Film Industry
Adjournment Debate -- 28 January 2003
Westminster Hall

As many contributors have said, there is some perplexity over what actually constitutes the British film industry. Sir Alan Parker, in the well-documented speech that has been referred to this morning, said that we should not be thinking about a British film industry but about British film industries, in the plural.

The right hon. Member for Islington, South and Finsbury (Mr. Smith) established the Film Council and a great deal of credit must go to him for having had the foresight to make that move. It is now easier to focus on the areas in the British film industry that need to be focused on. If it considers Sir Alan Parker's speech, and the aspirations behind it, the Film Council will offer extremely good leadership. Speaking as an outsider, I think that it will carry the industry kicking and screaming into the realities of the 21st century.

The UK has a successful film industry, as can be measured by the number of people who visit cinemas to watch films—films made here and films made elsewhere in the world. The latest figures show a 13 per cent. increase in cinema admissions last year and a 10 per cent. increase in box office takings for the exhibitors. If cinemas are to grow and develop, we need them to show American mega-movies and blockbusters, but we still need them to show films that are made in the UK and reflect our culture in stories about us.

In the past 40 years, we have been obsessed with public funding for our film industry. That funding has been concentrated on production. Many people contend that the funding has not taken us very far. Over the past seven years, we have had lottery subsidies, and over the past five years we have had production-focused tax breaks, which the right hon. Member for Islington, South and Finsbury introduced when he was Secretary of State for Culture, Media and Sport. Those subsidies and tax breaks have been successful in some ways, but it is questionable whether either of those sources of funding has delivered the fundamental structural changes that will be needed if the film industry is not to continue to suffer recurrent crises every five years or so.

If the present structure has not worked, what solutions will sustain a successful film industry in the future? The debate has recently been opened up within the industry. As we all know, the industry needs to embrace significant change, but the debate has also covered the future role and influence of Government. The Government have an important input into a large range of issues. As has been mentioned many times this morning, perhaps the most important input is in fiscal policy. The existing tax breaks have been extremely helpful. The 100 per cent. first-year write-offs were introduced under section 48 of the Finance (No. 2) Act 1997. That has certainly generated employment and delivered successful films. It is due to end in July 2005, which seems to be some time away, but in terms of film production it provides a window of opportunity of only another 18 months. It is important that, when the Minister responds, he informs us how the Department for Culture, Media and Sport regards the matter. If only 18 months of active space is left within which the film industry must operate, some consideration must be given to how to extend that period. Section 42 of the 1997 Act continues to attract the big American productions to our shores and keeps both Shepperton and Pinewood studios open.

However, although tax breaks have been useful and helpful, they are considered in some quarters to be inefficient. There is a view that the underlying philosophy of sale and leaseback is not helpful, and is rather flawed as regards the film industry. In his winding-up speech, will the Minister explain the Government's thinking on tax breaks? The way forward, as envisaged in a recent speech by the chairman of the Film Council, is on three fronts, which were well covered by my hon. Friend the Member for South Cambridgeshire.

Sir Alan Parker believes that distribution, not production, should be the leading force. In his words, there should be a pull factor, not a push factor—which means that the industry should be market-led. That is how most businesses and industries operate throughout this country and the world: they look at the market and they produce things that people want to use or to see.

Mr. Simon Thomas (Ceredigion): On the creation of a market, particularly a greater market for UK-based films, what value does the hon. Gentleman place on festivals? For example, yesterday was Wales cinema day; three quarters of cinemas in Wales took part in it. Since it was introduced two years ago, the numbers attending have doubled year on year. Surely there is a role for festivals to play in creating the market, but can there be that pull factor for the industry as a whole?

Mr. Moss : The hon. Gentleman makes an important point. He more or less answered his own question by saying that Wales cinema day has been a tremendous success, and I have no reason to doubt that. I think that it was a point well made and the Minister will no doubt take it on board.

The other two matters listed by my hon. Friend the Member for South Cambridgeshire were skills and infrastructure. The film industry needs to examine how it does things and its internal structure. There is a particular problem with low-budget films, particularly low-budget British films, whose principal, or only, market is the United Kingdom. The Relph report, commissioned by the Film Council last year, concluded that, unless there were fundamental changes, British film making at that level could cease to exist in a few years' time. The report showed that film makers in France, Denmark and Germany all made films more cheaply than we can in this country and that the essential need is to make films whose budgets reflect their market value.

As for skills and training, the film industry—as we all accept—is a people business. In this country, we have a good record of producing people with great talent, but there is now a dearth of skilled people. The Film Council admits that there are not enough good writers, new editors, cinematographers and production designers. Training is now a critical consideration and the Film Council needs to work more closely with the Government to develop a strategy for the future. Perhaps more lottery money should be diverted into training, as well as contributions from the industry itself. It is a surprise to learn that until now the film industry itself has not invested in training as a way forward. Training should be developed across the board, and that includes script development, production, distribution and exhibition.

On infrastructure, it is obvious from the comments we have heard this morning that film production is extremely mobile—New Zealand was mentioned in that context. Many Governments are dreaming up tax incentives to attract big-budget Hollywood film productions. Investment is pouring into new film studios in countries as diverse as South Korea, Thailand and Australia as well as New Zealand. We must establish working partnerships with those countries as well as develop critical financial incentives for the home-based infrastructure. The trend will not be reversed. As traditional trade barriers come down and digital technology frees up film production, it will go, literally, anywhere in the world.

Serious challenges face the film industry. However, we have a good record and immense talent. Working in partnership with the Government and the DCMS in particular, the British film industry should have an exciting future ahead.