08.29
The Pakistani Cricket Team Cheating and Match-Fixing Again, The UK Film Council 100% AXED AND X-MEN DIRECTOR MATTHEW VAUGHN SO NEARLY GETS IT RIGHT.
Jonathan Stuart-Brown for SAVE THE BRITISH FILM INDUSTRY
The similarities between The Pakistani Cricket Team and The UK Film Council have been frequently noted before.
http://www.guardian.co.uk/sport/2010/aug/29/pakistan-cricket-cheating-allegations
However, The Pakistani Cricket Team are not always guilty as charged and have occasionally been falsely accused of murdering their manager when he questioned whether they threw a World Cup game in The Caribbean. http://www.blinkx.com/watch-video/jamaica-bob-woolmer-death-police-studying-cctv-images-pakistan-cricket-team-in-london/zt892XvDvL56gj-zMqS8Vw
On the other hand every charge against The UK Film Council sticks. The UKFC are just guilty and should be facing the severest penalties. The Culture Secretary should be looking at surcharging the senior staff and seeking repayment of public monies. Indeed The Government has many quango bosses who should be surcharged and repaying monies.
But let’s move to The UKFC. You will note the big March in London by people furious that The Government had axed The UKFC, you know The March set for August 28, the really really big protest March….well it did not happen as clearly the grass roots support was just a PR scam whipped up by many Press Officers and PR advisors all paid for by the taxpayer. There is no grassroots support for UKFC, never was. the only ones defending the fat cats had received in the region of £4 million each to do so.
Chris Atkins puts it very well.
Let’s give great credit to Chris Atkins, and in case you have not yet read him or heard him on radio, then here he is again on youtube.
http://www.guardian.co.uk/film/video/2010/aug/28/uk-film-council-arts-funding
But let’s be crystal clear, The UK Film Council is now 100% axed. They have been caught red handed breaking every rule and every iota of trust in employing with public purse money a PR company to manipulate people to protest about their axing. The fact it did not work does not exonerate them.
Moreover, we know they are finished because Michael Grade (Chairman) and Ivan Dunleavy (CEO) of Pinewood Shepperton have thrown UKFC under a bus. They have said they are finished and not needed.
They would never do this unless they really knew they could be saved. The country’s leading property developer John Whittaker was top share holder in Pinewood Shepperton plc when they co-commissioned a report to say Pinewood should get the 1400 houses on greenbelt land tearing down the firewall which stops London expanding to Oxford and Bournemouth. In return the report said UKFC was indispensible and the PR company pumped out this disinformation.
UKFC was chief witness in the Public Inquiry next year in which Pinewood are appealling against refusal of their housing development on greenbelt land which is worth over 100 times annual profits based on the 2009-2010 interim accounts.
Pinewood’s Grade and Dunleavy (and pulling the strings John Whittaker) would not publically kill off UKFC unless they knew UKFC was 100% finished and uterly useless to their Public Inquiry plans. UKFC views on a housing estate are irrelevant and it is good this has been officially acknowledged.
Meanwhile Matthew Vaughn producer of ‘Lock, Stock and Two Smoking Barrels’ and director of ‘ X-Men:First Class’ has outed himself as a fellow lobbyist in getting UKFC axed. There are very very many others but they must out themselves in their own time.
He has even come up with a national plan to replace UKFC. Others have as well but let’s take his. The battleplace for ideas and national debate is very welcome and extremely healthy.
London-centric as he is, Matthew Vaughn has in that context done a brilliant job and is to be congratulated. It has a great deal of merit for the London Film Industry but has a very big bit missing.
Matthew Vaughn sets out the rationale for creating a UK Government film fund using the proceeds from the film tax credit ceasing to be free and instead becoming recoupable and entitled to a profit share.
He points out that “Film in The UK suffers from deep rooted market failure due primarily to lack of scale in its home market to support its industry”.
Here he is right but it is knowing why we now lack the scale which is the key to getting it there.
Matthew Vaughn says : “ Nevertheless, the UK has two major competitive advantages in its language and the renowned quality of its filmmakers, cast, crew and service providers”.
Language is a given here but not as much as 1990 when most cast and crew in the film industry worldwide speak English and in ten years 90% of the world will speak and understand English.
Film makers we have in abundance but have consistently ignored most unless they were born into film families or rich families.
We have also subsidised to the hilt people like Ken Loach, and now Shane Meadows who was crystal clear in 1996 that he wanted to make films he wanted regardless of whether they were commercial hits. In industry terms they are happy to make products the customers did not want. As an industry, this spells going out of business.
They not only deter investors from themselves but crucially from others. No US, Hong Kong or Indian film maker does not aspire to make films the audiences will pay to see in huge numbers. As a result they need no state subsidy as these real industries make profits and expand. People should only be allowed a subsidy once to produce or direct a movie : a showreel. After that they should make way for others who may have the products the customers want – great stories, well told. They have had all the subsidy they should ever get. Nice guys but time to mortgage their houses or get stories the customers want and investors can make a profit from.
Cast, well when we had our own industry and access to our own cinemas we produced Michael Caine, Peter Sellars, Richard Burton, Sean Connery, Richard Harris, Sir Anthony Hopkins, Catherine Zeta Jones, Laurence Olivier and we also claim George Sanders, Cary Grant, Elizabeth Taylor, Stan Laurel as Brits who made it in Hollywood. These were stars who opened any movie anywhere at their zenith. We also had Alec Guiness, Peter Ustinov, Albert Finney, John Hurt, Dereck Jacobi, Kenneth Branagh, Judy Dench, Charles Laughton, Patrick Stewart, Christopher Lee, Peter Cushing, Margaret Rutherford, James Mason, Bob Hoskins, Sir John Mills, Alistair Sim, and five hundred names you can list if given thirty minutes.
Crews, yes we certainly have these. Vic Armstrong is the elite of the elite.
http://www.vicarmstrong.com/show-reel/
Let’s look at service providers. Vaughn defines these as ” as post production facilities, physical studios, visual effect houses etc ”
Vaughn says these are “part of a global market competing for work on U.S. studio productions and currently much in demand because of its quality and the film tax credit incentivising the studios to base their films here”.
Nearly Matthew, nearly.
Until recently we had the biggest and best sound stages in the world. The big Hollywood movies such as “X-Men: first Class” need big studio sound stages. If they are sold off before the next sequel, where will you film them in the UK ?
Even if the sound stages remain at at Pinewood Studios in South Bucks or Shepperton Studios, there will within 18 months be much cheaper, bigger, much more modern and in strict building terms better sound stages and post-production equipment in Malaysia, Canada, France and China.
It is here The UK can and must up its game on price, quality and size by building on ex-industrial land around The UK.
The film tax credit helps but others will always undercut us in every way (tax credit and cheap labour). It is quality of sound stages which ace it viz Hollywood $100 million to $300 million budget movies.
As Vaughn correctly notes most of this finance comes from offshore (typically a US studio or other foreign distributor) so any profits arising from exploitation of UK films return to the origin of the finance and are taxed in that jurisdiction – none of the upside remains in the UK.
Jonathan Gems has been much more express in making this point.
http://www.pleasedsheep.com/forums/topic/9080-jonathan-gems-on-the-abolition-of-the-ukfc/
http://pinkonionmedia.blogspot.com/2010/08/new-british-cinema-law.html
As Vaughn concludes : “The erstwhile aim of creating a sustainable and thriving home grown production business to sit alongside the buoyant services sector therefore remains illusive”.
Vaughn then turns to the independent producer community which he says is a fragmented cottage industry consisting of producers of vastly differing ability, all competing to find money to finance their individual film projects.
Absolutely 100% correct on that. From Matthew Vaughn and Guy Ritchie to Paul Push to Shane Meadows to names you have never heard of. We wish we had five hundred Matthew Vaughns and almost certainly do somewhere in The UK. It is empowering these wherever they are born in The UK which is crucial.
Vaughn spells out that “In section 48 of the Finance Act (No. 2) 1997, the Chancellor introduced the ability for a private investor to deduct the cost of acquiring a British film from his individual tax liability, via a so-called sale and leaseback. A similar piece of legislation (section 42 of the Finance Act (No. 2) 1992) already existed but the deduction could only be claimed on a straight line basis over 3 years. Section 48 however allowed the deduction to be claimed in year one (but only on films below £15m). This stimulated a wave of private investment into the UK film business through partnerships of individuals, but was in fact a false dawn. Notwithstanding the benefit to the services sector from increased levels of production, the sale and leaseback mechanism was inefficient, complex and open to abuse. Moreover, the investors did not take performance risk on the films. Success or failure was irrelevant because investors simply received a tax deferral, to be paid back over the life of the film lease irrespective of film performance, while the producer used his benefit from the transaction to defray the cost of production. It was a purely financial arrangement which did not achieve the policy aim of creating a sustainable business”.
For the non-lawyers, this was a way for rich people to avoid or at least delay paying tax. It created more investment in movies in The UK from businesses and from new investors like Premier League footballers. But because success or failure of a movie was irrelevant to the tax advantage, it did not stimulate commercial successful films which audiences wanted. However Vaughn now gets to the positive habit it engendered.
It did however set the scene for investors to move further up the risk curve and the next generation of film partnerships did take performance risk, while using sideways loss relief (“SLR”) to protect the downside. The quid pro quo was that the partnerships’ income from film exploitation was taxable in UK, so that in success the Treasury would be better off because the tax paid on income would exceed the initial tax relief. In the long run, this could have made a lasting difference to UK producers, but was also open to abuse and despite Conservative-supported attempts to preserve SLR by introducing a purpose test and a pre-clearance procedure, SLR was eventually restricted to “active” investors. In 2007, the film tax credit was introduced in place of s.42 and s48 and in contrast offered a cleaner, simpler mechanism delivering greater value to producers with fewer professional fees to pay along the way.
Combined with the current $/£ exchange rate and the quality of UK service providers, the tax credit makes the UK an attractive and compelling destination for US productions (for which there is global competition). However the vast majority of UK independent producers continue to struggle, because despite the value of the tax credit, the balance of their film budgets is harder to raise than ever. Therefore the UK remains in essence a glorified service provider, with nothing to fall back on if the US studios shift their business elsewhere.
The fact is that unlike in the 1980s there are people with billions to invest who will do so in movies made in The UK, if but only if they smell a profit. However, they want access to the shops for the product ie they want guarantees they can get a good film into the cinemas. Matthew Vaughn should sit down with Jonathan Gems to get this straight. He should also grasp that Hollywood came to us as service providers, the more the industry profits have moved to franchaises not stars.
Franchaises not stars ? In the 1980s Sylvester Stallone was a movie star who opened movies. Almost any movie (let’s ignore the musical Rhinestone with Dolly Parton). Arnold Schwarzenegger and Eddie Murphy could read the phone book and open with $100 million at the first weekend box office. Tom Cruise could open any movie anywhere.
Now the game is different. The characters of Spiderman, X-Men, Batman, Fantastic Four, James Bond 007, Lord of The Rings, King Kong, The Mummy, open movies everywhere REGARDLESS of which actors play the roles. James McAvoy watch out. You need X-Men more than X-Men needs you. These franchaises sell video games and merchandising including toys.
Further, people will go out to watch certain actors in certain genres. Russell Crowe can open ‘Gladiator 2′ and other action pics but the romantic comedies, middle aged angst, rites of passage, political thrillers just do not get the opening weekend audiences. This is even when they are superb.
Stallone can still do a Rocky, Rambo, and Expendables, but if he was in an out and out comedy or mafia picture, it is not clear from the last ten years that he is able to open these. Eddie Murphy can open a slapstick movie for Kids but other movies are no longer automatic hits.
Johnny Depp and Tom Hanks are the most bankable film stars but both had the sense to gravitate to franchaises. Indeed Johnny Depp has made his Pirates of The Caribbean identified with him. Robert Downey Jnr in his welcome box office comeback has at least taken his two franchaises of ‘Iron Man’ and ‘Sherlock Holmes’ by the throat and would be a very hard act to follow artistically or commercially. Harrison Ford has held in there as Indiana Jones but as with Sean Connery and 007, in pure commercial terms other people can take the role further.
The point is that big movies, big franchaises, NEED big sound stages. The UK from the 1970s had the biggest and best. As franchaises became the heart of the industry, of course Hollywood gravitated to us. The stars followed the work. The work no longer follows the star.
Only James Cameron ( ‘Titanic’ and ‘Avatar’ ), who for personal reasons hates working at Pinewood Studios, was big enough to make the work follow him to choice of location.
We had a British USP which Vaughn just does not sufficiently comprehend. Maybe while at Pinewood Studios he will start to grasp that if it is gone within three years, that the next X-Men will be elsewhere in the world on other sound stages. He might just get The Government to intervene (as some buildings are 75 years old at Pinewood and Shepperton) and/ or get a consortium to buy the plc shares or support building sound stages and sets around The UK to rebuild the British USP for big budget movies.
Matthew Vaughn’s Proposal is so nearly right.
The film tax credit is currently non-recoupable and non-profit sharing but there is no reason why this should be so. It helps protect the downside for a film’s financiers and leverage their returns – in simple terms, a 16% tax credit means that a film costing £100 only needs to find £84 in risk capital, so its backers are reducing their risk by £16 at no cost (they do not share any upside with the provider of that £16). In the commercial world and in any other walk of life, that £16 would command a return and the project would expect to pay it. There is no convincing reason for film to be any different. Instead, there is an expectation formed by years of habit that government support should be free to the film industry, but this must change.
So far, so very good.
The US majors have enjoyed the benefit of our tax credit on some hugely successful films. They would argue that in return they have contributed millions of pounds to the UK economy, which is true but the world has changed, for everyone.
Vaughn misses out that since 1970 the US has owned UK cinemas (third biggest revenue in the world) killing any home grown studios which need guaranteed access to their domestic market to commit to making say 26 to 52 films a year (one each fortnight or each week). It was these which did exist when British companies owned UK cinemas which produced British stars (Alec Guiness, Richard Burton, Sean Connery, Michael Caine, Peter Sellars etc). Again Jonathan Gems is the master on this.
http://www.puremovies.co.uk/articles/why-we-dont-have-our-own-cinema/
The major studios (Fox, Disney, Sony, Warner & Universal) are all part of larger media conglomerates and have corporate parents with a keen eye for fiscal responsibility and the bottom line.
Well they are now but they were founded by businessmen and showmen. While the studios were allowed to manufacture and own their own shops (cinemas) they could each hire tens of thousands of permanent staff to manufacture minimum 52 movies each year. Often 104 movies. They had actors, writers, directors, producers, crew, voice training, fencing training, horse riding training, dance teachers, publicists, etc all on staff. They had a much better business model and it is arguable that companies should be allowed to make films and own cinemas again. This was stopped after The Monopoly Legislation which swept The US and UK in the late 1940s to 1960s. Monopolies prevent people controlling manufacture and distribution except in special cases such as pharamaceutical companies where it is thought unwise to let companies compete and undercut each other. Monopolies to be legal must be seen to be in the public interest. Arguably for The UK and indeed USA, it is time to permit this in film making.
Film production is a hit-driven, capital intensive business with volatile and unpredictable returns.
Our point exactly.
Were it not for the need to feed their distribution networks and keep their libraries refreshed, some studios would happily avoid the risk inherent in production altogether, but the stellar returns from new hits together with library cashflow cover the misses. These returns (and the perceived glamour of film) have attracted investors from time immemorial
Interesting phrase…’perceived glamour’….the fact is that to most of the world it is seen as glamourous as is flying if you only fly occasionally.
but outside investment in studio films went into overdrive in the boom decade as excess liquidity in the market sought a home and investors became sold on film as an attractive alternative investment (it’s recession resistant and uncorrelated to the stock market).
Exactly and this underscores how poorly UKFC did in the last ten years with perfect market conditions.
For their part, the studios (and in particular their corporate parents) welcomed this influx of co-finance because it allowed them to lay off risk and spread their own capital across a larger number of films, thereby creating more product for their distribution networks and increasing the chances of a hit (the portfolio approach at work).
It also made The Raindance Film Festival type success much harder as there were much more movies with big budgets to compete with. It made movies like Jonathan Williams’ and Michael Booths’ ‘Diary of a Bad Lad’ find it hard to get the type of media publicity which ‘Clerks’ or ‘El Mariachi’ got in the 1990s or indeed which ‘Shallow Grave’ got in 1995 or ‘Lock,Stock’ got in 1998. It is possible neither would have got distribution under the UKFC regime and volume of production in the last ten years of easily available finance for Hollywood Studio co-productions.
As a result of the credit crunch however, the studios will not have access to the same level of co-finance going forward, but have become dependent on it and their parents expect it.
Quite so.
They have reduced their output but their films are now more expensive than ever, as they seek to deliver a technology driven entertainment experience that audiences cannot find anywhere else (e.g. TV, online, mobile, video games etc).
Yes and this means big sound stages. Even state of the art sets as well. Pinewood Studios underwater tank is or was another usp the UK had but will soon be leapfrogged unless we build, build, build outside the south-east.
Further, Vaughn misses or does not sufficiently underline the massive change since he was first in Hollywood. Then The US cinema market was 80% of the world market. The rest of the world 20%. However, it is all turned on its head. Avatar took 73% of its cinema revenue outside The US. By 2020 it is likely The US market will be under 10% of the global cinema market. This creates a huge opportunity for British financed product which should have access to 90% of the world market in an expanding market. It also illustrates how dumb and strategically stupid UKFC were.
We are not proposing that the UK Government should position itself alongside professional investors. Rather, the point is that the studios need capital and will pay for it, so the tax credit does not have to be free. The studios will argue that asking for any kind of return will undermine the UK’s appeal as a location. We disagree.
So do we. The UK can deal with Hollywood as equals. You can keep our UK cinema box office, ie 12 screens out of 12 screens, provided you guarantee to place 40% of your productions each year in The UK. You must also make 10% of this 40% ie 4% with new UK producers or new Uk directors each year. If not, then not. Only The UK has held The EU back from imposing quotas of 50% or higher in every EU cinema. Hollywood knows it. Our hand is very strong. Stronger than even Vaughn realises.
Certainly there are other jurisdictions with attractive incentives, but every incentive programme has its limits. Looking at the UK’s position as a production centre, the country has a strong hand and should play to it. In today’s cash-strapped world, “soft equity” is a valuable commodity for studios and producers alike. For the studios, we would propose recouping the tax credit after the studio has recovered its own outlay and then also receiving a profit share. This type of “second position” deal will still be attractive to the studios and gives HM Treasury a chance of recovering sizeable amounts.
Amen to that.
A similar arrangement could be applied to independent films although the multiparty nature of their financing structure will generally necessitate last position for recoupment (but still with a profit share).
Much prefer our 4% of every Hollywood Studio financed movies must be in The UK producers or directors they have not financed before.
These arrangements should be overseen by a professional investment house. With these returns, UK Government could offer additional support to UK independent producers in the form of a matching fund intended to help producers of successful films grow their businesses and strengthen the creative sector.
Especially if 40% of Hollywood Studios financed production to be in The UK is locked down in a seven year deal in which The UK agree to continue to let The US own our cinemas and to lobby in Brussells to restrain and delay the EU quota imposed on every EU cinema.
Simply put, the fund would provide producers of eligible films with matching equity finance on terms that help them both finance their films and participate in a greater share of upside. By way of example, if the producer of a film costing £100 million has a private investor who is willing to invest 30% of the budget in consideration for a recoupment position and profit share, the fund would contribute the same amount of equity on the same terms, such that both parties are treated equally. Once the fund has recouped its investment, it would split its profit share with the producer, thereby providing the producer with additional capital to reinvest in his business.
Vaughn is to be commended for a heroic effort here. If his ideas were added to Jonathan Gem’s ideas, we could live with that.
In order to make sure that the fund is not wasted on films with little or prospect of profit, a strict set of eligibility criteria will be necessary and should include the following in order to direct the fund’s support to British films with commercial appeal:
The film must satisfy the same cultural test as the UK tax credit;
fine
The film must have a UK pre-sale to demonstrate appeal in its home market;
this needs more thought but for now it is a good rule of thumb
and the film must have international distribution in place either with a US studio, or with a 1st class international sales company who has pre-sold the film to at least two major territories in order to demonstrate appeal to the international market.
No set of criteria will be perfect, so the fund will inevitably require discretion to reject films in certain cases in order to prevent abuse.
As with the recoupability of the tax credit, the fund should be managed by a professional investment house with experience in the sector.
You have to congratulate Vaughn on improving immensely on UKFC shallow understanding and dumb strategy which clings to three episodes of a BBC sitcom sewn together – and which bombed at the box office – as proof of their worth.
Vaughn anticipates a few Issues
The UK film industry is hard to please,
Only The Guardian cares what Ken Loach thinks ! It is about the public who pay taxes and want fantastic films which celebrate our culture and style ….not the chattering classes giving the plebs the films they think they ought to want.
so despite the economic imperative and the obvious benefits to commercially minded producers, there will be objections, such as:
Objection: The previous government’s constant tinkering created uncertainty, prevented confident forward planning and made the UK less attractive as a film-making destination. The tax credit is bedded in and is working well, so why change it?
Answer: we are now in a completely different fiscal environment and the tax credit in its current form does not represent good value for taxpayers. Furthermore the creative industries are a highlight of the UK economy and this innovative additional financial support at no further cost to the taxpayer will help under-resourced UK filmmakers develop their commercial potential and promote further growth in this key sector of our economy.
Objection: Managing both the recoupment aspect of the tax credit and a fund of this size is considerable additional work. Who will do it?
Answer: An experienced professional investor would be appointed after a tender process. There will be a cost to this, but it will be covered by the revenues generated from the tax credit and the fund, so as above, there is no additional cost to the taxpayer.
Objection: The service providers are heavily dependent on US studios and will suffer if the studios desert the UK as a result of this. Why would they stay?
Answer: Although the tax credit will no longer be free, it is still a cheap source of co-finance compared to the studios’ usual co-investors, who in any case have less appetite today as a result of the downturn. Furthermore, we have to change the dynamic here and wean our film industry off its dependency on the US studios if it is ever to become self-sustaining. The UK has a huge talent base which it currently either exports or rents out to the US. This would change if UK film makers could strengthen their capital base through our proposed fund and sustainability might then become a reality instead of an illusion.
As we say excellent effort by Matthew Vaughn but let’s get it right.
Hollywood is now wedded to the ever bigger event movie, the bigger than last time movie. This needs huge sound stages and we no longer have either a guaranteed lead over other nations from 2012 NOR can we be sure that 34 of the 44 main sound stages will be still used for this purpose from 2012. We need to build big and fast or all of Vaughn’s calculations about Hollywood are out.
Next, we must offer another USP as we will never be cheaper than China or Malaysia. On cheap plentiful land around The UK we need to build bigger and much better sound stages and sets for Paris, Venice, Amsterdam, New york, New Orleans, ancient Rome, sci-fi, spaceship, Pyramids, Mumbai. Beijing, Rio, Moscow, Buckingham Palace, Houses of Parliament, North Pole, etc which double as tourist sites.
The US is on its way out. Its debts are unsustainable. It may take one year or at a push ten years. But its creditors (China and Japan) will call in the debts. The economy will crash. The EU will rise and rise (regardless of whether we do or do not love it). The Us will make great movies until the crash. We need to faciltate Hollywood doing it better here until the crash. We need to have the nationwide infrastructure to produce enough movies to take The US place in the EU and global market once the huge vacuum opens up after the crash. We can have 250 000 jobs in the UK and an industry worth over £50 billion a year from all revenue sources.
This requires 400 sound stages and magnificent state of the art sets which every producer everywhere wants to use.
But Matthew Vaughn has done extremely well. He is to be commended.
The Culture Secretary Jeremy Hunt, Creative Industries Minister and Matthew Vaughn would do well to read:
http://www.puremovies.co.uk/articles/why-we-dont-have-our-own-cinema/
http://www.pleasedsheep.com/forums/topic/9080-jonathan-gems-on-the-abolition-of-the-ukfc/
http://pinkonionmedia.blogspot.com/2010/08/new-british-cinema-law.html
Jonathan Stuart-Brown
www.savethebritishfilmindustry.com
[...] http://www.savethebritishfilmindustry.com/2010/08/the-pakistani-cricket-team-cheating-and-match-fixi... [...]
Herewith PR/Letter going out to all MPs and Members of the House of Lords UK.
The recent news of the intended demise of the UK Film Council is well overdue. It is an ineffectual organization populated by, with the exception of Tim Bevin (recent recruit) clueless individuals earning ridiculous sums of money. Now there are some that will herald a few successes as champions of the UK film industry but the successes are too few and far in-between to make any difference to the industry.
The question now arises what will replace it, what will the replacement organization contribute to the British Film Industry, which to frank is and has been in a shambles for decades.
Again, too many focus on one aspect of the industry and do not wish or have the capacity to grasp the BIG PICTURE. The core problem in the UK is the attitude of banks, hedge funds, financial institutions, etc towards film investment; they regard the film industry as a losing proposition, and quite honestly have little or no real experience in it. So when they do get involved they behave in the time honoured fashion of screwing the film makers, and attaching themselves to the perceived industry leaders who are as much responsible for the demise of the UK film industry as the banks, government and talent agents.
A new approach is needed, one that acknowledges the need for government assistance, especially at the early stage of development, script, budgeting, locations, etc. and the involvement of the private sector or ‘High Net Worth Individual’ as the source of major funding. What shape would the government entity take and who would run it? Well, ‘Film UK’ would be an appropriate title; it should be run by film makers with good legal and accounting support. Where would its funding come from? At the moment the lottery fund is the main source however, I would propose that ‘bums on seats’ should be the main funding source. A percentage of all income from Theatre ticket sales should go to Film UK. VAT is currently at 17.5%, 5% should go to the Film UK, 12.5% to the government. In 2008 theatre income was £850M, the 5% Vat would mean approximately £36M in funding. A similar approach for DVDs would contribute another £62M to the coffers.
The total available would be £98M P/A on average. A similar approach to other delivery formats might net another £30-40M. (I believe the Lottery money should go to other causes, medical research, etc.)
The question is then just how many people do you need to run Film UK approximately 10 experienced professionals plus legal & accounting and no one gets a salary of more than £80K P/A.
The second phase of the new approach is to create an environment where investors can garner tax relief on their investment in a feature movie. This involves the co-operation of Companies House and HMRC. A new classification of company should be installed, ‘Film Public Limited Company’. It is only for films or documentaries of no less than 80 minutes in length. The minimum capitalization should be £10K and the shares should be split into two entities – foundation shares, ‘A’ shares belonging to the owners of the intellectual copyright of the film and ‘B’ shares, the investors. B share investors would be able to get 30% tax break on all money invested in a film project (minimum buy in £1,000) on the year of investment. If they sell the shares within 3 years they would pay capital gains on any profit made. No capital gains to pay if they sold the shares after 3 years. Companies’ house would issue a special film company number and HMRC would issue their own special tax number showing that any investor buying shares in the company can claim tax back in the appropriate year. Once all funds have been raised the project is closed to funding and on completion HMRC must receive audited accounts, DVD of the finished project, etc. There should be no limit on how many or how much an investor can put into a film(s) projects.
The combination of increased funding available for development through the Film UK and the opportunity for investors to garner a tax relief on investment would increase the number of film projects undertaken but moreover it would give the film maker the control of the funding and take it away from certain film funds that have abused the tax system, screwed a number of HNWI and most of all screwed the film makers who have often had to give away the rights to the product just to get it made.
The added bonus is that if you shoot in the UK there is a UK VAT tax rebate on all UK spend be it talent, location, etc. This incentive should remain in place.
The real idea here is to generate more UK made movies, which in turn gives the UK more films to sell overseas where the real money is. It will generate employment, encourage young and first time film makers, hopefully also allow more on the job training and create more tax payers.
Robin Jacob
Producer/Director
1066
[...] http://www.savethebritishfilmindustry.com/2010/08/the-pakistani-cricket-team-cheating-and-match-fixi... [...]
http://www.savethebritishfilmindustry.com/2010/07/ding-dong-the-witch-is-dead-save-the-british-film-industry-kill-the-uk-film-council/
http://www.savethebritishfilmindustry.com/2010/08/the-uk-film-council-betrayal-of-the-british-flm-industry-is-about-to-be-fully-exposed-in-the-battle-for-pinewood-shepperton-sound-stages/
http://www.savethebritishfilmindustry.com/2010/09/x-factor-simon-cowell-to-become-a-movie-producer-picking-up-on-his-elstree-studios-roots-when-he-fetched-coffee-for-jack-nicholson-harrison-ford-and-oliver-reed/
http://filmutopia.typepad.com/lone_gun_manifesto/2010/09/movie-blog-an-open-letter-to-the-uk-government-about-the-film-industry-lgm.html
Quote;
‘We have also subsidised to the hilt people like Ken Loach, and now Shane Meadows who was crystal clear in 1996 that he wanted to make films he wanted regardless of whether they were commercial hits. In industry terms they are happy to make products the customers did not want. As an industry, this spells going out of business.’
Unfortunately if you analyse the history this is not correct.
These film-makers have not really been subsidised to the hilt – Loach gets his films made by finances from Europe – not the UK. Shane Meadows films were wanted by customers and commercially they were quite succesful; they found a target audience.
The films which flopped big time – say in the late 1960’s were actually the big blockbusters.
Sir John Davis probably thought that way and he ran the British Film Industry into extinction.
Though it would be great to try and second guess the market as to ‘what type of film sells’ to engineer the market in such a way has always proved a failure.
To have any kind of film market you need a continual DIVERSITY of films aimed a different audiences – there even has to be films for areas where there is a limited number audience. Some films which are thought of as sure fire hits turn out to be sure fire failures while some films which are thought to be failures turn out to be hits.
Therefore you create a range of films. Film-makers make more action and horror movies but romcoms aimed at women do better at the box office. But that doesnt mean you make one kind of film.
So the point about Ken Loach – well Ken Loach makes the films Ken Loach wants – and they are pretty good all told – and succesful – they are funded by Pathe in France.
He makes the films he wants – fair play to him – the ‘industry’ you describe doesnt exist – so who is to say that he shouldnt make films he wants ? If you dont like them – dont go and see them – but pointing to them as though they are the cause of the death of the UK film industry isnt just misguided – its wrong.
The extrapolation of the argument of films being commercial is followed; Hollwood films are commercial and so Hollywood films are shown. And as for BRITISH blockbusters – yes, well you need the sound stages you describe unless you do a PIxar and make it on computer – ok but also a pretty boring destination for film all told – even if the Pixar films are great.
But to say from this that you are going to allow only one kind of film – the kind of film that you think is commercial – I dont buy that – thats a sure fire way to strangle creativity and innovation.
The issue should not be trying to ‘prescribe’ the kind of film that ‘you think’ the audience should be watching – or that you think they want to see – I have been hearing that bs for years – usually from low budget wannabe action movie boys or horror movie fans who think that they have the formula for the film thats going to change the world – but whose ‘commercial’ films bomb at the box office and on DVD – and film-makers incidentally who have nowhere near the same kind of steady run of succesful films as Ken Loach.
The issue isnt the kind of film that should be made as it is about fair distribution once the film is made- its about having publicity, distribution and access to the market.
Also – in response to Robins point – yes fair enough; more movies – but its no use making more movies if those movies dont get distributed or exhibited and there are no funds for publicity,
Quote;
For their part, the studios (and in particular their corporate parents) welcomed this influx of co-finance because it allowed them to lay off risk and spread their own capital across a larger number of films, thereby creating more product for their distribution networks and increasing the chances of a hit (the portfolio approach at work).;
This quite frankly is nonsense. The film studios HAVE ALMOST ALWAYS DONE THIS. The spread of capital across product merely balances out risk – it doesnt eliminate it – it just minimises the negative effect when it does happen.
Quote;
fine
The film must have a UK pre-sale to demonstrate appeal in its home market;
this needs more thought but for now it is a good rule of thumb’
Well really – thats how its operated for years hasnt it? – have a panel of experts decide whether a film will be a commercial hit or not – this is what exhibitors have been doing for ages – and the end up placing Avatar on screen because its a safe bet. By using your blockbuster paradignm you are merely creating the same kind of culture that killed off British film in the first place.
A Uk pre-sale – what is that exactly?
‘Heavens Gate – was so notable because it was an exception to the above.
Michael Powell is worth reading on this – he made the comment (referring to a Hollywood mogul) ‘Never confuse size with greatness.’
Hammer made great, commercially succesful movies – so did Ealing and Rank – but they werent films on an ‘epic’ scale. The Wallace and Gromit films – intrinsically British – but not ‘epic’ in the sense I think you are referring to.
Otherwise – I agree with you about the sound stages – without the restrictions regarding access. Let the film-makers in and give us screenwriters a chance.
And on that point Jonathan – I think its about time you started talking about screenwriters – who have a tough – if not impossible – time of it – especially as you have mentioned Jonathan Gems.
Oh I have been hearing this for the last 30 years, save the British Film Industry, what British Film Industry?We have the studios and the crews here to work on big budget films and thank god we have Warner Bros. with Harry Potter and all the other franchises, Do you hear that word? Franchises, and if it wasn’t for that word, half these studios would of shut up shop long ago.
Until we have a sustainable industry based on the idea that by funding existing home grown talent, harvesting franchises and encourage decent financial investment, Lottery Funding of 15m? Is this right, Did I read it right? For a year. Matthew Vaughn Financed Kick-Ass with private money for 28m? He seems a competent fellow and he writes his films too!
I find it a total joke and always have done how the luvvies go on and on about saving the Film Industry. The war cry from Putnam – what did he ever do – got the sack from Columbia and he is talking about the British Film Industry – Charriots of Fire…yawn The idea is to make films financed here and ploughing profits into making further films, it’s called a business.
As far as the UK Film Council it was just another excuse for a members club. 6 people on the payroll of up to 100k each? 75 people employed to administer the running? Pull the other one it’s got bells on. What great talent we have got and the UK Film Council claims success for it’s failings. Pleased that gravy train came to an end.
Until there is real investment in this country you will not have an industry as successful as the US, you need all the pieces to fall into place. It’s a risk and clearly we have the wealth here (well at least to prop up banks when they screw us over) to fund projects but there does not seem to be any talent writing decent franchise films and when they do, the savvy Americans already buy the rights and make billion dollar franchises…
Having all the best talent in the world is all well and good but if the box office takings return to their respective country of origin – what use is that to us?
UK Film expenses being signed off…gimme a break…dinners,flights,lunches you name it and then it takes 15 months to wrap it up…how convenient…just a shame Branson couldn’t do something, he has conquered every other facet of industry in this country.
Wonder what would of happened if he won the contract for the Lottery and Camelot didn’t. He literally can get people to the moon, imagine what he could do for Film.
It’s about time they gave the film industry to a businessman a tycoon, Bevan has literally a handful of films that did well, the rest tanked at the box office “Johnny English Reborn”?…Another british gem.
Good luck Matthew Vaughn; writer, director, producer…shrewd too