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Dr. Julian Lewis (New Forest, East): I am sorry to interrupt the right hon. Gentleman's flow, but I cannot resist interjecting at this point to confirm one contrast

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between the US and British film industries: the US film industry is willing to take far greater poetic licence. I have in mind the new US film about the alleged capture of a German submarine by Americans who, supposedly took hold of the Enigma machine, thus shortening the war by enabling the code breakers to do their work.

I wonder whether, even at this late stage, representations might be made to the American producers to allow a walk-on part to my constituent, the then Royal Navy Sub-Lieutenant David Balme DSC, who actually captured the Enigma machine from the U-110 seven months before America even entered the war.

Mr. Clarke: I enjoyed the hon. Gentleman's little speech. He will understand if I do not respond in detail, as this is only a short debate and others want to speak.

Mr. Robin Corbett (Birmingham, Erdington): May I quickly pay tribute to my right hon. Friend's work as films Minister? On the point about distribution weakness inhibiting the success of British films, has our mutual friend Barry Spikings had any success in Hollywood with the American film distribution companies in trying out new arrangements with Britain and the rest of Europe, on a partnership basis, to make it easier for films made in the European Union to be shown in our own countries?

Mr. Clarke: My hon. Friend is absolutely right to refer to our mutual friend Barry. He is, indeed, working away on those projects in the United States.

We cannot complain about American investment and integration or even about the huge American influence in Britain's cinemas. The Americans have cracked it and we should welcome their investment. The United States can see the attraction in investing in Britain, but we do not invest with the same enthusiasm in our indigenous industry.

Mr. David Chidgey (Eastleigh): Is not the problem that we simply cannot attract sufficient investment in the production of British films to get beyond the critical mass that would enable our films to attract worldwide distribution and get the return on the investment that would bring growth to the industry?

Mr. Clarke: That is absolutely right. That was the main thrust of "A Bigger Picture". Frankly, until we reach that point, I do not believe that we can claim success for our film industry.

It is perhaps no surprise that the average budget for wholly British films produced in 1997 was less than £3.5 million, compared with more than £18 million for the overseas films made in the United Kingdom. The comparison highlights the bizarre situation of the British film industry. After all, if overseas--usually US--companies can, rightly, see the potential of investment in Britain, why is domestic confidence so much weaker?

The film policy review group had that in mind when it examined the underlying structures, and it soon became obvious that we need to encourage the emergence of a distribution-led industrial process, with firms capableof attracting major private investment, and greater integration between production and distribution. If we are

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to create a modern industry that is successful at every stage, from initial development of a script through production to marketing and distribution and, finally, exploitation by television or video, every part of it must come together and play its full role in building the conditions for success.

It was my belief during the review, as it is now, that the long-term interests of the British film industry and of the small independent production groups within it rests in collective action to address the needs of the industry as a whole. A great start in the process of all sectors coming together was my right hon. Friend the Chancellor's welcome announcement in his first Budget of tax reliefs for film production.

That announcement was excellent, and demonstrated the Government's will to assist the film industry, but if we are to get anywhere, Government actions must be matched by all who benefit from our film industry. In "A Bigger Picture", we proposed that, to complement the Government's fiscal initiative, the whole industry be invited to contribute on a co-operative and voluntary basis to an all-industry fund to improve the development, distribution and marketing of British films.

If enhanced, those activities will benefit the whole industry, and I still believe that they should be funded at least in part by the industry itself. After enormous consultation and debate, it was estimated that a voluntary contribution of as little as 0.5 per cent. of the film-related revenue of approximately £3 billion a year would raise about £15 million a year. With that funding, we agreed, there should be a significant increase in the size and prospects of the British film industry, to the benefit of all, which would more than outweigh the relatively small cost.

Some of the other measures recommended in the report are already being implemented. I hope that the House will recognise that the scale of what can be achieved will be greatly increased if the industry is prepared to underpin the Government's strategy with its own investment. That is an essential ingredient of success.

In effect, we faced a choice. We knew that we had identified desirable policy objectives, and we could either introduce the first Films Bill since 1985 or seek to bring everything and everyone with us, here and abroad, with a something for something principle, in which I still believe.

After all, should not those who benefit from films contribute to the investment in them? Are we to suffer from chronic lack of investment while our wiser, but no more gifted, competitors race ahead? In that spirit, I ask my hon. Friend the Minister whether progress is being made on the fund, which is a key element in the package. Considering the difficulties, has the action committee explored the scope for an alternative that will achieve the aims of the original proposal?

The fund would complement the work of the Arts Council of England, which has considered committing £100 million of lottery money to film over the next three years. I am sure that the House would agree that it is right to continue to support the British film industry, and I believe that the Government have set the policy options.

A further consideration that we identified was the need for significant progress in the development of links between the City and the industry to create long-term investment opportunities. That was the reasoning that helped to establish the film finance forum, which was to

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consider specific proposals and might improve the industry's investment potential, one of its primary tasks being to undertake a cost-benefit analysis of front-end tax relief schemes for investors to encourage the creation of well-capitalised, integrated distribution entities.

It would be helpful if my hon. Friend the Minister could tell the House about the progress of the finance forum. I am sure that she has kept the Treasury informed of the industry's views about the beneficial effects of the 100 per cent. tax write-off for production. Can she give us any information about the Treasury's thinking on further tax reliefs for the industry? Has there been further dialogue, for example on the £15 million cut? Given that the ad hoc working party that was set up in June 1998 by the film action group, which I briefly chaired, has presumably reached some conclusions on distribution tax reliefs, can my hon. Friend the Minister enlighten the House on what those might be?

A debate about the British film industry would not be complete without mentioning the role of the country's highly skilled broadcasters. It was the view of the group, and still is the view of many to whom I have spoken in the industry, that our terrestrial and satellite broadcasters should stand up and take more responsibility for their obligations to the British film industry. After all, broadcasters use film. They should make a contribution to the success of film.

When I met broadcasters, including Channel 5, Granada and BSkyB, there was an obvious synergy in the training and development of writers and actors which, with convergence, is bound to increase. It is a shame that there may be some broadcasters who object to contributing to the fund, as great care was taken to ascertain the views of the broadcasters during the review and afterwards in the action group. It simply is not on for some to suggest that they were not consulted. They were involved as much as every other section of the industry. That said, it would be wrong not to mention the BBC, with whose help "Mrs. Brown" was a major success, and Channel 4, which has recently made an excellent contribution to the industry. I understand that the ITV network has signalled that it wants its companies to invest more in film and we look forward to seeing the fruits of that £100 million investment. Some broadcasters still play a minor role, and, in all candour, I had expected satellite and Terrestrial broadcasters to be more vibrant as we move into the digital age.

The development of the industry depends heavily on film industry training and that point cannot be overemphasised. An adequate supply of skilled professionals is the only sure way to service a growing industry and to keep labour costs competitive. If the success of the industry in Britain is to be sustained, we need to emphasise the requirement for training, both for this and the next generation of the work force behind the camera, and in scriptwriting and development. We also need to encourage Skillset, the national training organisation for film and television, in its sterling work. In that context, it defeats me to understand why--if I understand the position correctly--the national film and television school has been largely sidestepped in consideration of structural issues.

I found it almost unbelievable that, before the review, in an industry with an annual value across all media in

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the United Kingdom estimated at more than £3 billion, the then independent production training fund raised as little as £90,000 a year. That represents a minuscule proportion of the value of the industry to this country. For that reason, a skills investment fund has been established. Producers of British films will be asked to contribute 0.5 per cent. of the production costs of their films up to £10 million and 0.25 per cent. for any costs above £10 million. For two years, the contributions will be voluntary. Because the group felt so strongly about the need for increased financing--and I agree--if the trial period was unsatisfactory, the Government would consider whether proper action needed to be taken. I hope that my hon. Friend the Minister can confirm that that is still the position.

Training should be seen as the responsibility of all sectors of the industry that rely on the quality of British films produced. I take this opportunity to ask my hon. Friend what discussions she has had on the skills investment fund and what plans she has to progress the crucial policy area of voluntary arrangements should they be proving elusive.

Obviously, the commercial appeal of films is central to their box office success. In that area, the group tried to set up an action plan to help the industry increase the marketability of British films and, equally, the attractiveness of films and the cinema for the British public. We recommended the establishment of a film marketing agency which would promote a generic interest in film, based on a permanent audience research capability, providing the sort of information that the British Audience Research Bureau provides for television and staffed by marketing professionals. Such a proposal would make it possible to determine the attitudes of the actual and potential audience for film, enabling the industry to respond to or even anticipate consumer demand, as television does.

The report also recommended that more should be done to help independent producers get their films shown at the major film markets. I understand that the Producers Alliance for Cinema and Television has agreed to take this on. I would like to ask my hon. Friend the Minister what progress has been made on the setting up of a film marketing agency and the PACT initiative on overseas marketing. Can she update me on how we are to launch script development in the absence of voluntary arrangements for the all-industry fund? It is often said that one can make a bad film from a good script, but one cannot make a good film from a bad script. Will my hon. Friend also update us on the script development scheme that has been proposed by the Arts Council? Will such a scheme include previous box office success in the criteria?

Some believe that the British film audience is less adventurous than some of its counterparts abroad, and that it should be a longer-term goal to create what is called a more cine-literate--although I do not much like the word--population, through education in its wider sense at all stages and at all levels. It was for that reason that we proposed the setting up of a working group to draw up a strategy for film education. Not only would this have education benefits for generations to come, but it would provide social and economic benefits. A broader range of film makers, distributors and exhibitors would be able to find an audience and to survive in the marketplace. What discussions has my hon. Friend the Minister had with

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ministerial colleagues at the Department for Education and Employment on that important matter and on whether the BFI's plans for it have now matured?

In terms of the UK industry and the worldwide marketplace, the UK has a real advantage. Because of its language, the Hollywood production companies find it relatively compatible with the work environment that they require and, even more significantly, our films have the ability to find an audience outside the local marketplace. Various measures were implemented, such as the setting up of an office in Los Angeles, and I wonder whether my hon. Friend has any plans to visit it in the near future. I recommend that she should.

Closer to home for me, the Scottish contribution to the British film industry continues to be extremely important. We have film-making talent in abundance up there, although I am too modest to include my own little effort, "Give Us A Goal", in that category.

The lack of structure of the industry in the whole UK, however, has a detrimental impact on Scottish film production. I ask my hon. Friend to clarify the relationship between Scottish and UK film institutions. The British Film Institute, British Screen and the British Film Commission appear to have a mixture of British and English responsibilities, and I urge my hon. Friend and her counterpart in Scotland to clarify that situation as soon as possible, not least because of the setting up of the Parliament in Scotland this year. It would be helpful if dialogue was known to be taking place this side of that Parliament's taking up its duties. As a Scot, I would welcome clarification.

It is important that the changes recommended for the British film industry should be seen within the objectives of creating a self-sustaining European audiovisual industry that is able to win a greater share of the European market. The European Union's audiovisual seminar at Birmingham during our presidency last year was a great success. Excellent work is being carried out in Europe by Commissioner Marcelino Oreja, whom I met a few weeks ago in Brussels, not least in his policy, which I wholly commend, of encouraging the development of centres of training and excellence.

In Britain, it was proposed that the film finance forum should make it a priority to develop plans to encourage the growth of European investment vehicles to lead private money investment in a slate of films attached to the distribution entities. What is the Government's position on the proposals in Commissioner Oreja's document, "The Digital Age", particularly those relating to the securitisation fund?

"A Bigger Picture" was largely silent on structure in the British film industry because we knew that the comprehensive spending review would produce proposals. The review was followed by a document containing a section titled, "Film--What happens now?" In another document from the Department for Culture, Media and Sport--"A New Cultural Framework"--I read:

Lord Attenborough is one of Britain's most respected film makers, and I am pleased to see that he is involved in such an important initiative. Perhaps the Minister can comment on the current status of that work.

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Film means many things to different people. For some, it is an industry, for others an art form. Many see it as an aspect of creative Britain. However, there is no doubt of film's enduring qualities, and its ability to adapt to changing demands from the most basic broadcasting to digital television. The audiovisual industry faces a challenge, but it is more than capable of taking it on. What is abundantly clear is that there is no limit to the role that the industry can play as we approach the millennium. The future can be a glowing one. Given a fair wind, and given the determination to succeed, that glowing future is well within our grasp.

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