Film Industry

– in the House of Commons at 3:30 pm on 6th June 1995.

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Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage 3:30 pm, 6th June 1995

With permission, Madam Speaker, I should like to make a statement about the British film industry.

As the House knows, the right hon. Member for Manchester, Gorton (Mr. Kaufman) has a longer history of expertise and knowledge about films than I have. It is therefore right that I should begin by acknowledging my debt to the National Heritage Select Committee, which he chairs. I very much welcome its thorough and perceptive report on the industry. I have, as I told the Committee I would, taken the opportunity of my response to its report to set out a full analysis of the state of the industry and of the issues confronting it.

The right hon. Member for Gorton has apologised for not being in the House this afternoon. He is attending Lord Wilson's funeral.

My response to the Select Committee represents the first statement of Government policy for the film industry since 1984. I hope that this response will be the beginning of a new and constructive dialogue between the Government and the film industry. I have set up a new team within my Department specifically to sponsor the wider audio-visual industry and to ensure that its needs are better understood by Government. I have done that because I believe that this sector, including the film industry as part of it, represents a major opportunity for Britain.

That opportunity takes two forms. Partly, it is an opportunity to create employment in Britain by attracting foreign film makers to come here to make films, and partly it is an opportunity to encourage British film makers to exploit a growing market and to take advantage of our considerable natural strengths in this field.

Britain is already attractive to foreign film makers. Last year saw American companies spend over £176 million in Britain, compared with under £70 million two years earlier, but more does need to be done.

The Select Committee rightly focused on the work of the British Film Commission, which is funded by my Department and which helps attract film makers to Britain. The Select Committee emphasised the need for a local film commission for London. I agree with the Committee and can today announce that we shall be offering direct pump-priming support for the establishment of a London Film Commission.

The Committee also highlighted the need to deal efficiently with work permit requirements for film production personnel working in the UK. I agree with the importance that the Committee attaches to this issue and my Department will work with the Department of Employment and with the British Film Commission to ensure that the needs of the industry are recognised.

The Committee's report includes a number of recommendations relating to taxation. The Government recognise the importance attached to tax issues by many in the industry. As the House knows, however, tax policy is a matter for my right hon. and learned Friend the Chancellor of the Exchequer, who announces his proposals for change each year in the Budget. I cannot therefore respond directly today to those aspects of the Committee's report which deal with tax policy. I can say, however, that as he prepares his Budget statement this year, my right hon. and learned Friend will carefully consider the Committee's recommendations together with the logic that underpins them. But the Government are not simply concerned to attract foreign film-makers to Britain —we are also concerned to reinforce the strength of our own film industry.

Despite reports to the contrary, the sector is doing well. Out of 24 feature films selected for the Cannes film competition this year, four were British, and three of them —"The Madness of King George", "Carrington", and "Land and Freedom" won awards. [HON. MEMBERS: "How many have you seen?"] Two of them. It is a success story. The question is how to build on that success.

The Government believe that the development of the independent production sector, as a result of the foundation of Channel 4 in 1980, and the introduction of the statutory independent production quota in 1990, are the key to the answer. This sector has produced a large number of small production companies. We now need to encourage them to grow into larger enterprises that are able to be more independent of television commissions and to absorb the greater risks involved in film-making for the cinema.

The television sector itself has a part to play in that process. Both Channel 4 and, more recently, the BBC and Granada have seen the benefits of financing films which have a cinema and video life before they are broadcast.

Producers cannot look only to television for finance, however. If independent production for the cinema is to grow, it must be able to attract support from capital markets. I am therefore establishing a new advisory committee to examine the financing of independent film production and to recommend the steps necessary to allow the sector to raise the capital it needs to finance its growth.

In the meantime, I can announce that Government action has made support available to the sector from a new source —the national lottery.

Since 1986 the Government have provided support to British Screen Finance, which has invested £37 million in 102 feature films. British Screen invests only in films which it believes have commercial potential and it shares in any profits which the films generate. It invests alongside the private sector. The Government's support to British Screen will continue.

In addition to this support, the Arts Council of England has announced that it intends to use lottery money to invest in British films in the way pioneered by British Screen. Depending on the quality of applications the Arts Council estimates that it could invest more than £70 million in British film making over the next five years.

Furthermore the Arts Council is making available further substantial sums, again depending on the quality of applications, to improve the accessibility of new British films to British audiences. This money will be available to increase the number of prints available and to enhance the promotion of new British films.

Over five years, therefore, the national lottery is offering the prospect of more than £80 million of new support to British film. This is but one more example of the opportunities opened by the national lottery which will —I believe —be widely welcomed.

A further issue stressed by the Select Committee was the need to maintain support for training in film-making skills. I agree with the Committee on this subject and will—as it suggests—discuss its specific proposals with industry interests. I am also pleased to be able to tell the House that the national film and television school, which receives support from my Department, has today announced that it has reached agreement with the BBC on a formula that will provide for the reopening of the Ealing studios. Ealing has a particular place in the history of British film making and I am sure the House will join me in welcoming the news.

This year is the centenary of the cinema. My final announcements therefore concern the Government's plans to mark this anniversary. First, they are providing £180,000 to support Cinema 100, an organisation created by the industry to mark the centenary. Secondly, the Government plan to examine ideas for a west end showcase dedicated to the exhibition of new British films. We believe that the proposal could enhance critical and audience interest in new British work; we look to involve other interested parties, and I am delighted to welcome the participation of the BBC.

If today's trends continue, that showcase will have plenty to exhibit. I have made no secret of the fact that my own attitude to the film industry has changed since I learned more about it. In 10 years, the British cinema audience has more than doubled—up from 58 million admissions in 1984 to 124 million last year. More films were made in Britain in 1994 than in any year since the early 1970s. The growth and increasing sophistication of the cinema audience; the earlier growth of video; and the imminent explosion in the television market as a result of the arrival of digital broadcasting all combine to create an important opportunity for British film. The Government are determined to ensure that that opportunity is not lost.

Photo of Mr Chris Smith Mr Chris Smith Shadow Secretary of State

I join the Secretary of State in paying tribute to the work of the Select Committee on the future of the film industry. I apologise on behalf of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) who, as the Secretary of State said, is attending the funeral of Lord Wilson of Rievaulx.

I welcome this first statement from the Government on the film industry in 11 years. However, its content is deeply disappointing. Of course some of the points in the Government's report and in the statement are welcome. The money from the lottery will be useful. The west end showcase will, I am sure, be a good idea. The statement of at least support for a London Film Commission is welcome, and the announcement of the purchase of Ealing studios by the National film and television school is undoubtedly welcome. I am sure that a new advisory committee in the Department will do no harm, but none of this amounts to much. As Rick Blane would have said, it does not amount to a hill of beans in this crazy world.

Specifically, why is there not a fuller analysis of the Select Committee's proposals on self-financing fiscal incentives to promote production? What notice has the Minister taken of the Irish experience with section 35, which is now reaping rich rewards for the Irish Exchequer as well as for the Irish film industry? What notice has he taken of the detailed economic modelling work that was recently carried out by the British Screen Advisory Council? Of course the Secretary of State must take those decisions together with his right hon. and learned Friend the Chancellor of the Exchequer, but where on earth is the evidence that the Government are thinking seriously about these possibilities?

The report makes much of the growth in American investment here in recent years, but why is there no acknowledgement of the massive trade deficit in film that persists between us and the United States? Why is there no recognition whatever in the statement or in the accompanying report of the one crucial and overriding factor that has driven increased American investment in the past couple of years—the favourable pound-dollar exchange rate? Why does the Minister reject out of hand any reform of the Channel 4 funding formula, which is not mentioned in his statement and is addressed fleetingly and rejected in the report? At the very least there could be some reform of the scheduled review date. In due course that could lead to £15 million of extra investment a year in British film production.

The Secretary of State spoke about pump-priming funds for a London Film Commission. What amount does he have in mind? That is nowhere specified. It has asked for £400,000. How much does he propose to devote to it? He had many warm words on the excellent work of the British Film Commission, but he has cut its budget in recent years. Is it true that he has no intention at all of making good those cuts? While we all welcome the news of the purchase of Ealing studios by the national film and television school, are not the funds for that coming from the Foundation for Sport and the Arts and not directly from the Government? Why is there no mention in the statement or in the report of the importance of developing the excellent film industries in Scotland and Wales?

Is it not true that the report adds up to £16 million a year extra from the lottery; £2 million for Ealing from the Foundation for Sport and the Arts; nothing for Channel 4; a token amount for a London Film Commission; £180,000 for Cinema 100; and a new committee? That is about it.

In "The Third Man"—in case the Secretary of State is not aware of the film, I point out to him that the Select Committee helpfully placed a photograph of it on the front of its report—Harry Lime famously said that 500 years of democracy in Switzerland had produced nothing but the cuckoo clock. Sixteen years of Tory Government, a series of Downing street seminars and a visit by the Secretary of State to Cannes to find out what a film actually is have produced nothing but a disappointing set of assertions and virtually no real action to support the British film industry.

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

To describe that reaction as churlish is an understatement. One of the questions that we shall repeatedly ask the Opposition in the coming months is how much they would spend on different aspects of their ambitions. We begin to learn a little about how they approach the expenditure of moneys under their control when we hear the hon. Gentleman dismiss more than £80 million of new support to the film industry as not a hill of beans. Most in the film industry will recognise that support for production from lottery resources as well as support for extra prints and support for extra promotion, so that we do not simply produce films but get them in front of audiences, will be seen as an important step forward in film policy in Britain.

The hon. Gentleman asked me why I did not deal with tax. As I have made clear in my statement, the answer is that I am not Chancellor of the Exchequer. The hon. Gentleman also asked me why I did not cover the impact of film in foreign trade. He must have missed pages 16 and 17 of the document, which are devoted to virtually nothing else.

The hon. Gentleman asked me what notice I had taken of the experience of British Screen. I should have thought that I made it pretty clear that I found the experience of British Screen as a mechanism for developing the film industry rather attractive, as I said in the statement that that was the process and the idea that would be followed up by the Arts Council in the distribution of its resources.

The hon. Gentleman asks me how much money we shall make available to the London Film Commission. The answer is that we shall provide pump-priming money; we are negotiating with the commission over precisely how much money will be needed. The hon. Gentleman accused me of having cut the British Film Commission's budget; that is not true. The British Film Commission's budget this year is the same as it was last year.

The hon. Gentleman regards it as a source of criticism—I do not accept this—that the purchase, refinancing and development of Ealing will be financed in part by the Foundation for Sport and the Arts. I should have thought that that would be something to celebrate and welcome.

Finally, the hon. Gentleman asked me why I did not elaborate on Channel 4. The reason was that I had no announcement to make on that subject, as the decision was made six months ago.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

Is my right hon. Friend aware that a substantial Malaysian group, Third Millennium Studios, has planning applications before Watford borough council and Three Rivers district council to construct in the borough of Watford what would be the largest film studio in western Europe? Can my right hon. Friend, if those planning applications go through—as I hope and expect they will—assure me of his full support for this plan which will not only turn Watford into the Hollywood of western Europe, but will give satisfaction to the hon. Member for Islington, South and Finsbury (Mr. Smith), who is himself a Watford boy?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I am grateful to my right hon. Friend. He draws attention to an important point, which is that the interest being shown by Third Millennium Studios in the development of the Leavesden site is yet further evidence of the attractions of Britain as a film-making destination to people coming from overseas. We should seek to develop that attraction, and my statement sets out some steps that we shall take to do precisely that.

Photo of Mr Robert Maclennan Mr Robert Maclennan Party Chair, Liberal Democrats

I welcome the disarming admission of ignorance by the Secretary of State and I hope that it presages wisdom on the subject of films, although I think that he will have to go a good deal further to satisfy the industry. What attention, if any, is his Department giving to the saga of Brent Walker at Elstree? Does he hope that that saga will come to a happy conclusion?

I understand why the Secretary of State is not willing to say anything about taxation. However, does he recognise that taxation changes could generate considerable additional activity in this country which, in the medium term, could be beneficial to the Revenue?

Finally, there is a slightly metropolitan flavour to the statement, which concentrates rather heavily on London. Has the Secretary of State nothing to say about the promotion of a national network of British screen activity, for there is much in Scotland, the provinces, Wales and Northern Ireland that could be exploited for the making of British films?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

The hon. Gentleman asked me several questions, the first of which was whether I was interested in what will happen at Elstree, and whether I hoped for a good and helpful outcome. Of course, the answer is yes, although the negotiations are taking place between private sector parties and the Department of National Heritage is not a direct participant.

I certainly do not seek the metropolitan bias that the hon. Gentleman detected in my statement. It is necessary for us to continue to develop London as an important part of the film-making jigsaw. That is why we must develop a London Film Commission, and why I am attracted to the idea of a west end showcase. But I am also interested in ensuring that the growth of the British film industry will mean British films being shown in the rest of the country as well. That is why I welcome the interest shown by the Arts Council in using lottery money to increase the number of prints and to increase the promotion budgets for British films, precisely so that they can be shown in cinemas outside the metropolitan area.

As for tax, my right hon. and learned Friend the Chancellor has made it clear that he will consider the proposals of the Select Committee and the representations made by the industry when he prepares his Budget for November. I am sure that the representatives of the industry, and probably the members of the Select Committee, too, will follow up that interest.

Photo of Roger Gale Roger Gale , North Thanet

I am sorry that the hon. Member for Islington, South and Finsbury (Mr. Smith) was so churlish in his response, and I hope that my right hon. Friend's statement will be seen for what it really is—not as tokenism towards the luvvies or as advocating subsidies for leisure, but as a recognition of the need to back an industry that could be worth millions of pounds, dollars, yen and ecu. The fundamental requirement is still for a fiscal level playing field with our competitors in Ireland and France. Will my right hon. Friend use all his endeavours to ensure that that is achieved?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I have already made it clear that that is a matter for the Chancellor of the Exchequer. No doubt there will be plenty of opportunities for all those interested to make their views known to my right hon. and learned Friend ahead of the Budget. However, my hon. Friend the Member for Thanet, North (Mr. Gale) is right to emphasise the opportunity that exists in the film sector to develop commercial enterprises that will employ people in Britain and draw attention to British achievements both here and overseas.

Photo of Mr Bruce Grocott Mr Bruce Grocott , The Wrekin

As the Secretary of State has rightly acknowledged the close relationship between the film and the television industries, is it not sensible to reflect upon the profound damage done to the television industry by the Government's deregulation policies which have meant, among other things, the loss of 8,000 jobs in independent television companies and thousands more at the BBC, with the consequent loss of the training opportunities that are vital to investment in the future of the film and television industries?

Is not the clear lesson, which even the Government may be able to learn in these revisionist days, that successful industries happen not by accident but only when the Government are willing to take a lead? They must acknowledge the importance to our economy of the film and television industries, both of which have suffered damage because of their policies.

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I simply do not agree with the hon. Gentleman's analysis, especially the proposition that successful industries arise only as a result of Government leadership. Of course I acknowledge that the Government have a role in ensuring that the environment is as favourable as we can make it to the growth of successful enterprises. That is why I think that our approach to broadcasting policy over the past 10 years has been right. In particular I believe that the development of the independent producer sector is the key to the opportunities that now exist for those small businesses to develop into medium-sized and larger businesses able to produce not merely programmes for television but films for cinematic release too.

Photo of Mr Harry Greenway Mr Harry Greenway , Ealing North

Does my right hon. Friend accept that Ealing, the nation and the world will be truly delighted by the injection of life which he has announced today for Ealing film studios, from which many brilliant comedies have emanated for many years? Will he say to those kind hearts who inspired the decision that they will be rewarded with coronets from successful films in the future?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I am not sure if I can respond in kind to my hon. Friend's references, but I share his enthusiasm for the opportunity which has been unlocked today by the agreement between the BBC and the national film and television school. I look forward to renewed success and prosperity for Ealing as part of a network of studios which—subject to planning—may include a studio in the constituency of my right hon. Friend the Member for Watford (Mr. Garel-Jones) as well.

Photo of Alex Salmond Alex Salmond Leader, Scottish National Party

Does it notsum up the Secretary of State's level of knowledge that when he was asked a reasonable question about the metropolitan bias of the statement, he started to waffle on about films being shown outside London? Does he not appreciate that the hon. Member for Caithness and Sutherland (Mr. Maclennan) was talking about films being made outside London? Can the Secretary of State point to a single proposal in the document which will assist in that process? The film "Braveheart" was largely filmed in Ireland as a result of a proactive Irish Government policy which is not matched in this country. Is there a single proposal in the document which would prevent such a situation from occurring again?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

It is instructive that the hon. Gentleman is interested only in making films outside London. That is not to say that that is unimportant, but it is equally important that films, once made, should be shown to audiences. There is not much point in producing films which do not find their way into cinemas. It was proper to answer the hon. Member for Caithness and Sutherland's question about a metropolitan bias as I did by placing emphasis on getting British films into a broader range of cinemas so that the hon. Gentleman's constituents, as well as constituents of hon Members who represent London constituencies, can see British films.

The development of film making outside London is part of the central purpose of the network of film commissions to be headed by the British Film Commission. When the hon. Gentleman has had a chance to study the document, he will find that another of the Select Committee's recommendations which I have accepted is that we should work with local authorities to complete a network of film commissions around the country.

Photo of Mr Toby Jessel Mr Toby Jessel , Twickenham

As a member of the Select Committee, may I warmly welcome the Secretary of State's positive response to our report? As Britain has a tremendous array of talent, skill and flair among our actors, actresses, producers, directors, photographers, artists and technicians of all sorts, and as there is a growing world market for English-language films, is not it entirely right for us to continue in this way by building on our strengths?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I entirely agree with my hon. Friend, and I am grateful for his support. The key point is the one with which he concluded: that there is a growing demand for films. Cinema audiences have more than doubled in Britain in the past 10 years. Digital broadcasting and the development of a broader range of broadcasting outlets provides further opportunities for British film makers to make more films for those outlets, as well as conventional theatrical ones.

Photo of Mrs Helen Liddell Mrs Helen Liddell , Monklands East

Like my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), I was greatly depressed by the Secretary of State's statement this afternoon because again he perceives film as peripheral to economic development in this country. I was impressed that the Secretary of State said that he has learned more about the film industry, but perhaps we should compare this country with Ireland where there is a Cabinet Minister with a passion for the arts and for the film industry.

What guarantee will the Secretary of State give that the economic modelling work which has been done will be taken into account when the new committee is set up, as often committees are set up as a recipe for inaction? The impact of that work can be seen in some areas; for example, the economic development which came to areas in Scotland as a result of the production of "Rob Roy". Is not the Secretary of State's view of the matter too concerned with over-centralisation?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I guarantee that the committee will be useful because I shall not give it a general brief to make any recommendations that may occur to it about how to develop the film industry. Instead, I shall ask it a specific question: what steps can be taken to assist the flow of private sector capital into the development of film-making businesses in Britain? If one asks a committee tightly focused questions, one is more likely to get something of value out of it, and that is what we shall do.

Photo of Mr Terry Dicks Mr Terry Dicks , Hayes and Harlington

May I ask my right hon. Friend to believe that Forrest Gump would understand how nonsensical his statement has been, and that it is another justification for closing down his Department and saving taxpayers £1 billion? What angers me most about his statement is that money from the lottery fund will go to the luvvies in the film industry when medical charities, such as organisations trying to find out about leukaemia in children and the Spinal Injuries Association, could do with that money. The damned statement is a disgrace.

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I will not say that I am grateful to my hon. Friend. I disagree with him, because, as he will know, the lottery legislation provides that 20 per cent. of the money raised by the lottery is available for the charitable sector. My hon. Friend will also know that the National Lottery Charities Board has made it clear that, while its first round of awards will be focused on those with problems of poverty, it intends to broaden the range of beneficiary charities in later rounds. That section of the lottery is most likely to benefit medical charities.

The money that we are discussing today has been awarded by Parliament to development of the arts. I join the majority of hon. Members who have asked me questions following my statement in welcoming the fact that the Arts Council is using some of the money available to it from the lottery to promote the development of a viable commercial film industry in Britain.

Photo of Nigel Waterson Nigel Waterson , Eastbourne

Is my right hon. Friend aware that, in the past 20 years, more than 30 per cent. of Oscars have been awarded to UK talent? Is not that an example of what can be achieved without massive indiscriminate subsidies to the film industry? Does he agree that intelligent targeting of funds on specific aspects of the film industry would be the most productive way to proceed? Is not the deafening silence from Opposition spokesmen about how much money, if any, the Opposition would devote to the film industry remarkable?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I entirely agree with my hon. Friend. Obviously, it is important to focus resources on a defined objective, and the Arts Council's plans will pass that test. My hon. Friend is also right to say that we face today an Opposition who dismiss £80 million as simply no more than a hill of beans. I look forward to hearing how much money we must spend before they conclude that we have got over a hill of beans and started talking about real money. Do they consider £100 million, £200 million or £500 million real money? What is "real money" to the Opposition?

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

May I warmly welcome my right hon. Friend's statement, not because it gives everything that the film industry requires—it certainly does not—but because it is a positive step in the right direction? Does he agree that setting up a film Commission in London was one of the major priorities of Sydney Samuelson and the British Film Commission and that therefore some of the Opposition's remarks are irrelevant to the needs of the industry? Does he accept that the representations which the House and his Department can make to the Chancellor of the Exchequer between now and the November Budget are critical because, if we are to compete with other countries like the Republic of Ireland, we must provide our industry with fiscal incentives, not subsidies, which the industry desperately needs to compete internationally?

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

I understand my hon. Friend's argument, which I have heard him make on previous occasions in both public and private. I am sure that my right hon. and learned Friend the Chancellor of the Exchequer will hear it between now and November.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

My hon. Friend the Member for Thanet, North (Mr. Gale) talked about the need for a level fiscal playing field. When my right hon. Friend pursues that point, will he bear in mind the fact that the real money is made not in film production but in distribution? We have a limited number of distributors. It does not matter how good a film is; it is the distributors who decide the total take and where it is to go in London or outside. If my right hon. Friend is looking for a way to help the industry, he should tell the Chancellor of the Exchequer that the most effective way is to find incentives for distributors to put money into film production in this country. That will be far more impressive than any subsidies that may be on offer.

Photo of Stephen Dorrell Stephen Dorrell Secretary of State for National Heritage

My hon. Friend makes an important point because he has underlined the important role played by distributors and exhibitors in getting films on screen. It is precisely because I recognise the strength of my hon. Friend's point that I welcome the plans of the Arts Council to focus on giving support for extra prints and extra promotion. I shall certainly look at other ways in which we might encourage the distribution network to be even more actively involved in film distribution. It is, of course, already involved, but the greater its active involvement, the more the distribution and exhibition system is committed to the exhibition of films.