Examination of Witnesses (Questions 439
- 459)
TUESDAY 17 JUNE 2003
MR ALEXANDER
WALKER
Chairman: We welcome you this afternoon
and thank you for the way that you have written about this inquiry.
I do not know if I have got the job you wanted but, as you very
well know, you have got the job I wanted. I will call Mr Fabricant
first to ask questions.
Q439 Michael Fabricant: Firstly,
may I say now nice it is to see you again because I well remember
when you came before the Committee eight years ago and gave evidence
before us. Mr Walker, one of the issues that came up in our visit
to the United States, and indeed in taking evidence here too,
is that possibly we are too concerned with making films that are
arty and not commercial. One of the views that was expressed by
some of the people in the United States is that "Look, we
are in the entertainment industry. We are here to make money".
Would you agree with that, that British films are not commercial
enough?
Mr Alexander: Mr Fabricant, you
start off with an advantage over me because you know the difference
between an art film and a commercial film. There are quite a few
commercial films that I see, week in and week out, that do not
make as much as an art film and quite a few art films that, to
everyone's surprise, cross over and become mainline movies and
entertainment in the multiplexes. I think this is a false distinction;
that if one pursues it, one really gets nowhere. But I think it
is based upon the reaction that Hollywood would have to other
industries that are not structured like theirs. Their great strength
has been, from the very beginning, to make what are called genre
films that fit into categories and this gives a confidence because
it is not a creative industry that they run there, it is an imitative
industry in which what is imitated is the last man's success with
variations until it proves the next man's failure and then the
particular powers that be switch to a new kind of genre, be it
a western, a musical, a crime, a cops and robbers, a shoot them
up, a horror flick. Our industry and most of the industries in
Western Europe are not structured like that. They are structured
around specific stories, individual aspects of life, that appeal
in those countries and consequently accept and have to accept,
reluctantly though, the application that they have when they wish
to make money in a huge market like the United States. I think
we make as many commercial films as it is possible for us to make.
Unfortunately, we make fewer and fewer of them, despite pouring
more and more money into them. I would like to declare at this
point, having mentioned that word "money" which is,
in fact, the word that is featured most frequently in the hearings
that I have been privileged to attend here rather than the word
"culture", I would like to mention a financial interest.
I am an investor in one of the franchises; the Film Consortium.
It is the best way, in fact, for any person to learn about the
film industry to take a small flutter on a film company. Since
I was anxious to find out how the consortiums were working, I
had my broker buy me 50 shares; not too much to determine how
I would write about any films that they might produce and not
too small to make me a negligible person, but just sufficient.
I paid, I think, 34 pence each. They are now worth less than a
penny. I think that that reflects the way in which those three
franchises were set up misconceived and, in two cases, mis-managed.
Q440 Michael Fabricant: Could I come
back on that one and also to an earlier point that you were making?
Because you said that one of the reasons for perhaps Hollywood's
success, perhaps the Hollywood failure in some respects, is the
genre thing. Could it not be argued that we have lost that and
yet we did do that successfully? Now, while I realise that 10,
20, 30 years ago television was less powerful, it was the genre
movie; Hammer Horror, the Carry On movies, Ealing comedies.
Were they not genre movies and were they not the movies which
made a real movie industry in England, which we now do not enjoy?
Mr Alexander: That is true. They
were studio movies however. They were movies that used them for
bread and butter purposes. They were very popular, the Carry
On films, the Doctor films, the Hammer horror films.
They were linked to the ownership of a studio and certainly in
the case of Associated British Picture Corporation and the Rank
Organisation, the two great power engines of our film industry
in the 50s right up to the 80s, they were linked to the ownership
of cinemas and the power to distribute your own films. That no
longer pertains. We are talking of a different era. You mention
Hollywood; how many of you ladies and gentlemen have mentioned
Europe? You say, Chairman, you have come back from Hollywood.
I will be very interested indeed to hear what you found there,
but I should have thought that the future of this film industry,
if we can call it that, that we posses in this country lay in
the continent of Europe, not in Hollywood, not on the West Coast
of America. We cannot challenge that. It has been the abiding
mirage that attracts people towards it over the decades, usually
into bankruptcy and certainly into grave financial disappointment.
We can never make a success of challenging the Americans. However,
we can make a success, and indeed have, of combining our talents
with the film production companies in Europe. One company that
was set up very successfully in the 1980s was a successor to the
National Film Corporation, a grant aided quango which was partly
private, consisting of three commercial companies and then a grant
from the, I suppose it was called, then Arts and Libraries. It
was succeeded by British Screen Finance first under Simon Relph
and then under Simon Perry. It had a run of considerable success
in making films in association with continental film producers.
Simon Perry was heading that company when the Film Council was
set up and the Film Council could not co-exist with British Screen
Finance; there was no temperamental affinity between the two chief
executives, Mr Woodward and Mr Simon Perry. Consequently British
Screen Finance was closed down. The great backlog of connections
it had made of understandings with producers, never mind the 50%
or thereabouts, recoupment rate it had, which is extraordinarily
high, was thrown into disregard. It shows the success that after
British Screen Finance had ceased to be and Simon Perry had been
paid off, I went to Peter Ainsworth, who was then the Shadow Culture
Secretary, and beseeched him to put down a question in the Commons
to find out how much money had been transferred to the Film Council
by British Screen Finance's demise, a figure that I was not able
to obtain from the Arts Council which said "That is not our
responsibility any longer", or indeed from the Film Council.
To my surprise, it was over half a million pounds. That is a very
nice sum of money to find in the pocket when you have taken someone
else's clothes. If only we had had British Screen Finance in a
federal arrangement rather than the Film Council in a unitary
arrangement, we would be much better placed to take advantage
of those film companies in Europe that want to make movies that
have appealed and should appeal to the vast audience of the continent
of Europe, rather than to challenge the more and more specific
tastes of the audiences in the United States.
Q441 Michael Fabricant: It is interesting
this genesis leading to the UK Film Council and whatever the mechanisms
by which the UK Film Council acquired some of the assets of British
Screen Finance, we are where we are. I was going to ask you anyway
and now is a good time to ask you; what do you see as the future
for the UK Film Council? Do you think now that their strategy
for promoting British film—and I should say British film
and not English film—is the right strategy given that we
now just have the UK Film Council?
Mr Alexander: Well, my reply to
that would have to be the reply that Mao Tse Tung is supposed
to have made when asked what were the effects of the communist
manifesto; it was too soon to tell. I would not like to prophesy
doom or success for either because I really do not think that
the evidence is in yet. We have seen relatively few films that
the Film Council has money in, but I can only hope that they behave
more wisely and certainly that they behave with greater competence
than the Arts Council did, which reluctantly had thrust upon it,
by the former Tory administration, the necessity of funding an
entrepreneurial industry from an attitude of patronage. You cannot
combine those two things. The Arts Council was naturally reluctant
to realise that the film industry is a betting industry like William
Hill. What you bet on is the public's taste and inclination to
go and see a film two years, probably, after it has been conceived.
Q442 Michael Fabricant: But you are
not arguing then that there can be no external Government or Lottery
finance, that such external Government or Lottery finance should
not be made available?
Mr Alexander: I am not. No, indeed,
Mr Fabricant, but I am saying that the huge sums of money that
were invested, and invested hastily, were inappropriate for that
kind of an industry. In my written evidence I have said that the
film industry is systemically dishonest. In all the years it has
been in existence—and I do not simply refer to the British
film industry—it has not managed a system of honest accountancy
and it has not been able or been willing to create a true impression
of net profit. I would not put money into an industry like that.
I would have thought, since you asked me for figures, I will hazard
a guess that if you put between 10 and 15 million a year into
the British film industry through an organisation like the British
Screen Finance, whose aspirations were determined by the market
and also by their abilities to finance that market, we would be
in a happier and a better position when 120 to 150 million pounds
since 1995 has been basically largely lost.
Q443 Michael Fabricant: But does
that not bring me back to my first question then? When you challenged
me and said "Well, if only you can distinguish between an
art film, a culture film and a mainstream film" and yet is
that not the very difficulty that the Arts Council found?
Mr Alexander: No, the Arts Council's
difficulty was understanding the film industry, not distinguishing
between films. The Arts Council people, to use the word neutrally,
were incompetent to finance an industry like the film industry.
They realised quite quickly that it went against all the traditions
of patronage. And I do not mean that in a pejorative sense, but
I mean that in the sense of putting money into what were considered
to be creative and artistic worthies and their art effects and
not expecting a profit to be made. The film industry expects a
profit to be made and that has not a place that the Arts Council
should have been asked to mediate. I am fairly certain that Lord
Gowrie and his successors were very grateful indeed when the Arts
Council had that responsibility lifted from it. But that was followed
immediately by the three franchises that I would like to return
to. You have heard evidence last week—I regret I was not
able to be here because I was in Italy doing some work of my own,
but I read the evidence that you were kind enough to send me and
I would like to place on record my gratitude to the excellent
secretariat that manages to get the transcripts to me. It really
has been very useful. The three franchises, as you know, were
about £33 million for Pathé and six related companies.
I have yet to find out whether those six related companies of
British producers are still associated with Pathé, as they
were when they made their bid in 1997. The Film Consortium, the
group in which I have my widow's mite, which got about 30 million
and the DNA Franchise that seemed, at the time, to be the most
promising of all because it consisted of two very successful film
producers, Andrew Macdonald and Duncan Kenworthy, one responsible
for Trainspotting and the other for Four Weddings and
a Funeral. Two and a half years later, after being awarded
that franchise in 1997, they still had not produced one film that
was visible on the screen. However, they had used their talents
to facilitate successful products by major American companies,
The Beach and Notting Hill. In fact, they did not
use their application that they should have been responsible for
in fostering the franchise that the public money had set them
up in. Instead of 16 films, which they promised in their business
statement, they squeezed with difficulty six films, none of which,
I think, has any pretensions to what you might call art house
films, but probably only one of which made what you would call
a commercial profit at the box office and that was largely due
to its being taken over, sponsored and heavily advertised by a
subsidiary of 20th Century Fox. It is very interesting to read
the particular statement made by Mr Macdonald in his statement
because it seems like a flyer for continuing the relationship
under public money with 20th Century Fox. If you will allow me
to read the sentence in it, it says "And this is the main
point; if we can retain our independence and form a relationship
with a company offering worldwide distribution which invests in
DNA alongside the Film Council, we are confident we can build
a British company that can continue to produce and finance films
which benefit British production, distribution and exhibition".
I see no reason why the owners of that particular franchise, who
had nearly £30 million, should be permitted, with what remains
of it, to form an association with one of the major American companies
because that is not certainly not one to create a self-sustaining
British film industry. And I hope, since that particular company
is owned by Mr Rupert Murdoch, who in another place has come under
heavy fire in the Communications Bill, that that will be taken
into account when the franchise expires, as it should expire next
year, and that the money will be returned to the public purse
or indeed to the good causes charity, rather than be given, however
successful or not, to an American major that can only dominate
the relationship.
Chairman: Thanks very much indeed for
that, Mr Walker. I will call Mr Doran.
Q444 Mr Doran: You mentioned earlier
in your evidence to Mr Fabricant, one of the comments that I picked
up, Mr Walker, in your written submission and that was your comment
that the film industry is systematically dishonest and you build
from that, but before we get on to what you build from it, I would
be interested if you could expand a little on what exactly you
mean by "systematically dishonest".
Mr Alexander: Well, you have heard
evidence from some of those people that should have hoped to recoup
from the success of their films how little they have got or indeed
having got nothing from it. Miss Gurinder Chadha, for example,
the power behind Bend it like Beckham, had to confess to
you that so far she had not seen a penny from one of her most
successful films that made over £11 million in the UK. The
way in which money is subtracted from the gross amount at the
box office, creating great difficulties in being able to both
access those sums and have them checked upon by reputable accountants
has always prevented the people who are the creative forces behind
films from pursuing what they regard as their rightful profits,
unless they themselves have a huge amount of money. One notices
that in a few cases in which they have been pursued into the courts,
particularly in America, it never comes to trial because the studio
witnesses would have to swear on oath, and you know how dangerous
that can be in the American legal system. Usually it is settled
at the courtroom door and settled out of court. The film industry
is not an honest industry in the sense that most of us investors
would regard it as suitable for our own money, unless the tax
arrangements in advance can be so certain that we are making money
before the film is even made. It is possible under the arrangements
made today, through the generosity of Mr Brown in 1997, to make
money without even having shown the film. The Lottery was devised
to finance things that should be of calculable benefit to the
public. Now, there are ways of interpreting those words; public,
calculable and benefit. But a film is not calculable, the benefit
is not certain and the public, upon the evidence that is presented
in the final results, has shown its indifference to the products
that have been created at largely public expense.
Q445 Mr Doran: You mentioned Gurinder
Chadha and I think for her the main villains were the distributors
and the exhibitors.
Mr Alexander: Yes.
Q446 Mr Doran: So you are not exempting
any part of the film industry from your charge?
Mr Alexander: No, I do not wish
to say that everyone in the film industry is dishonest, no. Quite
a few of the people even today are honest and worthy people, but
it is a structure and the historical legacy of the film industry
not to be an honest industry. May I, sir, just prevail upon your
patience for a moment, since you have mentioned Bend it like
Beckham, to show you the difficulties that that lady had which
were not referred to in her evidence of raising the money? Let
me read out to you the Bend it like Beckham official production
companies. These are they which produced one of the British hits
and it is quite revealing; "Kintop Pictures present in association
with the Film Council and Filmfurdurung Hamburg and with the participation
of BSkyB and British Screen and in association with Helkon SK,
the Works, and Future Film Financing a Kintop Picture, Bend
it Like Beckham, Bend it Films, Roc Media, Road Movies Co-production.
Supported by the National Lottery through Film Council. Supported
by Filmfordurung Hamburg". The six names of the executive
producers are all German of the film Bend it like Beckham.
If you went to Hamburg, you might well find that they are exultant
over the success of one of the best German films of the year 2002,
Bend it like Beckham. It is officially understood as a
German-UK co-production.
Q447 Chairman: Am I wrong, Mr Walker,
correct me if I am, but did not a great deal of the profit of
Four Weddings and a Funeral end up in Hamburg as well?
Mr Alexander: Yes, it did indeed.
That was, however, not financed by public money. That was financed
by the one man who has come nearest to challenging Hollywood and
that was Mr Michael Kuhn and significantly, you might think, he
was the man who said least about his experiences in the film industry
when he testified in the second week of your hearings. Mr Kuhn's
PolyGram filmed entertainment, at the time of its demise in 1999,
had a established a worldwide distribution and production circuit
and had got the confidence of the exhibitors in many of the important
European territories and overseas too and even in America to take
the product because consistency of flow is the thing that exhibitors
want and the thing that Hollywood can provide. PolyGram filmed
entertainment was sold from underneath Mr Kuhn by parent owners
who owned 75% of PolyGram; that was Philips, the electronics industry
that wished to boost the share price by getting rid of what Mr
Cor Boonstra, the Chairman, called "the bleeders" in
the company, that is to say bleeding away the profits made by
the hardware, the electronics and the printed circuits. But the
man who came nearest to establishing a practical circuit for British
films was, in fact, Michael Kuhn and it was a tremendous setback
to the industry when PolyGram filmed entertainment went under.
Q448 Mr Doran: Can I move on from
that point about the dishonesty of the industry? You make it clear
that you do not think it is an industry that is worth investing
in. I am not clear on exactly where you are so far as the Government
is concerned. You have been critical, obviously, of some of the
investments that the Government has made, but you also say in
your evidence that there is a place for judicious Government intervention.
So I would like to know exactly where you are on that.
Mr Alexander: Well, the place
for judicious Government intervention is very much the place where
British Screen Finance was at and where I hope the Film Council,
unless it is consumed by megalomania, will realise it should be
the sticking place. That is to say you should have adequate funds
but you should not have a superfluity of funds because that means
an over-abundance of production. That simply cannot be placed
in results, as it did some years ago, in something between 40-60%
of the films that were made not being shown within 18 months to
two years. Grey Gowrie, when he was Chairman of the Arts Council,
took me out to lunch one day and said "Well, you are so smart,
what would you do?" I said "Grey, I would buy a circuit
of cinemas". The Cannon Cinemas had just come on the market.
That in itself is a story of disaster, that two people who had
no roots in the British film industry were given the go ahead
by the former Conservative administration to buy up half the British
film industry—Associated British Picture Corporation, the
Elstree Studios, the Pathe Newsreel Collection and the wonderful
1,500 film library—and then to strip it of its assets two
years later when they ran short of cash. That was Mr Golan and
Mr Globus of Cannon Films. I said "If you bought a circuit
of cinemas, Grey, what you could do is go down on a Saturday night
with a sack and empty the cash box. Then you would have the cinema
screens in which you could show your own films, but you also have
the screens to show the American films and you would be in the
happy position of making money out of the American films that
take up 90% of the screen time in this country". Gray's reply
to that was "That is very interesting, but unfortunately
in the Arts Council we are not permitted to run a business".
I said "Well, then what are you doing in league with the
film business?" Absurd.
Q449 Mr Doran: But there must be
other areas where you think Government help would be useful. For
example, when we were in America we saw some superb advanced training
facilities at USC, for example. Nothing to compare with here.
So in terms of support and general strategic planning for the
industry, what role do you see for Government there?
Mr Alexander: I think that is
excellent. I am all in favour of that and my good wishes go out
to the Film Council in what it is doing; the skills set and other
training programmes. However, since you have mentioned that, might
I allude to what happened? In 1998 when the Film Policy Review
Group that had been set up under Tom Clarke reported on ways of
re-financing the British film industry, one of the ways that they
agreed upon, and appeared in their programme of the bigger picture,
was to have a levy which would paid by the DVD companies, the
television companies and the film companies of 0.5% of the budget.
That, they estimated, would bring in £15 million each year
which would provide for the training of film people going into
the industry, but also for the development of film scripts and
for, in some cases, the production of either medium budgeted or
perhaps one or two rather larger budgeted films whose budgets
could be leveraged. There was such a shock reaction from the Motion
Picture Association of America, under Mr Jack Valente, "The
idea of asking us to contribute anything to a film production
in another country that might challenge us" resulted directly
in Tom Clarke losing his job as Film Minister and nothing was
heard of that again. One has read the evidence of the representative
for the Motion Picture Association of America here who gave the
impression of the American Eagle benignly circling while the domestic
fowl picked up little bits of grain. Believe me, that is a stance
they wish to provide but any time the grain is threatened, the
Eagle drops and Mr Valente or some other elder statesman comes
over and tells the Government how the film industry that contributes
so much through the Americans in Britain will be ruined by it,
but backtrack very quickly. I do believe, although I have not
been able to provide the evidence, that when Baroness Thatcher
was Prime Minister one of the most welcome visitors at Downing
Street was Lew Wasserman, whom our Chairman has referred to several
times, and it was Mr Wasserman who said that "If you abolish
the Eady levy, which is taking now, along with VAT, a sizeable
proportion of the ticket money that we like to be having sent
back to Hollywood, we will agree to build cinemas in your country
so that the Treasury will not lose" and within two years
the Eady levy was abolished. It was being exploited and abused
anyway by the major American companies, but from that time on
the grip of America on our national culture was tightened until
today it is a stranglehold.
Q450 Derek Wyatt: Good afternoon,
Mr Walker. Do you think, looking at the fact that you cannot get
to the bottom of the funding of the three companies that you have
talked about, that that is not a case for the National Audit Office?
Mr Alexander: Yes.
Q451 Derek Wyatt: Good. I agree on
that too. Could you just tell me; in local planning law it would
be possible for local district councils and borough councils and
county councils to actually say "If you build a cinema here
or a multiplex, you must show a proportion of European of British
films". Is that something you are sympathetic to?
Mr Alexander: It sounds attractive.
In practice it is difficult to make work because the reaction
to that would be the immediate one of saying "We do not want
to be nannied. Entertainment should be freedom of choice. We do
not want to be told to see good films which will improve our aesthetic
outlook or our souls. We want to see what we want to enjoy".
And I am afraid that the powers that be would use that as a very
convincing argument to say "Do not put us in a straitjacket
otherwise the public entertainment will suffer". The idea
of having a public benefit, which is, I believe, what it is called
when a new building is put up and a certain proportion of it is
given over to a piazza or a courtyard or something, is very attractive
in solid bricks and mortar terms, but not in aesthetics or entertainment.
Q452 Derek Wyatt: But the figures
that we have got are that usually on Monday, Tuesday, Wednesday
and sometimes Thursday occupation of cinemas in the United Kingdom
is as low as 25 or 20%.
Mr Alexander: Yes.
Q453 Derek Wyatt: So is there not
a case for just doing what I have suggested?
Mr Alexander: Well, you are hearing,
I believe, from Stelios, the former EasyJet man, and he may have
much more up to date figures than I have and he certainly is a
more experienced entrepreneur in serving the public than I am.
I am paid to give my opinion, not to second guess the public.
He makes a success of his business by second guessing the public.
Q454 Derek Wyatt: On Section 48,
what do you think the damage will be to the UK film industry if
it is not replaced?
Mr Alexander: There will be cries
of woe, the begging bowl would be rattled, Oxfam would be called,
probably there would be an appeal to humanity and no-one would
seem to get poor. I doubt whether the restaurants would suffer
all that much and after 18 months to two years those pieces of
the industry that deserve to survive would have survived and probably
have been in a better and leaner position for it.
Q455 Derek Wyatt: Where do you think
the way that digital cinema is developing? Where do you think
that that is going to take us?
Mr Alexander: I shall look with
great interest on the experiment that the Film Council is doing
by hoping to have the regional cinemas and eventually some of
the multiplexes equipped for digital exhibition, but that will
depend upon where the money is coming from to do that. It reminds
me very much of the situation I wrote about in one of my books,
Shattered Silence, which dealt with the four years between
the ending of the silent movies and the beginning of the talkies,
how technological revolution succeeded revolution in a matter
of months. And if you are going to digital projection, you should
be wise after expending a huge amount of money in re-equipping
cinemas that is going to last a bit longer. Look at Betamax; a
name that has been consigned to the past now because it was overtaken
by the VHS system. It is a gamble, sir.
Q456 Derek Wyatt: Would you recommend
to this Committee that we should look at some digital tax break
so that we could be the most advanced?
Mr Alexander: Yes, I would believe
that it would appropriate to make a tax break that cannot be exploited
or abused. I do not see why not, but I would do it judiciously
and I would not make it an overall tax break until it is seen
whether it sticks and is producing results.
Q457 Chairman: Coming back to Mr
Wyatt's questions about Sections 42 and 48; you have demonstrated
a healthy scepticism on that. On the other hand, again and again
when we visited the Hollywood majors the week before last we were
told that 42 and 48 were critical in inducing them to bring inward
film investment into this country. Indeed, the President of Colombia,
who gave us quite a nice lunch, told us that if it had not been
for the responsibility of this Committee in inducing the Government
to adopt 42 and 48, he would only have served us sandwiches.
Mr Alexander: I do not hear a
question, but I will respond to your comments. He would, would
he not? That is the answer there. The cries that have gone out
to preserve those particular Sections from the witnesses are very
closely tied with the hope of the witnesses being able to eat
well and live well in the future. In many cases they are the first
people to be paid and even though the profits due may be remote,
they have no wish to make their financial situation worse. What
I am saying to you is that it has got out of hand. Gordon Brown's
generosity has been—
Q458 Chairman: He would not like
you to use that word, would he? He hates—
Mr Alexander: It is a bad word
to use with a Scotsman. But it has been compounded by the skill
of financial advisors and accountants, merchant banks and the
Stock Exchange, good heavens, even in advertising agencies now
to set up funds for film making, the idea being that the tax break
will compensate for wretched film that is turned out. There is
one company that I know (which I will not name) that employs a
screenwriter who has a brief to produce a psychological thriller,
a horror picture and a ribald comedy and the idea is to get a
screenplay written so that there may be something solid to show
to the investors with the guarantee that the investors will not
lose their money but will be able to make a so far legitimate
tax profit, even if the film turns out to be a dreadful movie
that no-one particularly wishes to show or see. To my mind that
is absolutely awful. There is a scheme whereby the prints and
advertising of one of the major American companies in this country
is subject to the same tax breaks because prints and advertising
are the first things to be written off when a film has finished
its runs. Therefore the investors get their money back and more
in double quick time. These are dodges that have perverted and
distorted the idea of what was supposed to be a legitimate way
of helping an illegitimate industry.
Q459 Chairman: Over the years there
have always been in this country—I do not mean permanently—if
one was looking over, say, the past 70 years, there have been
financial incentives brought about by the Government in one way
or the other. There was the film quota, which was not a financial
incentive but laid down the regime which brought about the era
of quota quickies. There was the Eady levy. Is your criticism,
which we obviously must take very seriously, about the way in
which financial incentives are used relating to the way in which
they are used or do you believe that a British film industry ought
to be able to make its own way financially?
Mr Alexander: The British film
industry can no longer make its own way, but then that is commonplace
with most film industries outside of Hollywood. Financial incentives
are the first invitation to people to come and exploit and usually
exploit them in the wrong way until eventually the abuse is ended.
That is not only I, it has been other people here who have given
evidence to you that say it is the same story in the end where
the people who are extremely clever, clever not in a creative
way but clever in a productive way where tax is concerned, stand
upside down. The very reason for having a tax incentive which
is to make films that the public can enjoy and sometimes enjoy
very profitably. Their desire is to make the films that the public
need not necessarily enjoy or indeed go to see which will make
money for their clients. That is an abuse that should be ended.
Either you make it more obligatory on the investors to hold their
money for longer instead of being able to get it out almost immediately
or sometimes before the film is shown, to insist that they keep
it in and eventually pay their tax on it. Because, of course,
it is tax deferral. It is not tax abolition that they go in for.
But you are getting into waters that I really do not put anything
more than a toe in because I am not a tax expert and I sometimes
say to myself that that institution which has given me a fair
amount of pain in my life, the Inland Revenue, should at least
be congratulated on stopping some of the abuses by refusing to
approve the tax break schemes that are presented to them now and
then by the clever merchants in the City to make money for their
clients but not to make entertainment for the public. It is to
the Inland Revenue that we owe the stoppage of the major abuses
at the moment. The Canadian film makers, for example, were able
to have 16% of their budget guaranteed without risk by coming
over here and turning a few scenes in Britain and spending 20%,
as it used to be, of the budget of the film and then having the
advantages of being considered a British film, have at last had
the screw tightened on them—they now must spend 40%. But
there are people in the DCMS whose job it is simply to keep tabs
on the Canadian film makers who have come over and abused our
system. I do hope, sir, that you will find a chance of going over
to Europe—it is not so far away as the West Coast of America—because
I really do think that that would correct the perspective that
you have been given from the American viewpoint by enabling you
to see where the advantage lies in greater co-operation between
Britain and Europe.
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