Dawn Primarolo: The problem is how to provide transitional relief. The hon. Gentleman referred to a contract to produce with everything in place and that would be a hook on which to hang it. However, if the producer has sold the programme, apparently for less than it will cost to make, the final contract that brings the relief is not determined and that creates a problem in providing transitional relief. I shall go a little further in explaining the difficulty. It is the way in which the relief is used that makes it so difficult to work out whether transitional relief would be appropriate.
We could have delayed the date of commencement long enough for all those series in commission on Budget day to be completed. We could have delayed until the end of the year, but that would have allowed every TV programme or series completed in 2001 to qualify for the relief and that is not our intention. If we just changed the date, the extension would include the soaps, game shows, makeover programmes and so on and the Government would lose virtually all the estimated savings of £225 million in 2003–04, and that is assuming that the relief was used only by those who would normally expect to use it and not by those who might decide to move everything forward because they had been given notice of what would happen. Announcing in advance that the relief will change would have an effect on behaviour in terms of bringing forward commissioning to include it within the definition. That could cost us more, which would be bizarre. Producers might certify even more programmes with the Department for Culture, Media and Sport in 2002 to acquire a stock certificate product that they could use for sale and leaseback then or later.
We considered those issues and decided that the risks were too great. Those risks are replicated in the amendment and we could not see a way of dealing with the commencement date. I am sure that the hon. Member for Epsom and Ewell would have argued the other way if we had done away with the relief because it was being misused and then provided for it to continue.
Chris Grayling: Will the Paymaster General give way?
Dawn Primarolo: May I finish my point before giving way?
Having said that, I recognise that the commencement date causes particular difficulty for producers who, on Budget day, were locked into an arm's length contract with broadcasters to make dramas for sums that anticipated a proportion of the budget coming from sale and leaseback when the series was completed. I am not unsympathetic to that problem and am struggling to respond to it without losing revenue to the Government.
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The Revenue have had extensive and constructive discussions with the industry exploring whether a targeted transitional relief is feasible in those circumstances. The main stumbling block is the absence of any contract between the producer and the eventual buyer on Budget day that would allow relevant programmes to be identified in law and practice.
The only evidence of an anticipated sale and leaseback is the arithmetic of the fee agreed with the broadcaster, and we cannot construct a transitional relief upon something so intangible. I repeat that I recognise the feeling in Committee that that is a serious and urgent issue for the producers concerned. I promise to give the matter further consideration and shall continue to have discussions to see whether there is an alternative way to achieve the same result.
Chris Grayling: I thank the Paymaster General for giving way again. I became slightly anxious when she expressed surprise at a producer selling a programme for less than its overall cost. Does she recognise that major productions are increasingly not sold in one block to one broadcaster? A production company takes a decision on the basis of sales across a number of rights areas and will often have secured contracts only for part of a programme, in which case it is carrying a considerable amount of risk. The loss of the reliefs could have a fundamental affect on the finances of a business carrying that block of risk.
Dawn Primarolo: I do recognise that point, which takes us back to the previous amendments about the nature of the risk, whether it is comparable with that of cinema films and the value of the production. I recognised that point when I tried to find a way in which to respond on the question of high-value dramas, which would typically fall into that category, and I remind the hon. Gentleman that I am still looking at that closely.
I am saying clearly and strongly to the Committee that the scale of the loss is so great that I need to be particularly cautious and the industry needs exactly to establish with us the points that the hon. Gentleman has rightly raised. I regret this deeply, but the Revenue is aware that there are problems with some early schemes that have been marketed but not yet used, and I regret to say that I shall have to return on Report with proposals to deal with that issue. We are making the move to close that further loophole with the considerable assistance of the vast majority in the film industry, which is determined, along with the Government, that the integrity of the relief should not be undermined. That relates to the point that the hon. Member for Cities of London and Westminster made about the importance of the film industry.
With that in mind, I again ask the hon. Member for Arundel and South Downs not to press the amendment to a vote. The amendment would not achieve what Conservative Members want, although the points that it has raised are very valuable. I am not promising that I will definitely find a way, but I am
Column Number: 422making a commitment to the Committee: I recognise that those two issues are sufficiently important for us actively to consider them beyond today's discussion. We shall try to settle them on Report, if we can. That is a big if, but I give that undertaking.
Mr. Flight: I thank the Paymaster General for her comments and for recognising the problem. I think she feels that amendment No. 88 would not work because it would be too generous.
Dawn Primarolo: Yes, unusually.
Mr. Flight: That is a good argument to deploy, although the amendment seems to reflect a point of principle, which the Paymaster General acknowledged. If the process has started, and costs have been incurred on the basis of the tax arrangements in place, I am not sure that the principle changes just because the eventual sale on a sale-and-leaseback arrangement is put in place only at the end. I am glad to hear that the Government are looking for a way of addressing the problem that minimises the costs, and I am grateful for the Paymaster General's comment that she will consider on Report those issues and others that emerge. In anticipation of the Government solving those nitty-gritty problems, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 98 ordered to stand part of the Bill.
Clause 99 ordered to stand part of the Bill.
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