way too often. I mentioned that I knew that the point was causing anxiety, but, before I could answer it, I courteously gave way. I take seriously the point about the independence of the NFFC. One thing that the companies will wish to do is to foster talent. It is in their interests to help people and to encourage young producers. They recognise that the NFFC has done a good job, and they want that tradition to be continued.
As concern has been expressed about whether the organisation will be over-commercial, I shall outline the arrangements to be made.
It is envisaged that the company will be run by a chief executive, who will be responsible for making investment decisions within broad guidelines laid down by the board. It is expected that the person to be appointed to the post of managing director of the NFFC will become the chief executive of the new company so that there will be some continuity and a smooth transition when the NFFC is dissolved. The Government have also made it clear that we wish to approve the appointment of the new company's chairman, and to appoint a Government nominee to the board.
None of these safeguards appears in the Bill, but the key provision is in clauses 3 and 4. It enables the Secretary of State to attach conditions both to the grant of money and to the loan of the NFFC's portfolio. The proposal to grant £7·5 million over five years is the Government's response to the industry's representations that the NFFC performs an essential role in encouraging new and relatively untried talent. Neither the Government nor the four private organisations wish to undermine that role. However, we think that by being rooted in the private sector the new company will bring a commercial edge to its operations.
Would the matter not be enormously simplified if the Government had had the sense to listen to representations made in all parts of the House that supervision of the film industry should be taken away from the Minister's Department, where it is a nuisance to everyone concerned, and given to a new cultural ministry? That suggestion was made by the Select Committee and by a number of other bodies, including myself. The film industry could be more responsibly run under a body analogous to the Arts Council. It could be dealt with at arm's length and given proper funding, and the appalling commercial risks involved in the hon. Gentleman's suggestions would not arise.
With great respect, I do not agree with the hon. Gentleman. We are not talking about the art house sector of the industry. The appropriate part of the industry is already under the guidance of the Minister for the Arts. If the other part of the industry is to be successful, it must appeal to the market. There must be a commercial organisation, and that is nothing to be ashamed of. We want the industry to be commercially successful. That has been the aim of the Department of Trade and Industry for a long time.
There has also been criticism that, despite the Government's contribution, the funds available to the new company are inadequate to carry out its role of investing in low and medium-budget feature films—the riskiest end of a risky business. We hope that in due course the company will attract other sources of finance and that participants may extend their own commitment.
The hon. Lady must wait a little longer. She is not always easy to please, but what I have to say may please her.
We also propose to transfer to the new company the NFFC's portfolio of rights and interests in about 800 films made since the late 1940s. In the White Paper the portfolio of film rights was stated to have an income-generating capacity of upwards of £200,000 a year. That represents net profits. However, we have now decided that, in addition, repayments of principal and interest should also be made to the new company. These are estimated to bring the total value of the portfolio—at least for the crucial first two or three years—to some £600,000 a year. That will bring the total amount initially available to the new company for investment in film production to nearly £3·25 million a year. That is over twice the amount of money that used to be available.
However, that is not all. Leaving aside the portfolio, the NFFC's principal asset is a bank balance currently standing at about £5 million. Of that sum, only about £3·3 million is presently committed to future film production, and in due course film producers will claim against these forward commitments. Our intention is that when the NFFC's assets become vested in the Secretary of State after dissolution of the NFFC, we will transfer to the private company the liability to meet the NFFC's outstanding commitments, together with a sufficient sum to cover them.
The uncommitted remainder of the NFFC's assets is the industry's money, and by and large it will represent the unspent income from the annual Eady levy subventions.
I believe—I am sure that the House will agree—that the logical disposal of that sum is back to the British Film Fund Agency for distribution to British film-makers. That is likely to be a substantial boost to the final distribution.
The White Paper stated that we received many representations that the work of the national film development fund should be allowed to continue. Our response has been a new project development scheme of £500,000 a year for five years. The scheme will be operated as a specialised type of industry support scheme by my Department—with the assistance taking the form of loans repayable in certain circumstances. We intend to sub-contract the operation of the scheme as far as possible on an agency basis. This may be an activity that the successor to the NFFC will want to take on, or there might be other candidates.
I do not think that I need detain the House for long on the remaining provisions of the Bill. Clause 5 and schedule 1—
I have dealt with clause 4. Clause 5 and schedule 1 are consequential upon the repeal of the existing films legislation. The schedule contains a mass of detail but it is largely a consolidation of existing provisions. However, it provides a definition of British films, which I know is a matter to which the industry attaches importance.
Clauses 6 and 7 deal with repeals, transitional provisions, and the short title, commencement and extent. The Bill is drafted to have immediate effect in respect of the power to end the Eady levy, and in respect of the regulatory provisions for licensing and registration. I know that the Bill falls short of the demands of some groups in the industry who advocate a return to the tax regimes of the past, or even direct subsidies, but we are concerned here with a commercial industry. We are not dealing with a sector that is deliberately targeted on minority interests. Like other branches of the arts, art films will no doubt continue to require special support, but the commercial film industry, like any other industry, is in the business of making products that will succeed or not according to whether there is a market for them.
I recognise that this is a high risk industry. Conventional wisdom is that of every 10 films made, seven make a loss, two break even and one makes a profit, but other industries involve high levels of risk and in films the rewards of success can be remarkable. If, as we believe, the British film industry is on the threshold of a strong commercial future, then—as The Times expressed it last week—the industry
should certainly be thinking in terms of moving with the grain of the Government's policies to encourage enterprise and stimulate small businesses, instead of subconsciously pigeonholing itself as an art that needs support from the public purse
In the long run, the film industry will be healthy and prosperous only if it is able to attract private investment on its own merits and if it is prepared to subject itself, like other industries, to the pressures of the market place.
I recognise that anxieties have been aroused by the changes and by the loss of capital allowances. I know that we shall hear about that from the Opposition today. However, I should take their attitude more seriously if they had permitted the Inland Revenue to allow the industry capital allowances when they were in office. I recognise the anxieties but, in the light of the concessions that the Treasury has made, I believe that they are unfounded. Opportunities are opening up and there are new and vastly growing demands for films. The problem will be whether we can generate enough films for the massive and numerous new markets.
Despite what we might hear from the Opposition, the Bill is not a tax Bill. It concerns arrangements for the levy and for the NFFC. Before the Opposition rush in to condemn it, I invite them to consider three things. First, the levy has been killing the cinema. We need to do something about that. Secondly, because the levy has fallen, cinema attendances have fallen. That has not done a great deal for film producers. Thirdly, with the levy gone, we have had to consider the future and status of the NFFC. I believe that the arrangements that we have come up with give twice as much money as before. That should be welcomed, as it will mean that there is more money to help with new films, new producers and smaller budget films.
We have recognised the special position of the NFFC. We have negotiated a means of continuing its work and are injecting Government money alongside private capital to get it off to a good start. If we include the film project development scheme, the new company will have nearly £3·75 million a year—far more than twice the income of the NFFC. In addition we are giving £250,000 to the National Film and Television School for new equipment. We are giving some money towards the industry's own initiative—British Film Year—and there are possibilities of further funding for that project's overseas dimension. The Bill is sweeping away, without delay, outdated restrictions, removing the burden of the Eady levy, and letting the film industry get on with its business. I therefore commend the Bill to the House.
It is unusual, even for this Government, to introduce a measure that has received such a hostile reception from those whose interests it is meant to advance. Many of the most famous names in British cinema, including some of those whose achievements the Government seem most anxious to share vicariously, are mounting a campaign against the Bill because they are convinced that the very survival of their industry is at stake.
It is a sad commentary on the Government's reputation of intransigence that there is little realistic hope of Ministers listening to the virtually unanimous view of the industry. It is not so much that there is opposition to the Bill, although there is plenty to oppose in it. Rather there is anger, disappointment and frustration at what is not in it and at what is widely regarded as a missed opportunity.
In their White Paper, the Government began promisingly enough. They recounted the industry's achievements, the employment it provides and its overseas earnings. They also recognised that it has an important influence in our national life and internationally which is out of all proportion to its size. There is nothing wrong with the rhetoric, although it is somewhat muted. There is not the recognition of the cultural significance of film such as might be found in a French Government publication on the same subject, but it is the Minister's analysis, which he repeated today, rather than the rhetoric, that is defective.
The Government claim, and take as their starting point, the assertion that the industry is in good shape and that there are grounds for considerable optimism. That is not how it seems from within the industry. The number of British films made last year, which the Minister cited as evidence of recovery and strength, was slightly above the disastrous and record low of 27 in 1982. However, at only 34, it is still less than half the post-war average. It remains an indication of weakness rather than strength.
As the Minister conceded, cinema attendances have resumed their sharp decline this year. Moreover, the British market, including the much-touted opportunities in cable, video and direct broadcasting by satellite remain largely at the mercy of the American industry. All of this is blithely ignored by the Government who, as is so often the case, show a remarkable and insensitive talent for ignoring and disclaiming responsibility for bad news while trying to claim credit for the stray bits of good news. There are a couple of British Oscar-winning films and the Minister seizes on them as evidence that all is well but, faced with the reality of an industry whose lifeblood is slipping away, the Government turn a blind eye. At best, the only remedy they suggest is further blood-letting.
A more sober assessment of the state of the industry and therefore of the extent to which the Government must act to put things right must begin with the succession of blows that the industry has had to endure in the past year. First in importance was the loss of capital allowances as announced in this year's Budget. I think that the Minister recognises that. The loss was imposed despite a clear ministerial assurance that the allowances would be maintained for another five years. That is a breach of faith that will not incline the industry to place much value on ministerial assurances in future. The loss of those capital allowances leaves the British film industry, virtually uniquely in the western world, without any form of tax incentive for investment in it. Some people object to that form of incentive because it leads to films being made for tax avoidance reasons rather than for artistic reasons. That is true, but it is true of any fiscal regime designed to encourage any form of economic activity. Even the Opposition would prefer to see some form of investment incentive to ensure that money is forthcoming and that the film industry prospers rather than that the British film industry should wither away.
The loss of that powerful aid is hardly compensated for by the niggardly provision of public money, about which the Minister seems so proud. The Government propose to contribute only £10 million over five years. That is a pitiful sum, compared with that available to other art forms, such as the theatre, ballet, music and opera, and with what other countries feel able to provide. The Bill does not mention the Government's commitment on that point. Although the White Paper and the Minister's statement are welcome so far as they go, there will unfortunately be cynicism and scepticism because of what happened to past ministerial assurances. The House should remember that the £1·5 million which the Government propose to make available to the National Film Finance Corporation is enough to finance only one low-budget film a year.
The industry has finally lost the protection of the quota system, which at least guaranteed to the British industry a proportion of the British market and some protection against the flood of American imports. There is to be no limit on imports. It is true that the Bill still provides, faithfully enough, a definition of a British film. I do not know why anyone should believe that that matters because, with the abolition of the Eady levy and the loss of capital allowances, there is little point even in attempting to define a British film.
The Bill delivers yet another blow. It arises not from the abolition of the Eady levy—all hon. Members accept that that is inevitable—but from the failure to provide an effective mechanism with which to replace it. A mechanism to redistribute the resources produced by the film industry as a whole, so that a proportion of its enormous earnings is fed back to the film-makers, remains of desperate urgency and need.
Unfortunately, by the time British investors take advantage of those alleged incentives, they will be of little interest or use to them. No one in the industry believes that what remains will be of any value.
No one disputes that the principle of a redistribution of resources remains of great importance. During its declining days the Eady levy was inadequate to fulfil that purpose, but the principle of redistribution remains valid and is recognised in the practices of many foreign countries, especially those in western Europe. True to form, the Government have thrown out the redistribution baby with the levy bath water.
If cinema audiences are no longer large enough to provide the necessary revenue, it becomes of cardinal importance that some recourse should be had to the modern equivalent of those once vast cinema audiences. We must now look to those billions of occasions when people watch films on a small screen—on television or on a video recorder.
The Select Committee and the industry recommended that an attempt to tap that huge audience was the remedy. Yet the Government do not mention it. They appear to reject it out of hand. The Opposition, however, believe that there is much to be said for some such mechanism. We do not commit ourselves to the technical or mechanical detail of a precise proposal—for example, the charge made on television companies or the levy on blank cassettes or pre-recorded videos— but there are possibilities worth considering. We believe that some means can and should be found to require television companies and video firms, who depend heavily on the output of the film industry and who pay such a small price for what they obtain, to pay a real return to the filmmakers. The industry as a whole will be profoundly disappointed by the Government's cavalier dismissal of those ideas.
Will the hon. Gentleman consider the possibility that if the craft unions in the television industry were to lift their restrictive practices and control their in-house production, the greatest possible stimulus to independent production would be for the big television companies and the British Broadcasting Corporation to invest in small independent productions?
The hon. Gentleman will undoubtedly develop that argument when he speaks to the House later, as I hope he will. We are considering the responsibilities of the Government, who claim to guarantee the future of the film industry through the Bill. However, in failing to provide a buoyant recycled form of revenue to the industry, they are condemning it to penury and to withering away.
I now follow the point made by the hon. Member for Cambridgeshire, North-East (Mr. Freud). It is to be hoped—I am sorry that the Minister did not mention this—that cinema proprietors will not be permitted simply to swallow the advantage that they gain from the abolition of the Eady levy, and that the money saved will be spent on improving cinemas. An enormous amount can be done in that area. The beneficial consequences for the industry are equally large, as the French experience graphically shows.
The final blow to the industry, which must be added to the loss of capital allowances, the loss of the protection offered by the quota system, the inadequacy of public money being provided and the failure to provide replacement for the Eady levy, is the abolition of the National Film Finance Corporation. That, in the view of the industry and the Opposition, is final evidence that the Government are prepared to wash their hands of the industry. The Government recognise that the NFFC has done valuable work. But in their anxiety to share in the glory of Oscars for "Chariots of Fire" and "Gandhi", Ministers overlooked both David Puttnam's and Richard Attenborough's publicly expressed debt of gratitude to the NFFC and their statements that they could not have made progress without its help. The Government's verbal tributes to it in the White Paper are not enough.
Despite the NFFC's handicap of admittedly inadequate resources, it has met over the years met a particular need in providing seedcorn finance for low to middle-budget films. In sweeping it away, the Government have left a gaping hole in the ability of the British industry to raise finance crucially needed if the industry is to survive. The Minister may say that the Government have made all kinds of complex arrangements to take care of that, but what the Minister described today falls short of being adequate.
It is astonishing that the Government will donate the NFFC's assets to a private company. Those assets were financed by the Eady levy, and belong to the industry, yet the income from them is to be handed over to a private company. The recipient of that munificence by the Government, the private company, will be committed only to its own short-term commercial and financial involvement. Most worrying, it will operate commercially and serve its own immediate interests. It will be suspected, unless the independence of its decision-making is guaranteed by statute or in some other way, that its decisions will reflect its own commercial interests. If, after three years, those interests should suggest a termination of its involvement in film finance, even the reudimentary and unsatisfactory mechanism provided by the Government will, one assumes, disappear.
Perhaps the hon. Gentleman would allow me to underline his point by reminding the House that when, 20 years ago, the Government withdrew, from British Lion, a special share was created to protect the Government's investment. However, when the company fell on hard times and was sold through the market, the special shareholding, or special condition, was withdrawn because the Government of the day regarded it as impractical to implement. That experience must endorse the hon. Gentleman's point that one cannot have much faith in what happened previously not happening again.
The hon. Gentleman has reinforced my point with the benefit of his experience of such matters. He also reinforces the urgent need for hon. Members on both sides of the House to scrutinise carefully the provisions proposed by the Government. In Committee, we shall certainly examine the Bill with great interest to see what mechanisms the Government will introduce to deal with the problem the hon. Gentleman mentioned.
The sorry picture of the withdrawal of Government interest, support and commitment from a major industry—perhaps not so much major in the economic sense, but certainly in the wider cultural sense—is in sharp contrast to the experience of many other countries. No one who studies the range of Government aids made available in many countries, not just those with film industries but those which aspire to have film industries, can fail to be impressed by their efforts and the importance which they attach to their film industries. It makes a sorry contrast with the parsimony of our Government.
To take just a handful of examples—one could cite dozens—in Australia, apart from the tax incentives that are found in almost every film-making country but that are signally lacking here, the federal Government contribute by way of grants and loans the equivalent of £50 million a year. The Brazilian Government— one does not automatically think of Brazil as a film-making country—provide much protection to their film industry through import quotas and restrictions. France, following a pattern established throughout western Europe, manages through incentives, grants, subsidies and levies to give about £35 million worth of help to its film industry. From Pakistan to the Philippines, and from New Zealand to Norway, Governments are involved in promoting their film industries. Even in private enterprise America, the federal Government make available a generous tax incentive scheme and the state Governments provide equally generous incentives.
The industry and the Opposition are forced to ask whether it is possible that all those countries have got it wrong. Or is Britain alone in believing that it is desirable and practicable to expect a film industry to flourish with almost no Government help?
My hon. Friend has cited, rightly, the fact that many other countries more sensibly and properly fund their film industries. But do not all of the examples that he mentioned have the additional defence that they do not share a language with the United States of America?
My hon. Friend is right. That is the usually unstated but fundamental factor that makes our position more precarious and difficult than that of almost any filmmaking country.
The hon. Gentleman must recognise that that factor gives us great opportunities and advantages. There is demand for 150 English language films a year, so we have more outlets and more opportunities. Many British films have been internationally successful because they are in English. It is extraordinary that, at a time when the media are opening up, when Channel 4 provides £8·8 million a year for new films, with DBS to arrive in 1987, and with the liberalisation of the American market—with the result that many British films have been successful there—the hon. Gentleman's instinctive solution is to levy films and transfer the money back. Why cannot British film-makers produce films for that market, as they have done successfully in many instances?
I am glad to offer the hon. Gentleman the opportunity to remedy the deficiencies in his opening speech. The fact remains that when we ask whether we are right and everyone else is wrong—that is the issue when we compare our practice with that of our foreign competitors—I have no hesitation in answering that the Government have got it wrong. They got it wrong for a familiar reason: as with so many other issues, they have succumbed to their own propaganda. They believe that by privatising the industry they will release market forces that will enable it to prosper. That is the real answer to the Minister's point. The problem with his naive view is that nothing even remotely resembling a free market exists for the British film industry. That was the overwhelming conclusion of the Monopolies and Mergers Commission when it examined the industry. The commission discovered that three distributor companies dominated film distribution; that two major concerns enjoyed almost a duopoly of outlets; and that there was almost a duopoly in television.
The overwhelming consensus of those who know, understand and fear for the future of the British film industry is that, under the influence of those monopolistic pressures, and despite the optimistic and facile noises made by the Minister, the market is rigged in such a way as to be almost impossible to resist. It is rigged in favour of the major American film-makers, who alone have the resources, distribution and exhibition arrangements, and consequently the guaranteed market opportunities, to be able to survive in what everyone accepts is a highly speculative industry. I warn the Minister that to leave matters to the market, as he and the Government intend, is simply to abandon the British film industry and to surrender the British film market to the American industry.
Despite their protestations, the Government know this to be true in their heart of hearts. If they truly believed—
Does my hon. Friend agree that the proof of the pudding is already in the eating in that, in 1983, Britain made 34 major feature films, the Germans made 131 and the French made about 70? If the Government remove their support, what chance is there for competition in the future?
My hon. Friend is right. I accept that quantity is not everything and that quality counts, but it helps a little if an industry can make 70 or 100 films a year rather than about 10 films a year on a declining trend.
The Government know that, in the end, market forces will not save the British film industry. If they believed that, why are they still legislating for the industry? They know that if they said, "No more Government involvement, no more help, no recycling—let those who wish to make films commercially do so," that would be the end of the British film industry. We are left with a damaging compromise between the Government's commitment to an ideological position and what at heart they are compelled to accept is needed in practice.
The Government and the industry must make a determined and concerted effort if the industry is to have a future. It cannot survive on the strength of the odd oneoff success. It needs a proper fiscal climate, a long-term guarantee of public funding and a buoyant source of recirculating revenue if investors are to take the risk of trying to match their commercial judgment to artistic imaginations and to popular fashions.
The Bill comes from a Government who manifestly know little of the film industry and who care even less. It is understandable and only to be expected that those who claim to be a business man's Government should undervalue creative achievement and misjudge the importance of the film industry to our cultural life and to the image of Britain abroad. It is also understandable that a Government who have seen so much of British industry decimated should apparently be content to envisage a future for the British film industry as a sort of minor provider of services to a dominant American industry. Even that future depends on the continuing strength of the dollar.
It is understandable that a business man's Government urge us to reconcile ourselves to a cultural and commercial surrender to the Americans, but it is less to be expected that as business men Ministers should so hopelessly have misjudged the commercial conditions needed to guarantee survival, let alone success.
These failures of commercial judgment and cultural awareness, which vitiate the Bill, demand that we, in common with most people in the industry, will oppose the measure this evening.
As we would expect, the hon. Member for Dagenham (Mr. Gould) made a powerful speech which reflected the criticisms of those who live and work in the industry, but in my judgment he exaggerated— no doubt for his own purposes— the Government's position. His criticism would be substantiated if one were able to say, "The Government are handing over completely the future of the British film industry to the forces of the market place dominated by the United States." From what he said, one would not gather that the financial support forthcoming from public funds in the next few years is considerably larger than that of the past few years, when from rock bottom the industry seems to have improved its fortunes at almost every level.
The problems of the film industry must be looked at in two contexts—that of our tax structure and that of the change in the structure of the market place for films. I shall not weary the House by regurgitating the Chancellor's arguments for believing that the phasing out of capital allowances and reducing corporation tax is favourable for all British industry. I believe that his strategy is absolutely right, and we run into tremendous dangers if we accept that somehow the film industry is so unusual that it must be given a totally privileged position.
That is particularly so in view of the track record of this industry, whereby tax allowances of different kinds have been exploited by overseas interests, principally from the United States. In no way will there be stability if the British film industry is subjected to the whims of American finance because we have provided a tax structure which makes it possible for people to come in and out of the industry who have not the slightest interest in British or any other form of film making.
I do not condemn that. We all know the history of this matter and are aware that the phasing out will take place in 1986 rather than 1987. The Minister has suggested that other things should replace capital allowances, but I do not want to go into the detail of those. The hon. Gentleman may consider that these are inadequate, but they are an attempt to meet the concerns of the industry. Included in these new arrangements is the business expansion scheme, which will be opened up to the small and medium sized filmmakers who feel particularly aggrieved. Incidentally, no one in the movie industry had anything to do with the business expansion scheme, because the industry was not included. I wonder how many producers and directors know how the scheme works. Have they tried it? However, both the Bill and the Treasury ask them to consider a new climate.
My hon. Friend was somewhat scathing about American-financed British films, but the second paragraph of the White Paper on which the Bill is based pays enormous tribute to the success of "Gandhi" and "Chariots of Fire". "Chariots of Fire" was financed from the United States and "Gandhi" received a third of its finance from Indian sources and a third from American sources. However, all the kudos was taken by the Government.
I am grateful to my hon. Friend for his intervention. I do not wish to denigrate those who have helped to provide finance, be it from the United States, India or elsewhere. I accept that in terms of talent as well as money, various people in the United States have made a tremendous contribution to what we sometimes regard as the British film industry. I do not always accept that anything made here is wholly British, because an increasing number of people believe that film production can reflect a national culture without the necessity of a film being made only by people of that particular nationality. My hon. Friend will recognise that the opportunity to exploit tax shelters as a result of previous legislation was taken by people from the United States. That was rightly stopped.
I do not want to do so because many other hon. Members wish to speak, and no doubt the hon. Lady will catch the eye of the Chair. I am making the obvious point that the tax structure regime had to be changed.
That is not to say that the Bill is perfect. We must ensure that money invested in British industry is used satisfactorily. As some of the money for the new company which is to replace the NFFC will continue to be financed from the Eady levy, it is not unreasonable that those who help to create the revenue should have some say in how it should be spent.
There is a suspicion that the organisations concerned with the successor to the NFFC will not act impartially but will have regard to their own interests rather than the interests of the small or medium sized producer. The British Film and Television Producers Association has suggested that it should be consulted from time to time on how the money should be spent. That would be courteous, if nothing else.
The Minister must be aware of the concern expressed about future moneys for the industry. We recognise that the Government have agreed to make subventions which are an improvement on the past. I welcome that. There is, however, an anxiety about what happens after the commitment runs out. Will the British film industry survive? Can it survive when we know that in one way or another other countries have some form of public funding? If the lessons of the past are to be learnt, both here and elsewhere, in the not too distant future the Government will have to make it clear that they are willing to have a discussion on funding to replace the loss of funds from the Eady levy.
It may be that revenue could come from a levy on blank video or audio tapes. I do not want to nail my flag to the mast by saying that that is the only way it can be done. That idea has plenty of advocates and some critics. I should declare an interest as a non-executive director of London Weekend Television, but I shall not advocate that the excessive burden should be borne by television companies. They already have problems of increased competition and the prospect of deciding whether to form part of the development of direct broadcasting by satellite.
The Government expect such things to be financed privately, but direct broadcasting by satellite requires substantial investment and it will be many years before a return is seen on that money. Any television company that is asked to consider direct broadcasting by satellite and at the same time to finance generously the British film industry will have to reflect carefully. It is not for me to suggest that they would be ungenerous if they were cautious.
There is a problem about future finance once Government commitments begin to run out. It is completely unfair that so many other interests which benefit from the British film industry should not be asked to consider some way of financing it. That is one of the main points that have been made so far.
I recognise that we are dealing with the commercial market today. It is right to help restructure the industry in the way that has been advocated by the Government. It is also right to take a much more robust approach. But I recognise that there are those in the production of films who are not in the business just for art but who straddle the borderline between minority interests and art. They can, if given a fair wind, and good judgment, make a profit, but they may not. It is in that area that so often we find the film reflecting some of the more cultural aspects of the film-making world.
I want to make a small suggestion, but one which could be of value. Nothing is more difficult for someone in the film industry, who is inexperienced about how such things are managed despite being good at film making, than to set up a project. Nothing is more valuable than that the national film development fund should be better secured. I may be speaking on behalf of a vested interest as a governor of the British Film Institute and therefore my advice cannot be regarded as being as impartial as it should be. The British film industry believes that the future of the film development fund might be better secured if it were attached to a body that is already engaged in project evaluation and development—the British Film Institute's production board. That was the source of such notable achievements and cheap budget films as "The Draughtsman's Contract" and the recent Berlin prizewinner "Ascendancy". The board is not in the film business to make films that will be seen by a few without caring whether any money is made. It hopes that costs will be covered and that the films will find a commercial audience.
My hon. Friend the Minister will be aware that the film development fund has just the sort of activities which recognise the problem to which I have drawn his attention this afternoon. It is to provide finance for the earliest stages in the creation of a film—the preparation of the screenplay, the assembly of the nucleus of a production team, and other such detailed matters. Rather than create another quango, why not pass that responsibility over to an organisation which is highly respected on all sides of the film industry?
I agree with my hon. Friend the Minister on the prospects for the British film industry. One of the problems that beset those who work in the industry—or some of them—is that they like the crutches, however meagre, that they have had. They fear that they are going to lose them altogether, rather than, as I have said, that in the short term they will receive greater support.
However, there is natural anxiety about the longer term. I suspect that the industry is wanting more help than is desirable for its own health and independence.
Films are still made in a remarkably old-fashioned way. Why does not the industry look more to its own house and see how far it can reflect the changes that I have mentioned? For example, too many productions are still treated as new projects. Individuals get together, form a company, get the talent and make a film. That company is then dissolved or put on a back burner. Then along comes another idea and a new company is formed. There is no continuity.
I would rather not give way if my hon. Friend does not mind.
The market has changed. The gap between television and film production has narrowed enormously. For those who want to get into film production, there is a market not just in the prestige cinemas or the small cinemas in the country and the smaller towns; there is also the video tape market and the terrestrial television market, followed soon by the DBS and cable markets. With those multiple outlets, not just because of Channel 4, there has surely never been a better opportunity for the small budget film. Surely the blockbuster film also provides a great opportunity, assuming that it provides value for money and is not just wasteful because of restrictive practices or the overblown ideas of some egocentric movie mogul.
If the industry will consider such opportunities and put its house in order, providing the Government respond in the longer term and give the assurance that something will replace the Eady levy, I am sure that the film industry will thrive.
I begin by complimenting the Minister on presenting what is a pretty unreasonable Bill in a reasonable manner. We all appreciate the stress under which his Department has been placed with the absence through illness of the Secretary of State. I think I speak for all hon. Members when I say that we wish the right hon. Gentleman well and we hope for his early return.
If one were pushed to find the most blatant illogicality in the Minister's argument it was when he said that the Eady money was of little consequence to the film industry and then prided himself on basing his aid on the Eady contribution. Essentially, my argument is that the Government are introducing a half-baked measure which fails to pursue the logic of their argument and thus contains potentially fatal misunderstandings of the structure of the film industry in both organisational and financial terms.
The prediction of health is based on one or two signs announcing the all-clear and the prosperity of the film industry. They are the success of "Gandhi" and the use of British expertise and studios by American film-makers. That is a completely incorrect diagnosis. Both the phenomena are specific to one point in time. It is generally acknowledged that "Gandhi"—we take it as epitomising the Goldcrest phenomenon—was the product of a short period of capital allowances that came to an end with the 1984 Budget. On the other hand, the presence of the United States is largely, if not wholly, a product of the exchange rate now prevailing.
An analogy can be drawn with the deregulation of buses. The Government are using the experience of the coach service following its privatisation to make a claim about the advantages of deregulation per se. As in the case of the bus industry, the experiences are specific. It is wrong to base a whole policy—if "policy" is the right word for what the Government are doing— on that model. Many film people now attest to the fact that Goldcrest will be all right under the new system but accept that it would have found starting out difficult, if not impossible, and that other film-makers do not have its track record and thus will be unable to attract the same financial backing. The Government are trying to create a summer out of one miserable, underfed swallow.
The film industry has also suffered from financial uncertainty. As I have said, the capital allowances were extended only to film stocks in 1979. The industry thought that they would remain until 1987. It should not be forgotten that half the money for "Chariots of Fire" came from City investors. Between 25 and 33 per cent. of the total Goldcrest money came from tax advantages that no longer exist. To speak of the prosperity of the film industry when the Government have taken away the infrastructure is plumb wrong. The Chancellor of the Exchequer has removed the source of finance. The British Film and Television Producers Association says:
The Association was deeply shocked by the 1984 budget proposals for the abolition of Capital Allowances in the face of pledges made for their continuation.
The White Paper claims great generosity in the Finance Act 1984, which allows for expenditure to be written off on a "cost recovery" basis, yet according to BFTPA that is really only the status quo ante.
There are also problems with relying on the business expansion scheme. We welcome that scheme, but I understand that it is for continuing trade and not for oneoff investments. Under the previous allowance scheme, it was much easier to find one company to put up a substantial sum of money than it is to find money under the business expansion scheme, which has a ceiling of £40,000. The National Film Finance Corporation Act dates only from 1981 and the Film Levy Finance Act also dates from that year. Under those two Acts, which ended Government funding to the NFFC, the first subvention on the Eady money was a constant £1·5 million.
It could he argued that the Bill will only stave off the next bout of uncertainty, since its condition for contributing to the reconstituted NFFC is a five-year commitment. There is one additional point to be made about uncertainty. It has been suggested that tax allowances should be held back until the Budget. However, that is another example of taking things in isolation, to which I shall refer later.
The new body will receive funds from private and public sources, which will amount to about £3 million, or twice the amount currently available to it. That means that the Government are funding at twice the pathetic level while at the same time claiming a great future. But doubling an inadequate sum does not make it adequate. It is widely known that the Eady levy has fallen to less and less. Can it really herald the new dawn of the film industry if we wait until the amount is totally inadequate, double it and then say that we have solved the problem?
In 1984, the cost of one low-budget film is about £1·5 million. The Association of Independent Producers wants the new body to be able to produce 10 to 12 features and six short films per year. Yesterday, I returned from a Commonwealth Parliamentary Association visit to Australia specifically so that I could speak in this debate. The Australian Film Commission has certified 28 films to start production during 1984 and 19 of them will be completed by next May.
The hon. Member for Dagenham (Mr. Gould) gave us a world tour of film production. However, he did not mention Ecuador. Even there, about 12 producers can make short films each year 'with state help. In the debate on the White Paper, I described the new body as a pigmy that had been established to replace a dwarf. I do not take that back. With the abolition of capital allowances in the 1984 Budget, Britain has become the only major country not to give tax concessions to those who invest in the domestic film industry. Even countries such as Ecuador have a finance system for short films. Cinemas pay a 27 per cent. municipal tax but claim back 22 per cent. of it as a rebate. Even that would be better than the Minister's inadequate suggestions. The money paid goes to either the House of Culture or the Association of Journalists. Other countries not only provide the cash but do so with a range of imagination that should be an object lesson to the Department of Trade and Industry.
In France, total Government support was worth £21·43 million in 1983, which represented 3·8 per cent. of the cultural budget and 0·03 per cent. of the total budget. Short films are eligible for a "quality" label and features that are shown with such shorts receive an extra 8 per cent. entitlement to an interest-free advance. Thus there is cross-fertilisation between support policies. Those quality shorts can compete for the title "quality premium", which means that the director then receives 10 per cent. of the prize money.
In Canada, the Canadian Broadcasting Corporation is pledged to ensure that over a five-year period 50 per cent. of its network programmes, excluding sport, news and current affairs, comes from independent producers. Indeed, 80 per cent. of peak-hour national network material is Canadian in content. In Italy, the film industry has some problems, but an "umbrella" Bill has just been introduced by the umbrella Minister for entertainment. This year there will be a 180 billion lire contribution. I realise I am speaking in multi-telephone numbers, so I should point out that that is $95 million. Again, that is a very substantial contribution.
It used to be said that the difference between Australia and yogurt was that one contained a living culture. But that joke is no longer true. Australia has, perhaps, the most comprehensive and effective system of tax incentives. The Australian Film Commission was created out of earlier bodies in 1975. Its remit was to establish a viable film and television industry. In my view, the two are indivisible. In 1983–84, a budget of $14 million could be given to "qualifying Australian films"—films in which most of the action is by Australians in the form of cash, loans or investment and could constitute up to 50 per cent. of the film's budget. In addition, taxpayers can claim up to 133 per cent. of the sum invested as a concession on their personal incomes.
We should like to see something like that in Britain. There is no doubt that capital allowances or tax concessions encourage film production. As the Minister said, Richard Branson has gone from the record business into the aircraft business and now into the film industry, and he said that the abolition of capital allowances would probably drive him to make his films with foreign associates in countries with depreciation allowances. That is what the Bill is likely to do to the industry.
The new British film industry, as outlined by the Minister, will not be competing on equal terms. All the Government talk of the value of competition appears ironic when they effectively penalise our runners and give their competitors a start in the race. To sum up the financial brunt of my argument, we need new sources of finance and a concessionary tax structure.
The Government are wrong to view film production in virtual isolation as regards administration and organisation. Effectively, they are saying that they do not understand the structure of the media or the shape of the leisure industry. There is a lack of integration. They have a muddled view of the subject for legislation—in which context they are unlikely in theory, as the Bill shows in practice, to get things right. Cinema films must be seen as a corporate entity with television, cable, video and DBS as part of the same structure.
The reason for that is that the place where people see films has changed. It used to be in the cinema, but it is now in the home. The market for films has not disappeared, although that is why the Eady levy has been decimated. According to the British Videogram Association, by the end of 1983 26 per cent. of all homes had a video recorder—that is more than 5 million machines. By the end of 1984, the figure will be almost 6 million. A total of 70 per cent. of the material recorded from television are feature films. There is an appetite which is being satisfied at home.
Film viewing has dominated much of television, so there is a market for film production. The next step is to connect the production to the exhibition.
The White Paper acknowledges that, in the past, British films and televison have tended to operate in isolation, especially compared with the United States. That is now changing. The report by Christopher Price states:
In comparing our film and television industries with experience elsewhere in the world, it is noticeable how the two arms of the moving image business have not directly collaborated in providing domestic television services in this country…There are signs that the gap between film and television is being closed…it may well be that this interface of films and television is where the key to much of the film production industry's future is to be found.
I do not believe that the Bill operates within that framework.
Film, as we saw, provides the most popular material on video. Its supply will falter once the big films take a larger proportion of a smaller ammount of production money. It has been suggested that the abolition of capital allowances will hit the medium budget films hardest—films like "Another Country" and "Cal". Big epics will still receive backing; it is the small and experimental films, for which we are so renowned and which we have produced with such success, that will fall.
The secondary market of the TV screen could be the stimulus to a flourishing and indigenous film industry—as, indeed, it could be said largely to explain the demise of the cinema industry in the 1950s and 1960s. Showing a new film in a smart cinema could be the promotion for the sale of that film for television and video. David Puttnam drew an analogy with the rock music business where it was the pattern to subsidise live performances to stimulate sales of the album. I believe that the cinema will promote the film and the costs will be recouped in other ways.
As we saw in other countries, there is scope for imaginative integration. The hon. Member for Dagenham was quite right to ask the Minister why, if all those other countries subsidise their film industries, we cannot do so when we have such expertise.
We must remember that British television is so much better than United States television. Therefore, it does not seem wholly impossible that we should have the sort of linkage that I have described. The Government recognise the relationship. They will tell us that Channel 4 is putting up £8 million to commission films and that the television companies have contributed about half of the money for the new NFFC. But their logic stops there, and they do not appear to understand the implications.
We need an organisation with one ministerial responsibility, a levy on video tapes and, perhaps, some new form of film authority or corporation to oversee the finance of film making. The proposed replacement for the NFFC is, in this context, only half of what is needed.
I wish to elaborate on those three suggestions. We must have one ministerial authority. Currently, responsibility is split between the Department of Education and Science, the Department of Industry, the Treasury, the Home Office and the Minister responsible for the Arts. Liberal party policy, and the recommendation of the Select Committee dealing with the public and private funding of the arts is that there should be an umbrella ministry that could co-ordinate activity and push the arts into political prominence. The Liberal party suggested that it should be called the Ministry of Culture. It is not an attractive name, but the concept is absolutely right. In the present circumstances, it is hardly surprising that film policy and film-makers seem confused and appear to receive contradictory signals from different sources.
There should be a levy on video tapes, either blank or both blank and pre-recorded. I was deeply opposed to that suggestion for a long time. Having looked at the Performing Right Society, I realised what an astonishingly large sum of money was spent in administration and policing. A tax on blank video tapes of 40p a tape, which would go straight to the new authority, would raise about £14 million or £15 million, and is an appropriate way to proceed. The alternative is that a tax should be paid by those who watch films on television. I am not sure that we could find a reasonable way to implement that. The Committee's recommendation was based on how much is lost to the industry as a result of home taping and on considerations of money. I am sure that we shall discuss that at great length in Committee.
A new film authority was envisaged not by the Select Committee but by the interim acting committee chaired by Lord Wilson. The Association of Independent Producers, among others, wants that. It would have much clearer powers than the proposed new NFFC and, with a levy, would have real financial clout. Indeed, it would be rather similar to the Arts Council.
It is unusual for such a Bill to have no support from anyone remotely connected with the film industry. I hope that the Minister will bear in mind that the industry is almost wholly united against the Bill, with the exception of one executive from EMI who said that he had not read it properly but did not think that there was much wrong with it.
I want to quote from Mr. James G. Lee, speaking to the Education, Science and Arts Committee. He said:
The British are actually rather good at making good films and good television. Furthermore the country has a natural competitive advantage. It is an unfortunate fact of life that few other sectors of the economy have such natural resources and natural advantages. It is a tragedy that the potential of this industry has not been fully recognised by those in a position to promote the changes that are required.
As I have shown in one or two interventions, I have been following the fortunes—if that is the way to describe it—of the film industry for a good many years. However, having attended many funerals of the British film industry, this is the first occasion on which I have attended its re-birth. At least, that would be my interpretation of the optimistic picture that was painted by my hon. Friend the Minister of State in his opening speech.
As I listened to the speeches of the Opposition spokesman, the hon. Member for Dagenham (Mr. Gould), my hon. Friend the Member for Wealden (Sir G. Johnson Smith) and the hon. Member for Ely (Mr. Freud), it seemed to me that, if we exclude the Government, we are almost conducting an all-party debate. I cannot speak for all my hon. Friends because they have not declared their position, but it seems that there is an enormous measure of agreement in all parts of the House.
I would include my hon. Friend the Minister when I say that I think we are all completely at one about the ends that we want to achieve. I think that we are all in agreement about the diagnosis of what is necessary, but we are less close in prescribing from the diagnosis and deciding what needs to be done.
Before offering my suggestions, I should like to make one general observation about the important difference between industry in general and what is called "the film industry" in particular. Industry develops a product with research and development. It makes pre-production models. It does market research. Perhaps, as a result of that, it modifies the product. Then it does trial runs. Finally, it manufactures, advertises and sells the product. That is what we understand as manufacturing.
The film industry is quite different. It has an idea. Then it lavishes waves of creative talent on that idea. It embellishes it with the reputations of countless other talents— some celebrated and others perhaps entirely unknown. After a process combining cajolery, flattery, persuasion and exhortation, it raises funds of a size and enormity that would make Chancellors of the Exchequer and Secretaries of State blanch.
A product is ultimately launched upon an astonished, delighted and— if the industry is lucky— spendthrift public. For a few halcyon weeks or months, the film makers are in business and then, like Shakespeare's "poor player", they are heard no more. That is not the typical process that we understand as industry. In short, the film industry creates and sells a prototype—a one-off. Every production— even when there are imitations of successful films—is one-off; it is unique.
The film industry—if I can call it an industry—not only defies the norms of orthodox accountancy; it defies the nostrums of orthodox monetarism. I should like the Minister to take particular note of that. We are not dealing with an industry in the typical and generally accepted sense of that word. It is necessary to establish those essential differences between industry and the film industry before we even attempt to extrapolate the largely irrelevant lessons of monetarism, political dogma, or the latest received wisdom of economic theory. The achievement of the ends that Governments, film industry and film audiences all desire lies outside that narrow thinking and interpretation of the film industry's needs.
Before considering the correct solution, I think it is sensible to consider for a moment— as other hon. Members have done—what happens in other countries. Do other countries perceive their film industries to be different in kind from other industrial activities?
I have a list—other hon. Members may well have received it— of over 30 film-making countries. It excludes the United States and all the iron curtain countries. All the countries on that list, from Venezuela to Jamaica, from France to India, from Malaysia to Mexico, support the making of large or short films from Government-financed sources. All those countries understand that "the film" explains, promotes and enhances their culture and their way of life. Therefore, it also improves their economic prospects in a world that is inexorably becoming more and more uniform. That is why they put Government money into the film industry.
Wilt the hon. Member agree that one of the reasons for the strange discrepancy between our film industry and those abroad is that we still seem to regard the film industry as essentially producing entertainment, making no great cultural contribution?
I concede that that is a factor and I am grateful to the hon. Gentleman for pointing it out.
I have also noticed from the list to which I referred that, apart from Israel, which has merely discontinued the awarding of a small annual prize, every other country except the United Kingdom is maintaining, although perhaps modifying, the support that it gives to its film industry. In the words of the White Paper of last July,
The British commercial film industry … has an importance and influence … out of all proportion to its size ".
The world, the Government and I are therefore in step. We agree with one another; we agree that films matter. They can make money, they can influence people and they can entertain them. So where is the snag? Where is the difference between the world, the Government and myself on the one hand, and the Government Front Bench on the other?
The position, alas, is that a clever doctor can make an accurate diagnosis, just as a clever White Paper author can marshal facts into a coherent picture of today's British film industry. But those clever men are only as good and as valuable as the prescriptions they offer—the one to save the life of his patient and the other to save the life of the British film industry. Alas, again, we have better results from our doctors than we have from the authors of the White Paper. The White Paper is strong on analysis but weak in many of its prescriptions. I should like to be more precise about that weakness.
There is an abundance of talent in Britain. We have producers, directors, writers, cameramen, technicians and actors who are as good as or better than any to be found anywhere else in the world. We have hungry, gawping audiences who will spend not hours but weeks of their lives watching the products of the film industry. There is an annual audience of about 4 billion for films on television and 66 million for films on cinema screens. The Government want films to be made and so do ITV stations. BBC moguls want to buy films and worldwide audiences want to watch films. The snag, as every contributor to the debate has said, is finance. Where is the finance to come from? The Government will not pay the price of even one full-length feature film of any notability. What is the point—I change the analogy—of deciding that we want an army but deciding at the same time that although tanks are needed we shall have only one? We cannot run an army on one tank and we cannot have a film industry with only one film, and that a pretty cheap one.
BBC and ITV companies say that they want films and their audiencies want films but they cannot pay a proper price even for the old ones. I believe that audiences would and could pay for films but even they, the public, are wayward and fickle in choosing where to watch their films. Film finance is a difficult, chancy and wayward business, because viewing fashions are changing constantly.
I believe that there is a solution. A levy on the viewing of films shown on television, which according to the estimates I have seen is not, as is stated in the White Paper, an uneconomic proposition because of the effect that it would have on licensing, would be at the rate of about 25p per viewer, which is equal to a 30p increase in the cost of the licence fee. To recycle some of the funds collected and absorbed by the greatest exhibitors of the British film industry's products, ITV and BBC, would seem to be the most sensible option open to us. It is, of course, the one that will raise the greatest contribution to film making. The Government reject this view, in my opinion rather unconvincingly.
It is necessary that we return to this matter again and again. In equity and in practice, a levy on the viewing of films shown on television would seem to be the solution in financing full-length British commercial films. For acceptance of this proposition it is necessary to disabuse our minds of the specious arguments about licence fees increasing by leaps and bounds. It is necessary also to ignore the siren voices of the copper-bottomed television moguls and magnates. It is equally necessary for the Government to get away from the idea that we can apply the rules, theories and dogmas of monetarism and free markets to an industry which is one in name but not in reality.
It is suggested in the White Paper that there is a glorious future opening up with the advent of cable television and direct broadcasting by satellite. It is said in Aesop's fable of the fox and the cat that one safe way is better than 100 on which we cannot reckon. We cannot reckon on the unknown effects of these new forms of distribution. Therefore, we should go to the one upon which we can reckon, which is a levy on those who watch films on television.
I count myself as one of those persons who has no specialist knowledge of the film industry nor any connection with it. I understand that some Conservative Members have such connections and perhaps we shall hear from them during the debate. I am proud of the contribution that the British film industry has made to the cinema. There is a British ingredient, and that has been evident in recent years when British films have been among the best in the world. I pay tribute to filmmakers who could have lived abroad and earned considerable sums but who have chosen to spend a large part, of all, or their working lives in the United Kingdom.
Despite the decline in the number of cinema-goers, there will always be a demand for cinemas. Next year will be British Film Year and its slogan will be "Cinema: the best place to see a film." There is a fundamental difference between watching a film in a cinema, with everything that that means, and watching the same film on a small screen. British Film Year has chosen an excellent catch-phrase and it happens to be true. I have no doubt that the wheel will turn full circle and that it may not be too long before we have the crammed cinemas that some of us used to see in our youth not too long ago. We must remember that the cinema is especially important to what might loosely be called working-class people.
Theatres have never been so readily available as cinemas to ordinary people in the United Kingdom and I pay tribute to the efforts of my hon. Friend the Member for Newham, North-West (Mr. Banks) to increase their availability. Working people in the north-east do not have so many opportunities of going to the theatre but my hon. Friend and his colleagues in London have made cinemas and theatres much more available to working-class people. Tribute must be paid to the work that they have done, and are continuing to do. However, there is not that opportunity in most parts of Britain and so it is important that we have well constructed modern cinemas in which to show quality films. Ideally, good plays and good movies should be equally available, but unfortunately that has not been the position in most areas.
The Government are once again demonstrating in the Bill their theory that market forces are the most effective way of producing what is best for the people. We see it time and time again from the Government. That is their theme and theory and it will be presented to us later this week in some of the proposed legislation that will come before us. It is said that public money will still be involved but I have some doubts, which I shall express later. It does not need a film enthusiast to recognise the fundamental difference between what is being proposed and the work that is being done by the National Film Finance Corporation, which has established an international reputation for itself. On most occasions it has secured what my right hon. and hon. Friends see as a balance between good entertainment—there is nothing wrong if a film has entertainment value— and quality film-making. I pay tribute to the dedicated work that has been undertaken by the director of the corporation, Mr. Mamoun Hassan. I doubt whether anyone in Britain knows more about the problems and merits of the film industry than Mr. Hassan. If people like him are to be lost to the British film industry because of this measure it would be little short of a scandal.
Before the Bill was introduced, and since, we have not heard one valid reason for the abolition of the corporation. Having heard the Minister's so-called case, I am sure that I can say on behalf of my right hon. and hon. Friends that we have even greater doubts about the proposals set out in the Bill. I repeat: the legislation is all part of the doctrinaire attitude that governs virtually everything that the Government touch. My hon. Friend the Member for Dagenham (Mr. Gould) said that there is grave doubt and distrust in all parts of the film industry about the alternative proposed in the Bill. People who share the Government's political philosophy and doctrinaire beliefs feel that such a change is not only unnecessary but a retrograde step.
We are entitled to ask for more details about the long-term effects of such important financial changes on the Children's Film Foundation and the National Film and Television School. The Children's Film Foundation is unique. It does a first-class job, and, without any question, its films are the best of their kind. The dedication and enthusiasm of the foundation can be seen also in the National Film and Television School. The school has made a tremendous contribution to the quality of British films. I refer to the whole range of technicians, budding directors and producers—everyone concerned with the school.
The information that we received from the Minister about the financing of the Children's Film Foundation and the television school made me suspicious. The amount is insufficient. It is simply not good enough to say that £250,000 will be spent on replenishing the place. It will take more than £250,000 to bring the National Film and Television School, which I have had the pleasure of visiting twice, up to the standard that we would like. Even more importantly, we must find out for how long the £600,000 contribution will last. When the Minister was questioned further about that amount, we did not receive a satisfactory answer, and that matter must be pursued.
In studying the Bill, had one main thought in mind: will its provisions enhance the structure of the indigenous British film industry— an industry fit to make films reflecting our way of life, our thinking, difficulties, strengths and weaknesses? I am certain that the Bill does not provide such opportunities. The bias towards the market place—I keep returning to this point, because it is the fundamental issue in this measure—inherent in the Bill inhibits our achievement of that objective. I hope that I am not being doctrinaire. I admit that I have no doubt that some excellent movies will result from the structure on the financing that is presented to us in this legislation. That will happen simply because we have available the full range of talent to make excellent pictures, as the hon. Member for Hendon, North (Mr. Gorst) said. My argument is that there will not be sufficient finances, having regard to our resources of talent.
The British film industry may simply become, as my hon. Friend the Member for Dagenham said, increasingly part of the United States film industry. The Americans will, as they do now to some extent, hire our studios, technical people and other experts, make more "Star Wars" and "Superman" pictures and hie the films back to the States, making a lot of money in the process. Is that the kind of arrangement that we want? Do we want something that will make no contribution to British film culture? I am afraid that, under this Bill, that is what will happen, in spite of our David Puttnams, Bill Forsyths and Richard Attenboroughs.
Finance is crucial in avoiding those pitfalls. Equally important is the need to have some type of British film authority. My party's policy is to have such an authority. We make no detailed recommendations, but we believe that there should be such a body with expertise available from all sections of the industry. That means experts and laymen who can intervene at appropriate levels— in training, co-operating with television and, not least, working with the unions. My party believes that the unions would have representatives on the authority. In this Bill, as always, there is not even a hint of this type of body.
All these matters add up to one point: how seriously do the Government take the British film industry? That question must be asked, and the answer is clear in the Bill and in the Minister's speech: not very seriously. My hon. Friend the Member for Dagenham properly compared the British film industry with the film industry in other countries. I shall compare our industry with those of two of our partners in the European Economic Community. Recently, I read an article by Anthony Smith who, I think we all agree, is the distinguished director of the British Film Institute. He said:
Re-deploying the Eady fund and supplementing it with television and video money would be an enormous boost and would cost the government nothing. But it would have to be administered not under the 'automatic' formulae of trade officials but in the light of deliberate artistic choices. That is what is done in Germany which has re-built its film industry into one of the most admired in the world during the past 10 years.
I think we would all concur with that view of Germany's film industry.
The French set up a high-powered commission which produced the Bredin report, the most important commentary in 50 years on any country's film industry. Some of that report's recommendations were expensive—in contrast to what we heard from the Government—but they have been implemented and, I understand, are already paying for themselves both financially and in artistic merit.
The Government do not even begin to think in such terms. In spite of having such an array of talent. we may be thought of only as a country that produces the "Carry On" films—
I agree. They are enjoyed by some people. I hope that the Minister agrees that our reputation should not depend on those films. It is a startling fact that a country's reputation depends, to some extent— I would not exaggerate it— on films. Those of us interested in films applaud that fact. This country, with its well-known films—I shall not repeat them—made in the past four or five years, demonstrates that. The National Film Finance Corporation has assisted in the production of more than just the usual films that are well known. The House must be reminded that an array of magnificent films—"Babylon" and "The Europeans" come to mind—has been made, and such films would not have seen the light of day had it not been for the NFFC's support.
The British Film and Television Producers Association appears to be enthusiastic about the Bill; I hope that I am not misrepresenting it. But even it says that the new body, which it calls the new FFC—that may be a Freudian slip, for we are, are we not, talking about a company—must be paid to retain independence so that it is not dominated entirely by the commercial interests involved. I could hardly expect it from this of all Governments, but I believe that, having regard to the nature of the British film industry, provision should have been made in this Bill for a nationalised sector of the industry. If the Government accept—they can hardly deny it—that publicly financed films have had some outstanding successes, they could demonstrate their faith by making finance and other resources available for a nationalised sector.
The Government profess to believe in competition—we hear that every day in the House—but I suspect that they are afraid of the talent that would jump at the chance to work in a publicly financed film sector. I am not talking about a vast sum of money. I am talking about a few million pounds. I believe that we have been given incorrect figures. One of my hon. Friends spoke of £1·5 million, but that is for a second-level film, if I can still describe it that way. I am pleased to see two Conservative Members nodding in agreement, but that is the measure of financial assistance that we request.
With the increasing tendency—I am talking about the public sector—towards cartels, monopolies, semi-cartels and duopolies in the economic terms that have been described today, some of us believe strongly that to have an independent nationalised sector is more important than ever. I hope that even this Government will not dismiss that suggestion completely.
When talking about independence, I genuinely seek some information. I was surprised that the Minister refused to give way on this point. The point involves clause 4(3) which states:
The Secretary of State may appoint a person to make recommendations and provide other services in connection with the discharge by the Secretary of State of his functions under subsection (1)(b).
Why does it refer only to subsection (1)(b)? If the Secretary of State is to appoint a person to make recommendations and provide other services, which is what the subsection provides, why does it not also apply to subsection (1)(a), or have I misunderstood something? Under the Bill financial assistance will be granted to any British company or person, but if I understand clause 4(3) correctly the person who may be appointed will deal only with subsection (1)(b). I find that puzzling, and if the Minister could deal with the point when he replies I should be grateful.
Whatever failings the present financing and structure of the British film industry has, it cannot be denied that there have been some outstanding successes. In my view, and that of my hon. Friends, that success could be extended by an increase in public financing and public accountability. By "success" I mean producing films of artistic merit which can also pay for themselves. I sometimes believe that Conservative Members think that the Opposition regard profit as a dirty word. We do not. We believe in a mixed economy. There is no reason why films should not make money. If that does nothing else, it provides investment for better films in the future. We have had proof of that in the past two or three years. The fact that artistic films can also make money has been proved many times in recent years.
We should, as a nation, be proud of the British talent for film making. We are second to none. Indeed, our people in the industry are presently setting the pace internationally. That talent needs to be nurtured and encouraged. Instead of that, today we are being presented with a Bill that is unimaginative, negative and lacking in justifiable pride. If it becomes law in its present form, I fear for the future of what should be a great industry.
I have listened carefully to the hon. Member for Easington (Mr. Dormand). I sympathise with much of his diagnosis, although the cures that he offered would not be my cures. A few minutes ago I held my breath for a moment when he referred to the "Carry On" films, remembering that I once made a fleeting appearance in a film called "Carry on Emmanuelle"—with my clothes on, I hasten to add—but he did not refer to it.
I was playing the part of a newscaster behind the television screen, so I was protected.
It is an interesting debate. Hon. Members have spoken seriously and given their diagnosis and potential cures. I wonder whether I might be allowed to approach the subject from a slightly different dimension. Before I do that, I should perhaps declare my interest in these matters as a consultant to the British Videogram Association and as a director of Airtime Publicity (Newsflash) Ltd., neither of which has, in fact, consulted me about the Bill, so I am free to speak entirely on my own and give my own views. I have, however, had a little experience generally within the industry and in television and radio.
I feel that we have arrived at the point that we have reached today because unfortunately many, many years ago the British film had to become involved, and have some sort of relationship, with Government. Since the time of the buccaneer who founded the nickelodeon at the turn of the century, and since those lovely 1930s-style Odeons were built and were making a great deal of money, the British industry has been in a state of almost permanent financial crisis.
The various interests involved—be they the massive, gaudy musicals and entertainments, through to the cultural and artistic low-budget side of the industry and the main feature which is not the huge expensive Hollywood extravaganza—have all looked for help wherever they could find it.
It is not unnatural that we are receiving in our post today communications from interested parties who see, as their first line of support, Government—taxpayers'—money. They seem to be saying that if that does not work, "Let us make the viewer pay. After all, he paid the Eady levy through the cinema, and that was no bad idea." The man or woman who went to the cinema and enjoyed seeing films contributed to the making of future films, thus perpetuating the art, but there were snags. As the matter developed, the Eady money did not go into the new production. It did not end up in the right pocket so to do. The audience therefore deserted the cinema. Now most of them, sadly in many people's opinion, sit at home and watch the feature film on television.
There is a justification for making the viewer pay. It is not a tax. It would be a contribution, albeit not entirely voluntary, by the film fan or buff to the future production of British films, if it could be organised in such a way. Do we want to give support through the taxpayer's money or the film buff's money to that sort of venture? Why should it not be purely commercial? Why should not commercial firms do what the hon. Member for Easington said so optimistically and idealistically, and make films which can pay for themselves and which have artistic merit? I hope that I quote him almost exactly.
The tragedy is that only a limited number of films can pay for themselves. One hon. Member spoke of one film in 10 making a profit. To be sure, the odd film that makes money makes a great deal of money, but most of the people to whom I talk suggest that the figure is more like one film in 20. A feature film, which is what we are talking about, is special. It is not to be confused with a television feature film. Any commercial undertaking in the business of making a feature film is probably looking to invest in each film that it makes a modest £1 million to £2 million; if it is to make the 20 to make the one that makes money, a vast sum is required. The company will then need much more than that.
When I was on the Select Committee which last Session investigated private and public funding of the arts, we looked deeply into this subject, as the Under-Secretary will remember. I remember a frisson going down my spine when I had a pleasant conversation one afternoon with the gentleman in Paris who is in charge of giving money to French productions. The thing that he said that produced that frisson was that every film that needed any support had to achieve his sanction. That is why I do not want a British films authority. That is why the Select Committee, in its report, looked at the present state of film quangos and other bodies in this country, regarded it as a muddle and suggested that it should be considerably simplified. The main thrust of its suggestion was that there should be a revamped NFFC.
We went further, as some hon. Members have said. We said that in 1984 one cannot consider the feature film made for the cinema—or television, but it is really made for the cinema in that special way—unless one also takes into account what is happening in television—in broadcasting, satellite and cable. That is why some of us are still pressing that some form of unified ministerial control over the arts and communications should eventually come. I do not want a "Ministry of Culture" because that is most frightening. However, we are asking the Minister and the Secretary of State almost to achieve the impossible in the Bill because their responsibility is for film, and they do not—and presumably cannot—take much regard of what is happening in television. I believe that one cannot begin to fund the industry properly until one does that.
I think that I have pointed the way to what I feel needs support in British film production—the medium-budget film. Some of us are old enough to remember the Ealing films such as "Whisky Galore" made about 30 years ago. Such British pictures reflect our society, good or bad, and do something for us abroad. However, they need serious funding. Because the Government have not got their act together on a film and television policy unifying the two, of necessity I come down to the practical. I sincerely hope that in Committee more thought will be given to exacting a contribution like the Eady levy from the television viewer of feature films, to support such pictures. It may be too late; it may be impossible, but I believe that the impossible is sometimes possible.
Presumably we shall discuss the details of the Bill for many weeks to come, but at the moment it reminds me of a piece of sticking plaster over a wound—there is a wound in the British film-producing industry—and unfortunately the wound needs more than sticking plaster. It needs a touch of antibiotics or something else. Those antibiotics can come either from funding from a source such as I have described or from tax relief—from restoration of capital allowances or some other tax relief. I am not often given to special financial pleading because it is not my nature, but in this case the high risks involved in making and producing good feature films for any investor are such as to warrant more attention from the Chancellor.
Like my hon. Friend the Member for Easington (Mr. Dormand), I have no experience of the film industry. I suppose that I must be classified as a punter. My enthusiasm began on Saturday mornings at the Odeon, which shows my age. However, I am a grateful punter, especially of late, because of the achievements of the British film industry. I shall make a short contribution to the debate because the main points of opposition have been made already, especially in the eloquent speech by my hon. Friend the Member for Dagenham (Mr. Gould) and in speeches by other hon. Members on both sides of the House. Such a debate enhances the House's reputation. I hope that the Minister's response will match the contributions that have been made.
Some of my hon. Friends think that I am a bit of a softy on such occasions, but I should like to absolve the Minister of State from any blame that one attaches to the Bill. The Bill is a slap in the face to the British film industry, but that is not due to the Minister, nor to the Parliamentary Under-Secretary. The reason is that the Bill has the imprint of one of the Minister's predecessors, a certain Mr. lain Sproat. The good people of Aberdeen may well have displaced him at the general election, but his narrow and doctrinaire approach to the British film industry lives on in the White Paper and the Bill. I hope that that will help the Treasury Bench to get off the hook in Committee.
The Minister of State listed his favourite films. We are pleased that he saw the films of which he spoke. Other Ministers have also said great things about the film industry. When introducing the White Paper, one spoke of a film renaissance, and in doing so he listed his favourite films. As on so many other occasions, today we heard about "Gandhi", "Chariots of Fire", "Cal" and 'Another Country". We also heard about David Puttnam, Bill Forsyth and Sir Richard Attenborough. Those names come easily off the tongue, but it is strange that the Government have not recognised what those people are saying. If they listened to what is said about the Bill by the very people who produced those films and whose expertise they are so ready to acclaim, they would scrap it now. Therefore, we must consider it in a new light in Committee. The Bill can be seen only as a backward step by the people I mentioned and others in the industry.
The removal of the Eady levy and the abolition of the NFFC will not revitalise the industry. Anyone who knows anything about the industry knows that only too well. The Minister of State said that he has been in his job for only a few weeks, and it is clear that he has not spoken to the people I mentioned, so perhaps he has not yet grasped the point.
We accept that the Eady levy may be outmoded and oudated, but the Government have not put anything in its place. The body to replace the NFFC could be a good idea. We are not doctrinaire, but surely the measure is inadequate and biased in favour of EMI and Rank, which already have too much influence on the industry. The £1·5 million put in by the Government and £1 million put in by those two bodies are not enough. That is small fry when one considers the needs of the industry. As my hon. Friend the Member for Dagenham said, the Government, who take pride in that paltry financial assistance, must recognise that it represents the cost of only one low-budget film. The industry believes that six to 10 main feature films and up to six short films should be produced annually, so the sum is clearly inadequate.
I should like to make one point that has not been mentioned so far. One may say that it is not in the Bill as such, but it is clearly associated with it. If the Minister is as worried as he says about declining cinema audiences, scrapping the Eady levy will not solve the problem. I spoke to several small cinema owners by telephone today and they are adamant that abolition of the levy will not be reflected in lower prices to the punter. If the Minister wishes the industry to pick up, especially in the suburbs of our cities and towns, he must act on the recommendation of the Monopolies and Mergers Commission report, Cmnd. 8858. We hear a great deal about free competition from the Conservatives, but the commission found that there was less than free competition in the film distribution industry, that Rank and EMI dominated the market and that many smaller enterprises were unsure what films they would be showing the next week. Four cinemas in Manchester today cannot tell the public what film they will be showing next Friday, despite many phone calls to the two major distributors. That is a disgrace and it leads to a decline in the number of people, mostly working-class people, who wish to go to the cinema. The Under-Secretary of State, the hon. Member for Rossendale and Darwen (Mr. Trippier), should take this on board, as many of the punters involved are his constituents too.
Greater Manchester has more independent cinemas than any other city outside London, but their prospects for survival are bleak. The vast population of Manchester itself has just two major cinemas with a maximum capacity of 3,600. One is Rank; the other is EMI. The Under-Secretary of State with responsibility for small industries knows that many of the independent cinema owners are strong supporters of his party. They are well intentioned in other respects but misguided in terms of political allegiance. Those Conservative supporters are being held up due to these monopolistic practices.
My hon. Friend the Member for Easington spoke of monopoly and duopoly. He missed out oligopoly, but it is rife in this industry and the small cinema owner is losing out. I take the north-west as an example. In Oldham there is no cinema at all any more. In Bolton, one is still open, but the Rank cinema has closed. Rank also intends to close its cinema in Blackpool, of all places, and in Bury and Sale they have already closed. If Rank and EMI are closing their cinemas but at the same time depriving the independent cinemas of the films that Rank and EMI show in the plusher areas, there is a great deal to be said for implementing the Monopolies and Mergers Commission recommendation straight away. The Palace cinema in Stalybridge is the plushest, most comfortable cinema that I have ever visited. The proprietor has done a great deal, against enormous odds, to make the cinema attractive, but he cannot get the films to bring in the crowds.
If the Minister is really passionate about putting bums on seats, he should not sit on his own bottom too long. The Government have been sitting on the Monopolies and Mergers Commission report for 18 months. It is time that they pronounced. I hope that that will be done when the Minister winds up today's debate. As I have said, I do not believe that the Minister who will take the Bill into Committee is as prejudiced as his predecessors. I hope, therefore, that, with the help of Conservative Members who have spoken so well in today's debate, the Bill will be amended and will emerge a far better Bill. If the Minister achieves that, he will deserve congratulations, and they will certainly be forthcoming from the film industry.
I begin by declaring an interest. Hope springs eternal and I remain a shareholder of Salisbury Cablevision. The cable industry will undoubtedly flourish in the future, but it would help if Members of Parliament were more to the forefront in encouraging it and if the Treasury were rather more co-operative.
I should also declare another interest. No doubt hon. Members saw Peter Shaffer's play "Amadeus" in London. I was delighted to hear that it was to become a major film, although unfortunately a United States film. Nevertheless, wishing to turn to the United Kingdom for the greatest talent, the Americans chose to record much of the music of Mozart and Salieri in Britain, including me and my choir, the Academy of St. Martin in the Fields. I am thus perhaps the only Member with such a direct interest, apart from the role of my hon. Friend the Member for Gravesham (Mr. Brinton) in "Carry on Emmanuelle".
Having listened to the views of the British Film and Television Producers Association and the Association of Independent Producers, I have learnt a great deal. I was surprised not to receive any information from the unions involved and I regret that. Another view that has been lacking in today's debate, with a few honourable exceptions, has been the consumer view of the Bill. As the Minister said, we are losing an average of one cinema per week due to closures. The hon. Member for Easington (Mr. Dormand) referred to the importance of entertainment in the cinema, and I entirely agree. I enjoy entertainment and drama in the cinema perhaps more than the intellectual or the avant garde, although that, too, has its place. My hon. Friend the Member for Gravesham said that people had deserted the cinemas for the comfort of their home and, regrettably, that is all too true. The hon. Member for Stalybridge and Hyde (Mr. Pendry) said that cinemas had become few and far between. Even in the sun belt of the south of England it is now a very long way from one cinema to the next.
When Lord Gowrie opened the 28th London film festival last week he said:
For film makers in Britain and those who watch their work, this period is a remarkable time of revival—of new kinds of film-making and artistic exploration, and of the discovery of a vast reservoir of new talent.
An enormous range of film work is going on in this country or is being undertaken by British film directors…In fact, the revival of British film-making must be one of the most important cultural projects in the world today. In the current year no fewer than 75 new British feature films will be completed. Furthermore, this great upsurge of work is going on alongside the steady flow of American films being made in British studios and by British technicians.
We welcome that development. He also drew attention to British Film Year, a joint project to begin in March next year involving the Government and a large number of
institutions, and suggested that that project could recreate the cinema experience for large numbers of people. I only hope that that is true.
The proposals in the White Paper were based on the assumption that the industry was booming. It said that in 1983
The signs of a renaissance were clear".
I believe that that is misleading and wrong. The White Paper also said that
production levels were being sustained
and noted an increase in production of seven films between 1982 and 1983, with a total of 34, but that still means that production is close to its lowest level ever. The White Paper continued:
Domestically … the cinema checked its previously steady downward trend
but admissions dropped by a further 30 to 35 per cent. in the first part of 1984. The White Paper also said:
in the all-important North-American market there was a much greater acceptance of British films".
In my view, however, two Oscar-winning films do not demonstrate a significantly higher penetration of the United States market. British films have won Oscars before, but very few British films have achieved national distribution in the United States. However, there has been a tremendous growth in sales of pop videos in the United States. I pay tribute to the pop industry, and to the pop video industry in particular, for its contribution to our export earnings. There is tremendous potential in the production and direction of such videos, in which we are taking the initiative. They are very popular throughout the English-speaking world, and notably in the United States.
In the United Kingdom, video has achieved 30 per cent. penetration in households with colour televisions, but that has not helped the British production industry. The lion's share of that market continues to go to American studios and to the video pirates. Video piracy costs our industry about £100 million a year. Like several other hon. Members who have spoken today, I feel that there is a strong case for a blank video tape levy of as much as £1 per tape. That would raise some £25 million a year which would be returned into the right pockets in the industry.
The White Paper succintly listed the reasons for significant market distortions in the industry. It pointed out that most overseas films already receive substantial Government support and that that means that a British film is handicapped from the outset. For instance, investment allowances in Australia have enabled the Australian film industry to make inroads into world markets on a scale of which we can only dream. The White Paper also pointed out that the cinema distribution system in the United Kingdom is dominated by the major American studios. That does not help us at all.
My hon. Friends mentioned the duopoly of United Kingdom broadcast television, the existence of which means that the prices paid for feature films shown on television do not reflect the enormous size of the audiences. The White Paper points out that the switch from the cinema to the home as the principal place for watching films means that, with the theft of copyright which naturally flows from that switch, there is no significant financial return for the producers. We are also told that home video, cable and direct broadcasting by satellite will provide a number of exciting new opportunities.
I am sure that that is true. However, the video business is levelling out at the moment, with little sign of an upward trend, and some distributors and retailers are currently facing bankruptcy. The development of cable and DBS is also passing through a very difficult phase. The reduction of capital allowances only months after the Government had agreed that the cost of the installation of the cable should be eligible for initial allowances has, in the absence of any alternative support, cast considerable doubt over the development of cable systems as an additional source of revenue for the film industry.
None of those markets, either alone or together, will be able for the foreseeable future to generate revenues sufficiently large to justify the production of feature films for those markets alone. There are now so many independent producers setting up in this country that they are finding it increasingly difficult to raise the necessary money. We must start making blockbuster films in this country, and we must be able to afford to make such films. I wish that the City would recognise the fact that our film industry contains unbeatable talent and would also recognise the comparative lack of risk. Putting money into films is not a great gamble. The risks are largely calculable. The industry undoubtedly feels that the Bill pulls the Eady rug from under its feet and that the floorboards underneath are rotten.
My hon. Friend believes that we should make blockbuster films, by which I presume him to mean high-budget extravaganzas. Would he not agree with me, on reflection, that such films receive international distribution right away, and do not require Government or Eady support?
They may not need such support in the first place, but what I am criticising is the fact that the City is unwilling to provide money and that the City, as well as the Government, has been deterred from supporting the film industry. That attitude needs to be changed. The industry feels that the investment allowances are vital, and it now feels very depressed.
Our film industry possesses unbeatable resources and assets, from unrivalled acting talent to unbeatable technology. The difference between the large screen and the television set remains enormous. I have already referred to the forthcoming film "Amadeus". I have been lucky enough to see a preview of the film. The technology, the acting and the music are stunning, and the film must be seen on a large screen to be appreciated.
Many American films such as "Star Wars", "Indiana Jones and the Temple of Doom", the James Bond films and "Superman" were all made in Britain. Most people do not realise that. I have referred to the fact that video penetration in this country has been rapid and deep. However, it is now slowing down. Films have an enormous export potential, whether they are destined for television showing or the big screen, and that potential is currently under-valued. I believe that it is shared by our provincial repertory companies and theatres. Some of our provincial theatres are as good as the theatres in any capital city on the Continent.
We should not forget that there are some good American productions. During Committee stage of the Cable and Broadcasting Bill there was much discussion of the possibility of the import of cheap American rubbish, and attempts were made to define what we meant by rubbish. We should remember that there is an enormous demand for high quality British films and videos in America, and that our export potential is enormous.
There is a big market for films in this country, but the market has shifted from the cinema to the home. Artistically, the home is not the best place to watch a film. When people watch films on television instead of in the cinema, comfort, convenience and cost have won over the technological impact of the big screen and the demands of the art form. That is regrettable.
The Minister tells us that a cinema closes nearly every week. In any year, therefore, many constituencies must be affected. The work done by the Cinema Theatre Association and by such campaigners as Mr. Alan Richardson should not go unnoticed. They are drawing public attention to the decline in the number of cinemas.
Those who campaign for the retention of cinemas need to decide whether it is the historic buildings that they want to save, or cinema as a form of art and entertainment. If they wish to save the buildings, they must concentrate their efforts on the planners and the elected district councillors. To save the cinema as an art form is a more complicated business, because they must persuade young people, families and tourists to make more use of our cinemas.
Other hon. Members have shared with us their reminiscences. I remember the day when my father took me to see "Twenty Thousand Leagues under the Sea". The impact of that film on a child of eight was enormous. However, in the past year alone there has been a considerable drop in cinema attendances. This afternoon I spoke to Rank Leisure Services. I was told that although Rank is supporting the £850,000 a year scheme to finance new film production, it has faced a considerable drop in attendances this year. Rank does not want to close cinemas. Indeed, it is building new ones. I believe that there is one in Bristol. It also has a responsibility to its shareholders. It could do better in terms of financing and financial returns in commercial activities other than the provision of cinemas. Rank may plan to spend the proceeds of the sale of the Salisbury Odeon to finance its new initiative. It would be no comfort to my constituents to lose their cinema.
It has also been suggested that cinemas which are under threat should be taken over by district councils. I do not recommend that. It is not the role of a council to run a cinema, and others can do it better. In my constituency, the district council has already taken over one of Rank's cinemas and turned it into a city hall. Frequently there are arts societies and centres, such as the St. Edmunds arts centre in Salisbury, which has projection facilities, but also suffers from under-financing.
Does the hon. Gentleman agree that a tragic result of the closure of cinemas is that in rural areas the only provision of cinema-type entertainment is by the district council, which either sets up and funds a local cinema group or puts on local shows and shows of historic interest?
I agree with the hon. Gentleman. The district council in my constituency supports an arts centre and took over the old Odeon cinema and turned it into a city hall.
It is often said that cinemas are unattractive, tatty and cold, and that performances are spoilt by interruptions from yobs and the activities of vandals. That may be true, but how should we respond to it? Should provincial prices be raised to west end levels, or should cinemas be turned into clubs? I do not like that idea, because old films which one can see on television or hire from a video shop would be shown in such clubs.
The problem facing provincial cinemas is that of marketing their product and changing social attitudes. West end theatres and cinemas have learned much about that recently. If one considers the marketing of some of our theatre musicals, such as "Starlight Express", which has been highly successful and innovative, one sees what can be done to market films in the provinces. I hope that the success of "Starlight Express" will soon be repeated in the United States of America. Last month I had the pleasure of travelling on a train called "Starlight Express" from Portland to San Francisco. I warned the company to await the musical and see its profits increase as a result.
All hon. Members want the British film industry to succeed. That is the spirit of our debate. It is clear that more people in the provinces are prepared to sign a petition to save a local cinema than to support it by taking their families to see films at it. No Government can solve those problems, nor can local councils. We are dealing with social attitudes, and the importance that the public attaches to the film industry. I sincerely hope that the Bill will help and not hinder the renaissance of the British film industry.
I listened with interest to the speech of the hon. Member for Salisbury (Mr. Key). I regret that I cannot give a list of declared interests to match his, or advertise a current production as he did so excellently. He has convinced me that I must see "Amadeus" when it comes on general release. However, I hope to convince the hon. Gentleman and other hon. Members that the Government have got it wrong. It is not the first time that they have got it wrong and their Tory Back Benchers have got it right.
I had the privilege of serving in Committee on the Cable and Broadcasting Bill. Hon. Members who served on it will know that Back Benchers got it right, and that the Home Office Minister did not always understand what they said. However, we managed to change the Bill a little and at the end of the day we got it right. I hope that in Committee on this Bill the same intelligent approach will adopted by Back Benchers, that Ministers will remain silent on occasion, listen to those who know about the industry and ignore their civil servants—that is essential if we are to achieve sensible legislation from this Bill—and that eventually we shall get it right.
No hon. Member wants to harm the British film industry—[Interruption.] At least those who understand it do not want to harm it. The Government Front Bench have been badly briefed. I do not blame the Minister. He has had only six weeks' experience, and many other pressing matters face him, such as insolvency, takeover bids in Nottingham Manufacturing and Johnson's. Therefore, the Minister has not had long to consider the matter in detail. That is a tragedy. We had a good chance when the White Paper was published.
I remind the hon. Member for Salisbury what the Association of Cinematograph, Television and Allied Technicians said about the removal of the Eady levy. No one objects to its removal, because it has outlived its purpose. It was introduced at a time when we needed to finance films, and it was a good way to do it. Cinema audiences were large enough to sustain a realistic levy. However, times have changed and cinema audiences have decreased alarmingly. That is a tragedy for those who represent constituencies, such as mine, which lie between large cities. Unless we have a Rank or EMI cinema, we get behind in showing modern films. Indeed, we do not get modern films unless there is an EMI or Rank cinema nearby.
The cable industry is beginning to get off the ground. I believe in cable. Cable is bigger than entertainment. The Government sought to have cable led by entertainment. That was a big mistake, as I told them time and again in Committee. However, the Home Office did not listen. The Home Office was responsible for an industry Bill, for which the Department of Trade and Industry should have been responsible. The entertainment industry must live with that kind of mistake under this Government. The Government are an entertainment in themselves when one considers how they deal with these matters.
The Minister should listen to all Back Benchers. Some of us understand the industry and are prepared to help it. Unfortunately, such Members are not in the Government. We are prepared to educate and assist the Minister if only he will listen. We want an industry that can take its place in the world, support itself and produce the quality product that we know it can produce.
The United Kingdom has some of the finest producers and technicians in the world. We have the facilities and the capabilities to produce quality films. All the industry needs is the financial stability to produce them.
The majority of our cinemas show American-based films because they are controlled by two companies: EMI and Rank. Obviously, they will show those films which will make the most money for them. They are bound to be subject to influences and pressures, especially from the American market. That has been going on year after year. It is obvious if one looks at cinema placards. It is difficult to get financial backing for a film if there is no distribution point.
We do not have the breakthrough in the American cinema market that we should like. Anyone will say that, but one has only to go to Washington or Detroit to see what is on in the American cinema. Only spectacular English films of Oscar-winning potential, such as "Chariots of Fire", break in. We have to make our own films and they must be supported financially. It is no use asking the City for money as it does not speculate on the film industry. That is a tragedy. The American financial markets are prepared to back their industry, because they realise that if good films are made and sold they are money earners. The Americans, the Japanese, the French and everyone else knows that, but somehow the City of London has not realised it. We have to live with that.
With regard to the development of cable, I have said repeatedly that we have the facilities to produce the programmes. I believe that cable will come, just as I am sure that direct broadcasting by satellite will come. They will compete with each other, but they will both come. In that event, we shall need the programmes to feed those sources of entertainment. Where will the programmes come from? If we kill off our industry, we will have to buy from America. I suggest that the next time a Minister travels in Europe, he switches on to channel 8, which is in English. It is a satellite station putting out programmes in English—but watch for the American accents. That is the tragedy.
Our cable will suffer the same fate if, through this Bill, we kill off our ability to make programmes. That was one of our major fears in Committee on the Cable and Broadcasting Bill. I plead with the Government to think again. This is not the last time that I shall make that plea. If I am a member of the Committee which considers this Bill, I shall say it again and again. I hope that many Conservative members of the Committee will have the same courage as they showed on the Cable and Broadcasting Bill. Perhaps then we shall get somewhere. It is possible to restructure film financing in Britain without it costing a vast amount of money. That would enable us to compete.
In an intervention during the speech of my hon. Friend the Member for Dagenham (Mr. Gould), I said that we produced about 34 major films in 1983 whereas the Germans produced 70 and the French produced 131. I am not suggesting that quantity equals quality, but drawing attention to the funding that enables such an output. Why the difference? The answer is simple. The rest of the world appreciates that there should be tax allowances for those investing in the production of films. In 1984 the Government took away such allowances here, automatically putting us one down and making it that much more difficult to acquire finance. Why? Could it be that the Government simply do not understand?
Right hon. and hon. Members on both sides of the House have made some sensible suggestions about funding, such as putting a small tax of 14p or £1 on blank tapes. Anything that can be done to inconvenience pirates who are messing about with the video industry has my wholehearted support. Piracy is theft. There is no other way in which to describe it. It has been suggested that a tax of 14p would raise £10 million a year and that a tax of £1 would raise about £35 million a year. if that money were put into a newly formed National Film Finance Corporation, it would have a substantial annual base budget. If there were added to it a tax on films shown on television, the corporation would have several million pounds more. It has been suggested that the tax should be 0·25p per head of population and that that might increase the licence fee by 30p a year. I am sure that nobody would object to 30p a year. If the Government, who keep telling us that they are keen about the United Kingdom getting off the floor and beginning to invest, put just a few pounds in, perhaps by knocking the odd £1 million off Trident—only £9 billion is involved there—that would help. It would also help if the Government underwrote the structure of the National Film and Television School. I am not asking the Government for much; I am merely showing where they can raise money. However, I beg them not to set up a body that is dominated by the two greatest distributors in the country. That would do nothing for the financing of films.
If I were a director of Rank or EMI and a member of the National Film Finance Corporation and I had a little project of my own coming up, I know that I should instinctively be inclined to support my idea. The body is supposed to support producers who create the new works. I am always suspicious of vested interests, no matter how well intentioned they might be. We are supposed to be establishing a properly funded financing corporation to enable independent producers, people with good ideas and talents, to get finance. There are plenty of such people in Britain, but they desperately need the finance if we are to produce the type of programmes that Britain is capable of producing and which are of such great export potential. A properly funded film industry is an investment for the future. It is regrettable that the Government seem not to understand the real meaning of the word "investment".
We are dealing not with an industrial problem or a City-type problem, but with the unique creation of artistic programmes which demand a slightly different approach. I hope that the Government will take the Bill away and that, when they bring it to Committee, they will have ensured that it reflects many of the views that are held on both sides of the House. We have a chance to fund the British film industry properly, and we should be fools not to take it.
Before considering films I should like to refer to the problems in the theatre and on the stage.
The theatre is an important part of our national life. We could claim that we lead the world in the theatre and on the stage. We are justly proud of that. The theatre is supported by the state through the Arts Council. The Theatres Trust, of which I am a member and which was founded by Act of Parliament in 1976, is a small body without much money that sustains the live theatre and saves it from decay and decline. It operates throughout Great Britain. The only part of the United Kingdom that it does not touch is Northern Ireland.
I speak as deputy chairman of the Theatres Trust. I am also a chairman of a theatre company. What has all this to do with the film industry and the Bill? I note your nodding eagerly, Mr. Deputy Speaker, as you might think that I shall be out of order. The cinema, the television screen and the live stage are all of the same family and should be recognised as such.
Live theatre is thriving not only in the west end of London but in the provinces. Theatrical success often results from the presence in the cast of actors and actresses made famous in the cinema and on television screens. Parliament and the Government have a cultural and commercial duty to secure the future of all theatre productions, including live stage shows, the cinema and television.
The Bill puts forward a new plan for the development of the cinema in the light of recent changes. In that respect it will be a help, and today's debate has shown that there is interest on both sides of the House in sustaining and securing the future of the cinema and the film industry. I hope that Ministers recognise that hon. Members on both sides of the House have shown that they do not believe that the Bill goes far enough. The White Paper of some months ago recognised the changes in the film industry, but the Bill fails to do so. The White Paper properly recognised the changed economic conditions, the reduction in audiences and the decline of many cinemas. It spoke of a massive decline in the exhibition of films during the past 20 years. However, the Bill does not live up to the hopes that were expressed in that excellent White Paper.
The White Paper also looks ahead. It does not simply moan about the decline of the cinema, but comments on the change in the way in which we see films today. Films are still made in great numbers. In 1983, more than 1,500 films were exhibited on the ITV and BBC channels, so although they are not being seen to a great extent in cinemas, they still attract enormous audiences. In 1983, there were 66 million cinema admissions, whereas 10 years ago the figure was about 3,000 million. That enormous difference was reflected in the White Paper, but it is not properly reflected in the Bill's provisions for maintaining the film industry.
The White Paper looks ahead to the new market for films. As many hon. Members have said, the market will become bigger and better, although not so much in the cinema. I am sorry that Britain does not have good small cinemas such as one finds on the continent, where going to the cinema is still part of weekly entertainment. It is a pleasure to visit small, intimate cinemas in Rome or Paris, because they are clean and show good films. The same is not true of British cinemas.
The White Paper talks enthusiastically about the great opportunities for the cinema industry and of the opportunity presented by video. There will be many opportunities in cable television and in DBS, and the Government have already provided one DBS channel for films alone.
I said earlier that live theatre was of the same family as television and the cinema. Paragraph 2.11 of the White Paper considers the relationship between films and television, and makes this telling comment:
It may well be that this interface of films and television is where the key to much of the film production industry's future is to be found, although the importance of theatrical exhibition in the cinema will remain. For it is in the cinema that a film establishes its reputation and its value to the small screen.
Many films are made for television, but when a film has achieved fame on the big screen, the television companies clamour to buy it within three years and broadcast it. We have seen "Gandhi" and "Chariots of Fire" not only in the cinema but at home, because their reputations were established in the cinema.
The Bill seeks to re-establish the British film industry against the changed climate of audience. It must be re-established on a sound commercial footing, but the Bill fails to do that completely. The Government are not offering much money, but I do not suggest that they should. It is difficult to get anything from the Government these days because we are living on a restrained budget, to say the least. However, there are other ways to tackle the problem. In 1983, the film industry earned about £93 million in exports, which was a great achievement. However, the giant television industry, whose turnover is three times that of the cinema, earned only £8 million in exports. I take my hat off to the struggling film industry.
In 1983, there were 66 million cinema admissions and 300 million film viewings on television. We need new measures to respond to the changed market conditions. Television shows films to a vastly bigger audience, but it does not pay a fair price for those films. The BBC and ITV companies have great power over cinema production, which enables them to buy films on the cheap and to show them to large audiences who wish to see the product of the British film industry as well as that of other countries. Television gets the benefit of the work and art of the British film industry for almost nothing.
Following the publication of the White Paper, some have suggested that a levy could be made on all films shown on television. A farthing—or in new penny terms, a quarter of a penny—levied on each viewer would raise about £10 million, which could be used through the Government agency to back new investment and production and sustain this side of British theatre. As many hon. Members said, we must also examine the video cassette revolution in film viewing. The cost of viewing a film in one's home is about £1·50 for the rental of the tape. That is extremely cheap, and the entire family can watch the film, provided that it is suitable. There is surely merit in the idea that a levy be applied to the video cassette that we watch in the home. That would hurt no one. It is suggested that the levy should be of the order of £1 per cassette bought, and an average cassette costs £40. This could yield as much as £25 million to be put into the kitty to help the film industry's investment.
We should also consider a levy on blank cassettes, because we are only too well aware of the black market in home recording through dual use of recording machines to make copies of rented films. Such levies could produce as much as £50 million or £60 million a year with no charge to the Government or the Chancellor or strain on the Treasury.
That sum would be no more than the Australian film industry is receiving today—and what good films the Australians are beginning to produce. That is becoming notable. I used to want to see French or Italian films, but now I tend to make a point of seeing Australian films because they are so good. Whether that is because they are properly financed is another matter. All I know is that Australian films are well acted and well produced.
We are grateful for what the Government have proposed in the Bill, but it is not enough. If they are wise, they will take on board the great amount of advice they have received from many hon. Members. The aria they received from my hon. Friend the Member for Salisbury (Mr. Key) was well worth hearing, and I was pleased that he was able to declare such a delightful interest.
I am not suggesting that there should be a large Government subsidy, rather that we should obtain a fair return, by means of a levy, for the important cinema industry which is part of our great national heritage—the theatre as a whole.
This is a fairly miserable wake which does not even have the advantage of booze. However, it is an important occasion. Many years ago it became clear to the Government of this country that we are divided from the Americans by the same language and that the kind of economic imperialism at which they are so good was rapidly overtaking our weak, although imaginative, cinema industry. The Eady levy was therefore created. Harold Wilson was extremely intelligent. He had difficulty with the Treasury. As well as wisely suggesting this way out of the difficulty, he named the levy after the Treasury official concerned, and that almost guaranteed that the measure went through the House fairly effectively.
It may show my terrible naivety, but I had hoped that the Government would have taken this occasion to look at the dire situation now facing anyone working in this industry. I hoped that they would have said, "We are about as low as we can get in terms of production without ceasing to operate altogether; therefore, we shall take this opportunity to do something imaginative. We shall not fiddle around with minor changes here and there; we shall look at the whole thing and decide how to fund production in this country." The reality, which has been spelt out time and again today, is that more and more people are looking at film and tape material than ever before.
The Government are prepared to reach all sorts of deals with people about direct broadcasting by satellite or cable. When the Government's failure to insist on modern technology results in the cable companies being frightened that they will not be viable, the Government look for a means of giving the companies a small sweet to keep them in being. When there is a problem with direct broadcasting by satellite, the Government go to the ITV companies and say, "Because we want you to be involved in this, we shall give you a much longer period before your franchises come up for examination." They thereby guarantee the companies a certain amount of money.
However, when we must decide something which will determine the future of British film production for the next one or two generations, the Government run away from any sensible thought. Several hon. Members have already made points which reflect the extent of the difficulty. The Government are saying that they will wind up the NFFC and hand over its assets—not sell them—to a private company. They will have a tiny stake in that company to encourage people to invest their own money. but the determining factors in that private company will be the very people who over the years have failed to attract money for production. We need only look at the history of the British cinema and at what happened to the duopoly. I know that we are not supposed to use foreign language, but plus ca change, plus c'est le duopoly.
Whether we talk of distribution, production or exhibition, the two major companies are always involved. There is now the suggestion that we need not worry because in future a private company funded by a partnership between the Government and private industry will provide all the money for production. That has not been so in the past, and there is absolutely no guarantee that it will be so in the future.
What was so important about Eady? We could have said, "We have now reached the point where cinemas are closing at a tremendous rate. We ought to be using some money to improve the facilities available to the general public." France does, as do the most bourgeois set of shopkeepers in the world, because they know that people want to be comfortable when looking at films. Therefore, we have not helped the exhibitors.
It was claimed that the Eady levy was killing the cinema. What rubbish. It could have been used to support the exhibitor and to provide him with the money that the banks will not lend to him. It is noticeable that when the large companies sell off their cinemas they take care to ensure that written into the sale is a bar on anyone using the property as a cinema. Just as they used the bar to control what is paid for films and where they are shown, so they put the same brake on the development of the small independent exhibitor.
Equally, the measure will not help the producer. If we are serious about putting up seed money for production, we must make the sums sensible. When the Government decided to give capital allowances, my view was that, although it was a Conservative method of doing so, it was reasonably effective. Of course some people tried to get round the restrictions placed on those tax allowances. I have never known any industry in which people did not seek to bend the rules to their own advantage. However, the Government then decided to remove even that small incentive.
We have been told more than once that we should consider the business expansion scheme as a useful means of replacing some of the money. The business expansion scheme will be of little benefit to film makers who will have to raise production finance for major films. With a maximum of £40,000 allowable from each investor under the scheme, there will have to be about 200 such investments before we get anywhere near a budget. It is not even a serious attempt to replace the money that was lost through the loss of capital allowances. It is worse than that. The Government have abolished the Cinematograph Films Council, which had at least some representation from various sections of the industry.
We have been told not to worry because that council will be replaced with something based on the interim action committee. But that committee was intended to do something very different from what has been suggested today. It was meant to set up a large production fund. It was meant on its own to- generate enough activity for a production line on films. That is the only way that British interests can be safeguarded. It was a much rounder and more deeply thought out plan than anything that we have today.
We have no guarantee from the Government who will sit on the committee, what it will do, or what powers it will possess. As far as we can see, we shall have a private company with a limited production budget that will be controlled by people with a vested interest in trying to keep the best productions for themselves. Why should we assume that there will be independence of thought in deciding on scripts and encouraging independent producers? We have never seen that before. At what point shall we have a completely different approach? We shall see a specific rundown of the remaining sources of production finance.
The Government have failed disasterously in their duty. If the scheme goes ahead, within five years virtually no British productions will be available. Instead of looking for a means of offering some kind of real production incentive, the Government have run away from the basic problems. We could at this moment say that television is using more and more original material and that that ought to be British, not the moving wallpaper that we are increasingly buying from America. We could say that cable has a chance to generate new production and new ideas, not to become what it is in some countries—a continuous re-run of ancient films, hired at disgracefully low rentals from any tatty old library that happens to have been acquired by a company. We could say that direct broadcasting by satellite offers us an opportunity to show the world that we have not just the best actors and producers but modern techniques and ideas. We do not always want to do "Barchester Towers." We do not always want to make films which present the classic view of the British way of life.
It took 20 years to raise the finance for "Gandhi". I was involved in the early stages of that. I argued with the Indian Government for the money that eventually went into that film. Do not tell me that what we are supporting today will in any way do anything other than underwrite perhaps one hour of one independent production that may eventually finish up on somebody's television screen.
The Government have funked the opportunity of creating a really live British production industry—not just a film industry, but a production industry that could span television, cable and all the means of tape and film that everybody in Britain enjoys.
I want to see a tax not just on blank tape but on hardware. I see no reason at all why those who, certainly until recently, have had a flourishing industry in VCRs should not contribute towards the production end of the industry. What was to stop them? I see no reason why companies in the television industry should not take up their responsibility and stop moaning about what that would mean to their overall profits.
Above all, the Government today are asking the House of Commons to accept a tatty little arrangement. It will do nothing to produce new films. It will do nothing to keep independent producers in Britain. It will not help those people who have cut their teeth on advertising films and who need the budgets to go over to features. It will not protect the producer of short films or encourage those who are looking for finance for new television programmes. It will, yet again, hide the British industry in some dusty little corner where Rank, EMI and the other large companies have a little panel on the cupboard door which says, "Don't bother us. If we can't work with the Yanks, we are not going to bother to work with anyone."
I welcome the abolition of the Eady levy. I am sorry that my hon. Friend and neighbour the Member for Canterbury (Mr. Crouch) finds the standards of our cinema somewhat lower than those he has experienced on the continent. If, in the near future, I can invite him from his cathedral city to the seaside resort of Westgate-on-Sea, I shall be able to show him a small independent cinema, which provides an excellent service to the community in comfortable surroundings, which would not survive were the Eady levy to remain. The seat penalty price demanded by that levy has come close to putting such cinemas out of business. It is imperative that such small cinemas, never mind the big two chains, should survive. They provide an invaluable social service, both to the elderly who go there for companionship as well as for what they see on the screen, and, still, to the young, who, as I said in the debate on cable television, cannot hold hands in the back row of a video tape screening.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) intimated that had the Eady levy been made available to film producers, that would have financed film production. On that economic basis I can well understand why it took her 20 years to raise the money for "Gandhi".
I am sorry. I thought that the hon. Lady was claiming that she was instrumental in raising the money for "Gandhi". I am glad to be corrected.
In recent years the Eady levy, while having been a penalty on the exhibitor, has been of small value to the producer, and it is entirely right that it should go.
I agree with my hon. Friend the Member for Canterbury on the importance of cinema and television to the theatre. I have worked in all three and I am acutely aware of the value of big star names from the cinema and television to theatre productions. It can make the difference between a show surviving and going under.
Much of the discussion has centred on alternative funding. During the debate on cable television, I said that the major television companies made small contribution to the work of independent producers. That applies equally to television and film producers. The Independent Television Companies Association Ltd. has a purchasing cartel. When it buys in programmes made for television, or when it buys in films, it has the power virtually to dictate its own price. Any independent producer will say that that price seldom meets even the cost of production, never mind re-investment.
To be fair, the BBC—at present on its knees and asking for yet more money—exercises the same right. I am in favour of a television levy on films, but with one constraint. That levy must depend upon the ending of the craft unions' restrictive practices. I mentioned that to the hon. Member for Dagenham (Mr. Gould) who is a former colleague of mine. We both worked for Thames Television before we were elected to this place a year ago. The practices of my former colleagues in the Association of Cinematograph, Television and Allied Technicians and in the National Association of Theatrical and Kine Employees, which effectively prevent the major independent television companies from buying made-for-television films through their insistence that production should be financed only by those companies if it is done in-house, are extremely damaging to the industry. Therefore, it is not fair to take a stick with which to beat television companies unless one is also prepared to take the same stick to the craft unions in that industry. If we can end the restrictive practices and at the same time impose a levy on films shown on television, we shall be able to offer the small programme and film producers a real stimulus.
I suspect that most hon. Members have received lobbying documents through the post. I have received two: one from the Association of Independent Producers and the other from the British Film and Television Producers Association Ltd. My hon. Friend the Member for Salisbury (Mr. Key) has already quoted from it, but it says:
The development of cable and Direct Broadcast by Satellite is now highly questionable.
The British Film and Television Producers Association Ltd. and the AIP have produced two highly depressing and wildly inaccurate documents. I believe that the future for cable television at least is extremely bright. I also believe that one or two companies that may have achieved franchises without having done their sums correctly may get their fingers burnt. But behind them there are plenty of others coming through which have confidence in this new industry and are determined to make it work and will do so. It will be a voracious industry that will demand an enormous number of products to put on its screens day after day and night after night. As we said during the debate on the Cable and Broadcasting Bill, where the product comes from will depend entirely on the industry.
Between the wars the American film company, Universal Films, for which I have also worked more recently, decided to go into film production and stockpiling. The other major film companies then believed that Universal would go bust. They failed to recognise something that Universal had seen, which was the advent of television and its phenomenal requirement for products. Within two years of the serious advent of television as a medium, Universal's shelves had been cleared, it had got back all of its money and. not surprisingly, had made a very handsome profit. Since then, Universal has been one of the foremost—if not the foremost—suppliers of film to the television world.
Within the next five years we are likely to be faced with the same situation. The advent of cable, not only in Britain but worldwide, will create a similar demand. It is up to us whether the film is made here or in the United States. If our film producers have the courage that I believe them to have, they will start to stockpile now. It was said that the companies involved in the new film company had clone nothing for film. However, Euston Films, which is a major and very good producer of small films, is a wholly owned subsidiary of Thorn EMI and has made a major contribution to the film industry in Britain. If those companies are prepared to stake their productions now, they will sell, and in five years' time the British film industry will be thriving. They need the incentive of a levy on television film to help them, but it is up to them. They have the opportunity, and they must act now. Either they stockpile now, or in five years' time the Americans, not the British, will produce the films for cable television.
The Bill owes far more to ideology than to the needs of the British film industry. I think that the Government will experience considerable difficulty in Committee, because thoughtful criticisms have been made today by hon. Members on both sides of the House. Most hon. Members seem to agree that the Bill will do little to secure the industry's future.
Clearly, the Government would like to move towards a free market for the British film industry rather than a market that deserves greater and not less public support. We would clearly argue for greater public support for the industry because it is far too important to be left to the random machinations of the free market. However, one of the problems we face is that insufficient recognition is given in our society to the cinema's cultural role.
Unlike theatre, dance or the visual arts generally, cinema is essentially seen as entertainment rather than as an art form. That does not mean that something qualifies as an art form only if it bores the pants off everyone. Clearly, entertainment and art go together, but we nevertheless tend to regard cinema as essentially entertainment and not an art form. That makes a big difference, because something that has been delineated as an art form can then tap into quite extensive public support from the Arts Council, local authorities and so on. The amount is never as much as we would want, but it is considerably more than the cinema can attract.
Great emphasis has been placed on the reputation and skills of those in the British film industry. Obviously, one would wish to be associated with those. plaudits. Bat we have tended to talk about the big international successes, most of which have been largely financed by the United States. As has been said., the British film industry is dominated by the United States. The ending of the screen quota, of the NFFC and Of the Eady levy will merely accentuate that decline. I cannot see how the removal of the various support mechanisms will in any way advance the film industry's cause.
Hon. Members have tended to talk about the industry at an international level and about the big blockbusters, but at the small independent producer level, the British film industry is still very active, although desperately in need of more support. There has been little mention in the debate or in the Bill of the need for much greater support for the film workshops within the industry.
I do not believe that the Government recognise the value to the economy in general of the British film industry. The hon. Member for Canterbury (Mr. Crouch) mentioned £93 million as being earned last year by the British film industry. I assume that that was the direct earnings from overseas sales of British films. But there is another figure that is more difficult to quantify in terms of the benefits of the industry for the British economy.
British films tend to create a much higher awareness of British culture in the world, and that can have a direct spin-off for the sale of British manufactured goods. I know that it is sometimes difficult to see the connection, but it is there. One has only to think back to the pop culture of the 1960s to realise how British manufactured goods achieved significant market gains as a result of Britain's role as a swinging nation. Therefore, popular culture can have a direct spin-off for manufacturing industry. I do not think that that is something the Government have recognised.
The British film industry is currently little more than an offshoot of the north American industry. If we allowed an entirely free market to operate—which even the Government are not proposing, but which I suspect they want—the British film industry would be swallowed by the United States film industry, rather as the British computer industry has been.
There is much talk about the way that the American film industry has been using our expertise and mounting significant productions here. Much of that is due to the favourable exchange rates. As those alter, there will probably be a move away from production in Britain to production in the United States, and a leaching of United Kingdom native talent. That has happened in computer and microchip technology.
The disappearance of the British film industry appears to be very much on the cards, and will not be mitigated by the Bill. That is worrying in two major respects. First, there is the gradual domination by the cultural imperialism of the United States. More and more of our television time is being taken up by cheap American imports. I do not doubt that hon. Members from both sides of the House enjoy watching "Dynasty" and "Dallas"—frankly, I do not. As we move towards deregulation, with the advent of more cable television, the floodgates will be opened to cheaper and cheaper American films.
My second concern is that the cultural industries in Britain comprise the fastest growing area of our economy. In London, the cultural industries employ 112,000 people. That makes them the largest sector of the economy in London. They also have the largest growth potential. It cannot be beneficial for that sector to be wholly unplanned and left to free market forces.
The Bill will do nothing for the film industry. It does not recognise the role of the film industry in British society. There have been many complaints from Conservative Members about the unions and restrictive practices. The ACTT, which is the main technicians' union, recognises the need to develop the film workshops.
It has drawn up a model workshop agreement. That is the way to proceed for the future of the film industry. Unless the film workshops and small producers are working well and producing films, and unless the industry is healthy at the bottom, it will not be healthy at the top.
My hon. Friend the Minister for Easington (Mr. Dormand) said that the Labour party had called for a film authority—ACTT has done precisely the same. It has asked for a broadly based, adequately funded and powerful interventionist film authority with a mandate to revitalise the indigenous British film industry. That needs income. What is left after taking away the Eady levy? For all its problems, it represented a source of income. I am glad that Conservative Members have spoken of alternative ways to raise finance. The suggestion of a levy on films shown on television is gaining ground in the House. I hope that the Government will consider it seriously in Committee. It has support from all sides of the House.
The basis of finance for the British film industry should change as the medium itself changes. People have stopped going to the cinema for a variety of reasons—many of them good reasons, such as cinemas tending to be rather uncomfortable. If someone can sit in the comfort of a front room and watch a film, so be it. However, there is no reason why he should contribute nothing to the financing of the British film industry. A levy on films shown on television would be a sensible way forward.
If we are to finance a British film authority, a levy on pre-recorded and blank tapes would be appropriate. They represent one of the fastest growing areas of the communications market. The levy should be made at the point of purchase. It may do something to bring back into the industry all the profits of piracy that tapes have extracted from it. I hope that the Government will think along those lines. We need the restoration of capital allowances and a concentrated application of the business expansion scheme.
The Government are wrong not to regard the film industry as part of the important cultural sector of Britain. As we have seen in other countries, any film has a marked influence on national culture, both in domestic and international terms. The Government fail to recognise the essential difference between the film industry in Britain and the hotel or catering industries. They tend to see all industries in the same way. They miss an important and essential difference.
The Bill is not good news for the film industry. All informed opinion agrees on that. I trust that the next Labour Government will scrap the Bill and give the British film industry the material and cultural recognition that it deserves.
I have crossed swords with the hon. Member for Newham, North-West (Mr. Banks) so often that—with the exception of his last two or three sentences—it is a pleasure to congratulate him on a thoughtful and constructive speech. I regret his last few sentences, but I shall not dwell on that.
I was interested in the hon. Gentleman's analysis of the distinction between the concepts of entertainment and art form. Whichever category it comes under, the product must be good to keep its public. In that, it is different from most standard manufactured or service products.
Entertainment and art form must be excellent to survive. Much of what the British film industry produces reaches that high standard.
The British film industry is growing. It has a new confidence and is an important national asset. The hon. Member for Dagenham (Mr. Gould) said that there were now fewer films, but surely quality is better than quantity. Such fine films as "Gandhi", "Star Wars", "Indiana Jones and the Temple of Doom", "1984", "Chariots of Fire", "Gregory's Girl" and— as we heard from my hon. Friend the Member for Salisbury (Mr. Key) who has seen a preview—Amadeus" have been produced in Britain during the past five or 10 years. Those, and many others, are great achievements.
There is a "renaissance" in the British film industry. The improvement in quality has been achieved in the face of an absolutely massive drop in audiences. The tables in annex B to the White Paper are interesting. A number of hon. Members have said that during the past 12 or 15 years the audience figures have dropped from 338 million to 66 million—a drop of 80 per cent. The table, which starts in 1953, shows that in 30 years there has been a drop from 1,300 million to 66 million. That is not, as my hon. Friend the Member for Canterbury (Mr. Crouch) said, merely a massive drop; it is catastrophic.
The prime cause was the switch by the public from cinemas to television which took place mainly during the 1950s and 1960s, but which has gone on since. The "box" almost destroyed the screen. Cinemas everywhere have been closing. In my constituency, the last one to shut was the Odeon, two or three years ago. The previous one to close was the Regal, 20 years ago. Its name is perpetuated in a huge and ugly office block called Regal house, which, as my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) is well aware, houses much of the work of the local authority.
Somebody said that cinemas were closing at the rate of one every week. There are now only 1,300 screens left. Obviously, there are fewer than 1,300 cinemas, because many cinemas now have three or four screens. They are mostly to be found in city centres, although some are in the centres of smaller towns, a long way from the major cities. In the face of such a major change in social habits, it is remarkable that the film industry and the cinema, taken together, still employ about 70,000 people. Their export achievement is about £26 million per year—£100 million more than the figure for imported films. The British do not much understand foreign languages, whereas many foreigners learn English, but the disparity may also owe something to the excellent quality of British films.
Annex A to the White Paper shows that Britain is now producing more films than a year or two years ago, whereas the EC countries are producing fewer films. There has been an enormous drop. Our performance is much better than that of the other EC countries taken together.
The success of our film industry flows from the fact that British films give tremendous pleasure and enjoyment, not only through cinemas, but increasingly through new outlets such as television and video. We hope that in future they will also have an outlet through cable television. Some of the films are made by television companies.
My hon. Friend the Member for Thanet, North (Mr. Gale) said that he used to work for Thames Television. I hope that the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who has left the Chamber, will not mind if I mention that her mother, Baroness Phillips, the Lord Lieutenant of Greater London, recently came to Thames Television studios, in my constituency, to present the Queen's award for export to Thames Television for some films that it had produced That was a great achievement.
My hon. Friend the Member for Canterbury wondered how cinemas could increase their audiences. He compared our cinemas unfavourably with many continental cinemas, where the interiors are maintained to a higher, and perhaps cleaner, standard. That comment has often been true of British cinemas in the past. The smaller ones especially have been regarded as "flea-pits", with low standards of cleanliness and comfort. People no longer tolerate those standards and most of the "flea-pits" have closed. Obviously, it is necessary to have high standards of comfort, cleanliness and convenience.
My hon. Friend the Member for Canterbury and the hon. Member for Newham, North-West mentioned theatres and drew analogies between cinemas and theatres. It is valid to do that. A few years ago there was a report commissioned by the Society of West End Theatre Managers. It instructed a firm of public opinion pollsters to assess the reasons for people choosing to go to one play rather than another, and their motivation for going to the theatre. It found that people were not deterred from going to a particular play because of the cost of the seat, with or without VAT, because, on the whole, they found that the price of a theatre seat, including VAT, was good value; they were deterred by the whole cost of the evening, including a meal in the west end and transport into central London and from there to the theatre, with perhaps the inconvenience of parking and getting to the theatre. I am sure that the same objections apply to visiting cinemas. If going to the cinema could be made easier and pleasanter, the takings of cinemas in the west end of London and in other city centres could be increased considerably, although I do not think that cinemas could ever win back a very large proportion of the audiences lost to television.
If the British film industry has such great achievements to its name and is so successful at standing on its own feet, why does it need increased Government support? It is already improving its performance with smaller support than it received hitherto.
As a country we must build on our strengths; we must concentrate on what we do well. Britain is one of the great arts capitals of the world, in film as in other arts. Films are having a renaissance. They are developing as an art form, they are important to Britain, and we must prime the pump.
A tax of £4·5 million will be removed from cinemagoers with the ending of the Eady levy. Another £3 million a year will be added in subsidy to replace subsidies of £1 million to £1·3 million paid hitherto. That is an improvement in the financial provision for the cinema. It does not go as far as we might like it to go, but we cannot pretend that it is not there, or that it is nothing. It is churlish of the Opposition to disparage it and try to stir up resentment in the film industry. The House should give short shrift to that disparagement and support the Bill.
—so the hon. Gentleman should be somewhat less churlish in his own views. When I worked in the film industry, it was my practice to edit ruthlessly, and in preparing my speech I have attempted to follow that rule. If there are interruptions, I may be unable to keep my promise to my hon. Friends to be no longer than 10 minutes.
This has been an interesting and wide-ranging debate. I am sure that those who have given a great deal to the British film industry—and will no doubt be following our proceedings—will feel that, almost for the first time in recent years, we have addressed ourselves to the real problems that the British film industry is facing.
My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) asked me to say— I am delighted to respond to his request—that when the Monopolies and Mergers Commission expressed its views on the industry, it paid tribute to the Glasgow experiment.
References have been made to the various Ministers who have been involved in the exercise. I shall not be saying much that is flattering about the White Paper or the Bill. With the greatest respect to the Minister of State, I have to note that, in dealing with the film industry, all the Ministers concerned have shown themselves to be accident-prone. I am glad that the Minister has been involved for only six weeks. I can imagine the damage that would have been caused if he had assumed his responsibilities earlier. Mr. Iain Sproat spent some time on this issue and it is clear that his influence on Government thinking was considerable. It is clear also that the people of Aberdeen had a greater affection and affinity for the film industry than Mr. Sproat. The right hon. Member for Mole Valley (Mr. Baker), the Minister for Local Government, made his contribution and his fate was even worse. It is now his task to dismantle local government. He will meet even greater opposition and even less success than his predecessor.
I was granted an Adjournment debate on the film industry before the summer recess and the Minister who had responsibilities for the industry made some comments which, even tonight, are worthy of reflection. The White Paper and the Bill will be damaging to the film industry but the events of the recent past have also been damaging. When the White Paper was published on 19 July, questions were asked by my hon. Friends and myself and the then Minister, the right hon. Member for Mole Valley, suggested that my hon. Friend the Member for Dagenham (Mr. Gould) had relied on leaks for his information. I asked:
Does he think that Mr. Hassan depended on the same leaks when he resigned from the NFFC, given that most of his predictions proved to be correct?
However, the Minister observed:
His predictions did not prove to be correct. Mr. Hassan resigned from the NFFC because he wanted to go into private film production, which is an expression of great confidence on his part."—[Official Report, 19 July 1984; Vol. 64, c. 527.]
If Mr. Hassan were present, I am sure that the last thing that he would say is that he has confidence in the White Paper or in the policies that are being put before the House. I deeply regret the damage which has been inflicted, which was reported in the Daily Telegraph, of all newspapers, on 26 July, a few days after the then Minister with responsibilities for these matters spoke so confidently. Even the Daily Telegraph observed:
The Government's film policy unveiled last week will fail to solve any of the problems of the industry, Mr. Mamoun Hassan, managing director of the National Film Finance Corporation predicted.",
It is clear that the British film industry has little confidence in the Bill. The Government should think seriously before they take up the time of the House of Commons in Committee.
The Government's policy will not succeed because they have not considered seriously the industry's real problems. The Eady levy was out of date and we know that not as many people are going to cinemas these days. Audiences began to decline after the war. Film production is having its problems in spite of excellent personnel within the film industry. The Government have failed to identify the industry's real problems, and it is surprising that they took over two years to produce a White Paper of 26 pages—in other words, a page a month. If that is the productivity that we can expect from the Government, it is no wonder that there is so much wrong with British industry and that the Minister has been so preoccupied with other matters.
The Government are going wrong because they seem to be suggesting that monetarism and movie making are one and the same thing. Monetarism and movie making do not match. We have heard properly and rightly from hon. Members on both sides of the House of the success of film industries in other countries. It must be recognised that we are facing serious competition from countries such as America and Australia. It comes also from countries that we would not normally associate with film making. It seems that those who are involved in our film industry are having their hands tied behind their backs by the Government. Given the effect that that will have on the livelihoods of those people, that is almost unforgivable.
It is interesting that the White Paper refers to only two films-"Chariots of Fire" and "Ghandhi". We know that the producers of those films would not approach the British industry in the same way that the Government have chosen. As my hon. Friend the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said, Sir Richard Attenborough spent 20 years trying to persuade the British film industry that it would be feasible to produce a film on Gandhi.
I am sure that it will be acknowledged on both sides of the House that Scotland has been making a contribution to the film industry recently. I represent a Scottish constituency and I shall say something about Scottish film making experience. Scotland has produced Bill Forsyth, perhaps the most acclaimed new film-making talent in British cinema for many years. His work has been so successful that even the Government might have heard of it, and that represents a considerable achievement. This proves that artistic and cultural successes are compatible and that films that are apparently the most local in setting and subject matter and the closest to their roots are most likely to have world wide appeal. We should base our consideration of the film industry on an examination of films like his and do our utmost to facilitate the emergence of more Bill Forsyths.
The Scottish Film Council is involved in production and training, the promotion of film education the work of the Scottish Film Archive and the development of new patterns of exhibition through regional film theatres and societies. The Scottish Film Council manages to carry out its wide range of work on an annual grant of £338,000. This is excellent value for money but we must ensure that the traditional Scottish virtue of thrift is not carried too far. The council will celebrate its 50th anniversary this year and I am sure that both sides of the House will wish to congratulate it on that achievement. I understand that the Lord Provost of Glasgow will do so next week. The council should receive a much enhanced grant to enable it to do even more good work in projecting the image of film making in Scotland.
Many films have been referred to during the debate and we have all paraded our favourites before the House. I liked "The Gold Rush". As I look at the Government Front Bench, consider their policy on films and reflect on the White Paper, I think of the scene which shows a party taking place inside a cabin which is slipping gradually over the edge of a cliff. It seems that the Government's role is to encourage the slippage of the cabin over the edge and not to stop it. That is the direction in which they are moving and consequently they can expect the utmost opposition from Opposition Members.
I welcome the Bill. The system of redistributing finance around the film industry which is based on the quota system that developed in 1927, the NFFC which developed in 1949, and the Eady system, which developed in 1957—all based on 4 billion viewings when we now have only 66 million viewings—cannot last. I listened with interest to the speech by the hon. Member for Dagenham (Mr. Gould). Although he argued for more public money to help the independent producers, I do not think that he or any other Opposition Member denies that the present system of finance needs reforming.
There has been a large amount of cross-party agreement during this debate. We are agreed on the ends, the cultural and national value of film-making, and the diagnosis. I believe—the hon. Member for Monklands, West (Mr. Clarke) may find this difficult to understand—that, by restoring the discipline of the free market, we can do much for the plight of the independent producers. I do not believe that they are given a fair deal at the moment.
The small producer is not allowed to operate in the free market. Four distortions affect that freedom: first, the subsidy received by overseas films; secondly, the domination of the United Kingdom distributive system by United States studios; thirdly, the duopoly of United Kingdom broadcasting companies—the BBC, ITV and the independent television companies whose fees do not reflect the enormous audiences— and, fourthly, the switch from cinema viewing to home viewing, including the theft of copyright.
How can those distortions be overcome? The Eady system is based on the principle of substantial cinema audiences being taxed, in effect, to help the producer. Clearly, that system cannot continue. We can no longer underwrite a blank cheque for large amounts of public money for new films. I agree that £1·5 million a year is inadequate, but what is the alternative?
I echo what has been said by a number of my hon. Friends, especially my hon. Friend the Member for Hendon, North (Mr. Gorst), although the point had been qualified earlier by my hon. Friend the Member for Wealden (Sir G. Johnson Smith). I am concerned that the White Paper rejected the argument that a levy can be imposed on the BBC and the independent television companies because, according to the White Paper, it would involve large increases in licence fees. Is that right? I believe that a number of Conservative Members will be interested to hear the reply of the Minister.
According to the Association of Independent Producers, the impact of a levy on the licence fee would be insignificant. The association says that, even if the entire cost of a levy on the BBC were passed on through the licence fee, the maximum increase required would be only 30p. I am interested in hearing the view of my hon. Friend on that point. The association says that, although there would be a reduction in the price paid to the distributors by the television companies, there would still be a benefit to British films, because they could contribute and receive funds from the levy at the expense of non-United Kingdom films.
The idea of imposing a levy on the television companies meets the point made at length by the hon. Member for Dagenham about the need for support for the independent producer, yet it avoids the difficulty of the Department involving itself in funding what must be a commercial decision. I hope the Government will at least say that they are prepared to look seriously at the AIP's suggestion and that a levy of 2·5p per viewer per film should be paid and then distributed to the makers of British films. ln talking about this matter, we are looking at the future. The Bill contains the mechanism to allow those changes. I welcome the Bill and shall support it in the Lobby.
Few hon. Members who have spoken in this debate have been as optimistic about the effect of this legislation as the hon. Member for Gainsborough and Horncastle (Mr. Leigh). Even the Minister of State in introducing this Bill did not make the grandiose claims made by the hon. Member for Gainsborough and Horncastle. The Minister must have regretted, by the time he reached the end of his speech, his generosity in giving way so many times. At one stage the Minister had to plead for mercy and say plaintively, "I have been in the job only six weeks. Please forgive me if I do not understand much of what I am talking about."
The truth is that the Minister's brief, far from being an international blockbuster, was low budget. The legislation is in every sense of the word low budget. To be fair to the Minister, the film industry is curious. No Government of either persuasion have come to terms with the dual and curious hybrid nature of this industry. Perhaps that is why, during the past 24 years, there have been as many as six films Bills in an attempt to achieve a financial structure for the film industry. The fact that the industry has reached its present state shows that Governments of both persuasions have failed.
The film industry is curious in that it is a highly commercial, capital-intensive, high-risk, venture capital industry which, as the Minister said, gives great benefits if a person gets it right. Most of the time, however, expert producers get it wrong. The only way in which most producers reckon they can get it right is by going for the softest options and the reassuring entertaining film. Films are also an art form. They are a way of telling stories about the way we live. If the industry is to be taken seriously, those stories should be provocative, challenging and questioning and should seek to change our perceptions of our society. That is not always a fast road to make a lot of money. Those conflicting views on and demands of the industry make it extremely difficult to legislate for.
If the Government have not come to terms with the film industry, it must be said also that the industry has seldom come to terms with the two conflicting demands on it. Many of the greatest film-makers that this country has produced—such as Grierson, Jennings and Basil Wright—have been unlauded and unacceptable to the industry in terms of finance. If the industry cannot get it right, it is asking an awful lot of a Government to get it right.
I must disagree with some points made by my hon. Friend the Member for Dagenham (Mr. Gould) in his very good speech. I regret to say that I heard only part of it because I had to attend a Select Committee meeting. I understood him to say that he felt that the Government had got the analysis wrong. I believe that the White Paper's analysis of what is wrong with the industry is acute and well researched—it is the prescriptions that are wrong. Paragraph 5·6 of the White Paper states:
We considered three possible ways of dealing with the present situation:
That approach to the industry characterises the Government's measures, because they are all mechanical and logistical approaches.
The film industry demands more of the Government than such a mechanical and technical approach. The Government's approach in the White Paper and in this legislation— in so far as the Government have a coherent approach in the Bill—does, to some extent, address the industry's commercial problems. The Government do not, however, even begin to approach the cultural problems that this industry poses. The Government have a duty to recognise that fact. That is what is wrong. The Government's attitude is deficient. In introducing the Bill, the Minister said that he was letting the industry get on with its business, while at another moment he said that he was concerned with the commercial interests.
That is a simplistic definition of the industry's aims. The Minister did not give the House the sense that he comprehended the fact that the film industry is an artistic medium of expression and a way of telling the stories of our culture to ourselves. The Minister and the Bill do not show the Government's vision of the industry. The Minister would say that he wants the industry to be profitable and healthy. I do not know whether that is a fair characteristic, but it is not adequate to the demands that the industry lays on the Government. Those aims may be necessary—I do not deny that— but they are by no means sufficient. It is difficult to come up with a coherent vision of what this industry should be and how the Government should approach it. The idea that we should ever return to the vision of 1·3 billion attendances is nonsense. There is nothing that we can do to go back. We probably cannot even return to the levels of the 1960s. However, in the past few years the United States has shown that growth is possible. If we are to see growth in this country we should go for quality of spectacle and of the serious artistic film. That is probably the only way that we shall keep the 1,300 screens that we have at present, or more than 1,000 screens.
With 1,000 screens, we could still provide a national means of expression and communication and a basis for an international approach by the industry. The Government lack vision and any form of coherent belief in what they are seeking, so it is hardly surprising that the Bill has neither character nor personality.
Members on both sides of the House will agree that Eady should go. No one regrets its passing. [Interruption.] There may be one or two hon. Members who do, but I do not wish to take issue with any of my hon. Friends on that. The Bill fatally lacks any guarantees, even in the logistic terms in which it sees the industry. There are no guarantees—the Minister could not give one today—about the National Film and Television School. He has a responsibility towards the broad training of technicians in the industry because the craft and technique demands of the industry are great. If he leaves it to television money exclusively to fund that, inevitably within a few years the school will become an in-house television school, and that will not be in the interests of the country or the industry generally.
The same applies to the NFFC. The specific arrangements for that were spelt out in section 7 of the White Paper. The Minister puts flesh onto the bones of the legislation, but the Bill lacks detail and does not pin down the guarantees that he was suggesting as the way in which his mind was working. In Committee the Bill must be amended to be far more specific if we are to feel confident that the Government can deliver on some of their aspirations, much less their promises.
There is a danger—I hope that the Minister will take this on board and accept it in a decent spirit—that there will be complete commercial control of the NFFC. I am not sure that he said specifically that he would appoint the chief executive; perhaps he will only advise on the appointment. But even if he does appoint him, the chief executive and one board member are inadequate control. To whom would they be accountable? Will they report to him? Will he report to the House on their representation on that board? If most of the money is coming from commercial interests, surely the Minister, a believer in the free market, will allow the industry to manage itself. He should not control the chief executive.
The Bill contains no guarantees of production or quality, and when it came to assets, the Minister had the impertinence—if I may call it such—to ask for the applause of the House when he said that he was giving away public assets. The Government have an appalling record of flogging off national and public assets for less than their real value. British Telecom is an ideal example of money that is given away, but at least the Government are asking something for it. Here, the Minister has asked for credit for completely giving away public national assets to a private company. He must reconsider that. If Rank, Thorn EMI and Channel 4—I believe that they are the participating elements—are to benefit, does the Minister not believe that they should pay something for the residual asset rights of films, or does he believe that they should be given away for nothing? How will he explain to the Chancellor of the Exchequer the fact that he is giving away money so casually and easily?
There are other curious aspects of the Bill. We need not go into them in too much detail at the moment. The Minister leaves the NFDF in a curious, ambivalent position. Once it is cut off from the present form of the NFFC and the development agency, it has only a minor role. I am sure that it will be grateful for the small amount of money thrown in its direction but to whom is it to relate and how will it fit into the market-oriented and market-conscious industry that the Minister is considering?
The Minister has given £10 million over five years. He will say that figure is realistic, and he would characterise the Opposition as unrealistic in asking for more public money. However, when it suits their case, the Government are keen to show the realism of the French Administration in what the Government regard as cutting public expenditure. Many Opposition Members and many people in the country who are unemployed would love to have the cut-back levels of public expenditure that the French nation is even now enjoying.
The Government like quoting France, so let us quote France back to them. Even after only six weeks, the Minister should know that the French Government subsidise the industry—it is difficult to calculate exactly—to the tune of approximately £77 million a year. Of that,—55 million goes directly to production, distribution and exhibition, and—22 million goes on training, conservation, festivals and other forms of promotion. The money comes from box office receipts and a television levy and from the Government directly. That aid to the French industry is across the board. That is another aspect of the Bill which is inadequate. It recognises just the production and distribution problems; it does not recognise the wider problems of training, short films, development money, workshop activities, as mentioned by my hon. Friend the Member for Newham, North-West (Mr. Banks), non-professional film-making, or even the Minister's role.
Those matters all conic under the French Minister of Culture, Jacques Lang. He has a fund of his own which supports films of international importance. It supports film-makers such as Bresson, and Orson Welles and Andrej Wajda who are not even French film-makers.
Under clause 4 the Minister will have the important right to invest in production. I hope that he takes the opportunity and enjoys his role as a film producer. Something that even the French do not do, and which I believe we should, is to take a far greater role as a country and Government and build up a new film audience by becoming involved in education. There is a role for commercial film-makers—documentary and feature—in polytechnics, schools and colleges to create an understanding for film and to put it onto the educational curriculum; to create a language of film and understanding of what film is about; and how it can relate to people's lives in the same way as the short story, the novel, the painting or any other medium of expression.
I believe that the Bill tackles a difficult subject, but that the Minister has missed a golden opportunity. It is not too late for him to repent. After only six weeks in the job, I hope that he will have the modesty to accept that he has not learned everything about it and will accept constructive amendments in Committee. We cannot have the film industry that the Opposition believe the country and the people deserve, but in Committee at least we can obtain a much better Bill.
While I welcome the Bill, I welcome all the more my hon. Friend the Under-Secretary's second son, who was born within the last half hour. If the British film industry can be as fruitful as the Minister, we have nothing to worry about. Over the past few years we have welcomed "Superman", "Superman II", and "Superman III"— I hasten to add that the analogy falls a little short there—but may I welcome "Rossendale and Darwen III" to the earth today. I am sure that I speak for the whole House when I wish mother and child and, from the Conservative Benches, the Minister well.
My father made 64 British films; my mother made 27 British films; and my sister some 18. My mother and sister would like it to be known that they are available for offers some time after Christmas. I made two films, although I must add that I retired at the peak of my career aged one and a half following "Holiday Camp". I just could not follow that. It was shown again recently on Channel 4. I am grateful that I and my children could see it, but I believe that it is right—I shall mention this later—that levies should be paid for blank tapes because I shall not now have to go to the cinema and I shall not ever again have to pay to see that little gem of the British cinema and the little gem that appears in it.
I was born in Beaconsfield and for the first few years of my life lived in Denham. Those names echo loud and clear around the film world. In my constituency of Richmond and Barnes I am proud to have Twickenham studios. In fact, my hon. Friend the Member for Twickenham (Mr. Jessel) said just before the election that one of his greatest losses due to the boundary changes was not only the film studios but the many people who worked there, many excellent artists.
British cinema has had the most remarkable renaissance. I think that it is fair to say that the films of my parents over many years were low-budget films, but British films of quality, whatever their budget, have been around for years. Only occasionally did they find international acclaim, but the fame that they found was regular enough to give all producers, both independent and tied, some hope. What the British film industry did with small funds, occasionally even with rare colour film, was often second to none. I should like to think that the British film industry has not wasted its funds, as the industry in other countries has wasted much bigger budgets.
The new dawn began with "The Railway Children". With such films, the independent producer heralded the new dawn. Then came "Gregory's Girl" and "Local Hero". I thought that the hon. Member for Monklands, West (Mr. Clarke) did a beautiful job of an audition for Bill Forsyth's next film. He has exactly the right tone of voice and reminded me of half the cast of "Gregory's Girl" and two thirds of the cast of "Local Hero", although he did not remind me of any of the cast of "Chariots of Fire". There was also "Gandhi" which was produced by one of my constituents, Sir Richard Attenborough, although he would wish that I were not his representative. Films of that ilk have without doubt put Britain into the forefront of the industry—not just in our rightful place, but on top of the world, as the recent Oscar awards showed.
Those who saw "Chariots of Fire" in the cinema could not have failed to feel their breasts swell with pride. The cinema was the right medium for seeing that film. I have seen it both in the cinema and on video tape at home. While I admire video, use it and think that the video tape player is one of the greatest inventions of my lifetime, I believe that those who have not seen such a creation as "Chariots of Fire" in the local cinema have missed out terribly. The sound, the effects, the size, the scope of the spectacle and the atmosphere are still absolutely unbeatable. What a tragedy it is that the average Briton is turning away from the cinema even today.
Today, I am glad to be able to call on those who enjoy films on television to try the cinema now. Great steps are being made. People are trying hard to design a modern emporium that is more suited to the needs of British entertainment. The cinema is no longer the old flea-pit that we used to have. It is now comfortable and air-conditioned, and even smokers are segregated. But my hon. Friend the Member for South Ribble (Mr. Atkins) will still find comfort in the back row.
To encourage the return to the cinema, I welcome the scrapping of the Eady levy. The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) said that almost everyone in the House would support the scrapping of the Eady levy. I find it difficult to understand why it has been in existence for so long, except that it has provided useful funding for many worthy causes. I shall mention those in a moment.
Since everyone agrees that the Eady levy should be scrapped, why do we have to wait until 12 October 1985? There are powers for the Secretary of State to scrap it earlier. I ask my hon. Friend the Minister to announce that date as soon as possible so that cinema owners can plan for its abolition.
I support a levy on television films. I fully understand the extra cost to the licence that that might bring. Some say that it is just a recycled Eady. I would say that it is an up-to-date Eady because it recognises the way in which films are seen by most people. Eady was relevant and necessary in its day. Now it is not necessary, and it is disadvantageous and destructive to the cinema. I would encourage people to go back. Now that people hire films for £1, £1.50 or £2 a night, as my hon. Friend the Member for Canterbury (Mr. Crouch) said, and if we are to have a levy, which can be justified, the modern Eady should be on blank tape and on cinema films shown on pre-recorded tapes on television. There should be a levy on blank tape not only for sensible funding purposes but because, as my hon. Friend the Minister will know, there should be compensation for what I regard as institutionalised theft of intellectual property— case that I have long supported.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said that the Bill did not give the vast support that she wanted. It is her job to oppose, but she could have been more constructive. The Bill is not the gathering together of film, television, video, audio, radio and everything that she required, with massive central funding. It does not nationalise the entertainment industry. However, it removes some of the last vestiges of state interference without removing state funding. That is the best combination that anyone in the House can wish for.
With regard to the replacement of the NFFC, the contribution of £1·1 million annually for three years from organisations in the film, television and video sectors to partly finance low-budget feature films is excellent, but that is the same amount as the NFFC budget beforehand—
Indeed, the portfolio of rights is being given and it will produce £200,000 a year, but I believe that if one is to give benefit to the film industry, it is not right to carp on the fact that it has not been sold for a vast amount to those who own it at the moment, or even to the Government, with their central funding.
It is constructive to give the new company a good start with some of the jewels in the crown of the British film industry. As has been rightly said, the Government will make £1·5 million available per year for the next five years to co-finance films with the new company.
There is also £500,000 a year for five years to continue the work of the national film development fund. That is helping at the earliest stages of creation and is greatly to be desired. I would not have fully supported the death of the Eady levy without the £600,000 a year for the National Film and Television School. The independent television companies, the BBC and the cinemas all benefit from that school. It is truly the cradle of this great industry, of which we are all so proud. The sponsorship of British Film Year is also an excellent and progressive step.
There are also tax changes in the Bill. I support them in the main. The effect of the change in the system of capital allowances is being felt genuinely by those in the film industry, but over the next few years taxation in general will be such that the benefits of lower corporation tax on a regular year-by-year basis will outweigh the immediate disadvantages of the change of system.
One other change that I must mention on behalf of some of my constituents is the change in taxation status of those working in the film industry. It has nothing to do with the Bill, but the Inland Revenue is too harsh in assessing people under schedule E rather than schedule D when they work in the film industry. Many of my constituents have either been driven outside the country or have had to change their job. That has helped to increase the costs of the film industry.
Therefore, on behalf of my constituents, myself and my family, and particularly on behalf of "Rossendale and Darwen III," I welcome the Bill.
This has been a remarkable debate in several ways. Most hon. Members on both sides of the House are agreed that the present financial structure of the British film industry is unsatisfactory. Most of us are also totally committed to the welfare and prosperity of the future of the British film industry. Most of us, again on both sides of the House, have said that we do not think that the Government have got it completely right. I for one will say exactly that. I hope that when we consider the Bill further in its passage through the House, the Government will listen to the genuine points that are being made via hon. Members on both sides of the House about the detailed provisions for the future of what is an extremely important industry for this country.
First, we must recognise the importance of films as an art form. In this country we quite properly believe that it is right to support the creation and performance of the arts. By means of central Government support through the Arts Council we make about £14 million per year available to support the production of opera at Covent Garden. When one compares that with the sums envisaged by the White Paper and the Bill one must ask the Government to pause and consider whether they have got their funding priorities right. As the hon. Member for Canterbury (Mr. Crouch) said, the arts are all of the same family. We must therefore consider how the Government and the community should foster and ensure the prosperity of the film industry in the context of policy towards the arts as a whole.
The thrust of the White Paper and the Bill relies very heavily on the commercial sector and on commercial motives. I believe that that is misguided. As my hon. Friend the Member for Newham, North-West (Mr. Banks) said, we must remember that the film industry is a major income producer for this country through the films sold and distributed abroad and the way in which British goods and materials as well as British culture are promoted by the film industry and its products. That is extremely important. It is thus absolutely right that there should be a commitment to sustain and support the future of the industry.
The question then arises as to how that support and sustenance should be provided. With regard to the encouragement of new film-makers, the Government state in the White Paper:
In keeping with the main thrust of our policy for film we believe that this important work should be firmly based in the private sector and directed towards the development of talent for the commercial market.
The core of the Government's policy is the private sector and the commercial market. I believe that in the White Paper and in the Bill the Government rely too much on that sector and on the good will of its two dominating companies, Rank and EMI.
Like other hon. Members on both sides, I support the abolition of the Eady levy as an inefficient, expensive and not very effective means of raising funds. The tax is at the wrong point of delivery. When cinema audiences throughout the country are dwindling and private video viewing is increasing it is clearly nonsense to maintain a levy on cinemas while there is no levy whatever on video.
I take just two examples of the Government's proposals to replace the levy. On funding for the NFFC, the first problem is that there is no apparent guarantee beyond three years, although the Minister hinted that funding might well continue. The White Paper refers to
arrangements with certain organisations in the film, television and video sectors".
When the Government refine the legislation before bringing it back to the House they must be far more explicit and give much more substantial guarantees about that funding. Concern has also been expressed about the National Film and Television School. The same problems arise in that context—the dependence on the good will of the commercial sector and the restriction of guarantees to five years. The entirely insufficient funding envisaged for both the NFFC and the NFTS in the White Paper and the Bill is most disappointing.
The hon. Member for Canterbury mentioned Australia. When one compares the Government's proposals with the way in which the Australian Government support, nurture and provide finance for the Australian film industry, the prospect is depressing indeed.
It has been said that the British film industry is undergoing a renaissance. To a certain, very limited extent, that is true, in that a number of extremely good and successful films have been produced in recent years. Looking deeper at the spread of work in the industry, however, there is less cause for hope. We must be concerned about the spread of support for the industry and the way in which new talent is enabled to work. In my constituency brilliant young technicians in film production and in the artistry that goes with it are currently unemployed and their talent is going to waste because the commercial film industry has no opportunities for them. That is the problem facing the British film industry. The alternative proposals put forward by many hon. Members— a levy on blank tapes and on films shown on television, amounting to a tiny amount per viewer—could bring enormous amounts of money into the British film industry and bring about a real renaissance, not just a few more star turns such as "Chariots of Fire", "Local Hero", "Gregory's Girl", "Ghandi" or "The Killing Fields", but real breadth of support for the British film industry and British talent.
I strongly echo the comments made about the phasing out of capital allowances through the Finance Act 1984 as a tax incentive to film production. That has imposed a real burden especially on small film producers and it is a major threat to the welfare of the industry.
Very little has been said today, and nothing is said in the White Paper or the Bill beyond a passing reference to the extremely good work of the British Film Institute, about the need to preserve our film archives.
We have a precious heritage of old and original film material, some of which is at serious risk because there are no proper facilities to maintain, catalogue and preserve it. That is something that we should be extremely concerned about. That material is part of our cultural heritage and an aspect of our genius through the ages, and we ought to preserve it.
Similarly, we should cherish the British genius and talent that is now waiting to be tapped and to produce the many films that I am sure that we are capable of producing in future. We should enable that genius to flourish. I do not think that the Bill provides the framework for that quality and quantity of production, and it is sad that that is so. I hope that in the corning months the Government will make enough changes to the Bill to ensure that it provides that framework, and that the British film industry will flourish rather than die
Many interesting aspects of film have been covered in the debate. Before I was elected to the House I served on the board of a regional cinema. The experience was valuable. I joined the board with serious misgivings about the way in which the film industry and such organisations were financed— sometimes with the aid of considerable public support. However, my period of service on that trust changed my attitude towards the film industry.
I welcomed the remarks of the hon. Member for Islington, South and Finsbury (Mr. Smith) who made a positive contribution to the debate. He welcomed the abolition of the Eady levy, so perhaps we do not have too far to go. With one or two exceptions, the tenor of the debate has suggested that there is all-party support for the British film industry. What is being debated, therefore, is the best way forward. With that aim in mind, and hearing in mind that the National Film Finance Corporation has been in existence since 1949, I draw the attention of the House to clause 3 and to future financing methods.
The industry has had quite a good run since 1949, with support from successive Governments of all political persuasions. It is uncharitable of hon. Gentlemen to suggest that the Conservative party does not support the film industry. In 1980, after the Government review introduced by my right hon. Friend the Member for Chingford (Mr. Tebbit), then Under-Secretary of State for Trade, a further £13 million was devoted to the financing of the corporation. It is interesting that in 1981 and 1982 the Select Committee on Education, Science and Arts urged in its report that the NFFC should be reorganised—although it may not have envisaged a reorganisation such as this. The Committee observed that there was no guarantee, according to the evidence that it had heard, that Eady money returned to the producers of films or was reinvested in film production. One hopes that the new private company will receive—as we are assured it will—money from the film, television and video sectors amounting to £1·1 million per annum over three years in order to finance low-budget feature films. Opposition Members, and some of my hon. Friends, have voiced doubts about the return of £200,000 per annum from past projects. I should be happy to see that as a form of underwritten grant rather than a straightforward contribution to the rights from past years. Perhaps the Government might consider such an arrangement. It would help to ensure that the new private company was taking the right path.
We have been assured that the Government will provide a further £1·5 million a year for five years to co-finance films with the corporation, but there is nothing in the Bill to explain what will happen to the rights from those projects when they return to the Department. Will they go to the Exchequer or be reinvested in the industry?
My hon. Friend the Member for Canterbury (Mr. Crouch) commented dramatically on the income that the British film industry earns for this country. I am sure that he and other hon. Members will recognise that the flexibility which the Bill will ensure will stimulate rather than harm the industry.
Much has been said today about the National Film and Television School. It has been justifiably praised for its international reputation. As we know, it receives £500,000 a year from the Eady levy. I understand that the cinema corporations, the independent television companies and the BBC have undertaken to provide £600,000 a year for the school for the next five years and that the Government will provide £200,000 to update the facilities in the next financial year. I wonder whether the support is sufficient and long-term enough to ensure that the school's justified reputation is enhanced still further.
The possibility of a levy on video tapes has been discussed. The one thing that worries me as a matter of principle is that once such a levy is introduced, similar ones could be introduced on audio tapes. That would have serious effects, especially on the blind. Nevertheless, I accept that pirating is a problem. Although I would not oppose such a step now, it should be taken with a great deal of caution and after much consideration.
As the hon. Member for Newham, North-West (Mr. Banks) said, there is a need for specialist cinemas as they concern cinema as an art form. One of my anxieties about the Government's proposal to abolish the GLC, and especially the metropolitan county councils, is the effect that abolition will have on regional arts councils and, therefore, the support that they provide for specialist cinemas throughout the country.
I hope that the British film industry will not suffer from the snob appeal with which we tend to regard other art forms. That has been the tenor of the debate. It is essential that the Government's undertaking to prime the pump continues. The Bill will give the industry greater flexibility. I am sure that it is flexible enough to make maximum use of it.
I am not surprised at some of what has been said about Ministers not having a close association with the film industry. I do not wish to embarrass them but the Under-Secretary for Trade and Industry and the Minister of State, Department of Trade and Industry both look quite debonair and capable of playing opposite many of our gorgeous ladies in the film industry.
The film industry has declined slowly but surely. I welcome the opportunity being given to Back Benchers to change that in Committee. I have no doubt that they will put Ministers in their places and point them in the right direction. They should be helping our ailing film industry, which has been famous throughout the world for many years. Nevertheless, it has been declining. When we watch television, we cannot help noticing some of the rubbish that we get from the United States of America. There are gaps for British films and actors.
I have a list of some famous British actors who have been encouraged to go to the United States. Right hon. and hon. Members will remember some of their names, especially more elderly hon. Members. I refer to Sir Cedric Hardwicke, Charles Laughton, Gladys Cooper, C. Aubrey Smith and, last but not least, Boris Karloff. They were all famous British actors who were drawn across the Atlantic because we were not sensible. Even now we are losing famous actors to the United States. The Government should provide greater encouragement for them to stay.
We have premiers of famous films and usually a Minister attends. His chest stands out for a yard with pride for British films. I want to see that at the Dispatch Box, especially from the Chancellor of the Exchequer. I have seen his chest puffed out, but I should like to see pride in the House for British films.
The United Kingdom has marvellous acting talent and the Government should encourage it. They should provide proper facilities for British films to be made, and for British people to see them, whether in the cinema or on television. We should build more cinemas and encourage people to see films there. We have the facilities, and the Government should find the money to finance the job.
I am pleased that I returned to the Chamber in time to hear the speech of my hon. Friend the Member for Ashfield (Mr. Haynes). The Government take credit for everything that British people do and refuse resources for them to do more. My hon. Friend is absolutely right, even if he goes back further in time than I do.
I follow the hon. Member for Richmond and Barnes (Mr. Hanley), who was first to congratulate the Under-Secretary of State for Trade and Industry on another useful production. The Minister represents Rossendale and Darwen and he is now doing his bit to secure the survival of the species. I, too, congratulate him. I have seen no greater sign of nobility than the Minister sitting doggedly throughout the debate. Whether his wife will approve of that as highly as we do is another matter.
The debate has been marked by one singular fact. It was expressed by the hon. Member for Hendon, North (Mr. Gorst), who said that it could have been an all-party debate with all hon. Members on one side except for the Government Front Bench. Without exception hon. Members have said that the White Paper is insufficient and will not work. The hon. Gentleman also said that it was strong on analysis but weak on prescriptions.
Both Opposition and Tory Members have spelt out regrets at the Government's failure to grasp opportunities. My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) said that the Government praise but do not listen, and my hon. Friend the Member for St. Helens, South (Mr. Bermingham) said that the Government had got it wrong. Those are echoes of what is being said by the industry. The main producers' association states:
The Association was extremely disappointed with the direction of the White Paper, in that it failed completely to provide some form of financial incentive to offset the loss of Capital Allowances.
Conservative Members echoed that view. The memorandum continues:
The Association was deeply shocked by the 1984 budget proposals for the abolition of Capital Allowances in the face of pledges made for their continuation by the same Government in 1983.
It will be a long time before the Government are forgiven for breaking that pledge.
The association further states:
The White Paper suggests that home video, cable and DBS will provide a number of exciting new market opportunities for the future. It is our view that the developments are likely to be considerably delayed … The development of cable and Direct Broadcast by Satellite is now highly questionable.
The Association of Independent Producers echoes that even more strongly. It states:
The White Paper and the Films Bill indicate that the Government intends to give financial assistance which will not exceed £1·5 million. We feel very strongly that the organisation should be given sufficient funding to enable it to produce between ten and twelve feature films per year, and six short films … the cost of one low budget film in 1984 is £1·5 million.
The Association of Independent Producers talks devastatingly about the White Paper, which states:
Production levels are being sustained.
The association says:
The paper notes an increase in production of seven films … to a total of 34.
In 1982, Germany produced 70 films, and France produced 131. The White Paper states:
Domestically … the cinema checked its previously steady downward trend.
The association states:
Yet, admissions dropped a further 30 to 35 per cent. in the first part of 1984.
The White Paper claims:
In the all-important North American market there was a much greater acceptance of British films.
The association states:
Two Oscar-winning films do not demonstrate a significantly higher penetration of the United States market.
The ACTT echoes the criticism. With regard to feature films, the union states:
The industry in the United Kingdom is clearly dependent, at this time, on the flow of American investment to generate employment and income.
The union says that the Government have failed to understand that the Hollywood style of feature, where our only input is one of technical expertise, is different. We have heard much about that expertise today, but it does not produce one low-budget or middle-budget film, which is what we need.
The union states:
But it is this type of production, which expresses social and cultural concerns genuinely indigenous to British society, and budgeted way below the level of Hollywood fantasies, that we believe can be richly assisted by Government-aided investment. Without that assistance this sector will be unable to develop systematically, creatively, and in defiance of the American hold on the world market.
We are facing a double problem—the sell-out of the funding to the two major firms and the problems with broadcasting, television and pirate videos.
To answer those critic isms we have what, by any standards, is a fairly shabby document. It is disappointing because it does not share the producers' and the union's anxiety about the future, and they are outraged by the Government's failure to take the opportunity that we have here.
There are three reasons for the Government's failure. First, they do not understand the impact of the new technologies, such as cable and DBS, and the feedback from those technologies to films. The hon. Member for Canterbury (Mr. Crouch) understood that, but: the Government have not. The British film industry now has inadequate funding to compete with the money that will flow in from abroad.
Secondly, the Government have failed to see beyond their blinkered devotion to private enterprise and private profit. They are replacing the levy with a private structure that is based upon the two main elements of the industry. Since the Government cannot see beyond private enterprise, they have decided to subsidise it. They will not subsidise the public sector, but they will subsidise EMI and Rank to control the financing of the industry.
Thirdly, the Government have no imagination. They do not perceive film as anything but a commercial commodity—an object to be produced, bought and sold. They do not understand the importance of film to our cultural life.
Those failures of imagination and understanding led to the inadequate White Paper. The proposed system will fail because the funding is insufficient and because there will be no control over the new body. The Government have proposed nothing new to create funding or a different structure for the industry.
Among the many Back Bench suggestions was the possibility of levies on blank tapes or film cassettes. I am tempted towards that for two reasons. The first is that no one doubts that the kind of piracy that is now taking place means that the film producers are not getting an adequate return for their work, from which they could obtain the seedcorn for the future. Secondly, I am concerned about copyright.
The introduction of something like video has a number of implications. The blockbusters will make their money in the commercial cinema, but copyright is vital for small or medium-sized budget films. I do not discard the concept of additional funding through a tiny levy on blank tapes or the possibility of a slightly bigger levy on film cassettes which, after all, are sold for commercial purposes. Such a move would at least help in the fight against copyright piracy, which has gone on since the times of Shakespeare. It could also be argued that it is necessary, given our present economic needs. However, none of that is a substitute for proper public subsidy of this industry.
Conservative Members. particularly those on the Government Benches, have suggested that a useful opportunity is in front of us. They argue that, as we share the same language as the United States, there is a huge market to be penetrated by our industry. My hon. Friend the Member for Dagenham (Mr. Gould) and I remember hearing the same argument about the Common Market. We were told, "Here is a consumer market of 200 million people into which we can flood our goods." But the opposite happened, and their goods flooded into the United Kingdom with the result that we now have the largest deficit in trade in manufacturing goods in our history.—[HON. MEMBERS: "Whose fault was that?"] The Conservative party has been in government for six years, and Conservative Members ask that. They have destroyed British industry around their ears, and they ask whose fault it is. They are now trying to do the same to the British film industry. I do not want to spend too much time on such idiotic remarks, but if we look at what happened two years before, when we joined the Common Market in 1972, the answer is evident.
If the opposite is true in relation to that, it is even truer in relation to an organisation whose mainspring of production is the American Hollywood film. That is why we have reason to be anxious.
I am also perplexed by the curious way in which Conservative Members have tried to separate the artistic from the commercial. They make a curious distinction between films as commercial products and films as art. I do not understand what gives rise to that point of view. Was Chaplin or Buster Keaton commercial or artistic? In my view they were commercial, good film and culturally valuable. Is "Gregory's Girl" commercial or art? It is both. I cannot for the life of me understand why we should seek to make such a distinction in defence of a shoddy commercially based White Paper.
If there is no difference between the commercial and the artistic, there is a difference between film for television and film for cinema. There is a major difference between the product for the cinema and the product for the small screen in the home. The comparison in painting is between the big public statement—the religious paintings in the churches or the statues in the square— and the easel painting for the home. That distinction has not always been fully seized upon by our producers. If we neglect the cinema and allow films to die away, a major part of our culture will disappear. That is why it is important to get this right.
One sees the same in the social response involved. I remember a marvellous 10-second shot of Chaplin going into a hotel, tramp's costume and all, and as he put his elbow on the reception desk, his left foot came up and started circling, feeling for the customary brass rail to rest his foot on. The audience responded because that demanded a community response. It would not get the same kind of response in the home. Therefore, we must pay attention to this distinction.
My hon. Friend the Member for Newham, North-West (Mr. Banks) took up the point of my hon. Friend the Member for Dagenham that we are seeing a kind of colonisation— a commercial and cultural surrender to the United States. We are not facing a free market. We are surrendering to an extent to the mercies and good will of EMI and Rank in order to survive. The market will be taken over by the Americans because it is already half rigged in their interests. Only if we understand that shall we be able to combat the problem.
In Committee—we give fair warning now—we shall need to probe deeply the nature of the strange beast that the Government are creating to replace the present funding of our films—that rough beast, composed of EMI and Rank, slouching towards the bank to be reborn. The concept is wrong, first, because it removes public involvement—public support, subsidy and return—and hands it over to an organisation whose operations must be determined fundamentally by its own interests. It is not only that it is insufficient, but it is doing the wrong thing. Middle and low-budget films and the independent producer will be squeezed out. We shall probe that deeply and do all that we can to reverse it in Committee.
We must also discover in Committee what kind of locus there is for the educational aspects. There has been some argument as to what will happen to the film school. I should like to know what the Minister has in mind. Will it be an education department responsibility or the same kind of structure as now? Funding is available and the kind of funding that my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) suggested, should be forthcoming, both to develop and to fund the film school.
Films are more than commercial projects. The White Paper neither answers nor begins to answer some of the problems that arise when we consider the future of our films. The funding of the arts in Britain is a disgrace. It is the lowest in the western world. Mr. Deputy Speaker was tempted to intervene when the hon. Member for Canterbury spent some time talking about the theatre and the Theatres Trust. But he was correct. Just as the intense work that was done in his field by the Select Committee on Education, Science and Arts, which reported two years ago, has been largely ignored by the Government, so too its recommendations in relation to film have been ignored and ignored for the same reasons. This is a penny-pinching, mean-minded and ultimately completely philistine Government. I absolve some Back Benchers, but the Government, with their monetarist theories, are the most philistine Government that we have seen for a long time. Until they understand that film is more than a commercial project and more than a commodity to be bought and sold, they will not get it right. They cannot even get it right for national reasons. I shall give a historic example to illustrate the importance of film. After the war, the Italian film industry developed with films such as "Rome— Open City" and "Bicycle Thieves". Hon. Members will remember that the importance of the great Italian directors of that period, such as Rossellini, da Sica and later Visconti lay in helping to liberate Italy from the ignominy of Fascism. In the eyes of the world it was largely the Italian film industry that helped to slough off the ignominy of Fascism and helped Italy to emerge with dignity into the world. Those of us who lived through that period recall that vividly.
Therefore, film even more than domestic television is a vital instrument for our people and the nation. Just as it served a purpose in Italy after the war, it can serve another purpose for us. The British Council may fall victim to the cuts instituted by the Foreign Secretary, by the grace of the Chancellor of the Exchequer. I hope that the same thing will not happen to our film industry. It would seem that the Government just do not understand. As my hon. Friend the Member for Ashfield said, the Government praise the films but refuse to provide the resources that will enable other films to repeat their success.
What shall we do when in their place? I shall take up some of the suggestions of Conservative Members and the Select Committee. One problem is that we have neglected to place the arts and the film industry in their rightful place in the nation's thinking. For the first time, there is this year a Minister for the Arts in the Cabinet. However, it has been made clear to the world—God knows why—that he has been included in the Cabinet not for that, but for other reasons. We should have a single Ministry for the arts that encompasses not only music and the theatre but also films. We should recognise the importance of film not only in our commercial but in our cultural life. In addition, a British film authority should take over the main job of guiding, advising, funding and educating for a proper film industry.
British films have played a notable part in presenting an image of Britain to the world at large. But they are now being starved of the resources that they need to do that job properly. Nevertheless, independent producers and directors such as Bill Forsyth have produced films such as "Gregory's Girl" and, more recently, "Comfort and Joy", and there have also been bigger scale films, such as those directed by Attenborough. Hon. Members should bear in mind the response that one finds in the cinema to a film such as "Gregory's Girl". It is quite different from the community response that that sort of film meets with when it is shown on the small screen. One of the most important features of "Gandhi" was the sense of spaciousness within India. Those aspects cannot be repeated on television. The fight is on not merely to provide a cheap and subsidiary product for television, but to save the film industry both for our cinema and for what it can do for this country's image abroad.
I thank my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) and the hon. Member for Paisley, South (Mr. Buchan) for the kind things that they said about the recent arrival in the Trippier family. For as long as I have been privileged to be the Minister with special responsibilities for small firms, I have been saying that small is beautiful, but tonight that phrase has taken on a whole new meaning in the form, I understand, of a boy weighing 6 lb 11 oz who is to be called Edward David. I know that it is your privilege, Mr. Speaker, to name people, but I hope that you will be kind enough to allow me to get away with having done so. [HON. MEMBERS: "Hear, hear".]
I have listened with interest to the debate, but what has struck me most forcibly is not so much the support that our policy has received as the wholly negative approach of much of the opposition. The sort of tone adopted when many of the points were made suggested that we had a patient who was seriously ill and fading fast, and that all that would save him was a blood transfusion—regardless of the identity of the donor. Nothing could be further from the truth.
Turnover in feature film production in Britain is the highest for years. Alan Sapper, the General Secretary of ACTT, made it clear when he met my right hon. Friend the Member for Mole Valley (Mr. Baker), now the Minister for Local Government, that more of his freelance film members were in work than for many years.
Leading members of the industry know that production in all areas is stronger than ever before. They know that we have more new talent than ever before and more quality films than ever before. Yet Opposition Members persist in the pretence that the industry is some kind of lame duck. That is patently untrue.
Everyone says that the film industry is special, and in many ways they are right. Film production has no settled industrial structure like other industries—a point made by my hon. Friend the Member for Hendon, North (Mr. Gorst) and the hon. Member for Easington (Mr. Dorniand) and touched upon by the hon. Member for Stoke-on-Trent, Central (Mr. Fisher).
My hon. Friend the Member for Salisbury (Mr. Key) was right to say that cinemas are declining fast. However, new technology is allowing the strong underlying consumer demand for films to show itself in new ways. In many ways, the film industry is a microcosm of British industry generally in the nature of its problems. My hon. Friend the Member for Gravesham (Mr. Brinton) touched on that point in his excellent speech. There is an urgent need for Government to stop fiddling around with parts of it through endless regulations which not only waste everyone's time but remove vital degrees of freedom from both the industry and the consumer in certain key areas.
In replying to the debate and a number of the points raised, I wish to concentrate on two areas—cinemas and production. I agree with the comments of my hon. Friend the Member for Thanet, North (Mr. Gale) about the need to remove the Eady levy from cinemas. It has been an unreasonable and unjustifiable piece of discrimination. It is imperative that it is removed, but I wish to make it quite clear exactly why we are doing so. It is most definitely not a question of legislating to support the ailing cinema. In the consumer demand for films, the film industry faces strong competition from newer technological means. Television shows an enormous number of films—a trend that began in the 1960s. It has now reached the point where in 1983 BBC1 and BBC2 showed 786 films., the ITV companies about 350 films and Channel 4 about the same number. They were all pre-existing films to winch they had acquired the TV rights and not films that they had either made themselves or commissioned from outside.
The thing that especially distresses cinemas about TV competition is that there is no direct market relationship between the consumers and the films that they see. The TV licence is, of course, paid by the consumer, and TV advertising obviously comes through in the prices of the goods and services advertised. However, it is not like the cinemas, where the patron makes his choice of film and pays his money to see it.
Video also provides strong direct competition for the consumer's money. Here again, the market relationship is not completely clear cut. Video recorders are used to timeshift TV programmes and, like TV itself, the consumer tends to regard them as an overhead.
Even the tape hire transactions have had distortions in the high level of piracy. However, thanks to private Members' legislation—fully supported by the Government—the means have been made available for rights owners to seek effective redress. That has cut piracy dramatically. However, there are signs of a levelling off of growth in video recorder ownership. With the past fragmentation of ownership rights, the industry has squandered 30 years of film in three years. Also, as the video market matures, there are signs of a diminution in the viewing of pre-recorded material as the length of ownership of a VCR grows. Signs of contraction are there, and it may be that that element of competition with the cinema will become less intense.
It is probably reasonable to assume that there are 4 billion individual film viewings via TV, where it is, in terms of marginal cost, free. For VCR owners, three prerecorded items, mostly films, in two weeks is a reasonable estimate. In audience terms, those are now well ahead of cinema, but in the fight for the consumer, cinemas are tied by the levy. We are removing it to allow cinemas to compete more effectively for their place in the consumer's priorities. Whether they do or not is up to them.
The various outlets for film represent a series of separate market windows. There are clearly interrelationships, the most important of which is that cinemas are the showcases. A successful cinema release is a major factor in determining the prices paid by other market outlets and, indeed, the timing of the release of a film in those media. Not only are we standing back from interference with the cinema sector; we are indirectly giving producers additional freedom in determing the exploitation pattern that will let them maximise their earnings from their films.
I listened carefully to the hon. Member for Easington, who made a valid point in regard to the other aspect of the cinema that I regard as being of high importance. Cinemas provide a social and leisure activity, particularly in city centres and deprived urban areas. It is essential that those cinemas, all of which are private sector operations, should have the financial burden of the levy removed so that they can continue to contribute to a balanced development in inner urban areas.
The hon. Member for Easington also referred to clause 4(3), which gives the Secretary of State powers to engage an outside person to make recommendations and discharge his functions in regard to the development finance scheme only. I think the hon. Gentleman will find his point answered there.
With great respect to the hon. Gentleman, I have so many points to make that I must press on with my speech.
The film industry's links with the educational system are very interesting. One particular area of promotion is films relating to set books in the educational curriculum. Wherever possible, cinemas try to offer reduced prices to children. Extra freedom there will be very welcome.
Cinema is also the reason why people such as David Puttnam make their films in the way they do. I was very impressed with a report that I read of his comments at the launch of British Film Year, when his new film, "Killing Fields" was shown. He said:
I loathe seeing films on television. I loathe seeing films on video cassettes. For me there is a wholly diminished image. There's absolutely no point (for TV and video) in Roland Joffe and all the rest of the people I've worked with over the past four years killing ourselves to get the sound perfect and the image perfect. Why on earth did Chris Menges ever bother to take his light meter out? There's no point because basically the image you see on television is vastly diminished. It's a terrible way of seeing a film and I'm not prepared and neither are my colleagues to see cinema vanish in this country without a hell of a fight.
That was, as I mentioned earlier, at the launch of British Film Year. It is another excellent example of a diverse industry that is determined to get people back to the
cinemas to promote the United Kingdom as a film-making country and sell more films abroad. But in the United Kingdom it will seek to do more than that. It will seek to promote greater awareness of the present place and future potential of film in industry and education.
It is an exciting initiative and the Government fully support the objectives as well as the strong and determined self-help theme implicit in the initiative. The Government have agreed to provide £250,000 to support that activity. Particularly impressive is the way that all parts of a highly individualistic industry are working together in a common cause.
I turn to the arguments that have been advanced on the problems raised by the removal of the Eady levy by the hon. Members for Stalybridge and Hyde (Mr. Pendry) and St. Helens, South (Mr. Bermingham). I shall refer to the Government's decision not to extend Eady-style levies to other exhibitors' media. I find the analysis in the White Paper on this issue perfectly clear and the conclusions completely logical. I am at something of a loss to understand the justification for the "levy everything" school of thought. Most of the consequences of Eady abolition have already been dealt with by my hon. Friend the Minister of State but there is the issue of the "loss" that will be suffered by producers, who were the principal intended beneficiaries of the levy when it was first introduced. The final figure for this year's Eady levy payments into the British films fund was £3·8 million. I remind the House that the levy year ends in October.
With the prior charges, the £1·5 million to the National Film Finance Corporation and the payments to the National Film and Television School and the British Film Institute production board, payments to or on behalf of producers will be about £1·6 million. It is virtually impossible to estimate what the current levy year will bring in. However, if the payments fall off in reasonable proportion to the decline in cinema audiences, which is running at a fairly consistent 25 per cent. down on last year, the payment to producers will be a good deal less, especially when the additional payment to the British Films Institute is allowed for.
Let us take a generous view of the loss of expectations of producers and take the £1·6 million in payments that is likely for this year. The first thing to realise is the significance of "on behalf of'. Most of the Eady payments are assigned by producers to distributors. The figure varies from year to year but it averages out at between half and two thirds being assigned in this way. Again, taking the most favourable assumption for producers, their loss from Eady abolition is about £600,000. We have already made it clear that the Government are putting back into production nearly twice that sum via the new company. The "loss-to-producers argument" is clearly unjustifiable as an argument in favour of levy extension.
One of the arguments for extending the levy is that television is somehow unfair to film-makers. It appears that the independent side is reasonably well endowed with money. There seem to be two slight variants of the argument. The first is that television has a general duty to the film industry and should pay it more than it pays for the purchase of film rights. The second variant seeks to introduce a degree of sophistication into the proceedings by expressing the argument in competition policy terms. The argument goes that the BBC and ITV are a duopoly and conspire together to pay trivial prices for television rights to films. The facts do not bear out that assertion.
It is generally known that a film should have three years to establish its full potential before it goes on to the small screen. I doubt whether there are more than about 120 new films in the English language, pre-promoted in the cinema, that are suitable and newly available in the most recent 12 month period. The rights owners are enormously skilled at packaging films in groups, rather like auction lots. There will be one highly desirable film offered with some which are mediocre and few which cannnot be got rid of in any other way. There are slight differences in the list of large films that ITV wants from the ones that the BBC wants but it is a question of strong competition for scarce goods forcing the price up and definitely not the reverse.
For the BBC, an extra payment in favour of the rights owner would be in effect an addition to the licence fee. That would be a problem for my right hon. and learned Friend the Home Secretary. I regard the proposition as utterly unreasonable. Among the leviers, the Association of Independent Producers has sought levies on various items to raise about £35 million for the independent maker. I have good news for it. There is a levy on ITV companies and £45 million now goes straight to that area of independent programme making. The mechanism is, of course, Channel 4.
The last major area to be cast in the role of sacrificial lamb is the video industry. Again, I suspect that the choice has much to do with the growth image the industry presents. In its early days it was unquestionably disorderly. Major video rights were held in a fragmented way and there was no clear "best" solution to the right retail mechanism. The question was, should it be sale or hire? Piracy was rampant in the chaos. Maturity has, however, come quickly to this industry and, as is so often the way, the highly enterpreneurial small firms in the sector can give a lead where one might have expected longer established companies to set the tone.
With the dramatic reduction of piracy, for the reasons I have already mentioned, a more settled pattern to rights ownership and the dominance of renting now clearly allowed for, there is simply no justification for saying that any producer suffers an economic loss in this sector either because it is disorderly or because he suffers as a result of someone else's dominant market position. Those would be the only arguments for an Eady-style levy on video tape, and it would, of course, have to be on pre-recorded tape. The Government have made it plain, and I repeat it now, that this argument does not stand up.
The argument then turns to blank tape, and I can assure the House, particularly my hon. Friend the Member for Salisbury (Mr. Key) that the Government will open the question of a levy on blank tape for copyright purposes to a further process of consultation. This levy should be the subject of further consultations because it would be a levy on copyright grounds only—to protect copyright owners. It would not be to recycle funds from one part of the industry to another—a process that the Government regard as wholly inappropriate.
Considerable dissatisfaction has been expressed here and elsewhere about the tax regime for films. The hon. Members for Dagenham (Mr. Gould) and for Cambridgeshire, North-East (Mr. Freud) have made that point. While this is, of course, a matter for my right hon. Friend the Chancellor of the Exchequer, who made the Government's new corporate tax strategy completely clear in his Budget statement, it seems that I will have to reiterate the point. Although there has been extensive debate about the implications for films, it might be useful if I remind the House of the regime that we have now and just how we arrived at it.
The main rate of corporation tax is being reduced from 52 per cent. to 35 per cent. by the financial year 1986. The small company rate has been reduced to 30 per cent. already. To help business further, the national insurance surcharge has been abolished. We maintain that lower tax rates will encourage enterprise and risk-taking and will reward success and profitability. Just as important, the distorting effect of excessive tax subsidies will be removed, so that investment decisions will be influenced more by the commercial judgment of managers and less by the characteristics of the tax system. In particular, businesses will no longer be drawn into investment by distortions in the tax system, which have led to the multitude of avoidance devices of one sort and another. That point was correctly made by my hon. Friend the Member for Wealden (Sir G. Johnson-Smith). These changes apply to the film industry as much as to others, but the film industry has pointed out special aspects of its business which it believes deserve special treatment.
There are three main principles underlying our approach. First, we recognise the contribution to the economy and to employment that a prosperous and innovative film industry can make. We have shown that we are good at making films. Secondly, the taxation of the film industry has to be properly integrated into our overall tax policy. All industries can claim to be special in some way. Thirdly, we are firmly opposed to the use of films for artificial tax avoidance purposes by people who have little or no interest in films or film making.
The Government have recognised, however, on the basis of detailed discussions with the industry, the special nature of the film industry. We have introduced four special measures to help. First, the entitlement of films to capital allowances—which was due to run out in 1987—has been made permanent for British films, but the rates of capital allowance are to be those applicable to machinery and plant generally.
Secondly, the film industry will have the option of choosing to take the capital allowances—at the going rate—or to be taxed on an alternative basis which allows expenditure to be written off on revenue account, broadly in line with the income accruing to the film.
Thirdly, the industry is to have a further option, which is to graft a system known as "cost recovery" on to the write-off basis I have just described. In effect, that will mean that expenditure on a film can be written off even more quickly in certain circumstances. I want to make it clear that that option is available to no other industry. It goes as far as we reasonably can. To go any further would effectively reintroduce the distorting effect of investment subsidies, and it would also reintroduce the distorting effects of the tax treatment to which I referred earlier and which was the basis of crude tax manipulation.
That brings me to the fourth special provision for the film industry, which is the one that I regard as of key importance. It is the extension of the business expansion scheme to the film industry. It was clearly misunderstood by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody).
The House will be familiar with the provisions of the scheme, whose aim is to encourage the creation of new firms and the expansion of existing small firms. Those companies are vitally important as a source of new jobs and prosperity, as the recent CBI Gallup survey shows. The aim is also, of course, to encourage investment in activities which may be high-risk and which might play a valuable part in creating prosperity tomorrow. We provide, through the business expansion scheme, a generous level of relief which to some extent matches the risks.
The business expansion scheme is now in its second year. The evidence is that it has already been a success. The picture that is emerging for the first year—1983–84—is that the scheme has attracted a great deal of money, and that most of it has gone into new businesses. That is particularly relevant to the film industry. It is plain that the scheme is directly applicable to films. The scheme is designed to mobilise a new source of financing—equity investment by individuals—for start-up companies and small established companies wishing to expand. As I have said, the idea is to provide growth of real activity including jobs.
Film production, as has been said by a number of hon. Members, is an extremely risky business. It also involves real economic activity at every stage from production through to shooting and editing and arriving at the original master negative disc or tape. The risks can be particularly high and raising finance can be hard for the small independent film producer, especially one who has yet to make his name.
The film industry lobbied for inclusion in the scheme and we accepted that. Film production companies are indeed involved in the sort of active and high-risk business which the scheme is designed to help. I should like the Oliver Twists among Opposition Members and in the industry to bear in mind the following facts. There is strong Government support for film as art from my right hon. Friend the Minister for the Arts of about £7·5 million. The Government commission about £4·5 million of "shorts" a year. There is already a £45 million levy on ITV paid direct to independent producers through Channel 4. All that added to the new support already announced amounts to some £57 million of support, which is well in excess of what the most demanding lobbies have asked for, and well in excess of the £35 million that is referred to as the money that France gives to its film industry.
All that is important. It is a fantastic sum of money. The industry is strong and diverse. There is a clear choice. We have a commercial film industry. We can have it debilitated by subsidy, or we can have an industry which is dynamic and diverse. I know which I would rather see, and Government policy, by removing bias from the business framework and by getting rid of three quangos, eight Acts and 25 statutory instruments, will achieve that success.
|Division No. 11]||[10 pm|
|Alexander, Richard||Baker, Nicholas (N Dorset)|
|Amess, David||Beaumont-Dark, Anthony|
|Arnold, Tom||Bellingham, Henry|
|Ashby, David||Benyon, William|
|Atkins, Robert (South Ribble)||Best, Keith|
|Atkinson, David (B'm'th E)||Bevan, David Gilroy|
|Baker, Rt Hon K. (Mole Vall'y)||Biffen, Rt Hon John|
|Biggs-Davison, Sir John||Harris, David|
|Blackburn, John||Harvey, Robert|
|Blaker, Rt Hon Sir Peter||Haselhurst, Alan|
|Boscawen, Hon Robert||Hawkins, Sir Paul (SW N'folk)|
|Bottomley, Peter||Hawksley, Warren|
|Bottomley, Mrs Virginia||Hayes, J.|
|Bowden, Gerald (Dulwich)||Hayward, Robert|
|Braine, Sir Bernard||Heathcoat-Amory, David|
|Brandon-Bravo, Martin||Heddle, John|
|Bright, Graham||Henderson, Barry|
|Brinton, Tim||Hickmet, Richard|
|Brooke, Hon Peter||Higgins, Rt Hon Terence L.|
|Brown, M. (Brigg & Cl'thpes)||Hind, Kenneth|
|Browne, John||Hirst, Michael|
|Bruinvels, Peter||Hogg, Hon Douglas (Gr'th'm)|
|Bryan, Sir Paul||Holland, Sir Philip (Gedling)|
|Buchanan-Smith, Rt Hon A.||Hooson, Tom|
|Buck, Sir Antony||Howard, Michael|
|Budgen, Nick||Howarth, Alan (Stratf'd-on-A)|
|Bulmer, Esmond||Howe, Rt Hon Sir Geoffrey|
|Burt, Alistair||Hubbard-Miles, Peter|
|Butler, Hon Adam||Hunt, David (Wirral)|
|Butterfill, John||Hunt, John (Ravensbourne)|
|Carlisle, John (N Luton)||Hunter, Andrew|
|Carlisle, Kenneth (Lincoln)||Hurd, Rt Hon Douglas|
|Carlisle, Rt Hon M. (Wton S)||Jackson, Robert|
|Carttiss, Michael||Jessel, Toby|
|Cash, William||Johnson Smith, Sir Geoffrey|
|Chapman, Sydney||Jones, Gwilym (Cardiff N)|
|Chope, Christopher||Jones, Robert (W Herts)|
|Clark, Dr Michael (Rochford)||Jopling, Rt Hon Michael|
|Clarke, Rt Hon K. (Rushcliffe)||Kellett-Bowman, Mrs Elaine|
|Clegg, Sir Walter||Kershaw, Sir Anthony|
|Cockeram, Eric||Key, Robert|
|Colvin, Michael||King, Roger (B'ham N'field)|
|Conway, Derek||King, Rt Hon Tom|
|Coombs, Simon||Knight, Gregory (Derby N)|
|Cope, John||Knight, Mrs Jill (Edgbaston)|
|Couchman, James||Knowles, Michael|
|Cranborne, Viscount||Lamont, Norman|
|Crouch, David||Latham, Michael|
|Currie, Mrs Edwina||Lawler, Geoffrey|
|Dorrell, Stephen||Lawrence, Ivan|
|Douglas-Hamilton, Lord J.||Lawson, Rt Hon Nigel|
|Dunn, Robert||Leigh, Edward (Gainsbor'gh)|
|Durant, Tony||Lennox-Boyd, Hon Mark|
|Emery, Sir Peter||Lester, Jim|
|Eyre, Sir Reginald||Lewis, Sir Kenneth (Stamf'd)|
|Fallon, Michael||Lightbown, David|
|Favell, Anthony||Li 1 ley, Peter|
|Fenner, Mrs Peggy||Lloyd, Peter, (Fareham)|
|Finsberg, Sir Geoffrey||Lord, Michael|
|Fletcher, Alexander||Lyell, Nicholas|
|Fookes, Miss Janet||McCrindle, Robert|
|Forman, Nigel||McCurley, Mrs Anna|
|Forsyth, Michael (Stirling)||Macfarlane, Neil|
|Forth, Eric||MacKay, Andrew (Berkshire)|
|Fox, Marcus||MacKay, John (Argyll & Bute)|
|Franks, Cecil||Maclean, David John|
|Fraser, Peter (Angus East)||McQuarrie, Albert|
|Freeman, Roger||Major, John|
|Gale, Roger||Malins, Humfrey|
|Galley, Roy||Malone, Gerald|
|Gardiner, George (Reigate)||Marlow, Antony|
|Gardner, Sir Edward (Fylde)||Mates, Michael|
|Garel-Jones, Tristan||Mather, Carol|
|Gorst, John||Maude, Hon Francis|
|Gower, Sir Raymond||Maxwell-Hyslop, Robin|
|Grant, Sir Anthony||Mayhew, Sir Patrick|
|Greenway, Harry||Merchant, Piers|
|Gregory, Conal||Meyer, Sir Anthony|
|Griffiths, E. (B'y St Edm'ds)||Miller, Hal (B'grove)|
|Griffiths, Peter (Portsm'th N)||Mills, Iain (Meriden)|
|Ground, Patrick||Mills, Sir Peter (West Devon)|
|Gummer, John Selwyn||Miscampbell, Norman|
|Hamilton, Hon A. (Epsom)||Montgomery, Fergus|
|Hamilton, Neil (Tatton)||Morris, M. (N'hampton, S)|
|Hampson, Dr Keith||Morrison, Hon P. (Chester)|
|Hanley, Jeremy||Moynihan, Hon C.|
|Hargreaves, Kenneth||Mudd, David|
|Murphy, Christopher||Ridsdale, Sir Julian|
|Nelson, Anthony||St. John-Stevas, Rt Hon N.|
|Neubert, Michael||Shaw, Sir Michael (Scarf)|
|Nicholls, Patrick||Silvester, Fred|
|Norris, Steven||Skeet, T. H. H.|
|Onslow, Cranley||Soames, Hon Nicholas|
|Oppenheim, Phillip||Stewart, Allan (Eastwood)|
|Osborn, Sir John||Stewart, Andrew (Sherwood)|
|Ottaway, Richard||Taylor, John (Solihull)|
|Page, Richard (Herts SW)||Taylor, Teddy (S'end E)|
|Pawsey, James||Thomas, Rt Hon Peter|
|Percival, Rt Hon Sir Ian||Thompson, Donald (Calder V)|
|Pollock, Alexander||Thompson, Patrick (N'ich N)|
|Porter, Barry||Thome, Neil (Word S)|
|Powell, William (Corby)||Trippier, David|
|Powley, John||Wardle, C. (Bexhill)|
|Proctor, K. Harvey||Warren, Kenneth|
|Raffan, Keith||Watts, John|
|Rathbone, Tim||Yeo, Tim|
|Rhodes James, Robert||Tellers for the Ayes:|
|Rhys Williams, Sir Brandon||Mr. Tim Sainsbury and|
|Ridley, Rt Hon Nicholas||Mr. Ian Lang.|
|Archer, Rt Hon Peter||Dunwoody, Hon Mrs G.|
|Atkinson, N. (Tottenham)||Eadie, Alex|
|Bagier, Gordon A. T.||Eastham, Ken|
|Banks, Tony (Newham NW)||Evans, John (St. Helens N)|
|Barnett, Guy||Ewing, Harry|
|Barron, Kevin||Fatchett, Derek|
|Beckett, Mrs Margaret||Faulds, Andrew|
|Beith, A. J.||Field, Frank (Birkenhead)|
|Benn, Tony||Fields, T. (L'pool Broad Gn)|
|Bermingham, Gerald||Fisher, Mark|
|Boyes, Roland||Foot, Rt Hon Michael|
|Bray, Dr Jeremy||Freud, Clement|
|Brown, Gordon (D'f'mline E)||Golding, John|
|Brown, N. (N'c'tle-u-Tyne E)||Gould, Bryan|
|Buchan, Norman||Gourlay, Harry|
|Caborn, Richard||Hamilton, James (M'well N)|
|Callaghan, Jim (Heyw'd & M)||Hardy, Peter|
|Campbell-Savours, Dale||Harrison, Rt Hon Walter|
|Carl Me, Alexander (Montg'y)||Haynes, Frank|
|Clark, Dr David (S Shields)||Hogg, N. (C'nauld & Kilsyth)|
|Clarke, Thomas||Holland, Stuart (Vauxhall)|
|Clwyd, Mrs Ann||Howells, Geraint|
|Cocks, Rt Hon M. (Bristol S.)||Hughes, Dr. Mark (Durham)|
|Cook, Robin F. (Livingston)||Hughes, Robert (Aberdeen N)|
|Corbyn, Jeremy||Hughes, Sean (Knowsley S)|
|Cowans, Harry||Jones, Barry (Alyn & Deeside)|
|Crowther, Stan||Kirkwood, Archy|
|Dalyell, Tam||Lamond, James|
|Davis, Terry (B'ham, H'ge HI)||Leighton, Ronald|
|Deakins, Eric||Lewis, Terence (Worsley)|
|Dewar, Donald||Lloyd, Tony (Stretford)|
|Dormand, Jack||Loyden, Edward|
|Douglas, Dick||McCartney, Hugh|
|Dubs, Alfred||McGuire, Michael|
|Duffy, A. E. P.||McKay, Allen (Penistone)|
|McNamara, Kevin||Rowlands, Ted|
|McTaggart, Robert||Sheerman, Barry|
|McWilliam, John||Short, Ms Clare (Ladywood)|
|Madden, Max||Skinner, Dennis|
|Marek, Dr John||Smith, C.(lsl'ton S & F'bury)|
|Maxton, John||Smith, Rt Hon J. (M'kl'ds E)|
|Maynard, Miss Joan||Soley, Clive|
|Miller, Dr M. S. (E Kilbride)||Spearing, Nigel|
|Nellist, David||Thome, Stan (Preston)|
|Oakes, Rt Hon Gordon||Tinn, James|
|Park, George||Wainwright, R.|
|Pavitt, Laurie||Wallace, James|
|Pendry, Tom||Warden, Gareth (Gower)|
|Penhaligon, David||Wareing, Robert|
|Prescott, John||Welsh, Michael|
|Redmond, M.||Williams, Rt Hon A.|
|Rogers, Allan||Tellers for the Noes:|
|Ross, Ernest (Dundee W)||Dr. Roger Thomas and|
|Ross, Stephen (Isle of Wight)||Mr. Ray Powell.|