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Lord King of Bridgwater: My Lords, I start with an apology. Old habits die hard: I realise that I should not have spoken from this Dispatch Box, but perhaps that is a matter for this side of the House and nobody else. I apologise for any embarrassment caused.

I thank all the noble Lords who have taken part in this very serious and most unwelcome debate. The noble Lord, Lord Livsey, and my noble friend Lady Byford both made the point that nobody wanted to be here; I certainly did not, but this issue cannot be ignored. There was no mention of the Rural Stress Information Network today but, as the Minister will know, it was mentioned in the debate yesterday. The right reverend Prelate the Bishop of Hereford chairs one branch for four counties. The network has seen a huge increase in the number of calls and, tragically, the suicide of somebody facing financial problems. None of us makes any apology for raising these issues.

I am very grateful to the number of noble Lords who have spoken with great experience—and, indeed, personal experience—including the noble Earl, Lord Arran, who spoke of the problems in Exmoor, a place that I love and used partly to represent. The noble Lord, Lord Grantchester, spoke with great authority on the dairy industry in particular, as well as other aspects of agriculture and the problems that people are facing. He brought up the issue of mapping, as did the noble Earl, Lord Erroll, and the noble Lords, Lord Dixon-Smith and Lord Willoughby. Clearly the mapping issues that have arisen are a real
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impediment, as I understand it—although I am unfamiliar with some of them—to the Minister being able to resolve the current crisis quickly.

I would like to query one point made in the Minister's speech. This is where the noble Lord, Lord Desai, with his economic background, may be able to help. I have never heard of £1.5 billion being transferred from one organisation to another without anybody making any attempt to earn interest on it. It may be my economic illiteracy, but this must, presumably, reduce the Government's borrowing requirement; it must make some contribution to the economic world. The noble Lord, Lord Desai, is much better qualified to tell me whether I am right.

Lord Bach: My Lords, the money remains with the EU—with the Commission. If anyone makes money out of it, it is that body, not the UK Government.

Lord King of Bridgwater: My Lords, I understood from the Minister's contribution that the money had been transferred, but, if I am incorrect, I am grateful for the clarification.

I also pay tribute to the contribution of the noble Countess, Lady Mar, who, with her obvious personal and considerable interest in the matter, asked very pertinent questions. Above all, I think that the whole House recognises the quite exceptional experience that the noble Lord, Lord Plumb, brings to these matters and to which the Minister paid tribute. I am very grateful to the noble Lord for taking part in this debate, because he speaks with such enormous authority and experience on these matters.

I asked one question of the Minister and I think that I know why he would not answer it. When are these payments going to be made? I understand that some people in the industry say that this may raise false expectations. He said one interesting thing in his contribution: that as the window existed until the end of June there would be no question of any compensation. The indication for some people listening to that remark would be that all payments would be made by the end of June. If I am wrong in that, he might like to correct me, but that would be the implication.

Lord Bach: My Lords, we very much hope that all payments will be made by the end of June, but I am not prepared—because there have been too many easy forecasts in the past—to give a guarantee of any kind. We did not appoint the new acting chief executive to give us the sort of forecasting that Ministers and others might want to hear if that was not based on solid fact.

Lord King of Bridgwater: My Lords, I am grateful for the statement that that is what the Minister now hopes to see, because we have not had that in the various exchanges in the other House and here until now. It will certainly be an encouragement to the industry.

On the agency, the Minister has made a brave speech. I understand entirely that he has been put in a very difficult position. Somebody else chose this
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system. He was then given the task, late in the day, of seeking to see it carried through. However, his Government set up the agency. When the agency was set up—it was discussed in another place yesterday—the Minister was Elliot Morley. He was specifically asked who was accountable. He said that the chief executive had the initial responsibility, but that the ultimate responsibility and accountability lay with Ministers. That was at the time when this Government—to which the Minister belongs—set up the agency.

We have just heard the Minister announce a number of perfectly sensible improvements, which he hopes will speed up the process. What this is all about and what I do not understand—what so many people up and down the country do not understand—is how it is possible that, two weeks before the date on which most of the payments should be made, somebody decides that it will be another 14 weeks before that can be done. I cannot understand how questions were not asked, and how there was not some examination. The charge for the Minister is: why were those questions not asked? How could that happen?

We have discussed this matter fully. It is a tragic situation and, like the whole House, I hope and I pray that the damage will not be as great as many fear that it might be. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Films (Definition of "British Film")Order 2006

3.42 pm

Lord Davies of Oldham rose to move, That the draft order laid before the House on 15 February be approved [19th Report from the Joint Committee].

The noble Lord said: My Lords, the order modifies the definition of a British film contained in Schedule 1 to the Films Act 1985. The Government's aim in promoting the order is to obtain sustainable production of culturally British films, ensuring that film continues to play an important role in British cultural life, expressing and representing British culture and national identity. This aim is supported through encouraging the production of films that might not otherwise be made, promoting sustainability in British film production and maintaining a critical mass of UK infrastructure, and creative and technical expertise, to facilitate the production of culturally British films.

Under the existing structure, to be certified as a British film by the Secretary of State for Culture, Media and Sport under Schedule 1 to the Films Act 1985, a film must meet the following requirements: the "maker" of the film must be resident in an EEA member state throughout the production of the film; 70 per cent of the total film production expenditure must be incurred on activity in the UK; 70 per cent of the labour expenditure must be incurred on labour or services of EEA or Commonwealth citizens or
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residents; and the film must not have more than 10 per cent archive footage from previously certified films or other makers' films, unless the film is a documentary.

Under the proposals in this order, the "maker" and archive footage requirements remain the same. However, for consistency with film tax relief, the "maker" test will now be amended to reflect the provisions of the Finance Bill. The changes proposed by this order are to remove expenditure requirements on labour and film production activity and to introduce a new points-based cultural test. A regulatory impact assessment has concluded that these amendments will not impose any extra burden on the industry or the Civil Service. Schedule 1 to the Films Act 1985 is being modified to introduce a more effective way of certifying culturally British films and of ensuring that the support given to films is consistent with the European Commission's rules on providing state aid.

The cultural test itself has been developed in consultation with the industry to be a simpler and more objective system for film makers, offering them much-needed certainty. The test is widely welcomed and supported by the industry. It awards points for the cultural content of the film, for where the film is made and for who makes the film. The general cultural test is set out in paragraph 4A of Schedule 1 as modified by this order. Paragraphs 4B and 4C set out separate tests for documentary and animation films respectively.

Responses to the consultation on the cultural test called for separate tests for animation and documentary films, in recognition of the fact that the unique film-making processes used by these genres of film are not catered for by the general test; for example, documentary films spend a considerable amount of time in research and development and so, for documentaries only, points can be awarded for the specific area of work.

To pass the cultural test, a film will require 16 points out of a possible 32. There are three sections to the cultural test. The first section assesses whether the content of the film is British, such as whether the film depicts a British story and has British characters. The second section awards points for where work on the film has taken place; for example, the use of UK studios or locations and UK-based visual effects facilities. The final section looks at who has worked on the film and whether they are British or EEA citizens or residents. A voluntary system of interim approval will also be introduced for Schedule 1 films. That will offer more certainty to film makers who want it and help them to secure financing to begin making their films.

The fact that 15 of the points are allocated to where the film is made is a response to the overwhelming view from consultation respondees that greater weight should be given to this section than to the others, so as to incentivise the use of UK talent and facilities and to build a sustainable British infrastructure for film making. Visual effects, in particular, are eligible for more points, as this is the biggest below-the-line spend
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for large budget feature films, and the UK's facilities are world leading and need to be incentivised to meet increasing competition from overseas.

Following the consultation, the test was also amended to recognise the role of the producer and the entire cast and crew. In addition, the test now awards points for key creative roles as recognised by BAFTA. The final framework of the cultural test was published by DCMS alongside the Treasury's announcement of revised and more generous rates and levels for the new tax relief for film in the Pre-Budget Report on 5 December. The final elements of the new film tax relief for film were announced in the Budget last week, including a reduced minimum UK expenditure threshold, which will allow a wider range of films to qualify for the new relief. This news was well received by the film industry. Accordingly, I beg to move.

Moved, That the draft order laid before the House on 15 February be approved [19th Report from the Joint Committee].—(Lord Davies of Oldham.)

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