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Lord Howie of Troon: As the saying goes, I heard what the noble Lord said, and I was not terribly comforted by it. I was confused, too, by his notion that an adjudicator might uncover some element of professional negligence in the course of some other investigation. However, he would be adjudicating on a particular dispute and if he uncovered anything which was not related to that dispute, that would be none of his business until such time as that became part of a dispute. But, leaving that aside, my only objection is the fact that by its nature a professional negligence problem is likely to be a complicated one which will require substantial investigation. I think, for example, of negligence in engineering design. That would require an investigation which would take far longer than the timescale which the Bill permits. The adjudicator could come to no sensible conclusion in that time, even an interim one. He could merely blow the whistle and say that it was half-time and that the people concerned should come back again the following year, or something like that. I am not convinced by the Minister's comments. I see the drift of the Government's answer, but that is quite inadequate.

Lord Monkswell: I hope that I can offer an explanation which might resolve the problem. As I understand it, if there is a dispute between two parties to a contract, the adjudicator is called in to make an interim judgment one way or the other. The debate this evening has concerned ways of keeping contracts going, making payments and other such matters, but there may be an occasion where one party to a contract is doing some work and realises that the work may not be right and that the job ought to be stopped. Perhaps the drawings need to be checked and the engineers need to be consulted. That party calls in an adjudicator with the express purpose--and perhaps the result--of stopping the job and requiring some further action by the other party. If one thinks of the adjudication process as making an interim judgment on one side or the other rather than always one way, perhaps that will resolve the problem that the noble Lord, Lord Howie of Troon, foresees.

Lord Howie of Troon: I regard that as a piece of adjudication, and a good example of it. I repeat that I am not convinced on this matter. I shall examine the arguments that were put forward by the noble Lord at my leisure and perhaps return to this matter at a later date. In the meantime I am happy to withdraw the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Ferrers: In moving the Motion that the House be now resumed, I suggest that the Committee stage begin again not before five minutes past eight o'clock. The Committee will wish to be aware that the initiator of the debate which follows is a maiden speaker. I beg to move that the House do now resume.

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Moved accordingly, and, on Question, Motion agreed to.

House resumed.

British Film Industry

7.6 p.m.

The Earl of Drogheda rose to ask Her Majesty's Government what proposals they have for long-term tax incentives to encourage and sustain the British film industry.

The noble Earl said: My Lords, I should like to put forward a proposal for a constructive and realistic way for the Government to help and encourage the British film industry. Before doing so I should like to reassure your Lordships on one point. Although it has taken me some time to summon up courage to make my maiden speech, I promise your Lordships that I shall not make up for lost time.

Your Lordships may well ask why I feel that the British film industry deserves a helping hand at this time. There are various reasons. On one level the cinema is an industry like any other. On another level it is entertainment, education, and, at its best, an art form. It is arguably the most influential art form of the 20th century. On yet another level it can be a sort of cultural ambassador for this country all over the world.

On the face of things one might question the necessity of helping British cinema at all as it seems to be flourishing at the moment. We see films with British actors, British directors, writers and technicians being nominated for Oscars every year; indeed, several won Oscars this week. I think the answer is that it could flourish far more and should be placed on a more solid base and, most importantly, British cinema should be able to share in the rewards it generates to a far greater extent than it does at present.

I hope I might be allowed to give a couple of examples. The film "Sense and Sensibility" is a most English story and almost, incidentally, a bucolic advertisement for the British tourist industry. It was made entirely in this country with a British cast and a screenplay written by Emma Thompson but it was produced in Hollywood. It will produce handsome profits, most of which will go back to Columbia Pictures. "Four Weddings and a Funeral"--a film that everyone assumes was English--cost 4 million dollars to make, grossed 400 million dollars, and was in fact produced by a Dutch company.

We are extremely fortunate to have in this country a great theatrical tradition. At the risk of sounding complacent, it is fair to say that our theatre is the envy of other countries today. Moreover, the National Theatre and the Royal Shakespeare Company are supported by a substantial state subsidy.

One might say that the theatre here is actively fostered by the Government. But cinema is a different matter from theatre production. It is infinitely more

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expensive for one thing; and with a few rare exceptions most British films rely today for their funding largely on television companies and Hollywood.

One has the impression that the cinema is looked on by the Government as a rather disreputable and tiresome relative of the theatre, a relative who is always asking for money. There is no significant state subsidy for the production of films, nor is it realistic to expect there to be one. We should not lose sight of the fact that film making is a gamble. It is, as one film critic succinctly put it, the "funding of hope over experience".

So why should the Government help film makers at all? In the Government's eyes, after all, the film industry is an industry like any other and should be treated no differently. If the risks are higher, so are the possible profits. Is it reasonable to ask the Government to encourage what the Treasury doubtless sees as reckless gambling? I believe that it is, not only for the sake of the film industry but for other considerations as well.

Let me emphasise that the Government would not be bringing help to a dying industry or even a sick one. They would be encouraging one which is full of vitality at the moment despite the lack of government support during the past years.

The creation of every new business is a gamble, and in a way the production of each new film is like the creation of a completely new business. Unfortunately, the capital investment necessary for the making of a film is large, and because of the high risk involved, the venture capital required for making films for the cinema almost always comes from abroad, where more favourable fiscal attitudes prevail.

The supply of talent that has been fostered by our theatre is now increasingly being tapped by Hollywood, which wisely makes use of British directors, actors and technicians and frequently makes films in British studios and on British locations.

This is obviously not something to be discouraged. However, it must be remembered that most of the profits from these American-backed films go back to the United States instead of staying here to be used to build up the British film industry.

In an ideal world, it would surely be preferable for the British film industry to be established and controlled in this country. In the 1930s, 1940s and 1950s the absence of a serious rival in the form of television meant that the profits from the cinema were larger and easier to come by, and this provided the necessary capital for reinvestment in films. For this to happen today, with the overwhelming presence of television, we need a real incentive for capital investment if the film industry is to flourish. As things stand, it is only in the United States and in other countries with a favourable fiscal attitude that there is the right climate to encourage the necessary venture capital to be invested seriously in films.

In order to produce films of high quality on a consistent basis it is necessary to revive the British film tradition. A great film, or indeed any great work of art, is rarely produced in isolation. In the 1940s and 1950s, for example, for every "Kind Hearts and Coronets" (a film that may strike a chord with your Lordships), and "Whiskey Galore" (which may also do so), Britain

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produced dozens of amiable but now forgotten films which created the working soil out of which several good films and a few great films emerged.

Two things are now needed. One is for the encouragement of investment in film by British production companies. The other is for greater encouragement for companies from other parts of the world to film in the United Kingdom. We lead the world in technology and expertise in the film industry. This is no empty boasting. Your Lordships may not be aware that there is a prize called the Cartoon d'Or which is awarded to the best animated film of the year. From the inception of this prize in 1990, it has been won by British films every year with one exception, when it was won by a film made in France--for which the animator was British. And since we share a common language with the Americans and are regarded by them as not very different culturally, a very small incentive is needed to persuade American companies to come to film here.

Unfortunately in Great Britain, although lip service is paid to the idea of encouraging film production, in reality we have excelled at discouraging it. Let me give an example. In order to raise money, films generally need a star. Foreign film stars coming to work in this country get taxed at source and if the rate of tax here is higher than that in their home country, they are taxed at that rate. The net effect is that the producer has to indemnify the star, which costs him more and is an unnecessary discouragement for him to make his film here. Canada, France, Ireland and Germany have recognised this problem and apply a lower rate of tax in these cases. Although I realise that this offends the British sense of fairness, it seems an occasion when to act too rigidly according to one's principles may give one a momentary feeling of self-righteousness but in fact is a self-indulgent route to a hollow victory.

Much has been made, and quite rightly, of the British successes at the Oscar ceremonies this week. However, the story behind the making of one of these, "Braveheart", vividly illustrates our problem. The shooting of the film began in Scotland, where it should have been completed. It was based in Inverness, where the local economy enjoyed a boom as a result--illustrating, incidentally, the advantageous side-effects to the economy derived from film production. Half-way through filming, however, it was moved to Ireland. There were various reasons for moving to Ireland, not least the Irish fiscal incentives which, even with the considerable expense in the move, still made it financially worthwhile. Moreover, the producer was persuaded not merely by fiscal incentives but by other imaginative ones that helped the production generally. For example, 600 horses were provided free by the Irish army together with other practical assistance.

The solution that I should like to suggest for the Government to help the film industry is not unrealistic and certainly not a Utopian one. First, could we not begin immediately by creating a climate, financial and otherwise, sympathetic to film makers? Secondly, I would suggest reviving the Eady levy. By this, a proportion of tax from cinema tickets was returned to the film industry for re-investment in film production.

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This levy worked well for nearly 35 years until it was discontinued in 1985. It was a highly ingenious device of the Civil Service which gave immense help to the film industry and was copied by nearly every European country. Although discontinued by us, it has been retained by the other countries, and I feel sure it could be re-introduced here without any loss of face to the Treasury, perhaps under another name.

The most realistic help the Government could give British films would be through tax concessions. I am not an economist and shall not bore your Lordships with what would certainly be confused economic arguments. However, I know that the repeal of Section 68 of the Capital Allowances Act 1990 would be an enormous help to the film industry, as would the introduction of 100 per cent. capital allowances in the first year of a qualifying investment.

Finally--and I hasten to assure your Lordships that my family connection plays no part in this suggestion--I believe that we should study the Irish example very carefully and extract all we can from it.

The Irish Government's attitude to the film industry has resulted in an enormous increase in the number of foreign films being made in Ireland, and also stimulated home grown production. Other countries are already beginning to emulate the Irish attitude since they have seen the many benefits that derive from it. Good films define a nation and establish a national identity in the eyes of the world. Film is both a tangible asset and an intangible one--like the BBC World Service or the British Council. The reputation of these two organisations as standards of excellence cannot be measured in purely financial terms. The benefits that derive from them extend far beyond what their aims are perceived to be.

It could be said that the survival abroad of the image of this country as an upholder of civilised values despite much evidence to the contrary is largely thanks to them. This in turn is of incalculable value to our trade, tourism and standing in the world. British cinema could, and should, enter this pantheon and become a symbol for excellence as well. I beg the Government to consider my suggestion.

7.20 p.m.

Viscount Mersey: My Lords, it is my privilege to congratulate the noble Earl on behalf of the whole House for such a thoughtful speech. We remember his father as a Knight of the Garter and, perhaps one should say, the King of Covent Garden, at both the Royal Opera and the Royal Ballet. It is in a way curious that the noble Earl has continued a royal association with his photography. I notice that he has photographed a royal publication on the Queen Mother's garden and, more recently, was photographer for the official brochure on Buckingham Palace. To the noble Earl I say simply: his father would be proud of him tonight. We hope to hear him often in the future.


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