Draft Films (Definition of “British Film”) (No. 2) Order 2006

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Mr. Vaizey: Does it not concern the hon. Lady that the new cultural test, which I emphasise was forced on the Government, effectively dictates the content of the British film? The previous test simply attracted money if the film was made in Britain, including by small, independent producers.
Glenda Jackson: With respect, that is absolute nonsense. People were attracted to making films in this country by a very good financial deal; that was one of the major factors. Another was that we have a vast, deep ocean of technical film skills, in every aspect of film making. We have markedly failed to support a system that ensures that the technicians work regularly and that there is a core of people to teach those who come after them. If we cannot do that, we will not be able to keep up in the rush.
The idea of the cultural content of a film is absurd. My idea of culture would not be the hon. Gentleman’s idea of culture; my idea of entertainment probably would not be the same as his. As he was positing the idea of a British version of “The Sound of Music” and/or “Mary Poppins”, I point out to him that it would not be anyone in this country who took that proposition to the courts: it would be the owners of those film rights, whom I can assure him are exclusively American. It would be difficult for anyone, anywhere in the world, to obtain permission to make another version of “The Sound of Music” or “Mary Poppins”.
I go back to my original point: the order could bring benefits by ensuring that what we genuinely need in the British film industry can be helped along—if not in total, then at least in the form of encouragement—and not produce the big down-turn that certain hon. Members have attempted to make it.
5.35 pm
Tony Baldry: I do not have any particular quarrel with what the hon. Lady says. It is always heartening to hear Labour Members say that the only thing that now matters is the money, not the culture. That shows how far new Labour has travelled in its time in office.
I draw attention to my entries in the Register of Members’ Interests, as a member of the Bar and as a partner in the Diamond Film Partnership. I want to make only two points. First, I was stunned by the Minister, although it is an uncharacteristically bad-tempered, portentous and middle-aged point. I am getting pretty fed up with Ministers seeking to suggest that the Conservative party is a group of Eurosceptic old bores.
I have to explain—I am sure, Mr. Conway, that you can bear testament to this—that I and others were promoting Britain’s entry into and membership of the European Union when the Minister was in short trousers. I can recall that when I was on the barricades promoting Britain’s entry into Europe with Margaret Thatcher, alongside me were such people as Shirley Williams and others who were leaving the Labour party because they could not put up with its anti-market little England attitude any longer. I am therefore not going to take any lectures from the Minister about our attitude to Europe. Of course, having at different times been fortunate enough to be a member of the Council of Ministers, I appreciate the difficulties in reconciling UK policy with the single market. However, if the Minister had come to the House and said, “Look guys, we have got to somehow get round the Commission and make sure that this way of giving money to the UK does not fall foul of state aid provisions”, we would have had a lot more respect. He cannot pretend that we are all getting excited because he has been having negotiations in Europe; frankly, that is infantile.
Secondly, the Minister did not answer my question about Bollywood. I do not think that it is a fanciful point, for this reason. Almost all of us in the Committee at this time grew up in a post-war consensus trying to build a multicultural Britain. There seems to be some debate about whether we still have a multicultural Britain, but we grew up in a world in which we were trying to have mutual respect for different groups within our society. All of us in our different ways have tried quite hard to do that.
However, I cannot think of any other instance in UK law that has a test of Britishness and what is British culture. I gently say to the Minister that if the Department does not get that right, I can see that the order could be a boon for some of the leader writers—quote, sic, unquote—in The Daily Mail and The Sun about what does or does not qualify as being British. Under the old cultural test, if a UK citizen was a non-resident Indian in Southall, Ealing or wherever, making a Bollywood film here, it would almost certainly have qualified because of the hub, the location and the UK nationality of the producers and participants. I am not sure whether, under the new test, that will be the case.
Might I make a gentle suggestion to the Minister? His officials should invest a little money now with counsel and sit down to think of all the worst-case scenarios that would give The Sun and The Daily Mail a field day as to what is, and what is not, British culture. They should ensure in the guidance that the Department issues that the diaspora of the migrant community and UK nationals from other parts of the world can tell stories about their experiences there. They are now part of the UK, and they must be covered by the guidance. Otherwise, the Government might well rue using the words “British Film” in the title of the order. With a little care, as the hon. Member for Hampstead and Highgate said, they can ensure that such people get the money without falling into open traps.
Mr. Vaizey: My hon. Friend makes a valid point. To a certain extent, the situation is worse than he imagines. The test is about not only whether a film is British culture but the degree to which it is. For example, the current draft guidance sets out that one point will be awarded if a film includes significant British culture and two points if it is an outstanding representation of British culture. It is to be about not just British culture but how outstanding it is.
Tony Baldry: The Minister yawns at that point, but it is serious. After his conversion to his position, I recall him lecturing those on our Benches about being more inclusive. I do not have any quarrel with him on that, and many of us in the Committee have spent the whole of our political lives trying to be inclusive. I say to Labour Members that they might need to examine their constituency correspondence and press the Minister on the point, perhaps in the Division Lobby. It would be a great tragedy if an instrument that was meant to attract money to the UK film industry—a motive that we all applaud—were to end up generating divisiveness and mischief making in certain quarters of our society in the attempt to define what is or is not British culture at the start of the 21st century.
5.42 pm
Mr. Woodward: I welcome the contribution made by the hon. Member for Bath, particularly his remarks on the figures that show just how well the industry continues to do. We have every reason to believe that it will continue to prosper in the future. I am sorry to say that those comments were in marked contrast to the contribution made by the hon. Member for Wantage. It was highly entertaining, but for the most part it verged on fantasy and was a highly misleading account of the state of the film industry in both this country and the United States.
It is important when considering such an industry that we do not turn to hyperbole. It is an important industry, and film bosses around the world see huge merit in coming to this country to make films. The tax relief scheme will not put that in jeopardy. To suggest that it will, and that film companies all over the world will turn their backs on the UK film industry as a result, is simply wrong and highly misleading, and the hon. Gentleman knows it.
Mr. Vaizey: I will pass on the Minister’s remarks to Screen Finance, from which I quoted the opinion that the scheme will be a disincentive. If my speech was one of fantasy, will the Minister explain why his predecessor, who is now the Minister for Pensions Reform, wasted Parliament’s time by passing the original Films (Definition of “British Film”) Order 2006 in March, and why we are now considering this order?
Mr. Woodward: Again, it is important for the hon. Gentleman to keep his feet on the ground. He suggested that when my predecessor introduced the previous order, he had taken part in no consultation with the Commission. If the hon. Gentleman reads through his remarks, he will see that he suggested that the Department had not involved itself in such consultation by March. The fact is that that process began on 14 September 2005, when the Treasury and HMRC notified the Commission of the UK’s new film tax relief.
On 7 December, the DCMS notified the Commission of the final version of the cultural test. On12 December, the Treasury and HMRC notified it of variations to the tax relief following consultation. In February, there was further consultation with the Commission on modelling, and there were two further dialogues in March. I could go on, but if the hon. Gentleman reads through his remarks with a little more care and measure than he applied in addressing the Committee, he will see that he was wrong. It is important that the Opposition are a little calmer about the scheme. It is a good scheme for the UK film industry, and I welcome the remarks from those hon. Members who, fortunately, have a little more sense and recognise its benefits.
The hon. Member for Bath raised the issue of guidance. He quite rightly made some remarks about one or two drafting issues, which we shall, of course, address. The new test and the underlying guidance, which retains many of the features of previous versions, were developed in consultation with the Treasury, HMRC and the Film Council and followed not only conversations with the Commission, but the results of our consultation last year. The guidelines should be open to change precisely because they are guidelines. It would be extremely foolish if guidelines were set in stone and were not capable of being updated.
Hon. Members have asked about PACT. Our response is that we will always seek to keep the relief competitive, but it is important to remember that we want to encourage UK activity. What we do not want is for the scheme wantonly to subsidise films being made substantially abroad, which was part of the problem with the previous regime.
The hon. Member for Bath asked about “The Wind That Shakes the Barley”, which was, of course, a co-production and, as such, would not have qualified. However, it would have been quite possible for it to qualify under the new scheme, but it would not have been made as a co-production. One of the virtues of the new scheme, as opposed to the former schemes, is that it ensures that the money that is either put up in the making of the film or made subsequently in profits comes to this country and does not disappear abroad. As my hon. Friend the Member for Hampstead and Highgate has recognised, when films are being made the spend happens in this country, and we do not want to sponsor that to happen abroad. We want to see the industry thriving here, money being invested here and all the benefits being felt in the UK. That is the basis for driving the scheme forward.
The hon. Member for Bath asked what would happen with the previous tax regime being brought to an end and with there being no replacement in place. We are keeping some of the provisions of the previous legislation open for a limited period, particularly for films that would have had a problem in that respect, to ensure that we can assist with those productions.
The cultural test will not apply to official co-productions. Films that meet the terms of the European convention on cinematographic co-production or one of the UK’s bilateral treaties will be certified as British films and will be able to access the new relief, in line with the schedule 1 films.
My hon. Friend the Member for Hampstead and Highgate made a number of absolutely crystal-clear comments about the future of the industry in this country. I pay tribute to her knowledge as both a practitioner and someone who understands the people working in the industry. It is important that we encourage young people into the industry, as my hon. Friend the Member for Stoke-on-Trent, North rightly pointed out in her intervention.
It is essential that we strike the right balance between ensuring that we have a thriving film industry and having a tax relief scheme that supports the industry here, rather than one that is simply used as a vehicle for others to acquire a film and offset tax losses against problems in other companies that have nothing whatever to do with the film industry.
The hon. Member for Maldon and East Chelmsford, the Chairman of the Culture, Media and Sport Committee, mentioned his list of blockbusters, but it is important that the profits from those films have some benefit here in the UK. Part of the problem with the previous system was, as he knows, that it was wildly open to abuse. Before the Conservative Front-Bench spokesman, the hon. Member for Wantage, gets too carried away by that, I am, of course, not suggesting that everybody from Hollywood was using the UK’s film tax relief schemes of the past as a scam or dodge. However, he must recognise that it was wildly open to abuse and that there were, indeed, many abuses.
It was essential, and not only because of the sunset clauses, that we produced a scheme that benefited the UK film industry. Yes; it may take a little time to bed the scheme down, but there is certainty. As a result of my conversations with studios here and abroad, I can reassure the Committee that the picture that has been painted is nonsensical. However, if the industry has genuine or legitimate concerns, my Department and I will be more than happy to help it understand what we are trying to offer and how we are trying to make things work.
The purpose of the scheme is to ensure that we have a long-term and sustainable film industry, and I am confident that we will attract the kind of money now being spent in the Czech Republic, which, regrettably, is too often based on using cheap labour. One of the virtues of all such countries being members of the European Union is that that kind of exploitation will eventually come to an end. When it does, the UK will have a sustainable film industry, with skills and talents that can be used by companies around the world.
Mr. Whittingdale: Will the Minister accept that one reason why internationally mobile film companies come here is because we probably have the most expert and professional technicians anywhere in the world? Our post-production expertise is probably second to none, as is that of our cameramen and sound engineers. We have enormous expertise, yet those factors have been downgraded in the test. They previously counted for 13 points, but under the revised proposals they have been reduced to only eight.
Mr. Woodward: The hon. Gentleman makes a fair observation. We believe that companies that want to come here will be able to use those facilities, but it is important that they realise that we need to work in partnership with other EU member states. We do not see that as a bad choice; we see it as hugely beneficial. Indeed, being part of the European Union is one reason why we have a successful film industry. We value having a tradition and history upon which we can build.
Mr. Vaizey: The Minister did not answer my previous question but, reading between the lines, he seems to be indicating that the regulations represent a conscious policy change by his Department. Will he confirm that that is the case?
Mr. Woodward: I am confirming that the changes are a consequence of the dialogue that has taken place with the Commission. The hon. Member for Banbury and I welcome that, although I am not sure that we should spend too much time recollecting me in short trousers. His enthusiasm for Europe is well known, more now than seven years ago, among members of the Conservative party. The Conservative party was a pretty lonely place, but I am sure that things have got a little better and that there is now much more inclusion. I am sure that one or two Damascene conversions have taken place, which will have widened the appeal of the party, although the harking back in the press to the need for Victorian values is a little worrying. However, I shall leave that to one side, because it is a matter for another day.
By and large, I feel that there is a tension within the Conservative party, which wants to welcome the proposals for the film industry but feels that, because the Commission is involved, they are a bad thing. They are not a bad thing—they are a good thing. Working within the single market is good for Britain. It will be a good day when, instead of thinking of it as an opportunity to exploit the tensions within Europe, Conservative Front Benchers recognise the value of the single market. The benefits that it brings, whether for the film industry or elsewhere, are good for Britain.
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Prepared 12 December 2006