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Commons Chamber

Volume 983: debated on Friday 25 April 1980

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House Of Commons

Friday 25 April 1980

The House met at half-past Two o'clock

Prayers

[MR. SPEAKER in the Chair]

Preston Hall Hospital, Maidstone (Thoracic Surgery Unit)

9.34 am

With your permission, Mr. Speaker, and that of the House, I beg leave to present a petition signed by very nearly 1,200 people who are resident in the catchment area for the thoracic surgery unit of Preston Hall hospital. This is a most excellent unit situated at the centre of the catchment area.

The London health planning consortium is threatening to abolish this unit and place a new unit in greater London at the extreme north-west corner of this catchment area.

People attending for thoracic investigation and then perhaps surgery have to attend hospital once for an investigation and a second time for surgery. This can be harrowing and a difficult time for friends to visit. If the unit were moved to the north-west corner, it would have a gravely adverse effect on the well-being not only of my constituents but of all those living in this great catchment area, which represents the whole county of Kent and some of Sussex.

People who suffer cancer of the lung and similar diseases and people who fear that they may be suffering from those diseases are not always in the most placid state of mind. It is, therefore, important that they should be protected. If this move is made, it will be for the convenience of the administrators.

Therefore, the petitioners petition as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of persons resident in the catchment area for Thoracic Surgery at Preston Hall Hospital, Maidstone, Kent— Showeth that the present excellent Thoracic Surgery unit which is conveniently situated to serve the whole catchment area is liable to closure and replacement by a unit at the extreme end of that area.
Wherefore your Petitioners pray that your Honourable House direct that the Unit only be replaced by one of comparable excellence and geographic convenience.
And your Petitioners, as in duty bound, will ever pray.
I beg to leave to present the petition.

To lie upon the Table.

Iran

On a point of order, Mr. Speaker. I seek your advice and, through you, ask whether it will be possible in the course of the day for the Government to make a statement on the events that occurred in Iran this morning. There is no doubt that this is a matter of very grave international importance.

I appreciate that the time is short and that I have been unable to notify you of my request in advance. But the landing in Iran of American forces with a view to relieving the hostages clearly implicates the United Kingdom, which is an ally of the United States. I would be grateful, Mr. Speaker, if you would convey to the Government a request that a statement be made on this matter before the House rises today.

I am obliged to the right hon. Member for Bristol, South-East (Mr. Benn). I remind the House that on Fridays we have a rather different system. If there are to be statements or private notice questions, notice must be given to my office by 10 o'clock. I leave the Chair to consider any applications either for a statement or a private notice question and at 11 o'clock, if there is a statement, business is interrupted. We are not yet accustomed to the new system, but I remind the right hon. Gentleman that that is the situation.

Solomon Islands, Tuvalu And Kmibati (Presentations)

On 30 January the House passed a resolution for an Address praying Her Majesty the Queen to give directions for the presentation of a clock to the Parliament of Solomon Islands, a gavel to the House of Assembly of Tuvalu and a gavel to the House of Assembly of Kiribati. Her Majesty's reply was reported to the House on 13 February. On 21 February, the House gave formal leave of absence for the hon. Member for Farnworth (Mr. Roper) and myself, accompanied by a Principal Clerk of the House, Mr. Jim Willcox, to present the gifts on its behalf. We were away for the last two weeks of March.

I have to report to the House that the three tasks have been accomplished, but only with great difficulty and at some risk to life and limb of the members of the delegation. They were accomplished within the period of two weeks only because I had two tough and very determined colleagues and because our hosts and the British representatives on the islands we visited all worked hard to rearrange programmes at short notice and to fill unexpected gaps with informal hospitality.

Our visits were made tolerable by the enormous kindness and the warmth of hospitality shown to us by all the people of the islands. In order that the House may learn from its mistakes for the future, I should like to explain that in the Central and South Pacific March is in the cyclone season. I should also add that inter-island air communication in the area of the South Pacific is poor, due in part to the unreliability of rather ancient aircraft which are used on the scheduled flights. As examples of that, may I say that we completed our first assignment on Tuvalu 30 hours late, and we arrived for our next task on Guadalcanal, having sacrificed our only rest day at the end of the first week, still 24 hours late, after spending an unscheduled 24-hour visit en route to another island in the New Hebrides for engine repairs. After Solomon Islands, we travelled in thoroughly reliable aircraft flown by superb Australian pilots. The only anxiety then was caused by short-notice changes in scheduled flights, one of which, fortunately, landed us in Kiribati one and a half hours early but which might just as easily have stranded us in the Marshall Islands for a week waiting for an onward flight.

We arrived first in Fiji late on 18 March in a cloudburst. This was to be our base for journeys to Tuvalu and Solomon Islands. The High Commissioner and his staff welcomed us and cared for us well. The Speaker of the Fiji House of Repre- sentatives and other members of the Fiji branch of the Commonwealth Parliamentary Association entertained us royally during our short stop. On 20 March, on a flight which was delayed six hours by engine trouble, we flew to Fanafuti in Tuvalu, there to be received, as we stepped from the aircraft, by a splendid choir of island girls, who had waited six hours on a dull, damp day to ensure that we had a good welcome. That set the standard for the warmth of welcome that awaited us at every port of call.

At night, we attended a great feast in the main maneaba of the island, where we were again entertained, this time by competing teams of young men and maidens, in the inimitable island way. Although our hosts and the elders of the island advised us that all the songs were biblical in nature and told Old Testament stories, I must confess that the members of the delegation reached the conclusion that the actions of the young men which accompanied their singing were more of a secular nature.

On the morning of 21 March, at a formal ceremony, we presented a gavel to Mr. Speaker. We were warmly welcomed by the Prime Minister and thanked by Mr. Speaker, who also read to the Assembly the letter which he had received from you, Mr. Speaker, on our arrival. Indeed, the personal letters which we delivered on your behalf to each Mr. Speaker were all warmly received and greatly appreciated.

Due to a delay of 48 hours, arising from necessary engine repairs to the two aircraft scheduled to fly us from Tuvalu via Suva and Port Vila to Honiara in the Solomon Islands, we arrived a day late, in spite of losing our rest day, with time for only a 24-hour stay instead of the 48 hours arranged. Fortunately, the Solomon Islands High Commissioner rapidly rearranged the programme and attended efficiently to all our worries about details. We presented the clock to the Solomon Islands Parliament at a special session of Parliament at 2 o'clock in the afternoon instead of at 9 am as was originally arranged.

As an example of the high esteem in which the Westminster Parliament is held by all the British democratic legislatures which we visited, I should like to read a short quotation from the welcoming address delivered by Mr. Speaker in Honiara, not because it was unique but because it was typical of the reception and the sentiments expressed by all the Speakers whom we were privileged to meet. He said:
" This Parliament is grateful for the traditions of the British Parliament, which I am afraid are still new to us, but are already well founded. We are also grateful for the continued interest in our Parliament shown by the British Parliament. I trust that the members of the delegation, when they return home, will convey to their Parliament our fraternal greetings. We can assure them that we will seek to maintain and enhance the friendly and beneficial contacts that have already been established."
On the only evening spent on Solomon Islands, we were entertained by Mr. Peter Kenilorea, the Prime Minister, Mr. Speaker, members of the Government and the CPA branch. At that reception, the Prime Minister presented me with a nusu nusu. This was a large head carved in ebony with mother-of-pearl inlays, with two hands clutching a carving of a shrunken human head. In making the presentation, the Prime Minister explained that it had been carried on all the sorties made by his ancestors when they were head-hunting, and that when they went out in their canoes it became a canoe figurehead. He explained with a smile that they had now discontinued the headhunting practice. On receiving it, I assured my host that I was Chairman of a Committee of this House which still continues the practice of head-hunting every Wednesday afternoon, and I assured him that his nusu nusu would be invaluable to me in continuing the role in which it had helped his ancestors on their headhunting expeditions.

The next day, we left for Kiribati, with an overnight stop at Nauru, where we were warmly cared for and generously entertained by the Speaker and members of the Nauru CPA. That was so typical of all the CPA branches wherever we went. In Kiribati, we were welcomed and entertained by the Vice-President, Mr. Speaker and, as in Fiji, Tuvalu and Solomon Islands, by the High Commissioner. As in Tuvalu, the Assembly was in recess, but again, as our first experience showed, in spite of the immense difficulties of inter-island communication, a high proportion of the Members came in from the outer islands to attend our formal presentation ceremony, which, like the other two, was a solemn and dignified affair.

I should like to make only one further observation about the area. In the Pacific zone, the island countries are economically so poor that they have learnt the hard way to make every penny spent yield a maximum return. Aid, therefore, is not only needed but is put to very good use. In the main, it is used to buy the seed-corn for the future—training schemes to fit the young men for the very limited number of careers open to them—or agricultural schemes to diversify their crop potential in partnership with large, experienced international companies. It was our distinct impression that every penny of aid spent in that area was money well spent and greatly appreciated.

I cannot end without expressing my appreciation to the House for selecting me for this assignment and for selecting the hon. Member for Farnworth and Mr. Jim Willcox to accompany me. When faced with insurmountable travel and communications problems, Mr. Willcox just kept beavering away until they were solved. No delegation could have been better served, and no Clerk of this House could have been more resourceful.

As for the hon. Member for Farnworth, he was always a source of strength and a fount of good humour, particularly when the outlook was grim, as it was on a number of occasions. It takes a strong sense of humour to be jocular, as he was, at 3 am on a strange island waiting for repairs to one engine of a twin-engined aircraft in which we were to fly 1,200 miles across an ocean. I hope that he will forgive me politically if I say that during those two weeks I increasingly came to regard him as an hon. Friend. The feeling may just have been mutual, because from time to time I observed that he would imbibe liquid refreshment which is named after my constituency, albeit manufactured in Australia.

Finally, I wish to express my warmest thanks to the House for making it possible for us to visit the splendid people of Tuvalu, the Solomon Islands and Kiribati in their homes. It was a great privilege to meet them. I hope and believe that the friendships which we made will endure for a very long time.

9.49 am

I echo the gratitude expressed by the hon. Member for Carlton (Mr. Holland), and I am glad that he permitted me to join him on a memorable visit. However, as he said, it was not without its difficulties from time to time. I had never visited the South or Central Pacific, although I have had a number of contacts with Pacific islanders. I very much appreciated the chance to see their problems at first hand and to enjoy the warmth of welcome so eloquently described by the hon. Gentleman.

The hon. Member for Carlton referred to the strains of travel in the South Pacific and the associated difficulties. I reiterate his thanks to our High Commissioners and representatives for all that they did at a local level to reduce those problems. With his family upbringing, the High Commissioner for Fiji and Tuvalu, Lord Dunrossil, has some experience of the problems of dealing with parliamentarians. He and his family, the High Commissioner in the Solomon Islands, Mr. Slater, and Mr. Rose, our High Commissioner in Kiribati, went far beyond the line of duty in their efforts to help us.

When we were air-wrecked in the New Hebrides for one day, we were most grateful to the acting resident commissioner, Mr. Cudmore. He had no knowledge of our arrival and was called back while on his way to a Sunday beach picnic. He efficiently made arrangements for us, despite the fact that he was not in particularly good health. The strength of the Commonwealth and the nature of the links that bind us together are appreciated and experienced on such occasions.

We travelled to three countries, which, in terms of travel time, are probably the furthest countries of the Commonwealth. They are not the most distant countries geographically, but it takes longer to get there than to anywhere else in the Commonwealth. As the hon. Gentleman said, we found a deep sense of affection for this country, and in particular for this House and its parliamentary traditions, in each of the Parliaments and countries that we visited. We were also well received by the Parliaments of the two countries that we visited en passant, Fiji and Nauru. I am happy to tell you, Mr. Speaker, that you will shortly be receiving the Speaker of the Fiji Parliament.

Unofficially, I also met Mr. Speaker Timakata and other Members of the New Hebridean Parliament. I hope that we shall have close links with them after they reach independence later this year.

I was particularly struck by the impact and strength of the Churches in the three countries that we visited. The missionaries who went out from this country to the South Pacific have left a record of which they, and we, can be proud. The Churches play a central part in the lives of the people of all three countries. I was able to attend services in Kiribati. The singing of their choirs rival those of your native land, Mr. Speaker.

Reference has been made to the problems of communications in those countries. They are experienced not only by visiting delegations from this House. When considering the difficulties of countries such as Kiribati, one should remember that, although the population of Kiribati is equivalent to perhaps only half that of one of our constituencies, one part of the country is as far away from the capital as Cyprus is from London. Members of Parliament in Christmas Island have to travel 2,000 miles, using rather unreliable flights, to attend Parliament. That indicates the communication problems that such countries have to face.

We found great enthusiasm among the people, and that is reflected in their singing. They are a happy people in the face of great problems. My abiding impression is that of the realism of their leaders. They know that they have limited resources. Indeed, Tuvalu and Kiribati have very limited resources. They are anxious to make the best use of them.

I am grateful to the hon. Member for Carlton, whom I should describe as an hon. Friend during those two weeks—I hope that our friendship will continue—and to Mr. Willcox for their tolerance, friendship and help during our travels. I am also grateful to the Parliaments and people of those countries for the warmth of their welcome. It will remain with me always.

The House is grateful to the hon. Members for Carlton (Mr. Holland), and for Farnworth (Mr. Roper), and to Mr. Jim Willcox, for the superb way away in countries with whose peoples we in which they have represented us far are linked by historic ties. I have received letters from the Speakers of the three countries that they visited. They express warm appreciation of the way in which our parliamentary delegation performed its duties on behalf of this House. I express the feelings of the House when I thank both hon. Gentlemen, and I note with particular pride the references to this House as the " Mother of Parliaments ".

May I say to the hon. Member for Carlton that I hope that the dancing girls, who waited six hours for both hon. Members, felt that they had received an adequate reward when the hon. Members and the Clerk arrived. We are deeply grateful to the delegation. It is always a very special occasion when hon. Members report to the House about a visit that they have undertaken on its behalf.

I am grateful to the hon. Member for Farnworth, who is the son of a Nonconformist minister, for his reference to the work of the Churches in that area. Commercials are not allowed or I should mention the Methodist Church. I shall ensure that the resolution of the national Parliament of the Solomon Islands is entered in the Journals of the House.

The resolution was as follows:

" That we, the Members of the National Parliament of Solomon Islands, convey to the Members of the Commons House of Parliament of Westminster our sincere and deep-felt gratitude for the gift of a Clock for our Parliament to mark the Independence of our nation, and take note of this heartening indication of the continuance of the relationship that exists between the mother of Parliaments and this Parliament."

Orders Of The Day

Films Bill

Order for Second Reading read.

9.58 am

I beg to move That the Bill be now read a Second time.

If our proceedings are read by those in the film industry, I hope they will recognise in the account of my hon. Friend the Member for Carlton (Mr. Holland) and that of the hon. Member for Farnworth (Mr. Roper) the possibility of producing a new film saga. It seems that their adventures, or at least part of them, should be committed to celluloid. We are careful about the type of films that we make in Britain.

The Bill contains provisions for some existing measures to be prolonged, such as the screen quota and the Eady levy. Some adjustments to the current provisions are also proposed—for example, the operation of the quota of multi-screen cinemas. It makes new provision for the financial arrangements of the National Film Finance Corporation. Finally, our films legislation will be made compatible with the Treaty of Rome. Before I go on to explain the provisions of the Bill in detail, I think that hon. Members might like me to say a few words about our film industry.

Since the last war, the United Kingdom has become a major centre of quality film production. We now enjoy an enviable reputation. There is the excellence of our actors and actresses, the expertise of our producers, technicians and scriptwriters, and the highest professional standards of all who participate in the making and finishing of films. Our studios are among the best in the world. They have been in the forefront of modern technological advances. As always, one hears criticism of restrictive labour practices, but they have not seemed to prevent foreign—particularly American—companies from coming here to use British technicians to make their films.

Despite all this, there are those who will say that the film industry is now in a state of crisis. But I recall—I am sure that the right hon. Member for Huyton (Sir H. Wilson) does—the opening sentence of the second report of the Interim Action Committee on the Film Industry—namely:
" The British film industry has been having crises for over 50 years, for most of its long life ".
Film-making is an odd hybrid. It is a mixture of manufacturing and art producing an end product which is never standardised. Each film is a unique one-off product. This makes is impossible to predict the reaction of the market with any certainty. Yet the scale of investment in a film can be very great and the risk is even greater. I am told that only one film in 10 shows a profit and perhaps another two in 10 break even. Clearly, it is not easy to keep a sense of proportion about an industry with such characteristics. It is hardly surprising that through the 50 years of crises opinions have frequently swung between extremes of pessimism and optimism.

There is no doubt that change has had—and still is having—a great impact upon the film industry in most countries. The rapid growth of television and leisure activities in the United Kingdom has led to dramatic reductions in cinema attendances. Immediately after the war there were around 1,500 million attendances a year; last year there were about 110 million. The number of licensed screens decreased from 4,700 to 1,600. Seating capacity has declined to about one-sixth of what it was 30 years ago. It is hard to believe that even massive sums of public money—if they had been available—would have done much to halt this decline. It reflects changes in leisure habits. Also, we have to remember that television has provided at the same time a growth market for filmed material and thus for the employment of many people who a generation ago might have worked in the cinema film industry.

The process of change continues. There will soon be the possibility of satellites beaming films direct into our homes or to receivers from which they can be distributed by cable. We owe a debt to the Interim Action Committee and the right hon. Member for Huyton for the work that has been done in bringing such matters to our attention. I hope that we shall have the pleasure of hearing the right hon. Gentleman on that subject. These developments offer on the one hand a daunting prospect and on the other a great opportunity for the film industry in future.

But, to return to the present, the Bill now before the House gives effect to my right hon. Friend's statement of policy in July last year. That described our intention to restructure the finances of the National Film Finance Corporation. In the past 30 years the corporation has made loans to assist the production of more than 750 British feature films. It is now approaching the end both of its statutory power to lend money and of the funds available under existing legislation.

Clause I extends for five years—that is, until the end of 1985—the power of the corporation to make interest-bearing loans for the production or distribution of films on a commercially successful basis. The functions of the corporation will remain unchanged except in respect of its powers to give financial assistance to meet certain expenses incurred before the commencement of film production, which power is also extended for a further five years. The House will realise that expenses and fees for script-writing have to be paid on many more projects than ever turn into films, and these have to be paid even on successful scripts some time before production begins.

Since the passing of the Cinematograph Films Act 1975, loans for such assistance have been provided out of the national film development fund from payments from the Eady levy made to the corporation which administers the fund. The type of assistance which it formerly provided may continue and may now be made direct by the National Film Finance Corporation. Experience has suggested that the fund has not had the means to market scripts, whereas the corporation will be better able to commission, guide, use or sell the scripts it backs.

I pay tribute to those who have given their services to the national film development fund, particularly to all those who have served on its advisory committee. The latter posts have not been salaried, but the time and advice given so conscientiously to applicants has been of great assistance and I am grateful for that.

Clause 2 introduces the new look to the corporation's finances which my right hon. Friend announced last year. Since its inception, the corporation has been advanced loans by the Government at appropriate rates of interest. Its borrowing limit has been progressively raised to £11 million. It has now reached this limit and is unable to give further support to the industry. Although the National Film Finance Corporation has laid upon it a statutory duty to achieve a financial break-even, it has not been able to do so and bit by bit it has lost money, although over the years it has advanced over £31 million to aid the production of some 750 feature films.

Film-making is a speculative business, and, although the corporation's track record in selecting projects is as good as the industry's in general, it has not yet managed to back what the trade calls a block-buster. It is on those that investors receive handsome returns to offset the more frequent losses.

Clause 2 also repeals the Department's power to lend the corporation money and proposes to write off all its capital debts owing to the Government, at present £11 million. Not surprisingly, this proposal has been publicly welcomed by the corporation. Although the loans have been made to the corporation at Government lending rates—and over £4 million has been paid to the Government in interest charges over the years—no interest has been paid for the past three years. It has been deferred. The interest outstanding is now nearly £2 million. This and the capital debt of £11 million—making £13 million in all—will be written off. The corporation cannot repay these sums, and we should not delude ourselves by pretending that it can. We want to give it a fresh start. To that end, I propose to make a once-and-for-all grant to the corporation of a further £1 million. I see this as a sort of financial pump-priming until other sources of funds are forthcoming.

What are to be those sources of funds? One may be short-term commercial borrowing. The corporation has long had the power to borrow up to £2 million from non-Government sources, with the approval of the Secretary of State and the Treasury. That limit is to be increased to £5 million. Such borrowings will be approved, but not guaranteed, by the Government. Hon. Members will recall that as an interim measure until the approval of the Bill we have recently undertaken to guarantee borrowings up to £1 million. But the guarantee will cease when the new measures have come into effect.

The other main source of funds for the corporation brings me to an important innovation in the Bill. It is to provide the corporation for the first time in its history with an assured annual income to enable it to plan and budget ahead. The House will be familiar with the film levy—the Eady levy—which is collected from cinema box office receipts. After payments which may be made annually to certain bodies associated with the industry, the remaining levy is distributed to the makers of films which qualify as British. The corporation is a film-maker and we propose that an annual subvention to the corporation shall in future be the first call on the levy. Each year for the next five years the corporation will receive £1·5 million or 20 per cent. of the levy, whichever is the greater. This alone, the corporation estimates, could ensure its participation in four or five feature length films a year that would not otherwise be made.

I believe that these measures taken together will enable the corporation to continue to play a distinctive part in British film-making, and to play it far more independently than ever before.

The board of the corporation is composed of seven persons, all appointed by the Secretary of State. Clause 3 proposes that one extra person may now be so appointed. Without commitment, it is likely that this additional appointment—in view of the diversion of part of the levy to the corporation—may be a person directly representative of the interests of the makers of British films.

Clause 4 extends the life of the levy to 1985. It will continue to provide an incentive and a reward to the makers of films in this country. It will also provide a guaranteed income for the corporation in the manner I have described. The details of the collection and distribution of the levy are dealt with separately in regulations, which are laid before the House for its approval.

Under clause 4 there will be four levy periods of 52 weeks and one of 56 weeks. The 56-week period has been introduced at the request of cinema exhibitors. It is a neat piece of calendar reform. So far as I know, it is the only 56-week year for which Parliament has ever legislated. I hope that it does not lead to such riots and disorders in the streets as the taking away of a certain number of days did on a past occasion, for here we give an extra 28 days. It is simply to correct an anomaly which has arisen because the use of a 52-week—that is, a 364-day—period for 23 years has moved the commencement date for the levy forward at least one day a year.

After 23 years the commencement date is now almost one month earlier than it was in the original legislation. This puts cinema exhibitors with high seasonal fluctuations in their takings at a disadvantage. It particularly affects exhibitors in holiday resorts. The details of this are technical, and I will gladly deal with them if the House wishes, either now or in Committee.

Clause 5 extends the life of the screen quota for five years from the end of 1980. The quota is the oldest form of legislative protection for the industry. Since 1928 there has been an obligation on cinema exhibitors to show a prescribed quota of British films. Since 1973 Community films have qualified for quota equally with British films. In fact, films made in this country still account for by far the greater part of the quota achievement.

The Bill does not make any changes in the percentage of British and Community films which must be screened. These have been 30 per cent. for first feature and 25 per cent. for supporting programmes since 1950 and 1948 respectively. Changes in these percentages may be made by the Secretary of State only after consultation with the Cinematograph Films Council and by an order which must be approved by resolution of each House.

Clause 6 concerns quotas and deals with a problem which has arisen in the past few years. Many cinemas have been subdivided into smaller auditoria—the multi-screen complexes. This development only offers not more economic operation but also more variety to cinema-goers. At present, exhibitors must achieve the 30 per cent. and 25 per cent. quotas on each individual screen in a complex.

Clause 6 proposes that all screen performances in a complex, providing the screens are in common ownership, may be added together for calculating quotas. Exhibitors at complexes will thus be able to show films on whichever screen they consider to be most economic in terms of seating capacity. They will be able to devote certain screens to certain types of film instead of having to move films around from screen to screen within a complex, after making time-consuming calculations as to how they may achieve the required quotas on each screen. In short, there will be greater flexibility and simplicity for exhibitors, helping them to make the best use of their facilities.

I accept the reason for this, but the Minister will realise that as well as solving some problems it makes some difficulties. Is it his intention to monitor the effect of the clause over a short period to see whether the showing of British films is being damaged? It would be wrong to change the legislation in a way which negated many of the basic tenets of the Bill.

I shall certainly watch the effects closely. Several people have suggested that this proposal would encourage exhibitors to show British films on the smaller screens in the complex and that quota calculations should allow for differing seating capacities. I would not welcome a new and heavy statistical work load of watching over this too closely which might be put upon my Department. I am unhappy at the suggestion which is made by people who are really supporters of the British film industry which seem to imply that they believe that British films cannot be expected to be profitable except in the smaller cinemas. I take the view that if exhibitors are freer to please their patrons, cinema-going will be more popular and more levy will be collected to encourage the making of more films in this country.

I have some hesitation in trying to coerce filmgoers to like the films we think they should like, and I know that the hon. Lady has, too. I have some hesitation in coercing cinema owners to show films in cinemas which they do not think are best suited to them.

The hon. Lady has a point, and I would be the last person to deny that the solution to one problem might throw up further difficulties. I am aware of the problem and I am always willing to listen to representations from the industry.

Clause 7 proposes that the Secretary of State shall have power to suspend—not abolish—the quota requirements and to re impose them after suspension should that seem necessary. This power could not be used before consultation with the Cinematograph Films Council. An order made under the section would have to be laid before Parliament and be approved by both Houses.

In recent years doubt has been cast upon the effectiveness of the quota, and the Interim Action Committee on the Film Industry was unable to come to a unanimous verdict about it in its second report. It is not uncommon to find that it is difficult to reach unanimity in the film industry about proposals which are made.

The report explained that in general producers and the unions are in favour of the quota; distributors and exhibitors would be pleased to see it go. The point was also made that, to the extent that the quota obliges exhibitors to show films other than those they might choose on commercial grounds, the cinema is that much less attractive to the public and less levy is therefore collected.

The Cinematograph Films Council, after an investigation of the quota, voted last year—with some members dissenting—for power to be taken to suspend the quota. It considered that the quota no longer fulfilled its original protective purpose.

It is salutary to consider the actual operation of the quota. In 1979, of some 1,500 screens making returns, 246 were either exempt from quota or were open for only part of the year; 73 screens were the subject of appeals, usually on grounds of local competition, and were granted part relief. Of all screens with a first-feature quota to achieve, 11 per cent. failed to do so. This percentage fluctuates from one year to another and in 1978 twice as many failed to achieve quota. In some cases the failure was marginal. In no case was a defaulter prosecuted. The defences are that it is not commercially practicable to comply either because of the cost of the films available or because of their character—for example, the so-called sexploitation films. These are not unreasonable defences. To remove the possibility of using them could be to condemn an exhibitor either to unprofitable operation or to screening films out of character with his cinema.

Naturally, it concerns me that costly manpower is being used in my Department to supervise a considerable burden of form-filling in the industry, in order to operate a system which is considered to be of doubtful value by many connected with the film industry.

I apologise for interrupting again, but these are the arguments that the industry has always used since the quota was introduced. There have been radical changes in the number of British films made, but the reason for the creation of the quota—it is still valid—is that without some protection virtually no British material will be shown if it is left to exhibitors who are locked into arrangements with big American distributors. I am sorry about that, and there are arguments to be made out on a commercial basis, but the Minister should know that what he is doing is removing some of the protection for British material.

The Minister is not removing the protection. He is taking powers to suspend it. If he does suspend it, he retains powers to reimpose the protection. He is not taking powers to abolish it. This is a cautious approach. I appreciate what the hon. Member for Crewe (Mrs. Dun-woody) says about the distribution industry and its relationships with the production industry. I must choose my words carefully. I think that that is a matter which might be looked at in other ways.

I emphasise that we have not made up our minds about quota. It seems sensible, with the legislation going through the House, at least to take the powers to suspend it in view of what the CFFC has advised.

Is not the effect of clause 5 to end the quota as of 1985? At that time the arrangements will expire totally. That causes us, and my hon. Friend the Member for Crewe (Mrs. Dunwoody) in particular, a great deal of anxiety.

I understand the anxiety. The Bill carries forward legislation to 1985. I am sure that between now and then we shall have to deal again with the film industry and with all the issues, including quota and the other matters

I understand the anxiety. The Bill carries forward legislation to 1985. I am sure that between now and then we shall have to deal again with the film industry and with all the issues, including quota and the other matters highlighted in the report by the Interim Action Committee. It should not be seen as a firm decision to end the quota in 1985.

If it were decided to embark on a period of suspension and the experiment showed no ill effects, we should still have to have primary legislation to do away with the system. There would have to be further detailed assessment and scrutiny by the industry and the House in any event before the quota was abolished.

Clause 8 amends our existing legislation. Section 17 of the Films Act 1960 requires that for a film to be registered as British a requisite amount of the labour costs should be payments to British subjects or citizens of the Republic of Ireland, or persons ordinarily resident in a Commonwealth country or the Republic of Ireland. The " requisite amount " referred to is usually 75 per cent. of the total cost. This properly leaves scope for the employment of foreign stars who have international box office appeal or for an outstanding foreign director and other such people. The significance of this 75 per cent. requirement is that to be registered as " British " is the first hurdle a film must clear on its way to be eligible for distributions from the levy.

In August 1979 the EEC Commission drew our attention to its view that the requirement appeared to be incompatible with article 48 of the Treaty of Rome, concerning the freedom of movement of workers within the Community. Similar observations were addressed by the Commission to four other member States in respect of their film aids.

I have discussed this issue with both Viscount Davignon, the industrial Commissioner, and M. Vouel, who is concerned with competition policy. I found Viscount Davignon in particular most understanding of our problems and I was assured that the Commission had no desire to harm our film industry. There was no lack of goodwill. We found a formula which met our mutual requirements. Under it, the United Kingdom will broaden the 75 per cent. labour cost requirement to include citizens of other member States. At the same time amendments will be introduced to preserve the infrastructure of our film-making industry.

Clause 8 deals with the first aspect. Citizens of other member States will now count equally in the labour cost qualification with Britons, Irishmen, Australians and so on. This satisfies the requirements of the Treaty, but I find it hard to believe that it is likely to make much difference in practice to the way that our industry works. Films are the product of teamwork. People who have worked together before, knowing each other's talents and idiosyncrasies, understanding each other's language and style, often prefer to work together again rather than to bring in outsiders.

The second aspect of the formula—preserving the infrastructure of our film industry—will be dealt with later by statutory instrument. Clause 8 will not come into force until that instrument is approved by both Houses, when there will be further opportunity to discuss the details. They have not yet been drafted, but their objective will be to ensure that films that are to qualify wholly or partly for levy distributions are prepared, made and processed wholly or largely in this country; or, where overseas location shooting is involved, that shooting is prepared in and based on this country. There have been discussions with representatives of film makers and the unions and I believe that they are broadly satisfied with that concept. I am grateful for their advice. But I must make it clear that until the statutory instrument is approved by the House the present labour cost provisions and the present levy distribution regulations apply.

Under Clause 9, the Bill—except for Clause 8—comes into force on the Sunday after the day it is enacted. That is because, as I mentioned, the levy is collected on the basis of cinemas' weekly takings, and a week in the regulations is seven days ending at the end of Saturday. The start of the entitlement of the corporation to a part of the levy will thus coincide with the weekly accounting periods of the levy.

The Government support the concept of an indigenous British film industry. Our priorities are to put the National Film Finance Corporation on a better financial basis and to renew those arrangements which benefit the whole film industry. These are the matters with which the Bill mainly deals. They are matters of some urgency. I trust that they will be acceptable to both sides of the House. In Britain we have the great advantage of speaking the most widely understood language in the world, although that carries with it the disadvantage of being open to cultural subjugation by our American friends, particularly in this industry. We have inherited a treasure house of history, literature and legend to draw upon. We have a fine film-making tradition with legions of talented people. If our film industry makes pictures that the public will pay to see and if we create a climate more favourable to the creation of risk capital, private finance will be forthcoming to back more pictures. It is not an activity in which Governments can meddle with any prospect of success. Certainly I do not see my predecessors in office, myself or my successors in the mantle of Sam Goldwyn!

If the hon. Lady thinks about it, she will agree that none of us in the House has shown any particular talent in that sphere in the past. Even with the assistance of our Civil Service advisers, I do not think that we shall show too much talent in that regard in the future. I prefer to restrict my acting performances to the House and politics. The Bill's purpose is to re-launch a modest, independent but effective British film-making body and to renew measures which assist all British film makers. The Government having helped to set the stage in the Bill, it will be up to the industry to perform. I commend the Bill to the House.

10.28 am

For the Minister and for me this is a House of Commons film debut. Judging by the numbers of those present, we do not appear to have much box office appeal. However, quality is certainly here. I was much touched to hear that the Minister is not to set out on a career as a Sam Goldwyn or even Cecil B. de Mille. Certainly, he does not have a cast of thousands of extras behind him today. If, however, he feels that he would like to have second thoughts about it, I am sure that he could capably produce a new version of " Dr. Jekyll and Mr. Hyde " for Seventeenth Century Fox. When the Minister spoke of Sam Goldwyn, I was reminded of the occasion when he was presented with a script which he admired but which was being criticised by his advisers. He said " Too caustic? To hell with the cost. We will make the picture, anyway."

The hon. Gentleman has presented to the House a somewhat ambivalent attitude about the film industry. It is unusual—though not unprecedented—to be considering an important Government Bill on a Friday. The Bill is inadequate and timid, but it is of some moment to the film industry. On the other hand, it would be churlish not to express the appreciation—albeit somewhat qualified appreciation—of those who want a successful British industry, and of the industry itself, to the Minister for obtaining time for the Bill from his beleaguered and confused colleagues, the Government business managers, who have created such a shambles of their legislative programme.

At best, the Bill represents a temporary palliative to the immediate problems of a once prosperous but now ailing industry, or, to use the simile employed by the Minister for Consumer Affairs yesterday, an Elastoplast to stop a haemorrhage. While we must be thankful for small mercies from the Government, it is a grossly inadequate response in view of the totality of the formidable problems confronting the industry at present, and the benefits which would accrue if we had a flourishing British film industry. If we strip away all the tinsel of the Minister's speech and all the nice words, regrettably we find still more tinsel underneath. The Minister paid all the proper tributes to the technological skills and all the artistic values in Britain, but at the end of the day he is offering very little.

The reason for that—in the long term—is that the Government have exhibited little or no faith or interest in the future of this industry. They have nothing to offer beyond the sullied and tired old cliches of telling the industry to stand on its own feet. It is clear, beyond peradventure of doubt, that that will be virtually imposible for the industry to achieve by 1985, or even beyond, and at the same time to retain high standards and skills. Other countries, notably Germany and France, support their industry in a big way.

Radical rethinking is necessary. In this respect—I pay tribute to my right hon. Friend the Member for Huyton (Sir H. Wilson)—we have the benefit of a number of significant and important reports which can provide the basis of that radical rethinking. The Terry report, which was published in January 1976 and presented to my right hon. Friend when he was Prime Minister and the other reports which followed provide a wealth of information and suggestions for reform that should be considered properly. Regrettably, the Government have not done so, either in the Bill or in the speech of the Under-Secretary.

The real question that we should be tackling is whether we should try to stimulate and revive the British industry and, if so, how we should go about achieving it. Unhappily, the Government have offered no real faith in the future. Perhaps that is because—as my hon. Friend the Member for Crewe (Mrs. Dunwoody) has suggested—the Government have evinced little understanding of the basic problems besetting the industry or of perceiving a viable or enduring role for the NFFC, or of trying to help to resolve the challenge to the industry presented by a dichotomy of interests, clashes of philosophy within the film industry, inadequate co-ordination and, as always, the deadening, lack of finance.

Unless worthwhile support is provided soon, there will be no film industry to argue about in five years when, as the Government have willed, the Eady levy and the quota system will be phased out. Therefore, the Opposition question the main thrust of the Government's case that Government and quasi-Government intervention must cease.

Not so many years ago—admittedly before the advent of television—in the postwar years the British film industry thrived as it had not done previously. My youth was made up of recollections of those great stars of British films—Gordon Harker as " The Frog ", Will Hay and George Formby. I understand, however, despite my youthful concentration on them, that the British film industry was not simply committed to productions involving those stars. If it had been, it would have had a somewhat limited international appeal. It was always difficult for me—as an Englishman—to understand Will Fyfe in some of the films that I saw. I cannot imagine what he would have done to an American or French audience.

The approach and the appeal of the British film industry in the immediate post-war years changed dramatically. Productions, many of them portraying life in Britain, were of a high artistic quality. They attracted large audiences, both here and abroad, and they did much to establish a favourable image of this country, besides earning foreign exchange. Portraying that favourable image abroad has an incalculable effect for the prestige of Britain.

Those were the halcyon days. Unquestionably—as the Minister has rightly pointed out—the advent of television produced changing habits, different requirements and a sharp drop in audiences. He forgot to mention that our new national game, bingo, has also created damage. It has had the effect of causing many cinemas to close. Unquestionably, the industry became almost entirely dependent on United States finance. As the Terry report said, it became
" an economic and cultural colony of Hollywood "
militating against the development of a characteristically British cinema. Today our film industry, perhaps more than that of any other country in the EEC, is largely in the thraldom of the United States film industry. Richard Widdington, the distinguished critic, once said that
" It is the business of Hollywood to shape the truth into box office contours."
That was a profound observation. It has unquestionably had a deleterious effect on the production of films of indigenous British interest.

As the Minister said, we have considerable talent and facilities in this country, which many other countries would envy. We have a technical and creative expertise, and we do not wish to see that put into a state of terminal decay.

There is a strong case for not operating exclusively according to the criteria of commercial profitability, which seemed to be one of the underlying—but not too emphatic today—themes of the Minister. There are other aspects of the industry that can be developed. I am not denying the importance of commercial profitability but we must have wider vistas and create works of artistic and social significance, universally advertising British art and prestige, which would at the same time provide some stability of employment and foreign earnings.

I do not sense that the Minister ieally appreciated or supported that point of view.

Our case is that the private sector may be unable or unwilling to support those objectives, and in those circumstances some substantial State support would be required. That has been the theme of a number of recommendations in the reports to which the Minister paid tribute.

We have concluded that the view expressed by the Terry report in 1976 still holds good. Providing we are able to establish the right framework for the industry and positive support is given to it, the British film industry is capable of success. Because we believe that far-reaching reforms are required, we are disappointed that the Bill misses an invaluable opportunty for reform, although we understand the constraints imposed upon the Minister.

I turn to a number of criticisms that I wish to make of the Bill, some of which we shall deploy more broadly in Committee. First, the Terry report recommended an annual allocation from the Eady levy of one-fifth of the total yield, not to exceed £1 million. In the present context, that is scarcely enough. It also recommended that the Government should provide an initial equity capital fund of £5 million, with the right to call on additional amounts of up to £5 million in the second, third and fourth years. That would assume a total investment in British film production of not less than £40 million a year on January 1976 figures.

The Government response has been to give an immediate advance of £1 million to the NFFC. I do not want to be churlish about that; it is good as far as it goes. Secondly, the Government have adhered to the Terry recommendation on the Eady levy. But in view of the problems besetting the industry in 1979 we regard that as woefully inadequate. Thirdly, the Government have said that they will ensure that there is no further capital forthcoming from the Government. It is true that this is mitigated to some extent by clause 2(4), which increases the ceiling of the borrowing capacity of the NFFC from £2 million to £5 million, subject to Treasury consent. But I do not think that that is a suitable alternative.

My second criticism is that, while there are justified objections to some of the anomalies in the Eady levy operation, and I will not rehearse them now because the Minister knows them well, the provision to end the levy within the next five years is too drastic. We would have preferred that the Government had taken power to extend by statutory instrument the provisions of the levy beyond the period prescribed. The alternative is for the Government—perhaps another Government—to have second thoughts, and if they do so they will have to introduce primary legislation, which is inconvenient and untidy, and it makes the Government a hostage to the fads and fancies of their business managers, who may feel that there is little priority for legislation affecting the film industry.

It will be necessary to legislate again before 1985 since almost all the powers affect the NFFC, and when they come to an end we will be in precisely the same situation as we are at present. Precisely the same arguments could be deployed to persuade even reluctant business managers to allow time for such legislation.

That may well be, but the Government have left the industry in a state of uncertainty. If the provision that I have suggested had been placed in the Bill, the industry would have felt that the Government were behind it and there would have been some continuity. The Minister may say that there will need to be more legislation. What will that legislation encompass? What will be the philosophy underlying it? I express these anxieties on behalf of many people in the film industry.

The third criticism relates to the quota provisons. We believe that there are strong arguments for continuing the quota, notwithstanding what the Minister said today. We will argue that point further in Committee. Again, this issue could have been tackled by taking power through a statutory instrument to extend the quota beyond 1985. Instead, through clause 7 the Government have inserted a provision which will create additional doubt and uncertainty—and that is not good for the industry; they are taking power to suspend the quota.

Fourthly, the Government have ignored or put into cold storage the concept of the establishment of a British Films Authority. We believe that this is a serious error of judgment. Although these arguments have been very skilfully deployed in the reports to which I have referred, I shall outline some of them to support the establishment of such an authority. I believe that this has considerable relevance to the industry's problems today.

The Minister himself would concede that there has been a fragmentation of the Government's responsibilities. It would be enormously helpful if we had one authority subsuming the work which is currently undertaken by the Department of Trade in the films branch, the Department of Education and Science in its connections with the National Film School and the British Film Institute, the NFFC itself, the Cinematograph Films Council and the British Film Fund Agency. The case for trying to rationalise the work of all those bodies by the creation of a single authority is overwhelming. That single authority would have the duty to advise the Government and would be able to do it far more coherently than at present.

It has been argued by my right hon. Friend the Member for Lanarkshire, North (Mr. Smith)—the former Secretary of State—that there are three principal points in favour of the establishment of a single authority. He said in April 1979:
" The purpose of the BFA would be as follows: (1) To support the operation of a specifically British film industry and to recreate an industry that is not dependent on foreign capital. (2) To establish as a priority the support of indigenous production without sacrificing the incentive to seek adequate return on investment or making Britain less attractive to foreign investors who seek to use British facilities and personnel. (3) To provide a better channel of advice on the film industry as a whole and to act as an executive body to implement the Government's objectives."
There my right hon. Friend was summarising the case for the establishment of a BFA. He went on to make an important point and we would like to know the Government's reaction to it. He argued that, as with other industries, one of the keys to commercial success in films was marketing and distribution. Therefore, he proposed, and it was an election commitment of the Labour Party, that the authority should set up a marketing arm to serve the whole British film industry in overseas marketing, covering not only finished films but also a wide range of excellent technical services that the industry could offer.

I shall not go into that matter in greater detail. It became a commitment of the Labour Party at the election but, regrettably, has not come to pass. I would have thought, leaving aside the party politics of the matter, and if the Minister can forget that it was a Labour Party commitment, that he ought to consider these matters on their merits. A powerful case has been made out for the establishment of a British Films Authority. I simply wish to ask the Minister, at this stage, why the arguments about this point have been ignored. How long will the Government take to make up their mind? The Minister has said that this is yet another matter in respect of which they have not made up their mind.

Are the Government satisfied that the disparate elements from which they glean advice and help is the most efficient way of proceeding? If the answer is " No ", as I think it must be, what are the Government proposing to put in place of the present set-up, apart from saying that (hey will withdraw totally from the situation in due course? Would it not be an advantage, therefore, for a British Films Authority to subsume these interests and to provide a single channel that would be much more convenient" efficient and effective?

The next question I put to the Minister is whether he is satisfied that the Government are getting proper statistical information about investment in British film production and the earnings of British films—a point set out in paragraphs 82 and 83 of the Terry report and, more recently, in paragraph 11 of the report of my right hon. Friend the Member for Huyton, " Statistics, Technical Developments and Cable Television ".

Unquestionably, a strong case, once again, has been argued about the inadequacy of the statistical information available to the Department. I have always been reluctant to become too involved in statistics ever since I heard some statistics about the legal profes- sion broken down by age and sex. But a case has been deployed for a much better way of ensuring that vital statistical information is made available in the United Kingdom. I should like to know what the Minister proposes to do about those recommendations. What consideration has been given to the possibility of providing the suggested capital equity fund from the levy on the excess profits of the independent television companies, as suggested in the Terry report?

I turn to the question of distribution, on which I have briefly touched. There has been a good deal of concern over the years about the duopoly in distribution. I believe that there is a case, notwithstanding the investigation carried out into the matter not long ago, for this to be looked at again. It it questionable whether the situation has improved substantially, or at all, since the matter was last considered. There is a strong case for the NFFC to be given greater access to cinemas for productions in which it has an interest and to which it sometimes feels, I sense, that it is unjustifiably prevented from having access.

Unquestionably, the film industry owes a great debt to the work performed by all those who have served on the succession of official inquiries that have highlighted the problems of the industry while, at the same time, suggesting remedies and pinpointing the successes of the industry and how those successes could be enlarged. I pay tribute also to the sterling work of those who have been involved, the NFFC staff and other members. It has done a great deal, within the constraints imposed upon it, to stimulate new talent and to give support and encouragement to films of considerable intrinsic value.

Because of the urgency of providing, albeit limited, help to the industry, the Government will be able to get away with this timid Bill. We shall not wish to divide the House against it. But the urgency has stopped the Government from coming to the House with a coherent philosophy about this industry and their approach to it. As a result, the industry will be left in a position of anxiety, doubt and uncertainty which, in its present parlous condition, cannot be good for it. I believe that if we had had a Labour Government, there would have been a different approach.

10.55 am

This debate is of some importance to the film industry. I appreciate that there are other events about to happen on the Floor of the House. I shall, therefore, abbreviate my remarks to try to fit in with that time scale so that I do not have to continue my speech after the statement.

I declare an interest in this subject. I am an adviser to the British Film Producers Association. I therefore have a stake in the industry. This is a highly technical industry. Hon. Members on both sides of the House have referred to its highly technical nature, its great skills and its importance as a creative industry. Most of the problems arise over sources of money and the risks involved. We in the industry regret the fact that the Government have put a limit on the investment but understand the background reasons for that decision at the present time. We welcome the relieving of the debt that was accruing and becoming an added embarrassment to the National Film Finance Corporation.

I wish to make one or two points that I hope my hon. Friend the Minister will consider. There has been a drop in cinema takings in the last three months. Bearing in mind the proposals in the Bill, this probably means that the industry will receive the lower figure due to the drop in receipts in the last three months. The money, after all, is the industry's money. It comes from the Eady levy, provided by the industry.

I was delighted to hear from the Minister that he is to place on the board someone with greater commercial background and experience in the industry. I hope that when there are other vacancies he will go further and put on the board more than one person with a commercial background. This is a matter of anxiety among those on the production side of the industry. There is a feeling that their views are not well represented.

The hon. Member for Crewe (Mrs. Dunwoody) mentioned the question of the composite cinema situation. This gives the industry cause for concern. It fears that British films will be put in the smaller cinema. I accept the Minister's view that the film should be good enough to be put in the largest cinema in the combine, but underlying anxiety exists.

We welcome clause 8. There has been misunderstanding about the question of location work. The number of films that go on location, particularly into European countries, is increasing. We welcome the proposals in the clause.

As soon as possible, the Government should tackle the position of the relationship between television and the film industry. This is still being put to one side. The television industry benefits to an enormous extent from the film industry. I do not think that the film industry pays due regard to the financial situation of the main film industry and does not move money across from television sufficiently to the main industry. I hope that the Government will examine and tackle this matter.

I support the Bill in its general principles. It was urgent that the matter should be tidied up. I hope that the Minister, in his wise words about the industry, will continue to support it and to back it. I trust that the Bill will go some way to helping the current situation.

I think that it is near enough to 11 o'clock to take the private notice question.

It being Eleven o'clock, Mr. Speaker interrupted the proceedings, pursuant to Standing Order No. 5 (Friday sittings).

Iran

asked the Lord Privy Seal what information he has and what exchanges he has had with the United States about last night's events in Iran.

President Carter's own statement this morning announced that there was an attempt by United States forces last night to rescue the American hostages held in Tehran and that the mission had to be terminated because of an equipment failure. Eight American crew members were killed and a number injured when two United States aircraft collided on an airfield in Iran during this operation. The Americans involved in the operation have now been airlifted from Iran. The President has said that at no stage were there any military hostilities with the Iranian armed forces.

I understand that President Carter is to make a further statement at I pm our time today. We were not involved.

I am very grateful to the Minister for making a statement at such short notice. I am, of course, aware that we shall all perhaps be rather better informed when President Carter has made his own statement later this afternoon. But the world will be holding its breath this weekend, and it is essential that the House should, without delay, give some expression of its great concern at last night's events.

Will the Lord Privy Seal impress on the United States Government the need for the utmost restraint in dealing with the unpredictable consequences of last night's events? Will he make plain that, while our hearts go out to the captives and their relatives, and while we are aware of the purpose and the nature of this limited release operation, we cannot support—and indeed, will oppose—military action aimed against Iran? Will he also make plain that our co-operation with the United States, in its wholly justifiable demand that the hostages be released, cannot continue unless there are full and frank—if confidential—exchanges between the United States Government and their friends?

Will the Lord Privy Seal immediately invite the Soviet Union, in its own broader interest, to join with others in calling upon the Iranian Government to release the hostages and to exercise all the restraint and influence that they can command over their so-called students?

Finally, since the Heads of State of the European Governments are meeting, as it happens, on Sunday in Luxembourg, will the Lord Privy Seal seriously consider inviting the United States President to join those leaders on that day?

Everyone, I think, will agree that the United States should show the utmost restraint, and that over the last few months it has shown the utmost restraint. We want to draw—and I think the right hon. Gentleman did by implication draw—a clear distinction between an attempt to rescue the hostages, on the one hand, and military action against Iran, on the other. [Interruption.] That is the distinction that most Ministers would certainly endorse.

I entirely agree with the right hon. Gentleman that the greatest possible amount of consultation between the United States and her European and other allies is thoroughly desirable, and I entirely accept what he says about the Soviet Union. It is most unfortunate that the Soviet Union vetoed the United Nations resolution last January. If it had not done that, the problem would probably have been solved long since. It is entirely wrong that the Soviet Union should not have done everything in its power to bring this great breach of international law to an end.

With regard to the right hon. Gentleman's point about considering inviting President Carter to join the European Council, I should be delighted, if that were appropriate. I suspect that the American President would want to stay in Washington at this time. The European Council will no doubt be considering Iran, but it also has a great deal to do. A meeting of the sort that the right hon. Gentleman suggested cannot be ruled out in the fairly near future.

I think that the Lord Privy Seal will agree that urgency really is of the essence now and that we are, as it were, in a different stage of these dreadful and protracted events. May I, therefore, urge him very strongly at least to sound out others about the two suggestions, the one aimed at the Soviet Union—aimed indirectly, of course, at the Government in Tehran—and also at least to consult the European Heads of Government to see whether such an invitation to the President of the United States would be acceptable to them and to him?

I entirely agree with what the right hon. Gentleman says about the urgency of the matter. It could hardly be more urgent. We shall, of course, hold all the consultations that we consider fit and proper at this time.

While some of us are not afraid of strong—not necessarily military—action over Iran, does my right hon. Friend accept that there is real concern about the quality of the United States leadership being exercised in this problem at the present time? Since Easter, when America began to take a strong line, there has been vacillation over food sanctions and military action. Now we have had the very sad venture of last night. May I reiterate the request that, before we get dragged any further into this, there should, as a matter or urgency, be a meeting of Western leaders at the highest possible level?

With all respect to my hon. Friend, I do not think that this is a suitable moment at which to criticise the United States leadership. The failure of this operation—and we do not yet know the exact reasons for it—surely cannot be blamed on the President. He was not technically involved. It appears to have been an unlucky technical fault. We shall, of course, remain in the closest possible consultation, but this is a time when allies should stick together and not criticise each other.

Did Her Majesty's Government know that this operation was to be mounted? Was the SAS involved in advising the Americans, as it was at Mogadishu in regard to the release of the German hostages? Did the Government give support to the idea of a military rescue operation before it took place?

Is the right hon. Gentleman aware that even a military rescue operation could well lead to an Iranian response which could stop oil supplies, bring in American and Russian troops, and involve British forces in the United Kingdom?

Will the right hon. Gentleman convey to the American Government that, although we fully support the negotiations to release the hostages, who should not be held, we do not believe that, in the light of the long history of bitterness in Iran against the United States, Britain and the oil companies, it would be right for military force to be used in any circumstances—even involved in a further rescue attempt—and that the British Government would not permit American bases in Britain to be used in any subsequent or consequential action in this case?

At the time of the Entebbe rescue the then Leader of the Opposition—rightly, in my view—refrained from making any strictures and pointed out that the fault lay with the hijackers. I think the same applies here.

The SAS was not involved. We were not consulted, but we were informed of the possibility of a rescue attempt.

Whatever our feelings about the Islamic Republic of Iran, are not the Government of Iran—and, indeed, most Islamic Governments—on the same side as ourselves in relation to Afghanistan and Soviet imperialism? Therefore, since the Islamic Republic is in danger of disintegration, is it not possible that further diplomacy could take place through Islamic Governments to bring about a settlement of the hostages question?

I very much agree with the drift of my hon. Friend's question. He well knows that a number of Islamic Governments have been very helpful in this matter. We shall certainly hope that their efforts will continue. The fact, unfortunately, remains that nothing so far has yet been achieved.

Is it not the case that the Islamic Governments believe that the political reconstruction of Iran depends upon the trial of the Shah? Should not world Powers, therefore, now be discussing the extradition of the Shah, if that is the legal position demanded by the Iranian Government? [Interruption.] On the basis of such discussions, will the Lord Privy Seal now say that the Government are totally opposed to military intervention in Iran and will in no circumstances support that intervention? Is it not the case that we are now beginning to pay the penalty in the disruption of good relations with the Soviet Union? [Interruption.] Is it surprising when the spokesman on behalf of the Labour Party calls for talks alongside the Soviet Union such a short time after the period when hon. Members on both sides of the House were calling for measures to be taken regarding the Olympic Games and elsewhere that brought about that disruption of good relations?

I do not know whether the hon. Gentleman intended what seemed to be implied in his question. He seemed to be implying that, because of what the Shah had done, the Iranians were justified in keeping the hostages.

The hon. Gentleman seemed to be implying that, because we have been hostile or have reacted adversely to the invasion of Afghanistan by the Soviet Union, the Soviet Union was justified in behaving in various ways. I do not accept that at all. The blame for this whole episode lies with the illegal arrest and detention by students, or so-called students, which the Americans have had to tolerate for five months and have behaved with the greatest possible restraint. No amount of talking about the Shah can possibly excuse that behaviour. Moreover, the extradition of the Shah has nothing to do with this country or America because the Shah is now in Egypt. But it would seem to me quite incredible that he should be extradited.

Order. This is a private notice question, but, in view of the exceptional circumstances, I shall call three more Members from either side before we return to ordinary business.

Is my right hon. Friend able to confirm this morning that the raid emanated from bases in Egypt? As we are within days of the possibility of a democratic election in Iran, on reflection, would it not have been better for Her Majesty's Government to play a vital role when the newly elected Government are in power to ensure the release of all the hostages in Tehran, which is the united wish of all Members of the House?

I cannot confirm from where the aeroplanes flew, because I do not know. Of course, we want to play a vital role in securing the release of the hostages. But, as my hon. Friend knows, the election of that Parliament has been put off for an unconscionably long time. However, we shall still go on trying.

Is the right hon. Gentleman aware that " my country, right or wrong " has long been regarded as a dubious slogan? In view of the Prime Minister's earlier statement that we are with America all the way, " my America, right or wrong" is even more suspect. Does he accept that the United Kingdom Government should now be playing the part of a rational and candid ally rather than that of a mindless satellite?

The right hon. Gentleman's choice of language was a little unfortunate. What he said bears no relation to events. We are playing the part of a valuable ally which obviously gives advice when asked. In no sense are we a satellite. The right hon. Gentleman is ignoring the nature of this operation. I think that it was Kennedy who said that failure has no friends. That is no doubt true. I do not think that what was attempted can be condemned in the terms in which the right hon. Gentleman condemned it.

Is my right hon. Friend aware that he would command the support of the majority of Members in saying that we all understand the deep frustrations that the Americans must feel and that the continued detention of the hostages must inevitably lead at some point to the kind of action which unfortunately failed last night? Equally, it would be right for even the most determined pro-America Member to point out that concern is felt that this action should be taken so soon after the Western allies had decided to make a common cause on economic sanctions. Surely these moves must be allowed to work before the situation is further escalated.

As my hon. Friend knows, we have throughout been working for a peaceful and speedy end to this problem, but so far we have failed in assuring a speedy end to it. We are keeping in close touch with the Americans. As the House probably knows, my right hon. and noble Friend is going to Washington the weekend after next to consult Mr. Vance. That does not, of course, preclude earlier consultations.

The right hon. Gentleman has drawn a distinction between a rescue operation and military intervention. Since he said that he was aware that there would be some rescue attempts, will he answer the question that has been put to him? [Interruption.] The right hon. Gentleman said that he was informed—HON. MEMBERS: " The possibility."] The right hon. Gentleman said that he was aware that there was likely to be a rescue attempt. [HON. MEMBERS: "No."] The right hon. Gentleman will answer for himself.

Will the right hon. Gentleman make it clear to America—and answer the question that he has not yet answered—that there is a thin line between a rescue attempt and military action and that, although one accepts the difference, in no way could this country support military intervention in Iran?

To get it right on the record again—the hon. Lady misquoted me both times—I said that we knew of the possibility of such action. As she knows from our actions this week and up till now, we have been seeking to solve this crisis by political and diplomatic means, not by military means.

Is it not obvious that the scale of this enterprise was no more than would have been required for the rescue of the hostages? Is it not equally obvious that, had it been successful, the world would have been applauding now? In those circumstances, should we not commiserate with the American President?

The answer to all three of my hon. Friend's questions is " Undoubtedly yes ".

Would it not have been wiser of the right hon. Gentleman to have made some condemnation of this action than to have expressed such commiseration at its failure? Does he not realise that the fiasco last night has probably sealed the fate of those unfortunate hostages in Tehran? Does he not understand and accept that such action, whether in the unsuccessful form of last night's operation or in the more successful outcome of the Israeli operation at Entebbe, is contrary to the standards of international law and should be condemned in all circumstances?

I disagree with the hon. Gentleman. Some of his remarks, in the very delicate situation that we are in, are most unfortunate. As I said, I do not condemn the action. It would be very difficult for anybody who has not considered his own country in this position of 50 hostages being kept in not very good conditions for five months to condemn it. It is easy to take a " holier than thou " attitude. However, I do not think that the majority of Members take that attitude.

I put the Lord Privy Seal on notice that it would be the very strong wish and expectation of hon. Members on both sides of the House that he should make a further statement to the House on Monday.

Films Bill

Question again proposed, That the Bill be now read a Second time.

11.18 a.m.

I had hoped that we might have had a somewhat more substantial audience for the continuation of the debate, but it appears that my wishes will go unfulfilled. I think that Labour Members would agree with the Minister that it was about time that the Government brought forward a measure to enable us to consider the British film industry and the policy of the industry for the future.

References were made by the Minister and by my hon. Friend the Member for Hackney, Central (Mr. Davis) to the various roles that they are playing in this epic before us this morning. I suspect that the Minister's role may be a little difficult to define, because it was clearly my reading of his performance this morning that he could not quite make up his mind whether he was with the cops or with the robbers. Certainly it appeared at one stage that he was definitely on the side of the angels and with the cops, in the sense that he was bringing to the House a measure to give some consideration to the film industry and to help it on its way for the future. That appeared to be the good news.

The bad news seemed to be that the Minister had taken on the mantle of the villain and the robber by saying that, whatever the Government had in mind and whatever their intentions were, they saw in future no further than 1985. I think that the fears expressed by my hon. Friend to the effect that we ought to be concerned about the long-term prospects and the long-term future of the industry were valid.

I hope that I emphasised sufficiently that there has been a tradition of legislation in blocks of five years in this matter, and that I am taking a view exactly as far ahead as that taken by my predecessors. But I have also undertaken to consider during those five years what the much longer-term implications are. Indeed, we might have hoped that, having had the Terry report for three years, my predecessor in office could have come to some conclusions on his reaction to i! before the general election.

The Minister might be surprised to know that he will not necessarily find a hostile response from me to his intervention, because I think that many of us would have hoped that this matter would have received the attention of the Labour Government in a more positive way than it did. None the less, a new Government are now bringing forward their proposals, and it is those which the Minister is more than prepared to defend and argue for. But the industry has certainly been neglected for a long time. The work which my right hon. Friend the Member for Huyton (Sir H. Wilson) has contributed towards parliamentary debate and discussion on the issue has taken us a few steps further. I join with those who have paid tribute to my right hon. Friend for the work which he and his committee colleagues have contributed towards the debate on the future of the film industry.

I make one or two more specific points. I think that both sides of the House have recognised that the industry is in a spot of bother—to put it mildly—in so far as it is suffering from a lack of funds, and it appears to be suffering from a lack of strategy for the future. Those of us who wish to protect our indigenous film industry are anxious that the Government should be able to offer some advice and comfort to it in the future. As my hon. Friend the Member for Hackney, Central said, the Government seem today to have missed the opportunity. The boat seems to have been there for them to jump on in order to steer the ship of State towards helping the industry, based on the information which has come from the various reports to which he referred, and from the various inputs into the Government's " think tank " from all those concerned in the industry.

I know that a lot of work has been done outside. The Minister alluded to that. I should have thought that that would have created an opportunity for us to have brought a very exciting Bill to the House today. The House could have been discussing the long-term future of the industry. It could have been concerned with all aspects of the industry, with regard to training young people who are anxious to make their way in film production and distribution and the management of the industry. Certainly the Government could have brought forward proposals to indicate their support for what is recognised throughout the globe, I think, as one of the foremost film production industries.

Reference has been made to the lack of capital and the lack of funds from which the industry has suffered for many years, and to falling attendances and the closure of cinemas. All these matters would have been good ground for the Government to have considered bringing forward wider, longer-term proposals for the industry's future. There are many millions of people in Britain who like to go to the cinema and see a good film. A lot of those millions like to visit the cinema and see a good British film, made with British technology, acted out by British performers and, one would hope, making profits for British companies. It is that element which the Minister has somewhat overlooked today.

I do not criticise the Minister too much for what is in the Bill. There is not a lot in it which I think one would in any reasonable sense wish to oppose. But it is not enough. It is not in depth. The reports which the Minister has before him are more than sufficient for him to have been able to bring to the House an exciting, progressive bit of legislation, which would have done two things at least. It would have ensured him a greater audience for his proposals and it would also have given the industry the encouragement and support which I believe it is looking to the Government to provide but which, as I have said, this measure has failed to give.

I hope that the reference that the Minister has made to the fact that this matter will have to be discussed again will result in his bringing forward the legislative proposals which the industry needs and desires in order to survive and which I believe we have a right to demand after such a long time.

11.26 am

I wish to raise two matters. The first concerns the future of the children's cinema clubs. I do not know how many other hon. Members, like me, had experience of them in their childhood. The memory of seeing Tom Mix and Buck Jones at the local cinema on Saturday mornings is one which is dear to me. In those days, if I remember rightly, it cost 6d.—2½p nowadays—and the fact that similar performances are available to children nowadays on Saturday mornings for 25p is very important. Twenty-five pence is not all that much to pay in view of the inflation we have had since I was a regular attender.

I understand that there are some difficulties about the continuation of children's cinema clubs in the strength and with the support that they have previously enjoyed. Of course, the body responsible, the Children's Film Foundation, has been entitled, as I understand it, to a share of the Eady levy, and it is very important that generosity should be applied in future towards the determination of its share. It may well be that exhibitors find it more profitable to keep their cinemas open late on Friday night and into the early hours of Saturday morning, making it difficult for them to open again for children later on Saturday morning.

That is one of the major problems of the Children's Film Foundation. Exhibitors are basically not keen on this activity on Saturday mornings.

I am grateful for my hon. Friend's expert confirmation of the impression which I already had about the reluctance of exhibitors.

We should not just leave the matter there. Exhibitors prefer to show X-certificate films very late at night, and they know very well that if CFF films were shown at some other part of the school day they would get similar audiences, because that has been shown by the work that the CFF has done. Therefore, it is too simple to say that exhibitors do not want to show in the mornings. There are reasons for that which could be dealt with easily.

I am grateful to the hon. Lady for adding that comment. It is clear that exhibitors who show films late on Friday nights are able to charge quite a high price for their seats, and, equally, arrangements for children may not be profitable for them. However, with good will and perhaps a little prompting from my hon. Friend the Minister, I am sure that it would be possible to resolve the situation and to enable children's cinema clubs to carry on in the future as in the past, providing a wonderful, valuable and most educative and helpful service to children.

The second matter that I wish to raise is amateur films, in which I have no pecuniary interest, though I am an amateur film producer on a modest scale. Amateur films are to the film industry what small businesses are to the economy. No doubt many big producers started as amateurs. I have no such ambitions, but I am sure that it is necessary for us to give as much encouragement to amateur film producers as to professional producers and the financing of the big business that is dealt with by the Bill.

It may be that my hon. Friend the Under-Secretary will not be able to comment on amateur films; they may come within the portfolio of the Secretary of State for Education and Science. But the British Film Institute is responsible for matters such as the annual exhibition of the six best amateur films, which has been dislocated recently through financial difficulties and other reasons. It has not been possible to continue that excellent exercise which shows to amateur film societies throughout the country the best films made during the preceding year by amateur film producers. It is an important exercise in developing and improving film techniques and encouraging new blood.

I agree with my hon. Friend the Under-Secretary that the British have a lot of talent available for film-making which can be important and valuable to the nation. It is important that we should consider assistance at both ends of the industry and especially what can be done to encourage amateur film producers, not only in the exhibition of the six best films but in many other ways, as well as in helping with the other important projects dealt with by the Bill.

11.32 am

In view of the references that have been made to my film committee, for which I am grateful, I must make clear that I am not attempting to represent the views of the committee in this debate, though the work that we have done and our first three reports provide some background to the Bill.

Any legislative measure on films and the NFFC is bound to arouse a little nostalgia, which, in the interests of other hon. Members, I shall try to keep as short as possible. The NFFC was set up by legislation more than 30 years ago, at a time when, despite the high quality of our producers and stars, there was a real danger that our film industry would fold.

Following the convertibility crisis in 1947, the Government blocked American film earnings in this country and cut them off until, after negotiations with the late Mr. Eric Johnston, we released 25 per cent. Of the remainder, a significant amount was ploughed back into American production and joint films in this country.

The Under-Secretary referred to Sam Goldwyn, one of the great historic characters of the film industry. I remember that when the Hollywood chiefs thought that we had worsted Eric Johnston in the negotiations, they insisted on meeting me in Washington. All eight attended the meeting—Sam Goldwyn, Louis B. Mayer, Nick Schenk, Spyros Skouras, Barney Balaban and the rest of the legendary names. Spyros Skouras came to London to complain about what we were doing. With his dubious broken English—more broken than English—I had great difficulty in following him, but I asked " To sum up, would you say that our blocking of your revenues has had a serious effect on Hollywood's finances? " He replied, " That, Mr. Minister, would be an exaggerated understatement."

Our producers, including refugees from Hitler such as Sir Alexander Korda, lacked the necessary resources to produce films, and the NFFC was set up with £5 million, which was a lot of money in those days. I also decided to set up the Eady scheme at that time. Sir Wilfred Eady at the Treasury gallantly took on from me the nominal paternity of a scheme which was bound to be more unpopular with some producers and exhibitors than others.

Fortunately, the then Chancellor of the Exchequer, Sir Stafford Cripps, was mad on films—and rather strange ones, really. I hasten to add that they could have been shown at any hour of the day or night. Sir Stafford's favourite producer, Mr. del Giudice, failed to benefit from the NFFC when it got the £5 million from Sir Stafford.

Lord Reith was the chairman—austere and economical—and the first three films that we helped to finance were winners—"The Fallen Idol", "The Winslow Boy " and " The Third Man ", which was the first of the Korda films we financed. That was not a bad start for Government film financing. We were lucky.

Later, in, I think, 1949, I was able to persuade Sir John Woolf, who had resigned after deciding that he could not sign the Rank balance sheets of those years because of the way that they constructed the figures of film losses, to go into production with NFFC backing, and he has produced some of the most remarkable, world-famous films of the past 10 or 12 years.

The cost has not been high. The Minister said that £11 million was currently owed to the Government and we know that other sums have been written off, but I submit that the total expenditure is a small cost to have kept in being our indigenous film industry, earning benefits in terms of the portrayal of British life and institutions and in helping to produce and maintain a skilled and dedicated work force at all levels, including producers and directors.

While our committee has been sitting, our members engaged in film production have won three or four Oscars and other awards, mainly reflecting the modern trend to Anglo-American co-production such as we have seen with " Murder on the Orient Express ", " The Deer Hunter ", " Midnight Express " and so on.

The tribute paid to the industry by the Under-Secretary is justified. It could not have existed but for the continuance of the NFFC. Hon. Members may have seen our third report published two months ago with our recommendations on better statistics for the industry—I do not think that that is controversial—and on the revolution facing the industry with the development of, not to mention pirating by, video discs and tapes and video recorders and players on which are played films for which the producers are not getting a satisfactory return.

Of course, there has been opened up through our report the great debate on the opportunities presented to the film industry, but also the threats represented to television, by satellite visual broadcasting.

The Bill gives the industry a measure of help until 1985, though with the threat, which I trust will not become a reality, of an earlier cut-off by Government order, subject to approval by both Houses. I was a little reassured—no more; I did not get enthusiastic—by the intervention of the Minister at that time. He said that there was no decision as yet to have that cut-off. I believe that it is vital that he gets himself into a position, as quickly as possible, where he can say what is the Government's intention.

A real assurance to the industry would be given—and I pick up the point made by my lion Friend the Member for Hackney, Central (Mr. Davis)—-if the Government would soon announce that the British Films Authority, recommended in Cmnd. 7071, became a reality. The Secretary of State—I do not think he will object to my saying this—with whom members of my committee and I have had a number of constructive meetings went so far as to envisage the creation, in due course, of the British Films Authority. To be fair to him, I must make it clear that this will not be dependent on the provision of Government money. The necessary funding is to be sought elsewhere. The right hon. Gentleman regards that as a necessary proviso. One hopes that there will be a change in that attitude.

However, whether there is a change or not, my colleagues and I are prepared to accept this challenge. I believe that it will be possible to raise some finance capital from the industry and from the investing institutions of the City, not least in respect of international and multinational films. It is in relation to these films that I ask the Government to look carefully at relevant tax changes.

There is a clause in the Finance Bill which is a little obscure. It would be out of order for me to attempt to debate it and go into the arguments today, but it is fair to say—I think that it should be put on record—that the Board of Inland Revenue has approached the problems of the industry, in consultations of which the industry and members of my committee have heard, with considerable understanding and characteristic ingenuity. Members of my committee have deputed informally to the Board of Inland Revenue—and I believe that many hon. Members who realise and emphasise the importance of co-production will have welcomed what happened—the acceptance by the Revenue of a proposal made by the committee and the industry that would enable key production staff and international stars to stay somewhat longer in this country in order to complete a film without falling foul of the tax collector.

The House need only consider in that context the case of a film being produced in one of our studios which involves considerable outdoor shooting. Too short a residence period for stars and producers might cause, and has caused, great difficulties if there is rain and there are still two weeks to go when permits run out.

In relation to the words " British made " and the definition of those words, a great deal of work and ingenuity has gone into various proposals. The definition has been the subject of a number of speeches this morning.

The committee itself produced one or two variants which we hope the Revenue will consider. Perhaps I can indicate one of them because it takes up the Minister's point about encouragement to British production and the definition of British production. However, if I quote it it is only right to say that at yesterday's monthly meeting of the committee other members of the committee felt that there were better alternative drafts. This is the sort of thing that might be considered.
" A claim by a company for the first year allowance in respect of expenditure on the provision of machinery or plant for the purposes of a trade carried on by it "—
because it has been linked with the leasing legislation—
" shall be allowed if the asset in question is a cinematograph film only when not less than 30 per cent. of the total cost of production thereof (exclusive of v.a.t.) is attributable to services, materials or facilities supplied by persons ordinarily resident in the United Kingdom or by companies incorporated in and carrying on a trade within the United Kingdom."
That is, as I say, one suggestion. Others will be considered. Hon. Members will, I think, already be asking whether we will be pushed fairly quickly into saying not "United Kingdom" but "Europe" on the lines mentioned by the Minister in his speech commending the Bill.

I have one anxiety about the Bill and I hope that the Minister will be able to reassure me. That anxiety concerns the tight limit on film financing. The point has already been hinted at that the system of priorities in the Bill may endanger even the existing provision—ignoring increases in inflation—for such vitally important bodies as the National Film School. The committee received a presentation yesterday from the school's director, Dr. Young. The point has already been made in the debate that the Children's Film Foundation may also be endangered. If there are not sufficient funds for production and if production is to have an overriding priority, those institutions will suffer—at a time when they can barely keep going because of inflation—unless there is a year-on-year increase to provide for inflation.

Does my right hon. Friend take the view, as a result of the considerable amount of work that he has done on behalf of the industry, that because there is a degree of uncertainty about how the Government view the future there is reluctance on the part of those personnel who have been referred to in the debate to come into the industry and make a career in films?

I entirely agree. To add to what has been said by my hon. Friend the member for Birmingham, Ladywood (Mr. Sever)—there is nothing I can subtract from it—the problem in the National Film School is that when young people enter straight from school or from the industry they are not able to get a grant during their first year though there are grants for the second, third and even fourth years. That is a serious matter.

There is not enough money as yet to meet the year-on-year inflationary costs, and if at the same time that institution is to be treated as a lesser breed—without the law so far as film financing is concerned—there will be a serious problem for an existing and successful organisation in creating the film industry of the future and of the next generation.

I referred to video cassette recorders and discs and the fears about them. I believe that video cassette recorders will be on the way out very soon. That is already happening in America. The discs with the laser beam will last almost for ever and it has other advantages compared with video. But it is a serious problem for producers, whether of domestic films or of films bought in from overseas, because of the possibility of absolutely unstoppable and unpreventable domestic piracy—in the privacy of one's home—of copyright products by putting these films on tape or disc.

We have studied the measures introduced abroad and we have come to the conclusion—it is contained in our third report—that in order to find some compensation for the industry for what it is losing, including audience attendance at future re-runs of these films, we believe that the right answer is that a small tax should be levied on the cassette instrument at the time of purchase. Experience in the United States suggests that, in the long run, the development of all these mechanical visual instruments need not mean a decline in the film industry.

My committee accepts the fact that, while there may be a short-run falling off in cinema attendances—as in the case of drive-in cinemas in the United States—audiences may very well, in increasing numbers, wish to see on the wide screen, for which there is no alternative or substitute, some of the films that they have been seeing on cassette or disc.

We have examined the possibility of cable television—another measure that I have suggested many times in the House—to help film production revenue. I referred to that in the debate on the BBC licence fee last December. To give the BBC the monopoly of cable—this could have been incorporated in the Bill—with strict safeguards to ensure that it did not secure a monopoly of programmes which were generally available in the past, such as the Cup Final or test matches, could help the BBC to become more viable, to save its orchestras and, over a longer period, to avoid a situation in which meeting the cost of a television licence becomes more and more difficult, especially for people on low incomes.

Does my right hon. Friend agree that he would not regard it as helpful if, through cable, the BBC became the only monopoly of pay TV in respect of films? Far from helping either the industry or production, that would simply result in a second closed circuit.

I certainly agree with that qualification. Indeed, in the near future we shall have to consider what we can do to save independent television, which I think is in greater danger than any other institution in this country as a result of the development of satellites, to which I was about to refer. It is certainly possible for cable television to develop new programmes. I would never have expected the snooker programmes to be so popular. Conservative Members may argue that it was obvious from the start, but I would not have thought that show jumping would be so popular. Therefore, I believe that it will be possible to make new programmes rather than to monopolise programmes that have already been widely seen.

The development of satellites will create a new facility for film production and showing. There will be a huge demand, and it will not cost that much. Jf any hon. Member is thinking of getting in on the act, he will need a dish aerial of about a yard in diameter. However, he will have to be careful where he locates it. It will probably be all right if he lives in a block of flats, and if he has a garden he can site it there, provided he is prepared to face up to the problems of vandalistic louts and peripatetic canines. However, if he wants to place it under his roof, he will need new fibre tiles, because the aerial will not work through existing tiles.

The House can readily imagine the effect on independent television if satellites increasingly capture advertising revenue. Satellite routes have already been allocated. I am afraid that Britain has come out of it very badly. We did not get in on the act fast enough. Apart from that, it is clear that foreign producers will not only be able to get their advertising on to our screens but will also be able to show their artistic products, such as films and so on. This will be a great thing for the film industry. Every film producer I know has already started to mark up his old films. He is marking up films which in the past he sold for about £10,000 because of the increased demand that will emerge. He is wise to do so.

As I said, all this will take place at the cost of independent television. Unfortunately, we have fallen behind in the race. I take full responsibility for giving the duty to the Home Office when the Post Office was merged. However, at that time I do not think that the Home Office was prepared for the subtleties of negotiation. The French got away with murder, as did Luxembourg, Iceland and even Ireland. The result is that the satellite coverage of France covers the whole of Britain from the Wash to the Humber. Luxembourg covers a considerable part of the South-East. Ireland covers the greater part of the country, and Iceland covers a substantial area of Scotland and parts of Northern England. But, in return, our pathetic coverage of France and the Continent will consist of a strip of north Brittany, along the coast north of Paris—we shall not be seen in Paris, except in the suburbs—finishing at Emden. It is essential that the Government address their minds to the problem of satellites.

As the House knows, by the middle 1980s satellites will be circling the earth at a distance of 22,300 miles. They will cost £100 million each, but that is no problem. There will be no problem in raising finance in the City, considering that each is expected to make £70 million profit from advertising in the first year. Satellites will become a significant feature of our lives before 1985—that is, before the date of the shut-off period envisaged in the Bill. That is why the option of keeping the period open is so important. I hope that that is what the hon. Gentleman has in mind.

As to the film industry, a wonderful market will be provided for old and even forgotten films. There will also be a market for new films whose budgets are reasonable.

I welcome the Bill in so far as it perpetuates the policy of successive Governments over more than 30 years since the time of the Act which established the NFFC.

I ask the Government to think again about the financial provisions and about the length of time for which provision should be made. I believe that the British film industry is poised for success and expansion. I hope that the Government will give it the chance. In this connection, I hope that there will be a further follow-up to several of our recommendations. For example, with regard to the NFFC, we commented on the inordinate rake-off from the NFFC which at that time was received automatically by the supporting film which was shown with a major film of great success. The example quoted was, I think, "Star Wars". The film which accompanied it was in no way undesirable, but I believe that it got more revenue than it was really worth just because it was shown jointly.

Our second recommendation, which was warmly welcomed by the press and the greater part of the industry, was that there should be a formula—I know how difficult it is to achieve—to preclude Government money going to what are simply called sexploitation films. I appreciate that this is a difficult area, because there is the problem of censorship as well as the problem of deciding. However, when the NFFC was introduced, that was not the intention of the then Government or the House of Commons, and I am sure that it is not the desire of the House of Commons now. Whatever ingenuity is needed, we should find a means of arriving at a definition, because the problems must be overcome. Out of the exiguous sums of money, which are even more exiguous now, there will be more help for films of which we can all be proud.

11.58 am

I apologise to the House and to my hon. Friend the Under-Secretary for waddling in rather late in the debate. However, I was delighted to hear the remarks of the right hon. Member for Huyton (Sir H. Wilson), who for more than 30 years has shown an interest in the British film industry in so many practical ways, and continues to do so. The right hon. Gentleman would not expect me to say that I look back with happy memories to all his contributions to the industry. He may say that it is very unfair, but I have always regarded him as the parent of the quota quickies. However, his work will be, and has been, of very great value to the industry and to the Government. It has led to regulations and legislation.

I must declare an interest, with a small " i ". As the Minister knows, I spent 13 amazing years with the Rank Organisation and two years after that as managing director of Granada International. Like the right hon. Member for Huyton, I find the subject one of happy nostalgia. The Department should give urgent consideration to the subject of copyright, not only with reference to today's debate but with reference to many other creative aspects. The existence of tapes has come close to destroying our gramophone record industry, just as discs are threatening the film industry and those who work within it. I hope that consideration will be given to imposing a levy system not simply on cassette machines but on th tapes used to record gramophone records. No doubt the Minister mentioned in his opening remarks that we all recognise that the Bill represents a piece of holding legislation. I hope that it will receive a Second Reading, but—as a result of technological changes—a great deal remains to be done.

My hon. Friend the Member for Orpington (Mr. Stanbrook) introduced the Children's Film Foundation. AU hon. Members will probably regret that some of the splendid work done by the Children's Film Foundation has recently diminished in quantity, but not in quality. All hon. Members were probably delighted that Mr. Geddes received a major international award a few weeks ago for his work. The Children's Film Foundation has temporarily declined in influence, not because its markets have disappeared but as a result of the restricted way in which it was set up. No doubt that was appropriate at the time. However, the foundation's directorate consists primarily of individuals who are concerned with some part of the cinema industry. The television industry has been excluded largely at its own wish. Those involved with video discs and other developments also play no part.

There is lack of demand for the foundation's products. It suffers because its distribution channels have become unduly restricted. I hope that a future Bill will include much of the committee's recommendations and a proposal that the Children's Film Foundation should be reconstituted to embrace a wider distribution network. However, we cannot tell the cinema industry how to conduct its business.

I look back to children's Saturday clubs with bpleasure. When I was 10 years old, I got a job that involved standing outside the cinema in the village in North Wales in which my family then lived. I had to shout " This way to the balcony seats." I was told to shout " balcony " in a way that would stress its three separate syllables—in composite motion—and I was paid 10s. to do so. My father was a keen member of the Labour Party but he had old fashioned ideas of discipline. When he found out about my job, he put those ideas into practice. My film memories probably go back longer than those of other hon. Members who have spoken.

Little boys no longer earn 10s. a morning for doing that, because television has made a rival claim on their Saturday mornings. It provides an alternative focus for the interests of children who might otherwise have gone to Saturday morning clubs. The present director of the Children's Film Foundation is nearing retirement and has lost his deputy. The foundation's administration is grinding down. It would be undesirable if he were to retire without a successor of equal calibre. I therefore hope that the foundation will be revitalised and that it will apply its activities to all aspects of the media, not just the cinema. I am aware of the difficulties of doing that, but if the foundation goes out of business not only shall we lose a highly specialised and distinctive type of film—which so many of us, including my hon. Friend the Under-Secretary, look back on with pleasure—but it will open the way for foreign productions. Such films do not always convey the type of messages that we would wish our children, or those of our friends overseas, to receive. These issues concern not only the Department of Trade but the Foreign and Commonwealth Office. I hope that it will be consulted when the Children's Film Foundation is considered.

12.8 pm

The debate has brought out one interesting fact, namely, that the House of Commons—which is enormously interested in many aspects of the media—unfortunately regards the film industry as of little importance. It is tremendously helpful to have a spokesman such as my right hon. Friend the Member for Huyton (Sir H. Wilson), who claims a number of distinctions. He has made an enormous contribution to the work of the British film industry. He inspired the original Eady levy. It is important to remember that the industry does best when a certain degree of discipline is imposed from outside.

It may be slightly unkind to tell the Minister that although the Bill is welcome it is pretty poor. Given the extraordinary economic views of Her Majesty's Government, I had not expected a Bill. I had assumed that the film industry would be abandoned without a backward glance. I therefore pay an ungrudging, if perhaps mildly ungracious, tribute to the Minister for managing to bring a Bill before the House.

The industry is its own worst enemy. There is no co-operation between those responsible for exhibition, distribution and production. The changes that have come about in the Bill are largely negative. It is worrying that we seem to be saying " There are enormous changes taking place and we must have different things done for the industry, but we must not be too positive."

The changes that we bring forward are always negative. For example, if we want to do something about pre-production work, we do not say " Let us give more money for pre-production packages. Let us expand the work of the National Script Development Fund." Instead, we bring the existing operation inside the National Film Finance Corporation. That is our approach to solving the problem of the pre-production package.

I am sorry that the Minister has allowed himself to do away with the voluntary work of the National Script Development Fund, especially the work of script writers and producers who have given their help voluntarily. They had a high degree of expertise and they were able to exercise the sort of judgment that enabled a number of packages to go forward. I know that so far there has not been a great number of films made from the work that has been done. However, I think that we shall see development over the next 10 years. I should have liked the committee to be given more muscle rather than for it to be subsumed in the corporation in the way that the Bill proposes.

Why is it that we still have many of the old barring procedures operating in the industry? After all, the cinema industry is going downhill very fast. There are areas in Great Britain where it is not possible to go to the cinema. Hardware improves all the time, but the opportunities to see software disappear.

There are many who would like to open independent cinemas. There are municipalities which find themselves in charge of cinemas which would be capable of being run efficiently and usefully. The immediate problem that both groupings face is that when they go to the distributors they are told that there are barring problems. Sometimes those prob- lems apply to cinemas that no longer exist.

That is all the wrong way round. We cannot run an industry with a number of restrictive practices and not have someone to criticise the operation. British cinema could be developing by using all the new techniques. It could run smaller cinemas. By using mixed television and cinema techniques, it could provide many outlets for modern film producers. However, it is not doing anything to change the way in which it has operated since the 1940s, when there were literally hundreds of cinemas throughout Britain.

I hope that the Minister will take from the debate the suggestion that he should be examining the operation of the barring committees. I have always believed that there should be a totally outside committee to examine barring. I know that the present committee has an independent chairman, but industry people sit on the committee. They have an advisory role, but I should like to see a greater degree of independence in the barring decisions. That could be achieved by having a wider independent membership on the committee.

The Bill brings forward only a derisory sum. The Minister said with some justification that all films Bills have a life of about five years and that the figure that has been written into the Bill relates only to the normal passage of time for films legislation. That would be true if the sum in the Bill were so large that we could foresee a successful period of operation for the corporation over the next five years and if we could see it producing a programme of films, some of which would undoubtedly be successful. On the one hand, the Department has rightly said "We shall write off your debts and give you some assistance." On the other hand, it has limited the assistance and it is possible that the next five years will see the demise of the corporation.

If there is insufficient finance to make films, especially at a time when inflation and rising costs are doing away with the small budget film, we are, in effect, saying to the film industry "There is little likelihood of your being able to continue in the near future." The Minister should be giving urgent and careful attention to the sum that is to be provided by the Bill and seeking means of increasing the borrowing requirement so that it is not restricted to £5 million. He should be considering ways of allowing the corporation to go to even double that sum.

There is clear evidence that the corporation will be one of the few sources of finance open to any British film producer in the next five years. Bankers are not coming forward with the offer of finance. In America there has been an explosion of film-making and production. It is true that that has been mainly for television, but films are being made that may be shown on television and in the cinemas. They are supported by finance from ordinary banking circles.

That is difficult to achieve in Britain. The average finance house regards the financing of films as exceedingly risky, which, of course, it is. However, were there a greater injection of Government finance as an anchor, the corporation would be able to turn its finance to some account. It will have to make a programme of films. Even though it has lost money during its existence, that has been a gentle process and it has contributed to the continuance of a British film industry.

I should like to see a change in the corporation's terms of reference. I should like it to be told " If we are to have a British film industry, you are the only peole who can assure it." I should like it to be told " Use the money which you have to make films which have a particularly British flavour." The Minister will remember that we were most successful when we were making moderate budget films that reflected aspects of British life. I do not believe that the British have become so boring that there is no subject matter than can be turned into a successful film.

The attitude of distributors, the need to cover the negative costs in the home base and the number of other factors cause producers to look increasingly for mid-Atlantic subjects and mid-Atlantic scripts. They think that that is the only way in which they will make a profit.

I hope that the Minister will bear in mind all that has been said about the Children's Film Foundation. I was interested to hear that the hon. Member for Fulham (Mr. Stevens) had such an intelligent family. I am only sorry that he did not manage to achieve the intellectual standards of his father. However, he has a strong point when he says that the work of the foundation is of such a calibre that we should be tremendously proud of it.

The films that have been made by the foundation, especially with Henry Geddes at the helm, have represented all that is best in the British tradition. The films are funny, clever and moving. They make a point without being propaganda. They encourage participation in an audience. One feature that I find rather worrying about television programmes for tiny children is the wholly passive relationship. Some children's programmes encourage the child to participate in art and in story writnig, but the foundation was always the initiator of something more than simply a film. It was the basis for a children's film club that brought in children on a Saturday morning. It made them part of a larger participatory exercise. That enabled the cinema to become a recognisable centre of entertainment. The industry has been extremely shortsighted in the attitude that it has taken to the foundation.

The CFF was created in the first instance because the industry understood that, unless new audiences were created, that entertainment medium would die out. The fact that the industry is not prepared to alter its procedures enough to allow the CFF to benefit from new audiences and new times of showing is a condemnation of the industry. It will have cause to rue that inflexibility before long.

It is not an accident that Henry Geddes and his team have received tributes from America, Russia and many other countries for the quality of the work they have done, with the strong co-operation of the unions. If we lose that quality we shall never replace it; it is unique, and we should be prepared to defend it.

I am worried about the change included in clause 8. I understand that the method of calculation of labour costs has to be looked at again, but I am worried that, in an industry with a high level of unemployment amongst skilled personnel, if we widen the terms of the clause we shall make it more difficult for British technicians to find employment. I am, therefore, slightly anxious about the clause.

I hope that the Department is looking closely at the means of protecting copyright. The late Hugh Orr in his capacity as the chairman of the Association of Independent Cinema Exhibitors—an international organisation—did a tremendous amount of work on copyright because he believed, rightly, that as people were able to lease or buy machinery to enable them to record film easily, inevitably the producer would find himself in considerable difficulty if there were no levy on that operation. The conclusions reached by the Union Internationale des Exploitants du Cinéma was that a levy at the point of sale was the only way to get any justifiable contribution to production costs. That also will have to be discussed in Committee.

The cinema industry in this country will be wiped out unless it is prepared to be much more flexible and realistic and to stop thinking only in terms of the next film, which is its normal horizon. It must start thinking about whether there can be any justification for operating an industry that will not protect itself.

Unless the producers, exhibitors and distributors get together, unless the big duopoly is prepared to be far more flexible in the way it deals with the independent cinema owners, unless there is a much more radical approach to the times and places of showing, unless a specific fund is created to enable cinema owners to upgrade and improve the standard of their operations, within a short time the mass cinema audience which some of us can remember will be a thing of the distant past. The film industry is in danger of becoming a minority interest, at a time when more people are looking at more films than ever before.

It is easier now to look at films in our own homes, in cinemas, and elsewhere. They can be shown with greater facility than ever before, but the speed of the industry's response to these developments is frighteningly slow. It leads me to believe that only by Government intervention, by the creation of the British Film Authority and by the joining together of the BFI and the various interests in the commercial world shall we get any new thought in this important branch of the media. I hope that that tiny light on the horizon will be capable of expansion, but I believe, sadly, that we may be at the beginning of the end of British film making.

12.25 pm

As the hon. Member for Hackney, Central (Mr. Davis) suggested, we are not exactly " packing them in " for this performance today. I suppose that is part of the problem of the film industry generally. Had we been debating television, I suspect that there would have been a much larger attendance. There is perhaps an element of truth in what the hon. Gentleman and other hon. Members said about the Bill. He suggested that it was a timid Bill. I would not say that it was a timid Bill. The hon. Member for Crewe (Mrs. Dunwoody) suggested that it was a modest Bill. Yes, it is a modest Bill.

The hon. Member for Hackney, Central was a little unfair. He spoke of the Terry report. That report was presented to the Government of whom he was a member in January 1976, and no action was taken on any of the proposals made therein in the ensuing three years. To criticise me for having brought forward this modest Bill after rather less than a year in office is a little unfair, particularly as we still await the final reports of the committee under the chairmanship of the right hon. Member for Huyton (Sir H. Wilson), which has drawn attention to matters which were not seen so clearly in 1976 as they are now. I have in mind particularly the impact of satellite television broadcasting. That problem will not go away. The right hon. Gentleman recognises the problems which have arisen from irrevocable decisions which have already been taken.

I am a little concerned about the hon. Gentleman's reference to our final report. I am not sure whether he meant to imply that it was a terminal report or the final report of the Interim Action Committee before a successor body becomes the British Films Authority.

I was certainly not pronouncing sentence of death on the right hon. Gentleman's proceedings. I was referring to the Interim Action Committee and its next report, which re await with considerable eagerness.

If far-reaching reforms are to be made, they had best be made after proper consideration of all these matters. I must confess I have a fondness for the idea of a single quango to replace a proliferation of quangos. The right hon. Gentleman put forward that proposal in a very subtle manner which would have appealed to my hon. Friend the Member for Carlton (Mr. Holland) had he still been here. A commitment to such an organisation could be made quite easily and has been made by many people. The problem is a commitment on how to finance it, and that is a much more difficult problem.

It is a little unfair of the hon. Member for Hackney, Central to say that a Labour Government would have done more. The Labour Government had the chance to do more for three years, but unhappily they did not take that opportunity.

My hon. Friend the Member for Reading, North, (Mr. Durant), who is not present now because he had to go to an engagement in his constituency, questioned the changes which we propose to make in the quota regulations as they affect multi-screen complexes. Often there is an assumption that the British film would be squeezed into the smallest cinema, and that worries me. The film which packs them in will be used in the biggest cinema.

Had "Star Wars" not only been full of British actors, British producers and British technicians and been made in Britain but had been a British film in the sense that it was financed and managed by British film-makers, it would still have been shown in the biggest cinemas that could be found because it was the type of of film which audiences want to see.

Of course, we want to pay attention to the cultural nature of British films and, of course, we should remember that some of the most successful British films were Ealing comedies and others which emphasised the British character and life. Audiences go to see successful films. They go to see the films about things that interest them, not necessarily the films that interest us or the more esoteric filmmakers. Seldom is the winner of the Cannes festival tiie film that packs in the audiences in the United Kingdom. We must be careful not to be carried away by what one might call the art and culture section of the industry. I know that the hon. Member for Crewe is not, so I shall give way.

The Minister is falling into a trap. We are not saying that the British films that we want should be " cultured ". We argue that we have something to contribute in terms of humour and drama and that it is sad that nobody seems to be prepared to give us a chance.

I agree. That is why I emphasised the essential Britishness of a film such as " Star Wars " which finished up as an American film. It involved our work.

The hon. Member for Birmingham, Ladywood (Mr. Sever) made an interesting speech. However, he did not come to the point that the heart of both the Terry report and the Interim Action Committee proposals involve the need to resolve the relationship between the television and film industries. Perhaps the relationship between the sponsoring Ministries—the Department of Trade and the Home Office—should also be resolved.

If the hon. Gentleman thinks that such matters can be resolved in the course of a busy year, I hope that he will chat with his right hon. Friend the Member for Huyton. I am only just beginning to learn a fraction of what the right hon. Gentleman knows about the way in which such matters are conducted in Whitehall and within the Government. Such issues cannot be resolved quickly.

My hon. Friend the Member for Orpington (Mr. Stanbrook) referred to the Children's Film Foundation. I have much sympathy for the work of that organisation, although I cannot claim to have been a great cinemagoer as a child. I am worried about the problems of the CFF. The foundation is considering how it should best continue its work. That might involve a restructuring of the organisation. The problem is far from easy because it involves the distribution of Alms and changes of fashion. There are changes in fashion in what children want to do on Saturday mornings.

The problems also affect the trade union's view of the relationship between television and film-making. It is perhaps appropriate to express my gratitude to the work that Mr. Sapper is doing in that connection. We usually think of him when our television screens go blank and then we do not think kindly of him. It is appropriate to think more kindly of him for the work that he is doing for that organisation.

My hon. Friend the Member for Orpington also mentioned the British Film Institute and amateur films. The BFI is not my responsibility. That again emphasises the difficulties that we have in dealing with these matters.

If I refer to what the right hon. Member for Huyton said, that will probably cover most of the issues raised in the debate. The right hon. Gentleman referred fairly to what my right hon. Friend said about the British Film Authority. I emphasise that we have not concluded that the concept of a BFA is to be dismissed. However, we have emphasised strongly the problems of financing and organising it in its relationships with the two great industries—the television and film industries.

When the right hon. Gentleman referred to a clause in the Finance Bill which is a little obscure, he was making another of his " exaggerated understatements ". I have never thought that of any Finance Bill. There are many other clauses which are " a little obscure ". I shall draw the Chancellor of the Exchequer's attention to the possible improvements which could be made to the Finance Bill. I hope that that will help the Finance Bill Committee.

The right hon. Member for Huyton also referred to the other beneficiaries of the levy. He and the hon. Member for Ladywood mentioned the National Film school. One of the problems is that half of the graduates of that school go to the television industry. But the television industry makes little contribution to the costs of running it. There is something inherently unfair and wrong in the way that the two industries will not recognise that they have a common interest.

The right hon. Gentleonan tempted me many times to stray well beyond my departmental responsibilities into those of the Home Office and television. I fear that I must resist the temptation.

My hon. Friend has no stronger supporter in the House than I. However, in one breath, he rebuked the television and film industries for failing to get together and told us for the second time that Government responsibility for the two industries is dispersed. There is a slight inconsistency in that.

Indeed, I recognise that inconsistency. I shall not defend myself against the charge. I do not know whether that gives my hon. Friend comfort or concern.

I hope that it will help the Minister if I say that I agree with all that he has not said.

I must be cautious in accepting the right hon. Gentleman's compliments, although not as cautious as he was in accepting my compliments when he was Prime Minister. When the right hon. Gentleman expressed surprise at the success on television of show jumping and snooker I thought that perhaps at some time somebody would seize the opportunity of producing a combined programme and calling it " Polo ", which might also be a success.

The right hon. Gentleman emphasised the problems of satellite broadcasting. I know that he is aware—but the House generally may not be aware—that the Home Office has recently written to a wide variety of interests, including the film industry organisations, asking for their views on the problems that are raised by satellite and cable broadcasting. They will be considered as part of the Home Office study which was announced in the House recently. I believe that the Interim Action Committee has been asked for its views by the Home Office.

The hon. Gentleman has obviously concluded his comments on my speech, but he did not refer to the unhappy way in which statistical information is made available to the Government. Will he give the House some indication of the Government's consideration of the recommendations of the Film Industry Committee report of March 1980?

I have not brought forward any proposals for change. In all cases where there are calls for more statistics, I have to bear in mind two main problems—the burden that is placed on the industry and the burden that is placed upon manpower in the Civil Service in collecting those statistics. We have to be satisfied that the benefits will considerably outweigh the costs.

As the hon. Gentleman said, the report was published in March, and we are now studying it. He may wish to return to the subject in Committee.

The right hon. Member for Huyton spoke about the levy regulations and their effect. The new regulations have dealt largely with the problems to which he referred. The " Hot Wheels " phenomenon was covered largely by the £50,000 limit for the benefit of short films and by a variation of the multiplier.

The change in the multiplier has also affected the likely benefits which may flow to the so-called sexploitation films. However, I should emphasise that it was not done primarily with that purpose in mind. I have no ambition to take over the censorship functions of the Home Office, or anyone else. I have plenty of trouble already, without taking on more. I have never seen myself in the role of censor, nor do I believe that the levy or payments from it were intended to be used as a back-up for censorship. If there is a place for censorship, it must be conducted independently of any measures for the support of the industry.

My hon. Friend the Member for Fulham (Mr. Stevens) referred to the Children's Film Foundation, with which I have dealt. The hon. Member for Crewe was kind enough to pay me a compliment. If she knew the whole story of how the Bill reached the Floor of the House, she might have given me an Oscar rather than simply a compliment.

With regard to the national film development fund, the Bill is intended not to kill off the concept but to transplant it into surroundings where it will have more chance of bearing fruit than it has done in the past. Anyone can be wrong in these judgments, and I notice that the hon. Member for Crewe is crossing her fingers. I hope that that is how it will work. Certainly that is the intention.

Throughout the discussions it has been said that the Bill provides insufficient finance for the industry. I expected that point to be raised. It should be remembered that one film that was made recently—"Superman"—cost about £18 million. The sums of money involved in the film industry are huge, and the sums about which we are talking are relatively small. In the present climate, I do not think that the proposals of the Bill are ungenerous. It includes a proposed grant of £1 million and a proposal to write off debts of £11 million and interest accrued of about £2 million. We are thus remitting payments of interest in future of about £0·7 million a year. The corporation will still benefit from any income from the investments which it made as a consequence of those amounts of money which we are writing off. So the Bill is not ungenerous.

Another £5·7 million a year is given to the British Film Institute through the Office of Arts and Libraries. That is not an insignificant amount, and some people suggest that it might be better spent in other ways within the industry. That is a difficult and delicate question, and perhaps I would run foul of my right hon. Friend the Leader of the House if I were to get mixed up in that affair.

As a modest Minister, I have introduced a modest Bill, and that is a modest claim to make. I believe that the House has given it a modest welcome. In that sense, we have had a good day and we have done something to secure the future of the British film industry for the next five years. I accept that during that time there may be more that needs to be done.

Question put and agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Films Money

Queen's Recommendation having been signified

Resolved,

That, for the purposes of any Act of the present Session to amend the enactments relating to the financing and exhibition of films it is expedient to authorise—
  • (a) the extinguishing of any liability of the National Film Finance Corporation in respect of advances made under section 4(1) of the Cinematograph Film Production (Special Loans) Act 1949, and in respect of any interest thereon, out of money provided by Parliament;
  • (b) the payment of £1 million to the Corporation out of money so provided;
  • (c) any increase attributable to any provision of that Act enabling the Corporation to borrow such sums, not exceeding £5 million, as they may require for performing their functions in the sums so provided on the dissolution of the Corporation;
  • (d) any increase attributable to that Act in the sums so provided in defraying any expenses of the Commissioners of Customs and Excise incurred in collecting the levy imposed under section 2 of the Cinematograph Films Act 1957 in respect of any period ending not later than 12th October 1985; and
  • (e) any increase so attributable in the sums paid by the Commissioners into the Consolidated Fund.—[Mr. MacGregor.]
  • Statutory Instruments, &C

    In order to save the time of the House, I propose to put together the Questions on the two motions to approve statutory instruments.

    Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)

    Agriculture

    That the draft Agricultural and Horticultural Co-operation Grants (Extension of Period) Order 1980, which was laid before this House on 19 March, be approved.

    Value Added Tax

    That the Value Added Tax (Fuel and Power) Order 1980 (S.I., 1980, No. 440), a copy of which was laid before this House on 26 March, be approved—[ Mr. MacGregor,]

    Question agreed to.

    British Broadcasting Corporation Licence Fee

    Motion made, and Question proposed, That this House do now adjourn. [ Mr. MacGregor.]

    12.48 pm

    I did not expect to be rising at this hour, nor, I expect, did the Minister of State, who is to reply. I say at the outset that although he is used to long speeches from me in Committee, I propose to speak at normal Adjournment debate length today, and I hope that we can all get away at a reasonable time.

    The House meets today under the shadow of great events, and hearing the noise of distant thunder. The event will be interpreted around the world from the British viewpoint by the overseas ser- vices of the BBC, and their deeper complexities will be probed here for the internal British audience by the news and analysis programmes of the corporation.

    Therefore, this is not an inappropriate moment to look at the consequences of the severe financial cuts which the BBC is facing as a result of the decisions that the Government took last week.

    Ironically, these cuts are being made at a time when the BBC is still regarded around the world as a pre-eminent source of potency and influence, not simply within British society but as a British influence within world society. During the very week in which the Government took their decision, the American newspaper the Christian Science Monitor published a supplement on British life. It singled out the BBC as first of all our institutions to win worldwide respect and admiration.

    Perhaps I am not the person that the corporation would choose to put its case today. In my time I have been a candid friend of the BBC, and that great and sometimes over-mighty organisation likes nothing less than a candid friend.

    I remind the House of what the Annan committee said when it began its examination of the BBC—an examination which contained many criticisms but which, on the whole, was positive and favourable. It said:
    " The BBC is arguably the single most important cultural organisation in the nation. It has over many years raised the level of taste and discrimination; such has been its success that austere critics attack the BBC for not raising it higher. We would wish to pay it the compliment of judging it by the very high standards which the BBC itself has set.... The BBC has been a great patron of the arts. More than any other single influence the BBC has transformed Britain from a Land ohne Musik to a great centre of music making; and the orchestras which the BBC supports have improved the quality of music in the regions.... Today the BBC, and not the West End, is the first goal of the dramatist and playwright; and some would add that it, rather than Fleet Street, is the centre of national journalism."
    I plead guilty to being an austere critic and I shall continue to be so in the future, but I am seriously alarmed by the current crisis that the BBC faces.

    I had sought on a number of occasions, as had my hon. Friend the Member for Grimsby (Mr. Mitchell), to get an Adjournment debate before the decision on the cuts was taken. We received many representations from the principal unions within the corporation and from many other people, particularly in the regions and the East Midlands, from which we both come. Many of my hon. Friends from Scotland and the North of England in particular have raised with us their serious concern about the extent of the present cuts.

    The present crisis stems from the fact that the BBC, not for the first time, has gone to the Government of the day—and my own Government were equally, if not more, culpable in this matter—and asked for the licence fee to be based upon assessments of inflation and staff and other costs over the coming years. That request has not been met by the Government. The corporation went to the present Government this year to put the case for a licence fee of £40 or £41. It was given one of £34 which is supposed to last for the next two years, regardless of the level of inflation, because there is no indexing of the fee.

    Even without the rate of inflation that we have—and most of us gloomily expect it to rise over the next year or so—and even without the pay levels which may be recommended to the BBC by the CAC this month, the £34 allocation would have been inadequate for the kind of service that the corporation currently is expected to provide. We are talking of something which costs the householder 9p a day. Had the BBC got its £41 fee, it would have cost the householder lip a day. In those simple terms it is a small enough sum, but in terms of a poll tax levied on the householder which is unpopular with Governments and disliked in the country, it is an issue which a Government intent upon financial retrenchment find it hard to accept. That has been the case with many Governments in the past.

    The licence fee is something to which I became converted fairly late in life. I believe that it is the best way to finance the BBC. However, its great weakness, irrespective of who is in Government, is its inadequacy during a time of rapid inflation. Under our Government, when inflation went through the 10 per cent. and 20 per cent. barriers, the position was precisely the same, and this is the essence of the corporation's difficulty.

    Simultaneously, the only competitor in our duopoly system is bloated with profits and replete with funds, and in many ways this is driving up the overall costs of programming and making it very difficult for the corporation, as long as it follows its present strategy, to compete effectively right across the board. These remarks and some others were made recently by the outgoing chairman of the BBC in what I suppose we must call his " Swann " song at the Royal Television Society. Sir Michael made the point that the commercial rival with a single channel was far better funded. He was reproved for that by the current chairman of the Independent Television Companies Association, who said that there were lean years ahead with lean profits and years of loss.

    Simultaneously we had the announcement of a record month of revenue for the ITV system—£50 million, which is an increase of 48 per cent. over the same month last year, recorded in April for March 1980. That means that cost is no problem to ITV because it can pay, pay and pay again. There is an abundance of Danegeld there. The wage claims in ITV, the current level of salaries and the current level of film costs all have their effect within the broadcasting system as a whole. That has made things doubly difficult for the BBC.

    I submit that this is probably the greatest crisis not only for the BBC but for British broadcasting in general, since the debate about " Broadcasting in the Seventies " and the statement put out by the BBC in 1969. The one difference between that crisis and this is that at the time of the previous one there was a major debate in the House and in another place on the implications for broadcasting. We had an intervention from the then Leader of the Opposition, the right hon. Member for Sidcup (Mr. Heath), who made a most powerful contribution. We have had no such debate, in either Government or Opposition time, during this crisis. I fear that this Adjournment debate is an insufficient substitute for the kind of deeply concerned parliamentary discussion that is now needed about these matters.

    The scale of the revised cuts agreed by the BBC governors on Thursday of last week makes some concessions. Here and there things are restored as a result of public pressures, regional and cultural pressures and some pressures from Parliament. However, the central part of the package of £130 million of cuts and postponed expenditure remains.

    I remind the House of the severity of these cuts. First, we must remember that the BBC has transformed Britain into a great musical centre, yet it is axing live orchestras, including the Scottish Symphony Orchestra. A saving of £90 million is being achieved by deferring capital projects and developments. There will be a saving of £12 million in network television, with 405 posts lost. There is a saving of £4T million in network radio, including the slashing of the hours of production of one of those curious British institutions—Radio 3. There is to be a cut in local radio of £2 million. There will be cuts in news, engineering, personnel and in the regions, as well as the severe blow being felt in English regional television and radio. Residual regional radio broadcasting will cease, first of all in East Anglia, then in Southwest England and no doubt elsewhere later on.

    That means that areas of broadcasting, which are not touched by others, which cannot be dealt with by the BBC's single competitor and for which there exists no other organisation capable or charged with the duty of producing, may cease altogether. The consequence of that is very serious. It means that the radio services which are produced only by the BBC, because only the BBC has a network service of any kind, are the ones that will be the most severely damaged. It means that in both regional radio and television there will be blows affecting the whole nature of the service provided, and, of course, there has also been the hammer blow to the orchestras.

    The corporation has attempted, with some ingenuity, to a save a little of everything. It has spread itself very thinly over the years, and now the overall pattern of programmes remains but it is so thin that in many areas one can see through it. The difficulty with the programmes that remain is that in some areas, even with the savings and concessions that have been made, they simply underline the extent of the economies.

    A possible answer, as some critics have remarked, is that the BBC should no longer try to do everything. That point has been made forcefully by critics such as Mr. Richard Last in The Daily Telegraph and by a number of other newspaper critics. It has been echoed from time to time within the corporation.

    It was not a malevolent outside journalist, but Mr. Stephen Hearst, a distinguished radio executive, who said recently in an article in Encounter:
    " We need to recognise that the BBC institutional interest and the public interest may not always be the same."
    His article went on to quote the example of large sums of money being spent on sports coverage that duplicated the sports coverage of 1TV at a time when ITV could much better afford that coverage. If that is a fault, as I think it may be, and a fault that was pointed by the Annan committee, which made certain suggestions about the likely future development of BBC radio and television in times of high inflation, it is a fault of which hon. Members are also guilty. We have left the BBC in a position where it does not know, and has never had any guidance from or dialogue with Parliament about, what should be its role in these areas. It is asked to do everything. It believes that it should do everything.

    In some cases, because of its comparative weakness and its growing financial weakness, it remains in areas for institutional as well as cultural or broadcasting reasons. That comes about because there has never been in the House of Commons an intelligible broadcasting debate. We tend to take seriously the protestations of the BBC and the fact that it is crying " Wolf " when it is partly being devoured by the wolf itself.

    An example is local radio. The Annan committee suggested that local radio should go to a new authority—that this was an area in which the BBC simply could not afford to expand, as it is still attempting to expand, at the cost of some other services. As long as the corporation feels as vulnerable to the political process as it is, and because of the fact that the fixing of the licence, inadequate as it is, is now done by the Government, it will pay a disproportionate amount of attention to the views of local Members of Parliament because it feels that those Members of Parliament must be rallied behind it as a pressure group for a comprehensive service.

    An executive of the BBC was quoted in a long article by Mr. Graham Taylor about local radio recently in the Sunday Telegraph. The article stated:
    " Suppose, on the other hand, the BBC were to pull out of local radio. Soon, the argument goes, there would be 110 commercial stations all giving their MPs an easy ride and, before you knew where you were, the commercial boys would be complaining that Radio I was knocking spots off them—and you'd have a 1955-type Tory pressure group fighting to hand over Radio I to the commercial people. It is a view shared by some of the shrewdest minds at Television Centre who were once in favour of getting out of local radio altogether. 'It's the most primitive form of self-protection racket,' agreed one, ' but we simply can't leave that flank unprotected '."
    I understand that view. That is the problem. As long as the corporation feels that it has to fight this extended territorial battle with inadequate resources, but has to protect the source of those resources due to its relationship with the Government and the ruling party of the day, there will be this dilemma. That is at the heart of the suggestions that I wish to make.

    Other hon. Members may say that other questions arise from my comments that should be answered, not merely on the funding of the BBC. Those questions include whether local radio, as the BBC intends, should be absorbed into some kind of federal network, whether the musical services that it provides and the orchestras that it has subsidised for so many years should be a charge on the licence fee and upon the corporation, and similarly with education.

    Another question is whether the pop services that are maintained and have very high listening figures are properly contained under the corporation's umbrella. I believe that they are contained under the corporation's umbrella for a good reason. As long as the BBC can claim to be a comprehensive national service, it knows that it can go to the Government with a strong case for a licence fee reflecting that range of interests. If it was ever dragooned into a position where it supplied only minority interests, it would be weakened in its argument about the licence. Yet the paradox is that it is precisely those minority interests that the BBC not only does better than anyone else and to the exclusion of everyone else but only the BBC can do. That is the difficulty of the present position.

    Before asking what should be done about all these matters, I should like to comment on the great disparities in salaries and the resultant problem for costs. We are now awaiting the pronouncements of the Central Arbitration Committee about BBC salaries. The BBC has made an offer of 15 per cent. across the board. It should be realised that, in many areas, as a result of the last pay settlement in ITV, the gap is very great. It varies between 30 and 60 per cent. I have heard of some cases involving journalists where the gap is almost 80 per cent. A relatively inexperienced producer in ITV can earn £20,000, compared with half that amount at the BBC. The difference for secretaries is about 20 per cent., for technical operators nearly 30 per cent., for videotape editors nearly 20 per cent., for costume designers nearly 40 per cent., and for technical operating managers nearly 50 per cent. This means that the corporation finds it hard to keep staff. With the setting up, as we hope, of the fourth television service in a couple of years' time, following the legislation now going through the House, there will be another pull on talented and skilled personnel to leave the corporation.

    One of the consequences of the high inflation that has damaged the BBC licence fee provision is that wage costs are rising much higher still and the pace is being set by an organisation with which the BBC cannot compete. That is ITV. As long as this position remains, and as long as ITV is able to pay, at all stages, higher prices for skilled personnel and to bring over from the BBC people whom it has had no share in training—it is BBC practice to bring up people from the start of their careers—the position of the BBC will be weakened.

    What should happen now? My suggestion, which I commend to the Government without the slightest belief that it will be embraced by the Minister, is that the Government should have set, and should still set, in the light of inflation this year, the £40 licence fee rather than the £34 licence fee. The corporation is being made the catspaw of the present public expenditure squeeze, when it is not a recipient of public expenditure. It is a recipient of the charge for the service that it provides. That charge is not set by it. It can make representations, but no more. The charge is set by the Government of the day. Yet, as I hope I have made clear, the BBC has to face other assessments, calculated on the level of inflation and the level of competition that affect its own coste. The CAC salary awards are a case in point. If, even now, in some amazing moment of enlightenment, the Government were to agree to a £40 licence fee, it would be only a temporary assuaging of the problem.

    I am calling for various actions by the Government. The first is for the Government to examine, possibly by a study in the Home Office, some new methods of allocating the licence fee and new methods of paying it. I confess freely that the Annan committee failed to deal adequately with this matter, partly because a number of us, including our chairman, were obsessed with the weaknesses of the University Grants Committee. By new methods of allocating the licence, I mean the establishment of some kind of buffer body that would make recommendations both to the Government and to the corporation about what should be the level of licence fee over a given period of two years.

    The figure imposed by the Treasury on the corporation no longer represents, and did not do so under the Labour Government, a realistic assessment of what the BBC naturally needs. A number of proposals have been trailed about new ways of paying, some of them by Sir Michael Swann recently. I have never been able to understand why the licence fee could not be paid on a quarterly basis with electricity bills.

    Electricity bills now go into almost every house. By definition, one must have electricity before one can run a television set. Therefore, one would need only to have some sort of exemption claim which allowed the householder to produce evidence that he did not have and did not use a television set. That would be no more cumbrous than the amazing way in which the scrutiny vans now go round, at very great cost to the corporation and at great expense to the Post Office, trying to check up on who has paid the licence fee and who has not. Many millions of pounds are lost either in evasion or in the cost of detection.

    I suggest to the Government that we really ought to look again at whether the licence fee, one and indivisible, is the only form of revenue that the corporation should have. I am well aware that some people in the BBC have been calling for forms of pay television—a sort of box office service that they could also run. I am dubious about that. I do not think that pay television is something into which the BBC should wander. But I believe that there is a case for having a separate licence fee for the radio services.

    It looks now as though, in the determination to preserve a little of everything, the revenue simply will not be enough to provide the kinds of services that my hon. Friends and I would wish to see right across the board. That means that we might ask for a secondary charge, a subsidiary charge, for radio. Some of us on the Annan committee suggested two separate corporations, a radio corporation and a television corporation, so that radio could get the priority it deserved within the overall planning of the BBC. Even if that is not possible—and neither the previous Government nor this one accepted that recommendation—a subsidiary charge for the radio services, given the peril in which they are now placed, is a question that the Government should consider and look at very seriously.

    I suggest, further, that we ought now, at long last, in these times of financial stringency, to acknowledge other responsibilities for orchestras, for some regional programmes, for some kinds of very local radio and for regional programmes. Whether or not it is correct that the BBC has maintained so many orchestras for so long and at such great expense, plainly that situation will not continue now. Historically, it developed because of the deliberate policy of Sir John Reith. The BBC built up a great system of orchestras because that was the best way in the 1920s and 1930s for it, as a radio corporation, to produce its own music.

    The situation is very difficult now, and over a period of time it has been quite hard to slot the radio orchestras into radio programming, let alone into television programming, and yet the radio orchestras represent a great body of cultural talent which is now to be dispersed and scrapped. There is a case for putting the charge of maintaining orchestras which will be used by the BBC partly at least upon the Arts Council, and similarly for putting the charge for some of the educational programmes, from which the BBC now seems to be in retreat—one thinks, for example, of the cuts in the budget in Scotland—upon the Department of Education and Science, in precisely the same way as the DES pays for the Open University programmes.

    The Minister will say that that would mean an increase in taxation and that the Government are committed to a decrease in taxation. I suggest to him one way in which the Treasury revenues could be increased by a larger amount than this additional form of subsidy would require. That would be by looking at the basis of the television levy.

    We heard recently—and something has just come from the Public Accounts Committee to this effect—about the amount of levy revenue that has been lost over the years by the Government and the taxpayer as a result of some of the companies being allowed to get away with a depreciation allowance for their equipment. I am still waiting to hear from the Minister what was the exact sum involved, but it would pay for quite a few orchestras for quite a few years.

    For the last six years the levy has been charged upon profits and not upon turnover. Ten or 12 years ago I was in favour of that. I did not realise at the time how easy it would be to fiddle the system. When I look at it now, I have a certain sympathy for what Sir Michael Swann said at the Royal Television Society the other day. He said, in effect, " If we spend £6 million on a programme, that is £6 million of the licence fee. There is no other way in which we can do it. But if ITV decides to spend £6 million extra to smash us out of the ground in one of these competitive arenas, £5 million of that will be remitted in licence levy, so that the taxpayer will have paid £5 million and the company will have paid the other £1 million."

    That surely cannot be a fair means of conpetition when the corporation is in such financial straits as it is and the companies are as flush with cash as they are. I suggest to the Minister that as there is some merit—as I believe there is—in the idea of financial support coming from the Exchequer in various forms for cultural activities such as the orchestras, perhaps through the medium of the Arts Council, the money could be recouped by a change in the basis of the levy.

    We shall hear next year, of course, as we have heard this year, from the bosses of ITV that hard times are coming, particularly with the setting up of the fourth television channel. But, as I have already suggested, that fourth channel will bring additional problems for the BBC as well as for ITV. It will mean an additional drain on BBC personnel. It will mean an additional drop in the number of people who watch BBC programmes, so that for the BBC also there is a problem here.

    Looking at the system as a whole, I do not believe that those who follow us in this place, and who look back on our broadcasting services over the last few years, will believe that it was right for us to go through the 1980s with a broadcasting system neatly divided into two halves, one overburdened with money and the other overburdened with debt, and where the latter service, the corporation, was the one which traditionally in this country set the high standards—even if in some respects now the ITV system has caught up or perhaps even passed it.

    We have to do something to make sure that the finance that is generated by broadcasting helps to pay for the whole of broadcasting. I hope that I have made some suggestions to that end.

    1.17 pm

    I am most grateful to you, Mr. Deputy Speaker, for calling me and to my hon. Friend the Member for Derby, North (Mr. Whitehead) for this special guest appearance on his show. It is indeed a pleasure—given the fact that he and I have diverged in our opinions on the Open Broadcasting Authority—for me to agree so wholeheartedly with every word that he said and with the sentiments that he expressed so eloquently about the corporation and the disaster looming over it because of the cuts.

    The tragedy is that a subject so vital, which affects the lives of everybody in this country, directly or indirectly, has to be raised in this fashion at this time, to this tumultuous audience, by Back Benchers when the Government have not given time to discuss what amounts to the consequences of their own dirty work. The licence fee that they have fixed is now forcing quite disproportionate and savage economies on the BBC, and those economies will produce irreversible damage to that organisation and to cultural life in this country.

    An orchestra, once cut, does not get restored and does not re-emerge fully armed from the head of some other organisation. A specialised unit which is cut back takes a long time to build up again to full strength. The cuts in the news coverage of an increasingly complex, tortuous and difficult world leave us all the poorer and less adequately informed to face the times that lie ahead.

    The cuts in training that are being made mean a deterioration in the quality of the service in future years, and a deterioration in that concern for excellence which has always characterised the BBC. They also mean a decline in a field in which ITV has never borne its share of responsibility—given the very rich finances of ITV—for training for the industry as a whole. Most importantly, the lowering of morale that is the consequence of these cuts and the Government's disregard of the needs of the corporation in fixing this inadequate licence fee mean that the drift to ITV which has been going on is in danger of becoming a mass exodus, and one which must undermine the efforts of the corporation by taking away people of quality at all levels and in all sections of the organisation. That will be an accumulative danger in the years ahead.

    The BBC is kept under this tight restraint by the licence fee, but ITV will continue to be profitable just as it has been in the past. The prognostications of gloom are due to the fact that the new contract bids must be put in. This is obviously an attempt to warn off competitors for the bids rather than realistic assessment of the economic situation. ITV will continue to be profitable and to force the pace. The Government believe in a selective incomes policy. They select the strong to give way to and the weak to clobber. ITV will be in a position to force the salary pace, and the BBC will lag even further behind under this kind of constraint.

    The cuts, which are necessary as a result of the failure to increase the licence fee to the realistic level that inflation would impose, are wrong generally. The cuts which are going on in Government and local government service are also wrong. However, they are disproportionately harmful when applied to a cultural media organisation, because the skills involved are transferable. People will leave because the cuts operate crudely and viciously in such organisations. They cause harm to an indefinable aspect of our lives—to our cultural and educational processes. They make us all intellectually the poorer.

    It is tempting for me, having worked in independent television and never having felt easy with the kind of elitist, almost Reithian, role of the BBC, to join in a chorus of criticism at this juncture. When my hon. Friend was speaking, I felt that the fact that he singled me out of the crowd around him to address his remarks to meant that he was aware of this dichotomy in my mind between populism and Reithianism. But it would be wrong for someone like me to join in the atmosphere of witch hunt which is unleashed by cuts.

    Cuts turn section against section in an organisation and in society at large. They turn interest against interest as each struggles to avert the weight of cuts from itself and to divert them to someone else.

    Radio 1 says " We have the audience. Let Radio 3. which appeals to a minority, take the weight of the cuts." News tries to pass them on to culture. The regions say that London is over-manned, that the Television Centre has too much money spent on it and that they, the regions, need the money. The producers turn against the administrators. Minority programmes say that too much is spent on big sports deals, the Eurovision slush contest or the mammoth spectaculars.

    That is the kind of atmosphere that cuts breed. They create a climate in which everybody tries to shift the impact of cuts on to other sections and in which people tend to work out old grudges. People outside the corporation say that the corporation is over-manned, that they do not like this kind of programme or that money should be spent on that kind of programme rather than on the alternatives. All these old wounds and sores are reopened. The whole unity and coherence of the organisation is undermined by this internalising process of bitterness that cuts create.

    However, there is no point in this kind of argument. The BBC has many roles and functions. One of those roles is to provide good, popular television or pop radio for those who want it. The corporation also has to provide minority programmes—culture and education—which appeal to minority groups who have no alternative. To cut such programmes now with no alternative means of support is a crime.

    Without such support, the orchestras will cease to exist. There might be an argument for saying that the orchestras should be transferred to some other body. But, until that body comes forward and the other organisation is provided, it is a crime to slash them in the way that they are being slashed.

    Minority appeal programmes, popular programmes and culture come under the BBC's rubric of public service and it is indispensable. I want to avoid the argument of sector against sector, which is the product of cuts, and I hope that the corporation will also avoid it.

    I want to consider briefly a preoccupation of mine—the impact on the regions. Obviously to a non-London Member regional services will be of prime concern. Although some of the weight of the cuts has been taken away from the regions, the cuts that have been made are still substantial: a cut of £2 million in local radio involving the loss of 72 posts and a cut in English regional television of £2·2 million involving the loss of 90 posts.

    Our society has always had a desperate need to decentralise—to break the focus on London which is a characteristic of our national life. I am referring not to career patterns but to many other aspects of our national life. We need to break that stranglehold, to decentralise and to give the regions a flourishing, competing medium as a stimulus to local life, politics and interest. That comes from the media presence and competition between the media. We need to shift the focus away from London.

    The BBC has always moved too slowly in the direction of reflecting life in the regions. London is of far less importance to people in the regions than the role that it plays in the BBC. We need local focal points which are centres in their own right. We need independent concentration of the media on local needs and information, not as offshoots of some empire centred on London as though they were district commissioners in remote parts of India.

    Over the past decade, things have improved with the growth of local radio and the developments that have taken place in regional television. But they have not improved far or fast enough. That fragile process, which is important to the regions, will be reversed by these cuts.

    For instance, Radio Humberside has an important role in an area which is isolated and divided by the Humber. Radio Humberside will suffer a cut of about an hour a day and a cut of about 10 per cent. in its already very small staff of 34 to carry out its obligations to a huge area. The programme allowance, which pays the freelancers, the programme costs and the coverage, is to be cut by one-fifth.

    My fear is that the commendable effort that is now going on to make Radio Humberside a two-centre station will be endangered. Radio Humberside, because it is in an area with different focal points, should be a two-centre station—one in Grimsby and one in Hull—providing programmes and coverage from Grimsby for Grimsby. If it is to have any impact on local life and interests, it must serve the area in that fashion. The progress which is being made by setting up a studio in Grimsby will now be undermined—possibly even reversed—by the imperatives of economy which these cuts are forcing on local radio.

    Local radio public service broadcasting has a very important role in the locality. If it is important at the centre, it is important in the regions and the localities as well. BBC local radio, even when it competes with commercial radio, provides a different kind of service for a different kind of audience, and the competition itself is important.

    Therefore, it is no use arguing that BBC local radio can be phased out and commerical stations can take it over, because the two are very different animals. If one changes the nature of finance, one changes the nature of the beast. I want to keep the kind of service that BBC local radio is providing. It is an increasingly important service in our area, isolated as it is. We should expand it and not cut it back in this fashion.

    Similarly with regional television, where the Grimsby area is served from Leeds. We now have the benefit of some 90 half-hour opt-outs per week. These are indispensable if one is to be able to serve local interests and to reflect local life. People want that on television, as well as the news and the latest entertainment and plays from London. They want to see something of their locality on television. We now have only 90 half-hour opt-outs. In itself this is not enough. It is not enough to build up a flourishing nucleus of talent and ability to cover the region. That is to be cut back.

    The original proposal was to cut these programmes back to 50 by about 40 half-hour opt-outs. Now, in deference to the kind of pressure which Members of Parliament, among others, and local interest groups have been bringing on the BBC, 20 of those half-hour programmes are to be restored. In other words, it is to be cut back to 70 from 90. But the staff cuts envisaged in the cut of 40 programmes have not been restored; so overstretched resources, already struggling, will become even more overstretched to carry out the obligation, even the partially restored obligation, which the BBC has to the regions.

    This is a betrayal of the BBC's responsibility to serve those regions. It is not the BBC's fault. It is a betrayal forced upon it by the licence fee, which stops the BBC from doing what it wants to do, I think, and what it certainly should do. It should shift the emphasis towards the regions and provide in the regional centres competition for regional ITV companies which are based there and another regional focus for news and current affairs, entertainment and local information—again, a programme which can bring about a substantial change in the national life of the country, which has for too long been focused on the great wen and which has now been cut back and reversed by these cuts.

    This is going on in the regions with local radio stations all over the country. It must have a disastrous effect on morale in the organisation as a whole and a quite disproportionate effect on morale in regions which have already been outposts where some of the people working regard themselves as exiles from the mainstream in London. What will be the effect upon their morale of this kind of cut in their programme effort and programme capability?

    Above all this hangs the further fear that this will not be the end of the cuts story and that, because of the rate of inflation and the financial situation in which the BBC finds itself, there will be more cuts, so morale will be disastrously affected by the situation.

    Our central preoccupation must be how to stop the effect of all this on the BBC. One suggestion, which is a temporary bridging suggestion, to avoid the full impact of these savage cuts is that the BBC should be allowed to borrow to continue to carry out many of the services which are now being cut. This could be helped by an announcement that the licence fee will be increased to keep pace with inflation, to the level at which inflation should put it, and an increase which will fill in the disastrous gap which is now occurring retrospectively.

    Now that this situation has arisen, it is important that we should seize the opportunity, as my hon. Friend suggested, to decide exactly what to do about the question of the licence fee, a question which has for too long been postponed and which has undermined efforts to decide what the size and shape of the BBC's finances should be.

    The BBC has always seen the licence fee as a sort of constitutional guarantee of independence—as a rock on which the BBC can build an independent existence. However, when inflation is getting worse and the costs in the media are increasing at a disproportionately rapid rate, the licence fee becomes not a guarantee of independence but a leash that is held ever tighter until it can strangle—as it is strangling now—the organisation whose independence it is meant to guarantee.

    Governments do not want to face the unpopularity of a hefty increase in the licence fee, because they know the chorus of protests that would be generated by such an increase. I have to blame also the previous Labour Government, because they did not increase the fee to the level to which it should have risen. I am sure that the Minister of State will not play party politics by making that sort of reply. We concede that the previous increase was inadequate.

    The licence fee is inadequate and regressive, falls heavily on pensioners and the poor and is becoming too heavy a burden. The arguments used by the BBC in an attempt at popularisation, namely, that the service costs 9p a day, are true enough, but that is not how the licence fee is paid. It is paid in a yearly lump, which is much more painful than 9p a day. Anyway, many people say that for 9p a day they are getting programmes that they do not want and they would pay 9p a day to have them taken elsewhere. That sort of approach by the BBC will not persuade people.

    Because of the inability of Governments to increase the fee in proportion to the rate of inflation, and because of the inadequacy of the fee as a means of finance—it is regressive and a particular burden on the poor—we need to provide a form of index-linked finance to take the whole business out of the political arena and reduce the dependence into which the BBC has been forced.

    The cuts are only one aspect of the dependence that has been forced on a so-called independent organisation which has to appeal desperately to the Government for an increase in revenue. Some members of the Government are not reluctant to shoot off their mouths at every opportunity and criticise and attack the BBC publicly in a most humiliating and wrong way.

    The BBC's dependence, through the licence fee, and that sort of climate in the Government will produce the swishing sound of horns being drawn in and an increasingly cautious atmosphere in news and current affairs coverage which will be harmful to an independent organisation.

    For all those reasons, we have to consider an alternative to the licence fee. Everyone has his own alternative. Some will suggest that there should be commercials on Radio 1 and will ask in what sense it is distinct from commercial radio anyway. The BBC would answer that such a move would be the thin end of the wedge.

    We must seize the opportunity to open up the whole argument and to work out a method of finance that will guarantee the independence of the BBC and an increase in its income proportionate to the increase in inflation and the BBC's costs, so that it can continue to provide the services that we have a right to expect.

    I am attracted to the idea of some sort of buffer organisation that could assess the needs of the BBC and assess impartially whether it is fulfilling those needs and whether there are economies to be made. The present standard of economies is totally inadequate. What happens with savage and sudden cuts such as these is that bureaucracy—which might well be too large and dominant—protests itself. It becomes more important because it is the machinery through which the cuts are carried out. It safeguards its own position. More bureaucracy in administration, decision-making and procedures is needed just to make the cuts.

    The present climate will not produce healthy cuts. We need a buffer organisation which can see what are the responsibilities of the BBC, the extent to which it is able to carry them out, the extent of the increase necessary to enable it to carry them out and whether it carries them out efficiently.

    I am attracted by the idea of a buffer organisation—perhaps like the University Grants Committee—which is independent of Government imperatives. If Members' salaries are to be fixed by a committee making independent recommendations, what is sauce for the goose is sauce for a flock of ganders. That is particularly important in an organisation such as the BBC. We need an organisation which will determine the priorities and allocate to the BBC the finance necessary to carry out its obligations to the public.

    Above all, it is important to take this decision and act quickly to give an increase in the licence fee to counter the current cuts, which will be so disastrous to culture, news, education and information programmes in this country. The cuts affect the quality of our television programmes which are part of the total quality of our lives. That decision is needed particularly to offset the effects of these cuts on the regions—on places such as Grimsby—and on the majority of people who live outside London and who regard the regions outside London as the most important part of the world.

    This is a problem for Britain, and I hope that the Minister of State will assuage some of our doubts and speak for Britain.

    1.43 pm

    I apologise to the House for not having been here for all of the Adjournment debate. I am aware of the content of my hon. Friend's original proposition. I wonder whether I might add a request to the Minister for further information about the future of the BBC radio orchestras in the regions. This matter has attracted a good deal of attention in the regions and it is one on which numerous representations have been made to many hon. Members, not only by those directly involved but by listeners who are concerned that these orchestras are to be disbanded.

    There is considerable feeling in the greater Birmingham area, and in the West Midlands generally, about the fate of the BBC Radio Orchestra in the Midlands for which many people hold a brief. I think that it would be helpful to those of us in the regions who are concerned about these facilities if the Minister were to say whether he has had any further thoughts on this problem and whether he has been able to respond to the representations that have been made to the Home Office.

    The Minister will be aware that a large number of hon. Members have signed an early-day motion, which I was able to promote, seeking a reversal of the Government's decision on the general funding to the BBC, which in turn affects the orchestras. It would be helpful if the Minister could give us further information on this subject.

    1.44 pm

    I begin by joining the hon. Member for Derby, North (Mr. Whitehead) in expressing appreciation of the invaluable role played by the BBC in our national life. The hon. Gentleman spoke, he said, as a candid friend. I do not know what epithets or nouns I should apply to myself, but I associate myself with the hon. Gentleman's expressions of appreciation and regard. I noticed with great interest that the hon. Gentleman expressed his support for the licence fee system as a basic method of financing the BBC. though towards the end of his speech he made suggestions for supplementing that system.

    The hon. Member for Grimsby (Mr. Mitchell) was perhaps less enthusiastic for amending the operation of that system. None the less, even he made suggestions for amending the operation of that system. He did not advocate the substitution of another system for it.

    It is important in a debate of this kind to clear the ground in this way because what can be done in the context of the licensing system is obviously the key factor in the consideration of the financing of the BBC. Obviously other voices, not represented in this debate, have come out against the licensing system and suggested alternative methods.

    The Government's view, supported in this respect by the Annan committee, is that those other methods do not provide a desirable alternative basic system of financing the BBC. In that regard, I note the interesting observations which were made by Sir Michael Swann in a lecture which has already been referred to by the hon. Member for Derby, North. When talking about the licensing system, he said:
    " The licence fee system is also the best, perhaps indeed the only system, that makes true public service broadcasting possible. The pull of Advertising, in whatever form and however constrained, must inevitably be away from minority tastes and towards the great majorities. So also must Pay TV. And direct Government financing, as one can see all over the world, only leads to increasingly baleful Government interference."
    Therefore, at least we start on common ground so far as the system is concerned.

    Both the hon. Member for Derby, North and the hon. Member for Grimsby, compared with the hon. Member for Birmingham, Ladywood (Mr. Sever), who intervened on a specific point, suggested some kind of filter or buffer which would determine the level of the licence fee and remove from the Government the difficult task which Governments, of whatever party, have had to bear. I do not find that, at any rate at first flush, a feasible alternative.

    The hon. Member for Grimsby prayed in aid the example of the University Grants Committee. That committee may decide how much each university should get or how money should be allocated for particular purposes, but it does not decide the level of expenditure on university education itself. It is a machinery for distributing money, not one for de- ciding the total share of our national resources which should go in a particular direction.

    Although one should never keep one's mind closed to fresh ways of considering the proper means of assessing the needs of the BBC and looking at how the organisation can operate on a financial basis for the future, at the end of the day, whatever consultative machinery may be set up or considered, I do not believe that the Government of the day can escape the task, within a licence fee system, of deciding what the licence fee should be. Once one accepts, as the hon. Members who have spoken do, that the licence fee ought to stay, I do not think that a Government can shirk the responsibility of fixing the licence fee.

    A suggestion has been made, echoed by Sir Michael Swann, that it is wrong to regard the licence fee as analogous to taxation or to regard the BBC's expenditure as analogous to public expenditure. In a sense, I can see the force of that argument, but I do not agree with it in toto. It has been suggested that the BBC is receiving a fee for services rendered and that it is a charge, not a tax. However, I am not sure that such a concept is entirely compatible with a system which demands that anyone watching television must pay a licence fee. It is a criminal offence to watch television without paying that fee. Such a mandatory requirement might not be a tax in the strictest sense of the word, but the analogy to taxation is at least as close as that to charging.

    It is, therefore, fair to consider the licence fee in the context of the BBC's services as well as in that of the consequences of any increases for the national economy. As the House will know, last November my right hon. Friend the Home Secretary announced increases in the licence fees. The licence fee for colour televisions was increased from £25 to £34 and for monochrome televisions from £10 to £12. Those increases represent the largest cash increases in the history of licence fees. There has been an increase of 36 per cent. in the licence fee for colour televisions and 20 per cent. in the licence fee for monochrome sets. Those fees will provide more than £1,000 million for the BBC during the two-year period 1980–81 to 1981–82. It represents a sizable increase in the corporation's previous expenditure levels of £324 million in 1978–79 and £406 million in 1979–80. Those facts should be put clearly on the record.

    In announcing the licence fee increases, my right hon. Friend made clear some important points, in particular that the increase was to last for at least two years. He pointed out that he had taken account of the BBC's need to pay off its deficit on current account. He took account also of the corporation's need to increase its capital expenditure and to increase its expenditure on Welsh language broadcasts by the autumn of 1982.

    When considering this question, one is entitled to look at the record of the previous Labour Administration. No attempt has been made during the debate to defend their record. The right hon. Member for Leeds, South (Mr. Rees) allowed the BBC to have increased borrowing powers of up to £100 million. He allowed it to run into deficit as he did not wish to increase the licence fee by a greater figure. The Government have inherited that legacy. One must consider not only what the licence fee should be in an abstract sense but also the extent of the increase imposed when the licence fee is increased.

    If the licence fee is kept lower than it might have been, it becomes that much more difficult to increase it, because any increase in relation to the needs of the BBC is proportionately higher than it would have been if the licence fee had been increased to a greater extent at an earlier period. That is the background against which we operate.

    My right hon. Friend was satisfied that the increase that he announced in November 1979 was fair both to the BBC and to the licence payer. He remains so satisfied. I acknowledge that the increase was less than the BBC had wanted. The corporation put its case for its future expenditure plans fully to my right hon. Friend. Those plans were attractive but, like so many things that are attractive, they were expensive.

    At constant prices, the plans involved an increase of about 25 per cent. in the five years starting 1979–80. Allowing for inflation, they would have involved a colour licence fee of about £41 over a two-year period. My right hon. Friend took the view that that was more than he could reasonably ask the licence fee payer to meet. However, the increase that he decided upon was the largest in the history of the fees.

    It is fair to say that, at the time that the increase was made, I do not recall, nor does my right hon. Friend, a volume of protest to the effect that the fee was not being sufficiently increased. At the time of the increase I do not recall it being suggested that the fee was being allowed to rise to an inadequate extent. It is entirely reasonable to take into account the balance between the licence fee payer and the needs of the BBC.

    It is necessary to consider the consequences of the increased fee. It is under standable and natural that much of the debate has been taken up by hon. Members giving their view of the cuts that the BBC has felt it necessary to impose as a result of the financial position in which it finds itself. It was only last week that the governors of the BBC announced their decisions about the economies that they propose to make. I must stress that it is entirely up to the governors and not up to the Government to decide what they will cut and how.

    The Government are not and should not be responsible for making such decisions. The Government are responsible for the total sum that is available through fixing the licence fee, but they are not responsible for how the economies that the BBC has found necessary should be made. Therefore, the hon. Member for Ladywood will not be surprised when I say that the decisions of the governors were made only last week and I have nothing to add to what they have announced. However, I have some general comments.

    The hon. Member for Grimsby referred to the cuts as operating crudely and viciously. He gave a description of the soul-searching comparisons and evaluations that were involved. That did not seem to be a description of cuts that were imposed crudely or viciously. It seemed to be a description of an organisation behaving in an extremely responsible way and doing something which all of us as individuals and many other organisations have to do from time to time, namely, carefully to consider priorities within a limited budget and to decide where and where not to cut.

    I do not regard that as being a crude exercise. It does not follow that, if I were in the shoes of the governors of the corporation, I would come to exactly the same decisions and the same conclusions. I have not been through the exercise, so I cannot say whether I would, but the method by which it was conducted seems to me to be reasonable.

    The Minister is betraying all the characteristics of a Jesuit. I said that the atmosphere of cuts turns group against group internally and produces that kind of argument. In trying to escape Government responsibility for what is now going on in the BBC, the Minister demonstrates an almost Jesuitical treatment of logic. Having decided the level of the licence fee for the period ahead and, therefore, the scale of the cuts necessary, do the Government accept no responsibility for the decimation of the orchestras, the weakening of services and the irredeemable and irreparable harm that is being done to the BBC?

    I am sure that the hon. Gentleman knows a great deal more about Jesuits than I do, so I shall not try to follow that aspect of his intervention. As to responsibility, I could not have been clearer. I said that the Government accept responsibility for the total level of finance available to the BBC but that the precise determination as to how to spend the money within that total is a matter for the BBC. There is no mystery about it.

    I was going on to examine the more philosophical point, if we can avoid religious analogies, raised by the hon. Member for Derby, North. He said that Parliament had no opportunity to give guidance to the BBC on how to spend the money. Whether there is a larger or a smaller increase in the licence fee, there is on any view a limited amount to be spent. It is inconceivable to expect there to be no constraints and no question of the allocation of priorities.

    The hon. Gentleman suggested the role of Parliament in this. He also raised interesting questions as to the comprehensive nature of the service that is provided. How comprehensive should it be? He gave his thoughts on the advantages and the disadvantages of its being a comprehensive service. All those are legitimate points to be raised, and Par- liament may well wish to give, through individual Members of Parliament, its views on what it thinks most important. Members of Parliament have not hesitated to do so. What I would think very inadvisable is the desirability of the Government taking a view on the priorities that the BBC should operate.

    Therefore, the answer to the point made in a less philosophical and more polemical way by the hon. Member for Grimsby is that of course the Government are responsible for the total. We are talking about money provided at the citizens' expense. We have no money of our own. In whichever direction the Government move, whether they are being generous or mean, does the House think that they should go on to say " This is what you are having, and this is how you should spend it. We shall protect the orchestras and the regions, and so on" or, at the other end of the scale, " We insist on something else being cut, with money being spent on something else "? Once we say that the Government should not only set the financial ceiling by prescribing the licence fee but should descend to the arena and make decisions of that kind, we are destroying the independence of the BBC, and I do not believe that any responsible person would wish that to be done.

    What is the BBC doing? It has made it clear that, of the £130 million, the bulk of the cuts—£90 million—involves deferring hoped-for improvements and planned increases in expenditure. A total of £40 million of the cuts is needed partly to finance £14 million of new developments which the corporation regards as essential and partly to finance increases in labour costs.

    The governors have not suggested that they are unable to carry out their obligations under the charter. They have set out their priorities for the future and have set the cuts, particularly in the regions, in the context of sizable levels of expansion in recent years. The governors have also indicated that they accept that the corporation cannot be isolated from the realities of the economic situation.

    The picture which has been presented, for understandable and sincere motives, is grossly exaggerated if what the country is asked to believe is that the broad nature of the service provided by the BBC is to be truncated to a substantial extent. That is not the case. I pray in aid what Sir Michael Swann said in his lecture because it is relevant to the cuts. He said that the cuts amount in practice to
    "around 10 per cent., or £130 million, spread over the next two years from now."
    He also said:
    " To be fair to the Government, this is more or less in line with what they are trying to achieve elsewhere in the public sector. And to be truthful, quite a lot of the £130 million, in fact £90 million, will be found by deferring or abandoning planned new developments."
    I do not suggest that Sir Michael or the governors want to do that welcome, enjoy or find it anything other than a painful exercise. However, he has said that what they were asked to do was more or less in line with what the Government were trying to achieve elsewhere in the public sector. That is the key to the debate. I do not accept that the Government have behaved unfairly to the BBC when one compares the role of the BBC in our national life with all the other important things on which public money is properly spent.

    One aspect of the debate is the comparison with the independent television system. I acknowledge that the independent television system is not facing the same financial strictures as the BBC. However, to use emotive language and say that it is bloated with profits reflects an attitude towards profits which I do not share. I do not disguise that.

    Not all the income of the independent television companies is spent on programmes. Some is profit, but the companies pay on profit substantial sums to the Government in levy and corporation tax. As my right hon. Friend told the House on Second Reading of the Broadcasting Bill, he and the Chancellor of the Exchequer are reviewing the independent television levy. I am not in a position today to announce the outcome of that review. I do not believe, whatever the levy might be, that it is right to hypothecate that levy for any particular purpose. I certainly do not believe that it would be appropriate to take a proportion of that levy and hand it to the BBC. That is not the purpose of the levy, nor a proper approach.

    The hon. Gentleman referred to methods of payment. I was interested in his remarks, but he will, or course, be aware of the television licence saving stamp, which provides a flexible method of saving to pay for the licence fee. He put forward the suggestion of paying the licence fee together with the electricity bill, and in that context he referred to the vans that detect whether people have televisions. I do not think that such a suggestion would make unnecessary that kind of detective operation, because presumably, even if a person paid for his television licence together with his electricity bill, he would still have to pay only if he had a television. If he did not have a television, he would not have to pay. It would still be necessary to check whether people who said that they did not have televisions had televisions.

    In most households, certainly in mine but perhaps not the Minister's, someone comes to the house to read the meter.

    In my household he usually cannot get in because I am not there. In that respect I may differ from the hon. Gentleman.

    The Electricity Council is totally opposed to this proposal, and it is not right for the Government to tell the electricity industry that it must undertake this task if it is not in favour of it. Therefore, although I accept the spirit in which the hon. Gentleman put forward this proposal, I do not think that we can move in that direction at the moment.

    The hon. Gentleman also referred to the question of separate radio licences. The cost of the reintroduction of a radio-only licence would be such that fees would have to be very high in order to obtain any real income. I do not believe that the concern that the BBC is showing for radio is so low that it is proper to intervene and have a separate expensive licence in order to ensure that radio is adequately looked after by the BBC.

    The hon. Gentleman suggested that orchestra charges should be met by the Arts Council and that the educational expenditure covered by the BBC should be met by the Department of Education and Science. After making those suggestions, in the very next breath he correctly anticipated my response. I do not believe that by shuffling around the costs in that sort of way we would be achieving anything of reality. Either the total level of spending remains the same, or it goes up or down. If the burden is shifted in that way to publicly financed bodies, such as the Arts Council or the Department of Education and Science, there is no escaping the fact that that would amount to a direct increase in public expenditure.

    The Minister is doing me an injustice. Even in the monetarist's haven, costs can be increased if receipts are increased. I said that with that measure of additional public support in the context of the change in the basis of the levy, an increase in receipts would be expected.

    I do not think that there is any difference between us. The hon. Gentleman has suggested that the BBC should get the same licence fee but that it should not have to meet out of that the costs of these particular expenditures because they should be met out of DES or Arts Council money. The only way to do that, unless the Arts Council is to save money elsewhere, is to increase expenditure on the Arts Council or the DES. There is no escaping that, and that means an increase in public spending. The circle cannot be squared.

    No one faces with relish the prospect of the BBC or any other valued public organisation having financial difficulties, but I am afraid that in that the BBC is not unique. As a nation, we are all having to learn how to live within our means. I believe that my right hon. Friend the Home Secretary, in setting the licence fee at the level at which he set it last November, was, as Sir Michael Swann conceded, operating in a manner towards the BBC which was in no sense discriminatory or unfair. This fitted in with the national needs and was reasonable in the balance that had to be drawn between the needs of the BBC and the limitations on the pockets of the licence payer.

    Question put and agreed to.

    Adjourned accordingly at fifteen minutes past Two o'clock.