DB7

Hammer blows hit UK film industry

Closed tax loopholes and lack of lottery cash blamed for downturn

Charlotte Higgins, arts correspondent
Wednesday January 19, 2005
The Guardian

Film production in Britain fell by 40% in 2004, with high-profile projects such as Tulip Fever, starring Jude Law and Keira Knightley, biting the dust.
According to figures assembled by the journal Screen International, the number of indigenous films that started shooting in 2004 was 27, as opposed to 45 the previous year.

Adam Minns, Screen's UK film editor, said the biggest single factor in the downturn was the government's crackdown on tax loopholes to end the practice known as "double-dipping".

That effectively meant producers could collect tax relief twice on the same film, using a pair of tax incentives known as section 42 and section 48.

In 2003 private investors invested £2bn into UK movie productions, lured by giveaways worth up to £8m. Many of those films in production and preproduction at the time of the government announcements ended up stillborn, though The Libertine, starring Johnny Depp, was salvaged when it moved to the Isle of Man.

On a Clear Day, the UK film starring Peter Mullan and Brenda Blethyn that opens the Sundance film festival next week, was also saved. But only by the skin of its teeth, according to its producer, Dorothy Berwin, since the movie lost 40% of its financing on the first day of preproduction.

"We had to go right back to the drawing board. We were extremely lucky we got it made," she said.

Other factors in the downturn in UK production include the relative paucity of lottery money, with the three "film franchises" - a trio of companies granted a total of just under £100m in lottery cash - having expired last year.

Chris Auty, a producer behind such films as Crash, My Summer of Love and In This World, said the industry had been hit by "three hammer blows" - the tax-break crackdown, the "sudden and rapid" reduction in the availability of lottery money, and the gradually increasing costs of film-making. "As the UK economy has done so well the cost of production has got higher. But the market has gone down," he said.

He saw the downturn as likely to be part of a long-term trend. "These negative drivers - including the strength of the pound as against the dollar - will affect less the big US-financed, British-shot films like Harry Potter on the one hand. Nor will it impact too much on films of the scale of My Summer of Love and In This World that had very modest budgets of £1m and £1.4m, which you can still just about make with money from the BBC or Channel 4, and a bit of lottery cash.

"It will affect much more the mainstream British movies, films in the £5m to £9m budget, films like Vera Drake or Enduring Love."

But the UK Film Council said the sharp downturn from 2003 to 2004 was partly due to 2003's having been a bumper year for British film production. "There was, as expected, a drop in film production of all types from 2003's one-off record year," a spokesman said.

"The reduction in indigenous [solely British] film production is due to a variety of factors, including the continuing long-term trend towards co-production of films in more than one country, and changes to financing arrangements during the year undoubtedly had an effect."

But according to Mr Minns, co-productions also dropped year on year in 2004, from 102 to 81.

Andrew Eaton, Michael Winterbottom's regular producer, who is taking the controversial film Nine Songs to the Sundance festival, said: "This industry is prone to peaks and troughs. I don't think these figures mean a long-term drop-off. In the early days of the lottery the market was flooded with a certain type of movie that struggled to find an audience. There was definitely a period when we were churning them out."

He said he had been affected by the section 48 clampdown, being forced to cut the budget for the film of Tristram Shandy.

But independent British film-makers should focus, he said, on wising up to the trajectory of the home entertainment industry, and embracing a future where it will be possible for film lovers to download movies from the internet.

"Just as in the music industry, these changes could really help the minnows. If the smaller companies can produce our own downloads and DVDs, we would have much more chance of getting a return on it than we would using the big distributors. The economics of the film industry are very old-fashioned. We have got to get much smarter."

deckard

Films in the £5m to £9m budget? How is it that Hollywood et al keeps churning out huge amounts of, shall we say dubious quality film with budgets of 80,90,100m dollars and in this country we struggle along with(in relative terms)peanuts? Even then they end up "stillborn" someone explain it to me, pleeeeeese. Regards, Decks.

"and what did that produce? The cuckoo clock"

Steve Crook

Could it be related to their being quite a few more people in the States? Actually I was surprised to see (in the CIA World Factbook) that there only about 5 times as many people in the States than in the UK.

I wonder how the number of cinema goers compares in each country? That must be related to the possible returns.

Of course then there's also the chances of a British film getting a worldwide distribution as opposed to the chance of an American one getting worldwide distribution.

Steve

Steve Crook

PaPAS

DB7

As Steve says, the major Hollywood studios have immense worldwide distribution power and can absorb losses that would signal curtains for many European companies.

I'd imagine their sizable back catalogues and DVD releases must result in a steady source of income.

Maybe what's needed is tax breaks for true indigenous films not those merely filming over here for financial benefits.

ThorntonD

the trouble is people don't appreciate British cinema as they should. Most of the high-profile american films made in Britain are pure american despite the locations. English actors tend to go for the art rather than the fame so they tend to be overlooked by the average fan. A state of affairs that is rather sad,I think. I've admired alot of Brits that don't want to be stars but love to act but u seldom see them after awhile.