Orders of the Day — Finance Bill. – in the House of Commons am ar 22 Mehefin 1939.
Sir J. Simons:
I beg to move, in page 3, line 27, to leave out Sub-sections (2), (3) and (4).
The broad effect of that change would be that the Excise Duty which I proposed in the Budget Speech would not be imposed. I think the Committee will probably like to hear from me as briefly and as clearly as I can give them, the reasons why I think that change should be made. It is never easy to anticipate the difficulties that will arise in applying a new Excise duty. Naturally this was proposed only after such careful examination as I could make, but we certainly did not realise some of the complications involved. The present law about the taxation of cinematograph films is a law imposing a Customs duty—a duty on film when it is imported. It is rather a complicated formula. When films are imported which already contain the picture—used films or exposed films—there is a tax which amounts in substance to 5d. per foot on the negative and Id. a foot on the positive print. When this Duty was first proposed, it was undoubtedly intended to put the higher duty—the 5d. duty—upon the import which was able, because it was the negative, to be the source of a great many more copies. There is no doubt at all that was the idea. The negative is the original from which you can make great numbers of copies. Unquestionably, the idea was that we could put the higher duty on the negative when it came in and then it could be used in this country for reproducing positive copies. Alternatively if the positive came in it would be charged the lower rate of Id. Subsequently the ingenuities of those concerned, which are of course, very great, developed a system, perfectly legitimately, but undoubtedly with a view to avoiding the higher duty, by which you could import a positive, and when you got it here, create a negative from it and then use that negative to make any number of films. Therefore one of my objects in proposing the new arrangement was to put a stop to that practice by securing that the first copy of the film, whether positive or negative, should be charged the higher rate of 5d., whereas subsequent copies would be charged at the lower rate. That portion of my proposal I do not wish to change.
I had a second proposal which was not a Customs Duty, but an Excise Duty. My proposal was that we should impose an Excise Duty on blank film manufactured in this country. I proposed it at a rate which was substantially about ½d. a foot. That involved putting up the Customs duties another Id. so as to keep the balance between Customs and Excise the same. I think there is a very great deal generally to be said for that proposal, but I am bound to say that I did not appreciate—I think my advisers would be willing that I should say that they, too, did not sufficiently appreciate—that this very great difficulty would arise. If you put an Excise Duty on the blank film of a fixed rate—I suggested ½d. a foot—the Excise Duty will in fact operate very differently according to the particular purpose for which the film is used. If it happens to be used for a feature film or a film such as "The Citadel" or "Goodbye Mr. Chips," a romantic film which is going to have a great success and which may be shown first in one town for a week and then in another town for a week, they might very well carry this duty. The film would last and would be used for a considerable time. Its popularity might continue for months or for years and, owing to the fact that the film was used in that way and was earning an income for a long time, an Excise Duty on that type of film would be justified.
Suppose, on the other hand, a film which is of exactly the same kind of material, but is used for a news reel, the circumstances are entirely different for two reasons; first, the news reel is only useful as long as it is news. You want to use that film for only a few days. Secondly, in the case of a news film, you cannot take a particular copy and hand it round from one cinema to another over successive weeks. You have to make almost as many copies as there are cinemas you serve. I endeavoured to meet that point by making an allowance, so that the duty should be reduced in the case of a news reel. Further examination has satisfied me that those allowances do not make up for the difference. In the case of a news film such as that of Their Majesties in Parliament Square to-day you would have to have separate films in use, and any duty charged by the foot would be very heavy indeed.
It may be said that we ought to have appreciated these things before. I have not wearied the Committee by telling them of other complications such as educational films, which we must consider of special importance, or yet another kind of film which I remember the hon. Lady the Member for Jarrow (Miss Wilkinson) championed in an earlier Debate. I think it was called the highbrow film. It is very often French, and comes over here as a single copy. It is reproduced very little and does not produce a great income, although it is a very important element in the service which the cinema gives.
I therefore came to the conclusion that it was a mistake to try and impose this Excise Duty. An hon. Gentleman just now referred to the Government as only paying attention in these matters to the powerful interests. That is not true, and I will give him an illustration at once. Undoubtedly the film industry is extremely well organised, and unquestionably they demonstrated vigorously against what they felt was not fair to their industry. This duty was broad enough to apply also to photographic films and plates. Amateur photographers are not organised at all, but I do not think it would be fair to withdraw this Excise Duty from cinematograph films and to leave it to apply to those who are not in a position to protest. I would never have proposed a separate Excise Duty on photographic plates; it came in as part of the general scheme. Therefore, the Amendment which I move is not merely to remove the Excise Duty as regards cinematograph films, but to remove it as regards photographic plates and films.
The amount which one loses has to be considered. I had already contemplated making concessions which would have cut down the original estimate very substantially, but, including the pre-Budget yield I should have had about £1,000,000. I am quite satisfied in my own mind, after closely examining the matter, that my proposal was wrong and I cannot recommend the Committee to agree to it. On the other hand I want to keep the other change which I made. It seems to me plainly wrong that we should charge a higher rate of Customs Duty when the first specimen enters as a negative and yet charge a lower rate of Customs Duty when the first specimen enters as a positive, when one knows that this is done in order to produce from the positive a negative and to make by duplication in this country whatever copies are desired. Everybody desires that the reproduction of films should take place in this country. The technicians have acquired great skill and no country does it better. We desire in every proper way we can to sustain that industry.
Therefore, the effect of what I am proposing is to keep the Customs Duty as it was before. I told the Committee that I had added another penny because of the Excise Duty, but I must now remove that. I do not persist in the Excise Duty; but, in relation to the Customs Duty, I propose to bring about the reform of making sure that when the first copy comes in, whether it is positive or negative, it pays the higher rate of duty. I hope that I have made plain to the Committee what the proposals are. Naturally no Chancellor of the Exchequer likes to come forward and say that he has changed his mind and that his first plan was not right, but I have come to that conclusion and I have told the Committee frankly what I have in mind.
I am very pleased that the right hon. Gentleman, after meticulous inquiry and negotiation with all those involved in this matter, has seen fit to do the right thing, although apparently the change of mind had to take place very rapidly. It is one of the classic examples illustrating why one should not impose taxation unless all the possible repercussions have been thoroughly examined well in advance. I am with the right hon. Gentleman in his desire to provide himself with revenue, but he must have accepted the advice of those who alone could give it to him before he made his Budget statement. I pointed out to the right hon. Gentleman certain possible repercussions, and I am very glad to find that the right hon. Gentleman has seen fit on further examination to put forward this Amendment. The film trade as a whole must be very grateful for the avoidance of a multiplicity of difficulties which might have accrued as a result of the proposed Excise Duty. The right hon. Gentleman discriminated rightly between the feature film and the newsreel and the incidence of taxation upon them. I wish he had carried it one stage further and had referred to the second feature film, which is very largely made in this country. The comparison is not quite so odious as in the case of the first feature film of, say, "Henry VIII," or "The Mutiny on the Bounty," but nevertheless, there is a very large portion of them made in this country.
I have upon the Order Paper an Amendment which has not been called, proposing to leave out Sub-section (1). It was put down not necessarily with the object of removing the Sub-section but certainly of asking the right hon. Gentleman to reconsider the question of employment when lifting the duty from 1d. to 5d. Now the duty is to be 5d. for the first copy, whether it is positive or negative. I am credibly informed that those who have escaped their responsibility under the original law by sending in a positive copy of a film instead of the negative, paying Id. instead of 5d., have been sending their positives to a laboratory in London where, from the positive, a negative was made, and other positives then extracted from this negative. During a short space of time quite an industry has been built up by cine-technicians in producing negatives from positives and other positives from the negatives. It is a very complicated question for those who have not followed the matter with meticulous care.
The increase in the Import Duty on the positive film from 1d. to 3d. will induce the importers now to import not positives, but negatives. Two consequences automatically follow. The nearer one gets to the negative the better is the copy of the film and that will be advantageous if the negative can be imported for the same charge. To that extent, the industry built up on the basis of evading the law will no longer be called upon to produce negatives from the positives. The result will be that the Chancellor of the Exchequer will collect a sum which, I believe, will be round about £180,000, while the cine-technicians in the laboratory will lose approximately £150,000 worth of work. It is one of the questions which cannot be solved and settled in the twinkling of an eye, but it is well worth consideration before the final stage of the Bill is reached. To-day I ask the right hon. Gentleman to do no more than to re-examine it from that point of view.
I have only one other question for the right hon. Gentleman, and it will be a matter to be dealt with finally on the Third Schedule to the Bill. I refer again to the question of the newsreel. The importation of newsreels from abroad conveys news to this country that we all like to see, but while the charge for importing newsreels is the same as that for feature films, it still remains inequitable, because the newsreel will be adversely affected by the change in the import duty. Two things may follow. First, he may reduce the footage of newsreel imported, and then other countries which export newsreels to this country may refuse to accept in return newsreels produced in this country. Since in both cases it would be advantageous to the cinema goer, in America and in this country, I am sure the right hon. Gentleman would be the very last person to deny to the cinema goer the right to witness what will be on the screens, I suppose, in all parts of the United Kingdom to-night and equally important events that are filmed abroad. I am sure the right hon. Gentleman would not like to deprive cinema goers of an opportunity of seeing them. Therefore, I would ask him not to make any promise now, but if between now and the consideration of the Third Schedule he would put the imported newsreel in the same category as the educational film, then I think he would not only fulfil the general desire of the trade, but he would also satisfy those 20,000,000 people who attend our cinemas weekly, in that the newsreels would not be cut down because of a certain tax burden. I am sure the film trade may well feel grateful for what the right hon. Gentleman said yesterday and is doing to-day.
I also should like to express my appreciation of the action of my right hon. Friend the Chancellor of the Exchequer. I drew his attention, as did other hon. Members, to the particular difficulties that emerged only gradually when this tax was examined. Anyone who has had anything to do with cinema films will realise how intricate the subject is, and it is because of those intricacies that I think some of the difficulties were not at first realised, even by some people in the trade themselves. I would like to add that not only will the British cinema industry benefit by this Amendment, but gratitude will be, or ought to be, felt by the cinema goers, because had these taxes remained, there is no doubt that sooner or later a certain percentage of the cost would have been passed on in one way or another. It is extraordinary how many of the 20,000,000 cinema goers mentioned by the hon. Member opposite occupy the sixpenny seats throughout the country. It is not only that they might have had to pay extra, but it might well have been that the length of programme, the amount of film that they could see, would have been cut down. Because of this, and because of the difficulties that we who are interested in building up a better British film industry realised, we so much appreciate the Chancellor's Amendment. I thoroughly agree with the point made by the hon. Member for Don Valley (Mr. T. Williams) in regard to the import duty on newsreels. When I spoke on this on the Second Reading, I said that it seemed to me that that kind of film was much the same as newsprint. I think that in these days of free circulation of news, by means either of print or of the films, is more than ever important, and I hope it may be possible, when we come to the Third Schedule, that a further concession may be made by my right hon. Friend.
I do not think anyone will deny absolution to the Chancellor of the Exchequer, who has admitted the fact that he has made a mistake, but when listening to the speech of the hon. Member for Dundee (Miss Horsbrugh) about the effect of this tax on the cheaper seats in the cinemas, I wondered how it was that that argument could be used with such effect in this House as it was used a little while ago, and yet, when we put forward the same arguments with reference to sugar, they are immediately dismissed. Obviously we cannot go back to that now, but when we are advancing arguments of this nature in future, we hope we shall have the same sympathy from the hon. Member opposite as she apparently received when she put forward her plea for the cheaper cinema goer. I cannot understand—this is the main reason why I rose —why it is that the Treasury, with all the knowledge at its command, had to impose a tax like this without prior knowledge of its effect on the trade. I am bound to say that it lends colour to the assertion, made by my hon. Friend the Member for Kennington (Mr. Wilmot) to-night, that it is only when powerful interests, with the aid of the public Press, as the cinema industry has done in this country in the last few days, can bring pressure to bear on the Chancellor, that it seems we can get concessions made.
I am in entire agreement with my hon. Friend the Member for Don Valley (Mr. T. Williams) that we must accept the Chancellor's explanation of the effect that his tax would have had if he had kept it on, and, therefore, I presume none of my hon. Friends will oppose his Amendment, but I am not inclined to accept that explanation at its face value. I do not quite understand how it is that the right hon. Gentleman, after examining these proposals—and he had plenty of time to do it before he introduced his Budget—should bring them forward, and then, after great agitation in the country from an interest which is not always running on parallel lines to the interests of the poorer section of the community, he can withdraw this tax and come down here and almost make a virtue of it, as he has done to-night.
I desire to express to my right hon. Friend a few words of thanks for the decision which he has announced to-day to abandon not only the duty upon cinematograph films, but also the duty upon photographic plates. The manufacture of photographic plates in this country is not very widespread. Indeed, I think it would be true to say that the bulk of the production of photographic plates takes place in the constituency that I have the honour to represent. This was certainly not a case in which my right hon. Friend yielded to the pressure of highly organised and influential interests. We had no films, we had no cinematograph theatres with which to put our case before the public, and we sent no circulars to Members of this House. Indeed, I myself, after a prolonged wait, had no opportunity of raising this matter in the Second Reading Debate. This duty on photographic plates was regarded with considerable apprehension by the industry; it would have given rise to great difficulties in factory organisation, and in view of the conditions under which these plates are manufactured and used, I think that the yield from this duty would have been disappointing. I should like to congratulate my right hon. Friend on the decision which he has announced, which, I am sure, will be received with great satisfaction in this comparatively small industry, an industry which, nevertheless, gives employment to a very large number of persons whom I represent.
I think the Chancellor of the Exchequer has been very wise in boldly facing the situation and then coming down to the House and announcing his decision, when, as he said, it means a substantial loss of revenue. I do not think, however, he need look very far for a means of making up that loss, because if he has the good sense to keep on the Medicine Duty, he will more than make up the loss so there is an easy way out of his difficulty. I want to say a word as to the newsreels, and I hope very much that sympathetic consideration will be given to that matter when we come to the suitable place in the Schedule. These newsreels are admirably planned and are a great feature in spreading the news in the daily life of millions of people in this country. They are very fair, they treat things in an objective way, and they are not subject to the interference or the censorship of the British Board of Film Censors, as is the case with the ordinary feature films. The only case where there was censorship was in the lamentable example during the Munich crisis, when the Government deliberately interfered through the American Ambassador, to get pressure brought in order that the views held by the Opposition and a number of Conservative Members too —
I am afraid that that is rather wide of the Amendment.
I fully appreciate that, Colonel Clifton Brown. I was only making a brief, passing reference to the matter by way of illustration, and if I might complete that sentence, I was referring to the attempt then made to censor the views of the Opposition on this subject. The effect of putting on this duty would be to interfere both with the introduction to this country of these newsreels, and also, what is quite as serious, to prevent, by means of the exchange that goes on, the distribution of British news abroad. It would be wholly inconsistent with the British Government's growing interest—growing very slowly, but still growing—in carrying information and propaganda about British ideas abroad that any hindrance should be placed in the way of the distribution of British newsreels. I hope the Chancellor will respond to the opinions which, I venture to think, will be expressed to him on this subject from all quarters of the Committee.
I rise to make a short point. I am sure the Committee is generally very appreciative of the action of the Chancellor of the Exchequer in this matter, and we congratulate him on his courage in coming down and saying that he has made a mistake and that he wants to remedy it. I want to appeal to my right hon. Friend, and through him to the Treasury, to remember when some new form of taxation is to be imposed, that it is almost impossible for Treasury officials or any others than those engaged in an industry to know what the effects of any particular tax will be before it is put into operation. If, on the other hand, an opportunity is taken to consult the interests concerned, there is every prospect of a reasonable tax being worked out and of substantial justice being done. That is a principle which has been follewed on many occasions in the past with the greatest success, and I appeal to the Chancellor of the Exchequer to follow that plan in the future.
I understand that this Amendment is to omit Sub-sections (2), (3), and (4) but not Sub-section (1), and I would like to ask whether that means that photographic sensitised negative material used by amateur and professional photographers will still have to bear the increased import duty on plates and films.
All that the Chancellor proposes is to take off the proposed Excise Duty, but to leave on the import duty. What will be the exact position with regard to the photographic material used by amateur and professional photographers? Will they be subject still to an increased cost for their raw material?
The answer to the question just put by the hon. Member is, no. There will be no Excise and there will be no increase in the Customs Duty.
Although I believe the Chancellor of the Exchequer has done the right thing, I do not intend to congratulate him, because I do not believe in congratulating him when the right thing is being done. I do not believe in holding out bouquets to my opponents who very seldom do the right thing from my angle. I said on the Budget Resolutions that I thought he was doing the wrong thing in this case and I am glad that he has now seen wisdom and is doing the right thing. I am also very pleased that the right hon. Gentleman has omitted the Sub-section dealing with the ordinary photographic film. I cannot imagine the right hon. Gentleman or anybody else making an important concession to big interests and not doing something for the smaller people, those who use the ordinary camera. A good deal of joy is got by millions of people in using a camera. Years ago I took a very active interest in photography, and I can look back with pleasure on some interesting Sunday mornings when I was out photographing some of the beauty spots of Derbyshire. The action which the right hon. Gentleman has taken will be of benefit to many youths, and I am glad that he has omitted the Sub-section in question.
With regard to newsreels, I hope he will look into the question very seriously. The newsreel can be a good sort of education, although I must confess, as a regular cinema-goer, that I see some newsreels on some occasions upon which I should be heartily glad to put a very heavy tax, that is, when I have sat in a cinema and have had to listen to what the National Government is supposed to have done. I have had to do that more than once. The last time that I heard the right hon. Gentleman at the cinema it seemed to me that he had a flare for that kind of work. I have on occasion heard other things with which I profoundly disagree. The educational film is a source not only of interest but of real education. I have seen a good many educational films and travel talks which have brought scenes in the Dominions and Colonies to the notice of cinema-goers. I believe these films to be extremely educative. I hope the right hon. Gentleman will look at the point with regard to the newsreels, so that there will be as little limitation as possible, and that the ordinary cinema-goer may have the benefit of these very interesting educational reels.
I support those who have sought to impress upon the Chancellor of the Exchequer the desirability of keeping to the minimum the duty upon newsreels; but there is a good argument which has not been advanced. If you import a very well-known feature film you use the whole of that film for showing in this country, but when you turn to the newsreel film, it may well be that you do not use half of what you import, upon which you pay duty. You may not use very much more than one-third. I do not say that it always happens, but in some cases it does happen. That seems to indicate that the newsreel stands in a different category, and for that and other reasons I would beg my right hon. Friend very seriously to consider the adjustment of the proposed duty on newsreels.
I am sorry to detain the Committee, more especially as I may be very much in the invidious position of looking a gift-horse in the mouth. Like other hon. Members who have intervened in the Debate, I am extremely grateful to the Chancellor of the Exchequer for the very important concession he has made. As he pointed out when he was moving the Amendment, the concession is even more important to the newsreel industry than to the rest of the film industry. While appreciating the generosity that my right hon. Friend has shown—indeed, he has been more than generous in this case; he has been wise as well, and has relieved the film industry from complete extinction—I would ask him to extend his generosity and relieve the newsreel industry from the scope of Sub-section (1) —in other words, to remove the additional duty which is imposed by Subsection (1) on the newsreel. As far as the newsreel industry is concerned, I do not believe that from the purely narrow point of view that duty will be a very tremendous burden, because the news-reel industry can avoid the duty quite easily by refraining from importing foreign newsreels.
I seriously doubt whether that is desirable in the national interest; whether it is desirable that the importation of foreign newsreels into this country should be curtailed. On the contrary, I believe that it is important, especially at the present time, that the people of this country should have the fullest possible information of what is going on in other parts of the world. Only about an hour and a half ago the Committee adjourned in order that hon. Members might assemble in Parliament Square to join in the national welcome to Their Majesties. I dare say other hon. Members besides myself had the thought that they would have been glad to participate in similar scenes on the other side of the Atlantic. We can do so to some extent by going to the cinema and seeing it on the screen; but I wonder whether the Committee is aware, or whether my right hon. Friend is fully aware, that even that source of instruction and enjoyment has been considerably curtailed by this import duty on the exposed film. I am told that a complete record of His Majesty's visit to the United States was made and was available, but only about half of the available film was bought by the newsreel companies because, in view of the increased duty, they could only afford to pay for half of the film instead of the whole film. In other words, the first fruits of this duty have been to deprive the people of this country a full opportunity of wit- nessing on the screen in. this country the historic visit of their Majesties to Canada and the United States.
There is this further point, which has been referred to, that if it is undesirable, as I believe it is, to curtail the import of foreign newsreels into this country, it is still more undesirable to curtail the export of British newsreels into foreign countries. At the present time the Government and the people of this country are, quite rightly, making every effort to counter propaganda hostile to the interests of this country and the interests, 1 might almost say, of western civilisation. We are endeavouring to counter it not by counter propaganda but merely by expressing to the people in other lands our English ways of life, our English values and our English ways of thought. In that way the British newsreel plays an important part but the part which the newsreel can play will very definitely be curtailed if this import duty stands.
The newsreel industry does happen to be one which delights the heart of the classical economist and would delight the heart of the Liberal party if there were any Members of the Liberal party in the Committee at the present time, inasmuch as the theory of the classical economist does actually work out in practice, and for every foot of foreign newsreel imported a foot of British newsreel is exported, by an arrangement of exchange between the various newsreel companies. Some 1,500,000 feet of newsreel were exported to Germany, Italy, the Balkans, South America and all over the world last year. If this duty is maintained so far as the newsreels are concerned, that total will undoubtedly be very greatly diminished in the coming year. I do, therefore, appeal to my right hon. Friend to consider this point very carefully and to see whether he cannot add to the blessing which he has conferred upon the film industry to-day, this further blessing, which will not cost a great deal, of exempting the newsreel from the increased Customs duty.
May I say, in reply to what my hon. Friend the Member for Kingston-upon-Hull, South-West (Mr. Law) has said and what was said by the hon. Member who opened the Debate, that I certainly will consider this point. That was all that I was asked to do. I am not going to give any hasty decision on the matter. It is, however, only right that I should point out to the Committee, one circumstance, so that we may get the matter into right proportion. This is a very technical subject, and it is only because I have done my best to understand it that I can speak with some amount of confidence. I understand that the anxiety of the newsreel people, their main anxiety, was due to the proposed Excise Duty, because it is the nature of a news-reel business that you have to make a great many copies of what you have photographed. Of the scene which we saw outside in Parliament Square to-day there have to be separate copies for exhibition in each cinema. Therefore, an Excise Duty on a film is a serious business for them. I know very well, because I have had very close inquiries made and representations have been made by the various sections of the industry, that that was the main thing that concerned them.
There is also another point which concerns them, if you say, whether it is a positive or a negative that is introduced, that the first copy has to pay a higher rate of duty. That has been a certain additional burden, but it is not to be compared in seriousness with the situation which, by general consent, we have relieved to-day. We must be careful in this matter, because it is a serious proposition to examine all the foreign films that come into the country at the ports for the purpose of determining which is news and which is not. I am confident that the newsreel business will not be receiving a mortal blow in regard to this matter, though I do understand that it might be very convenient, and in some way very desirable, if we could make this further exemption. I make this observation now, because I want the Committee to appreciate that what we have done is a big thing, and that this further concession which is asked for is not nearly such a big thing.
I would make one observation in reply to the hon. Member below the Gangway. As a matter of fact in considering any modification of a duty you are very much more circumscribed in your technical inquiries than many people realise. It is a very difficult thing, especially in a duty of this sort, to disclose your ideas to a large number of people who, quite honourably, but naturally, in the interest of their trade, will be very much interested and are not always able to give you at that stage exactly the same assistance that they can give afterwards. Therefore, to a large extent you have to rely on what can be ascertained in advance without the full assistance of the trade. I say this because the experts who advise the Chancellor of the Exchequer really ought not to be regarded as under any sort of reproach because they cannot at the time get all the detailed information as to how a duty like this will work out. No one could have done so. It is only after a duty is proposed that the people themselves begin to work out how the different combinations and permutations may develop. I say that not in the least to excuse myself, but because I think it is a mistake to suppose that a Government Department does not do it on a very large scale.
The great thing that worries most of us is this. You are going to lose much by the remission of the tax. Could the right hon. Gentleman give us any idea how he is going to make it up?
Not, as far as I am concerned, by continuing to impose a completely obsolete tax on medicines. If and so far as is necessary I think we may get a contribution from a tax, which will be discussed in a few days called the Armament Profits Duty.