TUESDAY 17 JUNE 2003

RT HON TESSA JOWELL, MP, RT HON LORD MCINTOSH OF HARINGEY AND MR ANDREW RAMSAY

  Q510  Derek Wyatt: Good afternoon, everyone. Can I ask you where you think we will be with Sections 42 and 48 in 2005 and where the lobbying starts and finishes, or is it your intention to look at the Canadian model or another model and generally what is your thinking currently?

  Tessa Jowell: Just before I ask Andrew McIntosh to come in on that question, can I just introduce my two colleagues? Lord McIntosh of Haringey, who has just been appointed in the re-shuffle as our Minister with responsibility for a wide range of things, excluding film, but he very heroically—because he knows so much about—

  Q511  Chairman: I know Mr McIntosh's view on films—

  Tessa Jowell: You would indeed. This is what he is—

  Q512  Chairman: I know his view on The Pyjama Game.

  Lord McIntosh of Haringey: And I know your view on the Judy Garland remake of A Star is Born.

  Tessa Jowell: Anyway, so for that reason, we thought that it would be excellent if he came this afternoon. And Andrew Ramsay, who is the Director in my Department responsible for this area of policy. Andrew?

  Lord McIntosh of Haringey: Well, Section 42, of course, of the tax relief has no end date. It will carry on. That is the one that is concerned with budgets over £15 million. But Section 48 is due to end in 2005 and there is an opportunity which we will pursue very hard with the Treasury to extend—not just to extend it in time, but to cover some of the issues which the Film Council has been raising in its second tranche of thinking on the subject and that is particularly, of course, getting involved not only with production but with distribution and exhibition.

  Q513  Derek Wyatt: There is a mixed view in Hollywood; some said that the British system was complicated, some said that they had no issue with it. Most said, though, that the Canadian was much quicker. So I was just wondering, your analysis, where are you with looking at what Canada is like?

  Lord McIntosh of Haringey: Well, we are three years old. The National Film Board for Canada is 60 years old at least, I should have thought, probably more than that. We have already brought together a number of rather complicated and inter-related film funding bodies into a single Film Council, which we think is the right thing to do, and they are already thinking again about the ways of extending the use of the money that they have from the Lottery. It is not just Canada. We are not unique in this. Virtually every country that makes films provides public funding for films. But the Canadian model, as I understand it, is largely a production model. We have particular difficulties because our distribution system is 90% in the hands of six large US companies and we have difficulties, which have been expressed to you, I am sure, with actually getting prints to small exhibitors who want to show independent and British films.

  Q514  Derek Wyatt: This morning we were at the British Film Industry looking at digital cinema and its implications. There was widespread—I cannot think of what the right word is—just unhappiness that Channel 4 Films imploded because it was such a rich source and had such rich talent. Do you think there is a role here for the BBC to take on almost a studio type influence in the UK market and will that be part of your Charter Review?

  Tessa Jowell: Well, the answer to the second part of your question is yes, it will. The Charter Review will look at a wide range of issues in relation to the BBC and seek, I hope, to achieve some definition of the BBC's role. They already put something like £10 million a year into film development and production. I think that, in a sense, the big questions which frame our response as Government to your inquiry is the legitimate and proper role of Government. You have already touched on the question of fiscal incentives, clearly as in a range of creative policy the existence of the BBC is also important, but I think that this is an area where principally, subject to the right regulatory framework, we are looking for the industry itself to deliver its own solutions.

  Q515  Derek Wyatt: With the development of a digital cinema concept, this has huge impact on our rural and semi-rural communities. I mean I have an island with 40,000 and we have no cinema. So is there a way in which you can see a digital tax incentive to help us to be the first to go digital in the world? And I wondered—no-one could give me the answer—given that the Chancellor has allowed hardware and software to be tax free, could a digital cinema system be either tax free or is there some way in which we can actually the smartest film going group in the world?

  Lord McIntosh of Haringey: You are talking about £70 to £80,000 per conversion to digital.

  Q516  Derek Wyatt: I know.

  Lord McIntosh of Haringey: That is an awful lot of money, even if it were to be tax free and there is no agreement to do that.

  Q517  Derek Wyatt: With all hardware it starts at the very expensive end and within five years it is very, very cheap. It is only a matter of scale.

  Lord McIntosh of Haringey: Yes.

  Tessa Jowell: And the Film Council, as you may have heard from them, have put a million pounds into a limited digital experiment in relation to non-theatrical exhibition and increasing availability of soft sub-titled prints for hearing impaired and audio visual description for visually impaired. So of course it may be appropriate to look at incentives in this area, but any decision about incentives is a matter for the Chancellor. The final point I would make, I think, is that the increase in digital technology obviously raises enormous challenges in relation to piracy which is of great concern to the industry, as you will no doubt have heard already.

  Q518  Derek Wyatt: Alexander Walker, who was in front of us an hour ago, was scathing in his criticism of the £92 million allocated by the Arts Council to three separate film franchises. Do you think that this is a matter for the National Audit Office? How are we going to see where that money is? There is some lack of transparency, according to his evidence.

  Lord McIntosh of Haringey: I do not think Government determines the priorities of the National Audit Office. It is a matter for the National Audit Office to decide what matters they want to investigate. If they ask any questions, they will be given proper answers.

  Tessa Jowell: I mean this has been an extremely controversial programme and it is a controversial programme which has had mixed success. The franchises come to an end, I think, in the middle of next year, 2004, and the expectation is that where they have worked, as they have in relation to two of the franchise companies, reasonably well then they would continue but not funded by the Lottery. There are obviously lessons to be learnt and I think they are lessons that take us back to the first question, which is (a) what is the legitimate role for public or the public's money, as the Lottery is? I mean my general concern about investment which becomes controversial is the wider risk of undermining public confidence in the Lottery, both in distribution and in ticket sales. So they have had a mixed press. Alexander Walker has very well established and strong views about them. I think that by and large they deserve the mixed press that they have had.

  Q519  Michael Fabricant: I was very pleased to hear Andrew McIntosh say that the Department would be lobbying hard to keep Section 48, because certainly all the evidence we have received in the United States is that they are businesses and that they will look at various locations for making films and, at the end of the day, often the price has to be right; if they are not always, it is off to location two. Will there be other areas where the Department might be lobbying the Treasury?

  Tessa Jowell: Well, the present incentives focus on production. I think that there is a growing view that we should be looking at beginning to shape incentives to increase distribution and so, without going into such a sensitive area as the nature of the lobbying of the Treasury, I think it is fair to say that the Film Council—Alan Parker has made, I think, very clear his view on this, that it is now time, given the experience of the success of incentives which are directed at production, to look now at the other aspect of the full chain, if you like, and to look at distribution.