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10.9 am

Mr. Jim Callaghan (Heywood and Middleton): I am proud and privileged to be a member of the Select Committee on National Heritage, which is so ably led by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). However, that leaves me with a problem, because my right hon. Friend's expertise on the film industry is so great that I cannot think of anyone else in the House with such a depth of knowledge, and it is therefore difficult to follow the speech that he made on behalf of the Select Committee.

In the few moments that I have for my speech, I shall be positive. The former Secretary of State for National Heritage, now the Secretary of State for Health, said of the Select Committee's report:

"The Government welcomes your report, and the clear, detailed and perceptive overview it provides of the history and current state of the industry".

I welcome those words, because, although the Committee has produced many reports, I feel that the best one so far is our report on the film industry. The Committee took a lot of stick when it announced that it intended to report on that industry, so I welcome the former Secretary of State's statement.

The right hon. Gentleman continued:

"Like the Committee, we believe the United Kingdom film industry is an important one, whose skills, talents and creativity have justly earned an international reputation"--

the right hon. Member for Mole Valley (Mr. Baker), too, said as much--

"the Government has been able to accept a number of the recommendations in your report".

As children ask for many presents at Christmas, knowing that they will not get all of them, although the Committee has made a lot of recommendations I am realistic enough to know that they will not all be accepted by the Government.

The response to the Committee's tax recommendations was as follows:

"tax decisions are by tradition announced in the Budget. This paper cannot, therefore, respond conclusively to this area of the Committee's Report. Nonetheless the Government will certainly bear in mind the Committee's recommendations, and the logic which underpins them".

So I shall not refer to the tax recommendations either.

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I am delighted that the Government agree that we have a film industry in which we can take genuine pride. There is considerable opportunity for growth, as is shown by the following statistics. United Kingdom cinema admissions have increased from an all-time low of 58 million in 1984 to 124 million in 1994--a notable growth. The number of screens in the United Kingdom increased from 1,250 in 1985 to 1,929 in 1994, and overall investment was up from £245 million in 1986 to £457 million in 1994.

Despite those encouraging figures, the industry has two main problems. First, British films captured only 2.5 per cent. of British box office receipts in 1993, compared with the United States product, which took a 94.2 per cent. share. So we have a long way to go to catch up with the American film industry. The United Kingdom industry is a cottage industry in comparison.

Nevertheless, there are opportunities, because the United Kingdom cinema audience is growing fast, and Britain offers skills and facilities of international renown, as well as the advantage of the English language, which the right hon. Member for Mole Valley mentioned. The Americans are making good use of those factors.

Another major problem for the United Kingdom film industry is the fact that most of the distribution in this country is in the hands of the United States majors. As a result, many British films have great difficulty in gaining large-scale distribution here. One witness who came before the Select Committee, representing the Cinema Exhibitors Association, runs a cinema in Withington in Manchester, and he spoke at length about the difficulties that private cinemas experience in trying to show major films.

Mr. Michael Fabricant (Mid-Staffordshire): Does the hon. Gentleman share my sadness at the fact that, when the major American production companies approached what were then the large cinema chains in the United Kingdom, Rank and EMI, and said that there was a future for the film industry not only in the United States but in the United Kingdom, that that industry would not be permanently dominated by television, but that cinemas would have to be refurbished and made more attractive, Rank and EMI rejected the idea, so that now, sadly, the large cinema chains in the United Kingdom, the UCIs and the MGMs, are based in the United States?

Mr. Callaghan: Yes; the hon. Gentleman is a little ahead of me, I shall come to that point in a few moments. Most of the new multiplex cinemas are owned by American companies, and account for 33 per cent. of all United Kingdom screens.

The Monopolies and Mergers Commission's report of October 1994 found that a complex monopoly existed. It did not attribute the low proportion of United Kingdom films shown in cinemas to any conspiracy but recognised that the United States studios are skilled in producing and promoting films that the United Kingdom public wish to see. However, the report suggested that the Director General of Fair Trading should monitor the market.

On the positive side, there is a new factor that could help to promote and develop the United Kingdom's film industry. The Arts Council of England has plans for using lottery money to encourage the production and distribution of films. My right hon. Friend the Member for Gorton has already mentioned those plans.

There is an absence of significant investment in the film industry in the United Kingdom, because the risks are high and the returns volatile and unpredictable. I therefore

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welcome the Government's proposal to convene an advisory committee of representatives from the leading financial institutions and production companies to discuss and promote ways of addressing those problems.

Large-scale subsidy is favoured by neither the Government nor the industry. Nevertheless, since 1986 the Government have supported British Screen Finance Ltd., with an annual contribution to help to finance feature films. I drew attention to that body many times in our Committee deliberations, and welcomed what it had done. To date, British Screen Finance has invested in 101 feature films, 86 of which involved directors, writers, actors or producers embarking on their first or second project. I welcome that development.

The Government have announced their intention to use lottery money to support British film makers as British Screen Finance has done, and their hope that the lottery support will encourage the private sector to back British films. I hope so, too.

The Arts Council estimates that it could spend more than £70 million up to the year 2000 on film production, which would enable it to attract more private sector support, and to increase the level of film support and the range of investment opportunities. It also estimates that it could spend more than £14 million up to the year 2000 on distribution and cinema refurbishment. I am sorry that the hon. Member for Mid-Staffordshire (Mr. Fabricant) is not listening now, because I am talking about refurbishing cinemas, and I hope that what I have said meets the point that he made earlier.

I am delighted that the Government welcomed the Select Committee's report. It also drew attention to training, and consequently the Government propose to lead discussions at ministerial level on how the Committee's proposals can best be given effect. That is because its skilled work force is one of the UK film industry's main strengths. Our seedcorn lies with our youth. Youngsters who want to study dance or drama and apply for local authorities often find that grants are discretionary, not mandatory. That is a great tragedy. I hope that the Government will consider that.

I would have liked to comment on many of the Government's other responses to the Select Committee's recommendations, but time will not allow it. However, I draw attention to the Committee's visit to the United States of America and our two-day visit to Ireland to discuss their film industries. I was surprised by what I saw in both countries. I was impressed by the Irish film initiative, which encouraged an increase in film and television production from £1 million to £100 million over two years. That is a tremendous leap forward.

Mr. Nicholas Winterton (Macclesfield): I am sorry that the hon. Gentleman has said that he will not venture into the subject of taxation, because it is primarily through that that the Irish Government have attracted film makers to Ireland. I hope that he will say that a 100 per cent. write-off of production costs in the first year would be a positive way of enabling the British film industry to achieve its immense potential.

Mr. Callaghan: I agree with the hon. Gentleman. The Government have said that they will not deal with tax

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matters in this debate because they are for the Chancellor. I was keeping to the recommendations that the Government have put before the House. Having visited Ireland, met Mr. Higgins, of whom I shall say more, and examined their section 35, I know that the Irish tax incentives encouraged Mel Gibson to stop filming in Scotland--it was a film about Scottish heritage--and take the whole production to Ireland. I would have liked to speak at length on that, but I am trying to keep to the brief.

Ireland's tremendous leap forward was due in no small measure to the enthusiasm and drive of its Minister for Arts, Michael D. Higgins. I was impressed by that gentleman, as was the whole Committee. I do not want to pour cold water, but I am saddened that we have not in recent times had an Arts Minister with a similar drive and love of the arts. The heritage and arts portfolios have been safe havens for Ministers who have had difficulties in their previous ministerial posts. I hope that I am wrong, but none of our Ministers has matched the drive and enthusiasm of Mr. Higgins. However, I always live in hope and I look to our present Minister to match them.

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