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Mr. John Bercow (Buckingham): I would like briefly to comment on what the Paymaster General has helpfully told us this afternoon. Just before I do, however, and with your indulgence, Mr. Deputy Speaker, I would like to congratulate you—four days in advance of the event—not only on my own behalf but, I hope, on behalf of the House, on the forthcoming 25th anniversary of your election as the Member of Parliament for Saffron Walden, following your four years' service in another constituency. You have given great service to the House
and to your constituents, and I am cheekily taking this opportunity to congratulate you before anybody else does so. Moving on—
Mr. Deputy Speaker: Order. I am extremely grateful to the hon. Gentleman for that completely unexpected intervention. I therefore feel that I can be cheeky enough to congratulate him on his engagement.
Mr. Bercow: Well, this is as good as it gets. All good things come to an end, and I fear that I must enjoy this while it lasts.
Dawn Primarolo: If I am allowed to be cheeky just for a moment, Mr. Deputy Speaker, may I say that you must have entered the House at a very young age? May I say, too, how much we value your attention? I also congratulate the hon. Member for Buckingham (Mr. Bercow) on the recent announcement of his engagement. What a lucky man he is! I congratulate him on behalf of all my colleagues, and we look forward to the wedding celebrations—
Mr. Deputy Speaker: Order. I thank the right hon. Lady, but I think that we had better get back to business.
Mr. Bercow: We had certainly better do that, Mr. Deputy Speaker. I thank you for your kindness, and I warmly thank the Paymaster General for what she has just said.
Mr. Deputy Speaker, I am about to astonish you, the Paymaster General and all right hon. and hon. Members present in the Chamber by making the shortest speech that I have ever made since 1 May 1997, when I was elected. The new clauses give a partial transitional relief to certain TV productions that meet cinematic standards. As the right hon. Lady acknowledged, we raised these issues in Committee, and my hon. Friends tabled two amendments that offered some protection, although it is only fair for me to say that, in financial terms, our proposals were more generous.
Nevertheless, it is encouraging that the Paymaster General has listened. She was slightly stung—perhaps legitimately so—towards the end of our deliberations in Committee, when her word appeared to be questioned. In fact, on one occasion, I think that I appeared to question the reliability of her word. Certainly, in this case, she has come up with the goods. She said that she would look at the matter, and she has done so. We understand the rationale behind the Government's position, and some relief is certainly much to be preferred to none. On that, I will rest my case.
Mr. Chris Smith (Islington, South and Finsbury): In contributing to this brief debate on new clause 21 and other new clauses and amendments, I should perhaps remind the House of the interests that I have recorded in the Register of Members' Interests.
When the Chancellor introduced the relief for investment in the production of films in the UK, in his first Budget five years ago, it was widely and warmly welcomed by the film community. I very much hope that the decisions that the Government have taken over recent
months will not endanger the warmth of that reception. In one important respect, the Government have moved to acknowledge some of the difficulties that the decisions announced in the Budget were likely to cause. New clause 21 contains a scheme for transitional relief, which I welcome.I know that particularly in the independent film and television programme-making sector in the UK, there is a feeling that the Government have recognised the problems of natural justice that arose where commitments had already been entered into, but the relief was on the point of immediate withdrawal. The Government have now tackled that. Yes, they have circumscribed the transitional arrangements, but they have done so in a reasonably fair way, and there will be a welcome across the industry and across the House for the transitional measures included in new clause 21.
However, I am deeply disappointed that the Government did not move on the other issue which they committed themselves to consider—the withdrawal of relief for high value mini-television series, especially those made with inward investment money in the UK. Those are usually major undertakings costing many millions of pounds to make. They have all the features of a movie-making exercise—the amount of money, the scale of the operation, the kind of skills required and the type of film used to make the movie. All are akin to the making of a film for theatrical distribution, rather than to the making of a run-of-the-mill television series.
With those high-value television series, there are major employment and skill benefits for us here in the UK. In the past year, for example, £173 million-worth of inward investment came into the UK to assist the making of such major television series. A large segment of that was the HBO series "Band of Brothers", but there were other major series as well. The employment consequences of that inward investment were substantial, as were the opportunities that were given to people in the UK to learn the process of making film and television programmes, to develop their skills, and to find employment not just directly on the movie sets, but in all the ancillary occupations around the making of television programmes and movies. I fear that as a result of the decisions that the Government have taken, we will lose such opportunities in the future.
When the Government made their announcements in the Budget, they rightly drew attention to the fact that the original intention of the relief was to provide support for the British film industry, and not the British television industry. They stated in their Budget press release that they were trying to
- "refocus the reliefs on the original intention of stimulating the production of films in the UK and to promote growth, employment, investment and opportunities in the British film industry".
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Undoubtedly, there have been abuses of the system, as the Paymaster General rightly said, in that soaps, game shows and even the weather forecast have been eligible for tax relief. It was not the intention of the original relief to assist such programmes, and it is right that the
Government have taken action to restrict relief so as to prevent such abuse. However, I fear that, in seeking to catch the abuses of the system, they are eliminating genuine, major investment in British employment in the making of major series.My right hon. Friend said that the makers of television mini-series are not subject to the same risk as film makers. Yes, that is true in the majority of cases. Most major mini-series, especially those reliant on inward investment, are made by substantial companies, which usually have some guaranteed outlet for distribution before they start to make the series. If that were the only test to be used, the conclusion that the Government have reached would be the right one. However, that is not the only test to be applied.
I put three arguments to the Government. First, they are in danger of losing substantial amounts of valuable inward investment as a result of this decision. Secondly, the makers of mini-series may not be faced with the same risks as the movie maker, but they have the same temptation to make their mini-series elsewhere around the world where they can get tax relief, be it Canada, Ireland, Australia or anywhere else. That temptation is still there. The removal of the relief in the United Kingdom makes other environments more attractive to the makers of mini-series.
Thirdly, the making of these mini-series has helped to sustain the infrastructure of the film industry, especially in the past year and a half when times have been difficult for parts of the industry. By damaging the television mini-series potential in the UK, the Government are in danger of damaging the film infrastructure. I urge them to reconsider that point.
I realise that, for the time being, the Government's mind is made up. I would warmly welcome a proposal from the Paymaster General that she will come to tomorrow's proceedings in the House with a draft amendment to put this matter right, but I suspect that she will not do that. I am sad about that, but I hope that she will commit herself to reconsidering this question over the next year or so to see how in broad terms the new restricted relief is working in practice, and whether damage to inward investment is occurring as I fear it might. If that is what the analysis shows, she should introduce measures, perhaps in next year's Finance Bill, to put right the damage caused.
I hope that a review of what is happening on this relief will be put in place. I shall listen with great interest to hear whether my right hon. Friend is able to assist in this matter.
Mr. Edward Davey: I fear that I am about to strike a discordant note in the debate, but before I do, may I join in the congratulations to the hon. Member for Buckingham (Mr. Bercow)? We will be looking at the Conservatives' policy on the married couples allowance to see whether there are any changes in the future. [Interruption.] The Paymaster General has just mentioned the child tax credit as well. Perhaps there are other announcements that I have not yet heard.
On new clause 21, it is always nice when Ministers tell us that they have listened and introduced changes in consultation with the industry. However, bearing in mind the general interests of the taxpayer, I am concerned when the Minister says that the industry is very happy with this
measure. I have great respect for the right hon. Member for Islington, South and Finsbury (Mr. Smith), who made a powerful and informed speech. However, many industries and individuals across the country would like a bit of tax relief, given half the chance. Is this tax relief necessary and are the provisions sensible? Let me deal with the details before discussing the principles.New clause 21 contains an attempt to prevent tax avoidance. As the Minister said, when the relief was originally introduced, it was not intended that it could be abused in the way that it has been. My concern is whether new clause 21 will be sufficient. I predict that we will be back here, perhaps not next year but the year after, discussing other anti-avoidance measures to stop the abuse of this tax relief. That is what happens when reliefs are provided in this way.
Proposed subsection (2)(c) provides that
- "a significant proportion of the earnings from the film should be obtained by such exhibition."
I do not know whether this is the first time in tax legislation that the words "quiz show" have appeared. The new clause refers to a range of different types of programmes; it has to be extremely specific to ensure that abuse does not take place. I am worried that the tax commissioners will determine whether something is a film or a quiz show. Will there be case law on that? I can see the policing costs mushrooming in the future. So although the Government are quite right to want to tighten up the provisions, I am worried that they have not gone far enough.
When the Paymaster General was discussing new clause 22 she said, almost as an aside, that although the new clause restricts relief, providing transitional relief in the process, the costs in the coming year will be about £50 million. That is an awful lot of money. The right hon. Lady says that it will not reoccur because it is transitional, but let us imagine what £50 million could have done for an endowment for a higher education institution, providing training and education for the skills that people need in the industry.
We will still be spending significant sums on giving the industry tax relief. The question that the House should really address is whether those sums, directed in a different way, would help the wider industry, the individuals who work in it, and UK plc overall. Should we be giving tax relief to those who are effectively the companies' shareholders, although they may be few in number, rather than investing in the skills and talents of British people who would work in the United Kingdom and abroad? I fear that we may be choosing the wrong method to support the industry by investing in shareholders rather than the skills and talents of British people.
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