House of Commons
Wednesday 24 April 1996
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
British Film Industry
[Relevant documents: The Second Report from the National Heritage Committee of Session 1994-95, on the British Film Industry (House of Commons Paper No. 57-I,-II and-III), and the Government Reply thereto (Cm. 2884).]
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Streeter.]
Mr. Gerald Kaufman (Manchester, Gorton):
Madam Speaker, on behalf of the members of the National Heritage Select Committee, I thank you for making this period available for us to debate the National Heritage Select Committee report on the British film industry, which was published last year, and such developments as have taken place since then.
We are in a period of some rejoicing in this country because British artists have won Oscars, a whole collection of British Academy of Film and Television Arts awards last Sunday evening and awards at the Cannes festival. I should certainly like to congratulate everyone who won those awards and everyone who was involved in those achievements.
I must go on to say that that plethora of awards, which is a great credit to British film makers, conceals the absence of anything resembling a structured film industry of the type that we once had in this country. British film makers scramble around in their attempts to obtain finance for projects in a way that is often disheartening and only too often demeaning. Any hon. Member who has any doubts about that fact should read the newly published history of Palace Pictures, which collapsed while it was making "The Crying Game".
Our film makers go to Hollywood to make American films because they are in huge demand there. If they are able to make films here, those films are very often financed by foreign money, and the profits therefore go abroad. The enormous profits from "Four Weddings and a Funeral" ended up--via Hamburg, where the film was registered for tax purposes--in Eindhoven.
Many congratulations to Emma Thompson on scooping up awards at the Oscars and at the BAFTA ceremony for "Sense and Sensibility", but the profits of that film will go back to Columbia Tristar Pictures, in Culver City, because it financed the film. "Restoration" won the Oscar for best costumes, but it is an American-financed film.
"The Madness of King George" won the Alexander Korda BAFTA award as the best British film, but it was mainly financed by Samuel Goldwyn Jr., whom our Select Committee visited and with whom we had discussions in
Hollywood when we went there. Mr. Goldwyn required Alan Bennett not only to "mid-Atlanticise" his original play, but to change the title from "The Madness of George III" to "The Madness of King George", because he feared that American audiences might think that it was the third film in a series about George.
Tim Roth won the BAFTA award for best supporting actor for his performance in "Rob Roy", but that was an American-financed film and the profits went back to the United States.
Our Select Committee issued its report on the British film industry 13 months ago. The report was praised throughout the film industry, which one may think is not surprising, because it met a very great many of the industry's demands. But on 6 June 1995, the then Secretary of State also lauded our report as "thorough and perceptive". I feared that that kind of praise was a prelude to total inaction, and that has indeed been the case. We made a raft of recommendations, but scarcely a single one has been implemented.
Some of the recommendations are quite simple and, I should have thought, uncontroversial. For example, we recommended a season ticket for work permits for key personnel from abroad to enter and re-enter the United Kingdom to work on films financed by inward investment. The then Secretary of State paid lip service to that recommendation, but nothing has been done about it.
We recommended the fullest support for the London Film Commission Initiative. The then Secretary of State promised "direct pump-priming support". A grant of £100,000 was given last October, but I am afraid that that was the end of that. As I shall explain later, there is great need for such a commission because the facilitating of filming, especially on location, is one of the most important ways to attract inward investment. Indeed, the lack of a commission was one of the reasons why the filming of "Braveheart" moved from Scotland to Ireland.
Mr. David Harris (St. Ives):
Is the right hon. Gentleman aware that a film is being made of a book by a Cornish author, Judith Cook? The book is set in Cornwall and the intention was to film it in Cornwall but, because of the tax incentives given in Ireland, the shooting is to move there. Is not that absolute nonsense?
Mr. Kaufman:
I know Judith Cook well and have read some of her books. She wrote one about Hilda Murrell, for example. The problem affects not only the disgraceful example cited by the hon. Gentleman. The BBC has filmed British-located television productions in the Republic of Ireland because of Ireland's section 35 incentives. The hon. Gentleman's intervention leads me directly to my next point and the next recommendation made by the Select Committee.
We recommended establishing and co-ordinating regional film commissions, which would be of enormous importance in getting productions filmed not only in London but across the country. That proposal has not been taken a single step further by the Government, even though overseas experience has demonstrated how useful such commissions can be in attracting film makers. Canadians have that system, and much Hollywood film making is taking place in Canada. The American states have that system, which means that filming is done across the United States rather than in Hollywood alone.
"Judge Dredd" is an example of what I am talking about. It is a £50 million film starring Sylvester Stallone. It was brought to this country, but filming was almost brought to a halt because of obstruction in the use of the most elementary locations in the capital. When the film was completed, its producers said that they would not wish to repeat the experience and come here again, but when they read the Committee's report, they said that if the recommendations were implemented, they would happily come back to Britain. Ministers cite "Judge Dredd" as an example of inward investment, yet it is also an example of the obstruction that inward investment meets.
We also proposed something which I should have thought was completely non-controversial and which would have cost the Government no money--that the Government hold discussions with the industry about a job placement scheme. However, as far as I can tell, the Government have ignored that recommendation, too. They have certainly ignored our recommendations on immediate write-offs of production expenditure of qualifying British films, which could help to sustain indigenous film making. They have also ignored our proposals for an amelioration of the withholding tax and our recommendation for introducing a tax incentive scheme similar to Ireland's section 35 initiative. Our recommendations for attracting inward investment and promoting indigenous film making have been ignored by the Government.
Our proposal to revoke the Channel 4 funding formula--it is extraordinary that such an anomaly is allowed to remain on the statute book--was at first rejected by the previous Secretary of State. It is now being botched, and on Second Reading of the Broadcasting Bill, I am sorry to say that the Secretary of State showed that she still has no real idea of what she is doing about that formula. However, Mr. Grade has made it clear that any moneys accruing to Channel 4 from the revoking of that formula will go towards indigenous film and television production.
The Minister will no doubt say that my approach is negative, that the Government have done other things and that, in any case, nothing much needs to be done because the British film industry is flourishing like the green bay tree.
Last June, the previous Secretary of State made a statement in which he promised £80 million of national lottery money for film production and distribution over five years. In October last year, the present Secretary of State announced £5.5 million of new money for 13 new British films.
As it happens, the Select Committee did not recommend cash subsidies for the film industry. We do not believe in them or regard them as appropriate. We do not believe in subsidising manufacturing, of which the British film industry is a part as well as being an artistic endeavour. However, if the Government promised £80 million of national lottery money for film production, they should have at least fulfilled their promise. The Government promised that film would obtain 15 per cent. of all national lottery arts funds but, so far, it has received 4.07 per cent. What the Government claimed as a great initiative is not being carried out.
The Government promised an advisory committee to recommend steps necessary to improve access to capital markets for film makers. That is extremely important because banks in this country are extraordinarily backward-looking in that respect. I and my colleagues had discussions with the Lord Mayor of London and some of his advisers in the hope that we could obtain such an advance but, so far, we have not done so. The establishment of the advisory committee promised by the Government was not even announced until December. The names of those involved have been announced, but we have yet to see any positive results of its work.
The Secretary of State promised a feasibility study into establishing a west end showcase dedicated to British films. Ten months later, consultants have just been appointed and terms of reference agreed. Indeed, we have gone backwards.
In its report, the Select Committee listed aspects of finance and assistance for British film making and drew attention to the Eurimages scheme. That scheme provided funding for 55 UK co-production films between 1993 and 1995. Quite inexplicably, the Government have now withdrawn from the scheme at a saving of £2 million. Unlike our Government, other countries accept an obligation to provide incentives for their film industries. Although its cost-effectiveness has been questioned, Ireland has now renewed its section 35 incentive at a modified rate for another three years. Even the Isle of Man is extending its tax credit scheme for film and television production.
The result of section 35 in Ireland has been phenomenal. The expenditure on film and television production in the Republic has risen from 2 million punts in 1992 to 180 million punts last year. Although the direct trade-off between tax revenue forgone and gain to the Irish Treasury may not have worked out precisely as had been hoped, the multiplier effect in Ireland has been of great value, as has the linking of section 35 with training young Irish men and women in film production. It is required that they are attached to film productions.
Compared with that 180 million punts attracted to the Republic in 1995, in Britain, despite the fact that expenditure has risen substantially in recent years, total investment in UK-linked production in the UK fell last year by 3.4 per cent. to £420.79 million. The figures are not directly comparable. It is difficult to obtain such figures. Nevertheless, there is an enormous disparity between that £420 million in the UK and the 180 million punts, taking into account the fact that we have nearly 20 times the Republic's population.
Of course, "Braveheart", the Oscar winner for best picture, is the most telling example. It is of course about a great Scottish hero, and it was decided to film it in Scotland. Pre-production work and a few weeks' filming took place there. Production was then moved to Ireland because Mel Gibson not only became aware of section 35 incentives, but was given assistance with, for example, extras for battle scenes, which was simply not available in this country. Therefore, of the £35 million spent on that high-budget epic about a Scottish hero, £3 million was spent in the United Kingdom and about £30 million in Ireland.
Britain per capita probably has the greatest roster of film-making talent in the world. Yet in film production per million population in 1995, the UK was behind not
only the United States, but France, Italy, Spain, Australia, Denmark, Finland and Norway, as well as Ireland. Only west Germany was behind us.
Our screens are swamped by American films. Last year, 83 per cent. of box office receipts in British cinemas were for American films, compared with 8.6 per cent. for UK films. In 1994, the latest year for which I have available figures, box office receipts from national films were higher in France, Denmark, Italy, Germany, Australia and Spain than in Britain.
I repeat that I am not calling for subsidies for the British film industry or for the stringent and in many ways absurd bureaucratic controls imposed by the French, under which they even lay down the nights on which films can be shown on television. I am calling for incentives. As the Select Committee report made clear, we are not asking for incentives that favour the film industry and single it out. We are asking for incentives that are available to certain other industries.
It is ludicrous, for example, that the withholding tax does not apply in the same stringent way to Barbra Streisand when she comes here to record a CD as it would if she came here to make a film. It is ridiculous that the castle built at Shepperton studios for the filming of the Sean Connery and Richard Gere film "First Knight" was regarded as a capital asset and therefore not available for write-off, although of course the moment that the film was finished, the castle was of no use to anybody. It ought to have been written off. The Select Committee asks for the same treatment for film making as is already available for television, sound recording and even shipbuilding.
Let me make it clear that although the domestic audience for films exhibited in theatres is not large--even though it has doubled in recent years--film making is not a marginal industry. It is a $53 billion-a-year global business. It is bigger than the music industry, it is expanding at about 8 per cent. a year, and, most important for us, it is predominantly an English-speaking industry. We have the huge advantage that the lingua franca of film in the world is English, and we are the custodians of the language.
More than 70 per cent. of films worldwide are in English. Yet when Kenneth Branagh made "Much Ado About Nothing", he was ordered by Samuel Goldwyn Jr. to cast Hollywood stars regardless of whether they were suitable. As I have said, when Alan Bennett adapted "The Madness of George III" for the screen, he was made to mid-Atlanticise it. The cast of Branagh's new film of "Hamlet" includes Robin Williams and Jack Lemmon--neither of whom is known as one of the world's foremost Shakespearean actors. Laurence Olivier never had to put up with that.
In this centenary year of British cinema, we can celebrate the contribution by the British industry, of some of the greatest films ever made, the role of some of the greatest directors in world cinema, and the contributions of marvellous actors and brilliant scriptwriters. A new century of cinematic endeavour in Britain is about to begin, in which our film makers not only should demonstrate their own genius, but ought to make British films whose profits return to this country, to fund further indigenous film making, instead of going to Holland, Tokyo and elsewhere.
9.34 am
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