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Britain’s film industry on the skids?

The BBC is reporting that the British film industry – however defined – cut its total payroll by about 20 percent in 2004, caused in part by uncertainties over the future tax treatment of said industry. It is a familiar tale.

British governments, especially the current Labour one, liked to attract the plaudits of the film-buff classes by promising to shower grants and tax breaks on the film business, but the returns on all this activity have been mixed at best. I am not sure whether tax is the prime reason for choosing to avoid Britain or not. Surely the availability of top talent, on both sides of the camera; good locations, ease of access and relatively decent labour market conditions also play a big part in all this. The latter point gets overlooked, particularly given the still-severe armlock on the industry by the acting union Equity, which operates a closed shop system on the industry.

Another thing – far too many British films try to go for the “quirky” or period-piece route and I suspect that the industry is now saddled with a fairly set image. Brits continue to ply their trade around the world – some of the best movie directors, special effects artists and so forth are Brits – so maybe some concerns are misplaced. Film-making is a global industry anyway and I would not be at all surprised if a lot of work is getting outsourced to cheaper locales like India.

I do not believe the government should dangle even bigger tax breaks under the noses of our would-be Spielbergs or Ridley Scotts to get them to make movies here. Cutting taxes overall and keeping labour costs free of regulatory red tape would be a better long-term bet. The film industry is a nice thing to have but it does not deserve and should not get, special treatment from the State.

15 comments to Britain’s film industry on the skids?

  • Jacob

    “The film industry is a nice thing to have but it does not deserve and should not get, special treatment from the State.”

    Indeed. The same goes for all other industries.

  • Sylvain Galineau

    Maybe not India, but a lot more movie work is now being done in Eastern Europe.

  • Andrew Duffin

    I believe this is because El Gordo saw that the tax breaks he’d “given” to the film industry were just being used to make alread-rich people richer still, meanwhile the films were of the class of “Sex lives of the Potato Men” (look it up). So the tax breaks were abolished.

    Couldn’t happen to a nicer bunch of people.

  • I remember reading about the number of Aussie films that are bankrolled by the government-owned Film Finance Corporation (FCC). It’s obscene. Most of these flicks take next to nothing at the box office. A mate of mine was quoting figures at me regarding this issue – “Such-and-Such cost the Australian taxpayer $1.5 million and took $25 000 at the box office”. This margin of loss isn’t uncommon, I shit you not. That’s the sort of commercial “success” I’m talking about for a huge number of Australian films. But hey, we’re building a “culture” here so who cares?

  • Well said…the sports nor the arts deserve a single penny from the state. If individuals wish to support them that should be a private matter not for taxpayers at large.

  • HJHJ

    It just goes to show that despite the government’s professed enthusiasm for free markets, it is still trying to “pick winners” through the tax system, by favouring one industry for investment over others.

    And Gordon Brown is just as incompetent at it as every previous Labour government. He created the tax loophole, was surprised when it was ruthlessly exploited and so closed it. And this guy thinks he is a good chancellor. He’s a very slow learner.

  • Julian Taylor

    I shoud think that one thing everyone in the film and TV industry has learned is NOT to trust Our Little Tony and his cohorts.

    To illustrate that point I can recall the behaviour from Blair in 1998 at the UK opening night of Spielberg’s Saving Private Ryan. Because of some screwup or other in 1997 (during the Major administration) Spielberg was unable to secure the (promised) services of the UK military as extras, instead the opening scene had to be shot in Eire, while the remainder of the movie was shot at the old BAe works at Hatfield, using 2020 Casting to furnish ex-military personnel as extras – obviously at greater expense to messrs Hanks, Spielberg and Dreamworks SKG. At the premiere the new improved ‘promise everything, deliver bugger all’ Tony Blair publicly (on camera) assured Spielberg that if he decided to film in the UK again he would personally ensure that British Army soldiers would be made available for his use as extras.

    So come the next year Spielberg set about casting for Band of Brothers in the UK … similar locations in and around Hertfordshire etc. etc. However when it came to using the military there was a problem. Nobody had told the Ministry of Defence about Our LIttle Tony’s promises so yet again no military extras. Result? Spielberg had to use another casting agency, at considerable expense this time, to furnish military extras.

    It is worth bearing in mind that Shepperton, Pinewood and a large number of other studios (Twickenham, Bow etc) are still fully booked up for some time to come – it is now really hard to secure a decently sized sound stage (+60,000 sq ft) for most filming, without a good lead time. While we are certainly not getting as many major Hollywood movies as we used to – a hell of a lot goes to Fox Studios in Australia now, and to the excellent Barrandov Studios in the Czech Republic as someone commented above – we do still have enough to provide work for the majority of crews in the UK, something that I daresay many industry professionals in the USA would envy.

    It’s also worth bearing in mind that the BBC has constantly tried to undermine the film industry in the UK through its use of BBC Resources – providing high quallity facilities and crews at state-subsidised artificial production rates. It might be quite enough to compete with Fox’s own studios or Barrandov Studios in Prague but it must be even bloody harder when you have to compete with Our Little Tony’s personal TV station as well.

  • simon

    We all know that tax funded British films are self-indulgent exercises for their makers. The same can be said of the BBC’s output, which costs us nearly £4 billion a year funding. Wasting public cash on a few arty films nobody wants to watch is a disgrace, but the BBC and its tax-funded output is a full blown scandal.

  • HJHJ

    But just occasionally, and perhaps belatedly, the BBC does get things right:


  • Johnathan

    HJHJ, your first comment on this thread was dead-on. Tax breaks often distort economic activity.

    BTW, as I know from my other half, Malta is now quite a significant place to shoot historical theme movies like Gladiator, Troy, and the Count of Monte Cristo, to name just three. Britain is expensive.

    From what Julian said, there is a burning need for more production facility space. Perhaps some of those massive disused aircraft hangars up in the old U.S. airbases and RAF stations in my native Suffolk could be put to use.

  • Verity

    Jonathan – Please! No more British movies! They’re dreadful. They’re either twee – Four Weddings, etc, or nitty gritty “pushing the boundaries” – as though there are any boundaries in slagged out Britain. Spare us.

  • HJHJ

    Johnathon, what’s interesting is what happened as a result of Brown’s tax breaks for the film industry – it had two aspects:

    First, the tax breaks were ruthlessly exploited by companies and individuals using clever tax accountants and lawyers to avoid tax on a number of things – much of which couldn’t, by any normal definition, be defined as film making. I make no criticism of them for doing this – they were just exploiting Brown’s idiocy.

    Secondly, it did increase the ‘investment’ in, and number of, films made in the UK – the original intention – although perhaps at the expense of other industries that had no such breaks (which is what I meant by accusing Brown of trying to “pick winners”).

    But let’s look at this more deeply. It is clear that film-making is internationally competitive and cost sensitive. It seems that the UK could compete well when the tax breaks were in place and can’t compete with them removed. There is plenty of evidence that other internationally competitive industries (even very high technology ones) can’t compete in the UK on cost grounds either – hence the shocking industrial output and trade figures under New Labour. Perhaps,if they had tax breaks they could compete too – but this would be a bad idea as it would be the government picking winners through the tax system again. But imagine the scenario where the tax (and regulation) burden on all industries based in the UK were reduced. It would not affect the relative competitive positions within the UK (no picking winners), but it would transform their international competitiveness and the attractiveness of investing in the UK.

    If Brown’s tax breaks showed one thing, it is that the UK industries can compete well in many areas, provided they’re not over-taxed.

    Will someone tell me why Brown fails to see this obvious truth and taxes the private sector ever more highly in order to pay for the public sector which has no such competitiveness pressures? In effect, he has picked “winners” (those things provided by the public sector) and losers (the private sector) that will be taxed to subsidise his winners. Ultimately, the greater the burden on the private sector, the less likely it is to be able to compete and grow and generate the tax of which he is so fond, and his whole picking winners policy will fall apart.

    Incidentally, Verity, you’re somewhat unfair. For a start many films made in the UK are not ‘British’ films and it is largely production of these that is being impacted. I believe that Star Wars was a good example. Secondly, because the UK film industry is so much smaller than the US one, good films will naturally come along much less often although I suspect that the proportion of good to bad films is not very different. Let’s face it – most Hollywood output consists of absolute, albeit often popular, turkeys.

  • Verity

    HJHJ – Yes and no. Americans normally, unless it’s a film starring Susan Sarandon and her ilk, make films they hope are entertaining enough to persuade people to part with their money. The British make messages. They don’t do fun the way the Americans do, although they used to. (I am one of the people who thought “Four Weddings” was a nasty piece of work.) I haven’t ever rented the video about the boy who wanted to be a ballet dancer because I felt there would probably be so many semaphore signals in it, I would be overcome by irritation.

  • HJHJ


    I offer Harry Potter, Fish called Wanda, and Full Monty as counterexamples. The greater propensity (if it exists) to do ‘message’ films is perhaps a function of subsidised film making. Outside subsiised films, I suspect that film making is driven by the same commercial necessity as in the US.

  • Julian Taylor

    It would appear that that BBC, yet again, has got it wrong. Far from the factually incorrect statement that,

    Big-budget Hollywood productions have been particularly scarce, with only two – The Da Vinci Code and Basic Instinct II – shooting at Pinewood since the start of the year.

    there are some awesome movies currently being filmed at Pinewood, Shepperton, Leavesden and elsewhere. Let alone the latest Harry Potter (Harry Potter and the Goblet of Fire), there is also the latest ‘politically correct and gadget-free’ Bond movie (no doubt Pierce Brosnan is not allowed to shoot Brazilians), Basic Instinct 2 and a whole load of what appear to be big budget ‘Untitled 2005’ films being made there right now. The ill-informed heavily indoctrinated staff at BBC News really do need to start checking even basic facts before publishing these potentially damaging stories online. Perhaps I might recommend using Screen
    or even IMDB
    , always presuming they are actually allowed to access Samizdata …

    Oh, and Verity you really do not want to rent the Billy Elliot movie – not unless you really, desperately need another lecture on how Margaret Thatcher and her Southerners destroyed the coalmine industry.