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Films Bill

Volume 983: debated on Friday 25 April 1980

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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).