Save The British Film Industry.Com

The UK Film Council – The Old Gags Are The Best.

Jonathan Stuart-Brown for SAVE THE BRITISH FILM INDUSTRY

The Parliamentary Select Committee  on Culture, Media and Sport recent session with The UK Film Council witnesses…..

We urge you to read it in full and to see that there are very dedicated concerned MPs on The Committee. They need briefing to know what questions to ask, what witnesses to call. You can help by writing to them and telling them what to ask, providing facts, figures, evidence.

They are doing their best. They are sincere. They are hardworking. Help them out by letting them know what you know. They must make a report which can be debated in Parliament AND the national media – even frontpages or Paxman on Newsnight.

You need to play your role for dedicated MPs to function.They really are trying.

We were very much impressed by the MPs. Less so by one of the witnesses.

We were somewhat amused at the answers to the questions given. It seems that in PR spin as in comedy that the old gags really are the best.

Please note… 

Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

http://www.publications.parliament.uk/pa/cm201011/cmselect/cmcumeds/uc464-ii/uc464ii.htm

The material listed may be reproduced without formal permission for the purposes of non-commercial research, private study and for criticism, review and news reporting provided that the material is appropriately attributed.

http://www.publications.parliament.uk/pa/cm201011/cmselect/cmcumeds/uc464-ii/uc464ii.htm

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 19 October 2010

Members present:

Mr John Whittingdale (Chair)

Ms Louise Bagshawe

David Cairns

Dr Thérèse Coffey

Damian Collins

Paul Farrelly

Alan Keen

Mr Adrian Sanders

Jim Sheridan

________________

Examination of Witnesses

Witnesses: Mr Tim Bevan, Chair, UK Film Council, Ms Amanda Nevill, Director, British Film Institute (BFI), and Mr David Elstein, Member of the British Screen Advisory Council (BSAC), gave evidence.

Q115 Chair: Good morning. This is the second session of the Committee’s inquiry into funding of the arts and heritage, and in the first half of this morning’s sitting, we are going to be looking at support for the UK film industry. May I welcome Tim Bevan, the Chairman of the UK Film Council, Amanda Nevill, Director of the British Film Institute, and David Elstein who is wearing his hat as a member of the British Screen Advisory Council this morning-I think it is one of many.

Mr Elstein: That’s right. I’m not here in my role as former chairman. I’m here as chairman of the working party that wrote a report on post-UKFC policy.

Chair: Very good. Adrian Sanders is going to start.

Q116 Mr Sanders: Good morning. Is the British f ilm i ndustry good value for money?

Mr Bevan: So a general question? Undoubtedly it is, yes. Yes, it is very good value for money. It is a business that generates £1 billion-worth of inward investment a year, which is a healthy return to the Exchequer.

The thing about the film industry is, in production terms, it’s divided into two distinct arenas. One is inward investment, which is bringing big studio pictures into the country, which tend to be backed by Hollywood majors and are a big employer-”Harry Potter” and “Sherlock Holmes” are prime examples of that. Then the other half of the production business is domestic British production. In that, we punch a little bit above our weight, I think, in terms of a world film producer in that we have delivered, as it were, to the world film industry probably more writers, directors, actors and producers than other countries of a similar size. That has quite a lot to do with the fact that we share the same language as America.

Q117 Mr Sanders: Is there anything that either of you want to add to that?

Ms Nevill: I do. I’d just add that I think there is also a lot of peripheral benefit to the country as well as the hard industry edge that Tim talked about, which is the way in which it promotes Britain as a place to come to-the tourism benefits. I also think that filming is a great way to spread the economic benefit across the country. I think one of the benefits of the past 10 years, in particular, has been, because of the way the funding has been delivered, we have seen actual production and greater film activity, and the crossover into the wider creative industries, not just in London but out across the regions as well.

Mr Elstein: I think, Mr Sanders, you have to differentiate between the different types of support that the UK film industry gets. By far the biggest is the tax credit, which is worth over £100 million a year, and the truth of the matter is if the UK did not have a tax credit system, we would not have a functioning meaningful film industry at all because this is an internationally competitive environment in which Australia, Canada, individual states in the US-and indeed in Australia-have incentives to induce inward investment. The great majority of the money spent on film in this country is inward investment and, therefore, if we want the infrastructure-studios, technicians, crafts people, post-production-and all that goes with it, in a sense you have to put that money down in order to get the £1 billion in. Over and above that, there is about £15 million a year of Lottery funds that goes into individual films, and that is designed to support not the big studio pictures, but the UK independent producers, and to help them in terms of matching up to an international industry. That’s partly a commercial strategy and partly a cultural strategy.

On top of that roughly £15 million, there’s currently about £25 million to £27 million that is invested by our publicly-owned broadcasters: the BBC and Channel 4-Channel 4 through its very famous Film Four subsidiary. They do that, I guess to some extent, for political reasons but primarily for creative reasons. It’s part of their remit. It’s written into Channel 4 as a stated requirement. It’s not in the BBC charter. I think they feel pretty good about the investment they put in and the return they make. The truth of the matter is that, if you look at the Lottery funds historically, over more than two decades now-and if you look at how the BBC and Channel 4 invest-on the whole in commercial terms you get back on average only about 50% of your investment. So the other 50% is what you might call a cultural commitment and an infrastructure commitment, but on balance I share Tim and Amanda’s view. I can’t compare it with the widgets industry but, in terms of the outcomes proportionate to the inputs, it is a good outcome.

Q118 Mr Sanders: There is a difficulty in persuading the public, when we are going to be announcing lots of cuts, that there should be a public subsidy for such a commercially successful industry. Do you not think that you ought to be able to put your finger on some facts and figures that would help you to help us to persuade the Government that you should continue to get a public subsidy?

Mr Bevan: The £1 billion of inward investment is a figure and a fact.

Q119 Mr Sanders: The fact is you are getting that. What you don’t know is whether that would come if there wasn’t a public subsidy.

Mr Bevan: It undoubtedly wouldn’t because, as David Elstein said, this is an international business and there are individual states around America, a number of countries in Europe and a number of countries around the world that offer up tax incentives-which, on the whole, are more competitive than the UK one-for films to go and shoot in their particular state or country.

Q120 Chair: Just before we leave that, the tax credit is not under threat by the Government.

Mr Bevan: It’s not under threat, no.

Q121 Chair: So the question is really would the £1 billion be coming anyway if the UK Film Council wasn’t there, not if the tax credit wasn’t there.

Mr Bevan: You have to look at it in a circle basically. The £15 million of Lottery money that is spent on film production-which is not taxpayers’ money, it’s Lottery money-that the Film Council has administered on the whole goes to first and second-time filmmakers. So it’s investing in the future of films to a large extent. It is also investing in our culture and there is a balance there. So you back filmmakers like Ken Loach or Stephen Frears and people like that who people feel have a cultural value to the country and, also and more importantly, you back first and second-time filmmakers-people like Danny Boyle; people like Paul Greengrass-who then go on to produce bigger films and bring in that inward investment. With Paul Greengrass, we backed “Bloody Sunday” at the Film Council and on the basis of that he was given the two Bourne pictures that came and shot inside the UK and qualified and bought in, between them, $600 million of inward investment. So I think that is a pretty good return. It is a people business.

Q122 Mr Sanders: A people business. Explain what you mean by a people business.

Mr Bevan: It’s a people business in that it is all about the people who are directors, writers, producers and actors, and it’s a strange business because a massive financial decision can be made on the basis of a person. If Ridley Scott, to pluck a name, decides that he wants to make “Robin Hood” and he wants to make it in the UK, as a result of that a studio will spend $250 million on the movie in the UK. So it’s a very odd business.

Q123 Mr Sanders: What’s the connection with public subsidy there? You are saying if somebody who is a known person-

Mr Bevan: Well, the public subsidy is creating the future Ridley Scott.

Ms Nevill: Which it did.

Mr Bevan: Which it did.

Ms Nevill: It’s very interesting because it was public money. It is a long game, if you like, and you are absolutely right. In terms of investing in emerging artists-whether you’re talking about emerging painters or emerging filmmakers-there isn’t any level of certainty as to which ones are going to hit gold and going to develop into the sorts of filmmakers that are going to make a really positive and valuable contribution economically. But the record is that the public subsidy is really, really important, so whether it’s Ridley Scott or whether it’s some bits of money that went to John Lasseter or whether it’s money that went to-help me out here!

Mr Bevan: Working Title, my own company. Without public subsidy in the 1980s on our early movies, we would never have got started with the bunch of filmmakers that we’ve gone on to have a 25-year career with, basically. So arguably Richard Curtis-a household name who made “Four Weddings” with us-would not have got started. And we received public subsidy from, in those days, British Screen, from the broadcasters and all the rest of it, and that got our business started and we’ve subsequently existed for 25 years and made 100 movies.

Mr Elstein: And if you track back even further to the funding for, say, the National Film and Television school, the £1 or 2 million a year have to put into that generates a fantastic flow of talent, from Nick Parks and “Wallace and Gromit” onwards, who make a huge contribution to UK culture and, in due course, to UK commerce. Now, obviously, as Tim says, people are people and half the best cinematographers in Hollywood are NFTS-trained and ply their very lucrative trade in Hollywood these days.

But what we also find is that outstanding talents emerge from a school like that, make their first three or four films in the UK, and help to build a film culture to which other aspiring filmmakers can hope to follow. And, in general, what you have to do in a situation like this is say, “Are we in this business or not? What is the best value for money we can get, given all the other constraints that apply to the film industry?” And then you step another step back. As the Chair has said, the tax credit is not under threat but at some point you do have to ask yourself, “Is that tax credit good value for money as well?” However, I guess that’s not the subject of today’s proceedings.

Mr Bevan: On the other area of public subsidy, the Film Council, for instance, has invested in training to quite a high extent over the last decade-several million pounds a year-which is very important for the inward investment. For the studios to come here to make movies, it is essential that we have the depth of technical expertise across all the jobs in the film industry, basically.

Q124 Ms Bagshawe: Just as a supplementary to that. I hear what you say but, as you rightly say, it’s a people business. Is it not true that apart from a good tax credit situation that keeps us financially competitive, what the UK has that other countries don’t necessarily have is a huge depth of technical expertise? If there is a Hollywood production company, they know they have the crew to shoot it properly, they have the sound stages and they have everything set up. But that level of crewing and technical expertise is not necessarily available in other countries in Europe, even if they have more competitive tax credit positions.

Mr Bevan: One needs to be very careful. Absolutely, the British technician is brilliant, but they will migrate. If the tax credit ceased here and existed in Hungary-to pluck a country where there is a very competitive tax credit-the crews will migrate with it, so one wants to be very careful to keep the investment in England.

Q125 Ms Bagshawe: Just to repeat, I don’t think the tax credit is at all under threat and indeed subsidy to film is not under threat. When we’re looking at the specific way in which subsidy to film is delivered, I don’t think we can overlook the fact that the UK offers massive competitive advantages to major Hollywood studios that other European countries simply can’t match.

Mr Bevan: Yes. One of the many non-public things that the Film Council has done is it’s helped that a lot. It has people soliciting the studios to come here, and helping them find locations and all the rest of it, and that’s not one of the high-profile things that the Film Council does.

There was an excellent article by David Pittman in the New Statesman recently about how the Film Council evolved over many years, basically. A decade ago, when the Film Council was formed, it brought all of these things together and it created joined-up thinking. The great danger of the Film Council being closed down and these various activities being put out to disparate bodies is that that joined-up thinking goes away, and that would be a majorly regressive step for film in Britain. And I think that, frankly, the closing down of the Film Council-as I said when it happened and was broadsided by it-was a very bad idea and nothing that has happened in the couple of months subsequent to it being closed down has led me to believe anything different. I think we’re in danger of losing joined-up thinking. I do not think any money is going to be saved by the closure of it and it is a regressive step for film.

Ms Bagshawe: Okay, thank you.

Q126 Jim Sheridan: Notwithstanding the millions of pounds generated by the industry, the bureaucratic and administration costs were a significant factor in the Government’s announcement to abolish the council. If indeed that is the case, have you made any attempt whatsoever, either prior to the announcement or since the announcement, to reduce those costs?

Mr Bevan: Yes, absolutely. One of the important things about the Film Council is that it is a Lottery administrator. So, of the 70 people who work there, 35 are involved in the legalities of it being a Lottery administrator, and we were looking at putting that out to another Lottery administrator. Prior to the closure of the Film Council, we’d been through a spending review, because of the reduction in Lottery funds, and reduced the budget by £25 million over three years. We were on our way to see the Secretary of State about further reductions when we were broadsided by this announcement.

The thing about the Film Council is that there are obvious areas of expenditure, but then there are also areas that nobody really knows about, which are about expertise, and I take two examples of this. One was in the mid-2000s when the tax credit didn’t exist. It was a system of sale and lease-back and various fiddles, basically, and the Film Council rallied all the troops and, with the Labour Administration at the time, got rid of that and put in a totally transparent tax credit system that works extremely well. One of the proposals around at the moment-the Matthew Vaughn proposal-would have us go back a little bit towards that system of the past, which I think would be an absolute disaster. Any mucking around with the tax credit is not a good idea. But the leadership that the Film Council provided there arguably saved the taxpayer hundreds of millions of pounds.

Another very important area that affects all of our lives at the moment is piracy in the digital age. It affects broadcasting, it affects film-it affects all of arts basically. And, again, the Film Council has done an enormous amount of work in terms of campaigning and bringing awareness to the public, along with the other creative sectors, to try and battle this piracy issue. Those are two things that have not received a lot of publicity at all but have been very beneficial.

Q127 Jim Sheridan: So the Government were unaware of the savings before they made the announcement?

Mr Bevan: We didn’t get to go and talk about the-

Q128 Jim Sheridan: And has there been any change since?

Mr Bevan: No, because we’re dealing with a body that’s been closed down, so basically the dialogue that has been going on is where these funds will be-we’re still a Lottery administrator at the moment.

Q129 Jim Sheridan: So why then did you feel it necessary to engage a public affairs company? How much did that cost?

Mr Bevan: The PR company? It cost, I think, £50,000. Basically, I was broadsided by Ed Vaizey at midnight on a Friday to be told that the announcement was going to take place on the Monday that the Film Council was going to be closed down. And I said, “You can do what you want because you’re the Minister in charge of this but let me tell you, we may be a minnow of an industry but we pack a lot of punch in our PR.” And one of the reasons why people tend to a little wary of the film business is that it gets page 3 all the time because most editors are pretty lazy. If they can put a picture of Keira Knightley in the paper, they’ll put a picture of Keira Knightley in the paper, and if the story running underneath it is the closure of the Film Council, that’s what will happen. That happened, and it swamped the small PR-side of the Film Council, so we had to take on an external agency to help deal with the volume.

Q130 Jim Sheridan: Has that proved valuable? Has it achieved better-

Mr Bevan: To get through the work, no.

Q131 Jim Sheridan: So you have wasted-

Mr Bevan: Well, no, not at all. The assurance I was asked for by the Secretary of State then was to stop the tide of bad press that was going on. That was the first conversation I had with Jeremy Hunt and I said I’d do my best, and part of that was to bring on an agency to help us.

Q132 Chair: The agency launched the Save the UK Film Council, didn’t it?

Mr Bevan: No, it didn’t.

Q133 Chair: It didn’t?

Mr Bevan: No.

Q134 Chair: So it was simply helping you respond to press inquiries?

Mr Bevan: Yes.

Q135 Chair: You didn’t spend any public money on trying to make the case for your own survival?

Mr Bevan: No. There was one thing that we were asked was to not deal with. The one thing I was asked-the only thing I was asked-was not to talk to the press, and it’s something that I’ve adhered to.

Q136 Chair: Because the Secretary of State told us that you had hired a lobbying campaign to make the case.

Mr Bevan: Yes, which is untrue.

Q137 Jim Sheridan: Can I just finish, John?

You also have an office in Los Angeles?

Mr Bevan: Yes, that is very important.

Q138 Jim Sheridan: How does that generate wealth or business?

Mr Bevan: Basically, as I’ve said before, a lot of the inward investment comes from the six studios in Los Angeles. Persuading Warner Brothers, Disney, Universal, Paramount, Sony or Fox to come and bring their productions to the UK is a very important thing. So, having a small office that is in LA persuading those people to do this and setting up location reccies and all the rest of it is a pretty good return for money, I think.

Q139 Jim Sheridan: Just finally, in terms of cost again, could you tell us just how many people that are on the Film Council earn in excess of £100,000?

Mr Bevan: Six.

Jim Sheridan: Six?

Mr Bevan: Yes.

Q140 Damian Collins: I would just like to ask about how the UK Film Council assesses the value of its investments. Obviously, if picking winners in the film industry was easy, we would all be millionaires, but as we’re using public resources, I think it is right that we question this.

A few years ago there, were a couple of notable flops in terms of investment, particularly “The Republic of Love”, in which we had an investment of £1 million and didn’t receive any box office returns, and a film called “The Proposition”, which did receive about £1 million of box office returns but after a £4 million investment by the Film Council. Now, after something like that, what do you do to look at how those decisions were taken and whether that was a good level of investment?

Mr Bevan: I don’t do anything because I’m chairman of the Film Council, but there are people whom we employ to do that. Basically, when assessing any investment, be it for a script, a production or anything, first and foremost there is a creative assessment as to whether the script is any good or the film is any good or not. Once you’ve got through that hurdle, which is the big hurdle by the way and takes 95% of everybody’s time, it is then looking at the financial criteria that surround that investment. In terms of script development, obviously, the Film Council tends to 100% finance that, but when it comes to production, it is looking at the various partners that there might be and whether that makes sense or not. I think the Film Council’s run, if you look at it globally, has been pretty good, in actual fact. You’re always going to have your hits, as you rightly say, and you’re always going to have your misses. Like anything, when you have a miss you try and learn from it.

Q141 Damian Collins: There was a film in 2007 called “Faintheart”, which I have not seen but I am told is a romantic comedy set in the world of battle re-enactments. That had a grant of £400,000 and then sadly no cinema release. So do you-

Mr Bevan: That happens. If you look at Working Title, which is the only other example that I happen to know the numbers on, of the 100 movies that we’ve made over 25 years, probably six or seven of them have not had theatrical release because they’ve been total dogs. We’re pretty good at bearing that. As a public body, it’s a more difficult thing to do and, in actual fact, I believe of the 170 movies that the Film Council has invested in, only eight have not received a theatrical release in the UK. I would say that’s an extremely good record.

Q142 Damian Collins: There is a film called “White Lightnin’” of the same year, which produced box office sales of only £773 after a grant of £600,000. So, I suppose there are probably a few in the lower grossing end, even if, technically speaking, somebody did go and see them.

Mr Bevan: I think you also have to bear in mind that part of the investment strategy of the Film Council is to bring on new talent and if people hadn’t taken risks on me as a young person-and I lost them some money along the way-I wouldn’t be where I am now. I think that part of the Film Council’s responsibility is to ensure that we have future directors, writers, producers and actors.

Q143 Damian Collins: I am just looking at the accounts published for the Film Council, and particularly accounts relating to John Woodward’s expenses. What sort of policy do you have in place for entertaining and hospitality for executives at the Film Council?

Mr Bevan: What is the policy?

Damian Collins: Yes. The reason I-

Mr Bevan: Well, I think the thing is this. John has been running a big organisation. I sign off on his expenses. It’s the only thing I do sign off in terms of expenditure, and if I think that they’re justified, I do it. He has to cover a lot of ground. Conversely, I think, at the Film Council, you have a board of 12 people, all of whom do it for nothing. None of them claim any expenses unless they have had to fly in from Ireland and all the rest of it, so I think, on balance, the Film Council does pretty well-the public does pretty well.

Q144 Damian Collins: The reason I ask about policy, because I’m not complaining about the chief executive taking people out for lunch, even if it’s for public bodies, but for the last accounting period I think he spent about £6,500 that is attributed to hospitality. There are about 70 or so lunches and dinners as part of that. About a third of the people he took out are people from other public bodies, including Dawn Primarolo when she was Minister for the Treasury. I just question that-this is public money.

Mr Bevan: I don’t know how they split money, these public bodies. If you’re taking somebody out from a public body, I don’t know how that works.

Q145 Damian Collins: I just wondered whether you had a policy about that. With the chief executive of the Film Council, given he is giving money to people, I thought people would be taking him out for lunch.

Mr Bevan: No, but also one of his main jobs was the interface between the film industry and the administration, and I think that he did brilliantly in that and nobody else could have done it. And if that requires lunches here and there, I would say that’s a price worth paying for the film industry.

Q146 Damian Collins: Just one final question in global terms. Looking at the top 10 grossing UK films of all time-independent films-there are two that were funded by the Arts Council and that’s a great success. Eight weren’t. Do you think that we need to be unduly pessimistic about the future of the British film industry?

Mr Bevan: No, I think right now we’re in pretty good shape, to be quite honest. I think we have an exceptional bunch of young actors and an exceptional bunch of new and interesting directors. I think we’re in turbulent times, which tends to chuck up decent writers. Providing the Lottery money stays intact for film production, which I’ve been assured it will, and providing that that the tax credit stays intact, which I’ve been assured it will, I think that British film is in quite good shape. It brings pleasure to people, which is our job as cultural folk.

Q147 Chair: So, if you’ve been assured of those things and the British film industry is in such good shape, why is the abolition of the UK Film Council such a disaster?

Mr Bevan: Because I think that the joined-up thinking that’s gone on is under threat. There are two different things. I was asked whether the film industry is in good shape. Well, creatively, the answer would be yes. Commercially, because of recent events, there is a question mark over it. However, I have been assured that the Lottery funding going into movies will remain intact and that the tax credit will remain intact-they are the two bedrocks. I would hope that they remain intact and are administered through the same body, but that’s down to those who make these decisions, not me.

Q148 Chair: But if we simply find a more efficient way to distribute that money without the huge overheads of the UK Film Council, there shouldn’t be a problem?

Mr Bevan: Yes, but the Film Council does not have huge overheads. If there’s a more efficient-

Q149 Chair: 25% is quite huge.

Mr Bevan: Sorry?

Chair: 25% is quite huge.

Mr Bevan: It’s not 25%; it’s 10%. Half of that is due to it being a Lottery dispenser.

Q150 Paul Farrelly: You just said, Tim, that you were called, or you knew on the Friday night before the Sunday that you were going to be abolished. That seems to me quite an extraordinary way to go about handling the future governance and stewardship of a very important industry.

Mr Bevan: I would agree. I was surprised not to have had a conversation beforehand.

Q151 Paul Farrelly: Can you just tell us which new Ministers in the DCMS-because you’ve said there was no consultation-you would single out as knowing a great deal, or even a little, about the film industry and its dynamics?

Mr Bevan: I think Ed Vaizey has been an excellent Minister because in opposition he chose to educate himself hugely about the arts, hoping to get, I imagine, the job when and if the Government were elected, and he’s continued to do so. I don’t know Jeremy Hunt as well as I know Ed.

Q152 Paul Farrelly: So would you say Ed has consulted with himself, then?

Mr Bevan: He’s consulting a lot of people. He was the bearer of the tidings. I don’t know whether he fired the bullet or not.

Q153 Paul Farrelly: Do you think it might have been done for effect? They knew that the luvvies would shout-and shout loudest-and that therefore, in a perverse way, it was a great way for them to get a message out that everyone was sharing the pain?

Mr Bevan: I’d like to think that, but-do you know what?-I don’t believe it. I don’t think any great thought had gone into it at all. And I suspect had they known how loud the luvvies were going to shout they wouldn’t have done it. Actually, we’re not luvvies. You might be a luvvie but I’m not a luvvie.

Q154 Paul Farrelly: It was affectionate, not pejorative.

In the statements, Jeremy Hunt said that with the abolition of the UK Film Council, “a direct and less bureaucratic relationship with the British Film Institute would be established”. Presumably, therefore, if this decision has been well thought out, there is a succession plan and you will have seen the paper and the mechanisms by which the transition will be managed. Is that the case?

Mr Bevan: It’s not, but Amanda could speak better to the direct relationship with BFI than I could.

Ms Nevill: The announcement was as big a surprise for us as it was for the Film Council.

Q155 Paul Farrelly: So you have not seen the mechanisms? You have not seen the future business plan, the succession plan and the transition plan?

Ms Nevill: No. I think it was a statement of intent rather than a statement that had anything behind it.

Q156 Paul Farrelly: The Government seem to have shifted their position now on the bonfire of the quangos, in that they say it is being done to improve accountability, not necessarily to save money. I saw a Guardian request under freedom of information about the costs of winding up the Film Council. It’s not, sadly, in my press clippings or in my briefing here but, as I remember it, the figure was more than £11 million.

Mr Bevan: I believe it is, yes. I’m not exactly sure of the number.

Q157 Paul Farrelly: Can you tell us over what time period and what time scale the abolition or winding up-or whichever word you use-of the Film Council will take place and how much it will cost?

Mr Bevan: We were told when they told us they were going to abolish the Film Council that it was 15 months. I think, practically, once it is decided-it doesn’t seem to have been decided yet-where the various activities of the Film Council may lie in the future, that process will then be speeded up.

Q158 Paul Farrelly: Can you let us have a breakdown of that figure?

Mr Bevan: Yes, I can. I would have to send it in.

Q159 Paul Farrelly: Absolutely, in a follow-up. A breakdown of your accounts would also be useful just so that we can look at some precise figures and what you say is attributable to the Lottery side of the activity, which is half your headcount.

Just a final question: for every pound invested by the UK taxpayer through the Film Council, less 10% or even 25% for admin, what would you reckon would be the net benefit to the UK film industry through the existence of the Film Council?

Mr Bevan: To the business as a whole? About a fiver.

Q160 Paul Farrelly: So £5 for every pound?

Mr Bevan: Yes, if you look at the businesses. The industry as a whole turns over £5 billion or £6 billion-and I think that’s across all its parts-and it returns about £1 billion to the Exchequer.

Q161 Paul Farrelly: My final, final question, Chair.

Can I then ask you, given the way this has been handled, what do Ed Vaizey and Jeremy Hunt know about the film industry that you, Nick Park and Clint Eastwood don’t?

Mr Bevan: Well, Ed is probably learning pretty quickly, but I’ve spent 25 years in it, Nick’s spent 25 years, and Clint, goodness knows how long he’s spent in it-a great deal longer. So, put it like this: collectively, Clint, Nick Park and I probably have about 100 years’ experience in the film industry, and Ed Vaizey has two.

Q162 Chair: But it would probably be fair to say that Clint Eastwood’s knowledge of the intricacies of film funding in the United Kingdom is not huge?

Mr Bevan: Yes, fairly scarce. I think that would be fair.

Q163 Chair: So Clint Eastwood was wheeled in as a sort of profile name that would get page 3 of the papers, but he doesn’t have great expertise?

 Mr Bevan: Yes, but that’s what we do. If you can’t get Keira, get Clint.

Q164 Ms Bagshawe: Mr Bevan, forgive me, but I was a little perplexed by your answer to Jim Sheridan on the whole PR issue, because I remembered a quote and through the magic of Google I have drawn it up here, so I wonder if you could comment. You’ve just told us that a PR firm was not specifically hired to make the case for the Film Council and your spin doctor-it says here, without naming him-said, “The future of the UK film industry is the only thing the UK Film Council is interested in”. Unfortunately PR Week had gone to press and it carries a quote from Oliver Rawlins, whom I believe was the UK Film Council’s head of PR. He said that the body had been handling a comms strategy relying on third-party advocacy and that “We’ve ensured that the message has been simple, clear and consistent: this is a terrible decision that disregards the commercial benefits of the UK Film Council”. That does seem to me to be reasonably open and shut-that’s why a third-party PR guy was hired.

Mr Bevan: That’s based on a press statement we made on the day that it happened, basically.

Q165 Ms Bagshawe: No, the press statement you made on the day that it happened was that you were only interested in the “future of the UK film industry”, whereas the argument here is that public funds were spent on advocating for yourself as a body, and he does specifically say that you employed a third-party comms strategy because the decision “disregards the commercial benefits of the UK Film Council”. So you did in fact spend PR money on batting for yourselves, did you not?

Mr Bevan: I beg to differ. I don’t think that’s what we did.

Q166 Ms Bagshawe: You are differing then with Oliver Rawlins, your own head of communications?

Mr Bevan: Yes.

Q167 Ms Bagshawe: I would humbly suggest that there is a slight disconnect there between yourself as chairman of the UK Film Council and your own head of communications.

Mr Bevan: Listen, I was very clear about the strategy and that was the strategy that was adopted. I made an assurance to the Secretary of State, which he chose not to believe by the way, and he was the one who counter-briefed against me. But I was absolutely 100% clear with everybody that there was to be no offensive press strategy-fair enough to have a defensive one, but there was to be no offensive one.

Ms Bagshawe: I take you at your word. It would appear then that your own head of communications didn’t get the message. He clearly said in PR Week that that’s what he had done and that’s why this PR firm had been employed. So I think we should perhaps get that on the record with all your other statements I would like to hear.

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Q168 Alan Keen: Could you paint us a picture of how you think things will work without the Film Council, the disadvantages, and will there be savings? Can you try and explain that? I know you’re biased but I’m biased-probably towards you as well.

Mr Bevan: Well, will there be savings? Yes, probably because whichever body is decided should administer the Lottery funding will be a body that already exists, I suspect. So whatever the overhead related to being a Lottery distributor is will be saved.

The funding for the Film Council basically divides very neatly into two arenas: roughly 50% of it is Lottery funding; and roughly 50% is grant in aid. I guess there may be a reduction in the grant in aid with the cuts that we’re going to hear about tomorrow, but it’s my understanding that the basic activities of the BFI, which is the main beneficiary of the grant-in-aid moneys, will remain intact. I think there’s going to be a rationalisation of the Regional Screen Agencies, which receive grant-in-aid funding, so there may be a small saving there, and there may be a small saving in terms of the central overhead.

It’s my understanding that the Lottery money post-2012 is going to rise a little bit, basically, if it’s allocated to film, because it’s 2.25% of the Lottery cake. If, as I’d hope, the administration for Lottery-funded movies and the tax credit remains intact in one place, I would hope that the people who are working in that arena within the Film Council at the moment are moved over to whatever body administrates that, so I don’t see huge savings there. With the 11 million quid over five years, it will probably be a wash, I have to say.

Q169 Alan Keen: What are the disadvantages?

Mr Bevan: My primary concern would be that the various activities of the Film Council are put out to too many different places so that you don’t have joined-up thinking going on in terms of a commercial film strategy in the UK.

Ms Nevill: Just a point of clarification. Tim mentioned that the grant-in-aid money to BFI would remain intact. I don’t think it will because, like everybody else, obviously we’ve been asked to model 25% cuts. So in the context of the cuts, we will still get some grant in aid but it is going to be-we imagine after tomorrow-very significantly reduced.

Q170 Alan Keen: In answer to an earlier question, you said that it’s a people business. What you’re really saying is that the contacts that bring the business to the UK will not be handled as well by people who are not the right people.

Mr Bevan: That would be my principal concern about the closure of the Film Council, yes.

Mr Elstein: There’s another aspect to this, Mr Keen. When the British Screen Advisory Council did its analysis of options for Ministers in the light of the proposed abolition of the Film Council, we were able substantially to place functions with existing institutions, although not quite in a square-peg, round-hole fashion. Clearly that can be done and, in particular, if you give up functions you will save money, but our biggest single concern was the loss of the advocacy role, which is inherent in the organisation rather than a specific function. If Ms Bagshawe is right about the PR manager not being quite on message, perhaps there’s a question mark there, too.

Our serious concern at the British Screen Advisory Council is that the kind of thing that Mr Bevan was talking about-how to replace a dysfunctional tax-based film policy, the old section 42 type of amount, with a rational one-takes a lot of work. BSAC was heavily engaged in that, the Film Council was heavily engaged in that and BFI was heavily engaged in that. This dispersal of functions leaves a question mark as to where the advocacy role will sit. Obviously, the Government have an advocacy role in terms of dealing with external players, but we’re aware that when you’re dealing with Brussels, for instance, there are British interests at stake all the time in the way regulations emerge, the way they’re implemented and so forth, which people who work in the film industry have a much closer sensitivity to than any Government civil servant or Minister.

So we are concerned about that and we do hope that one of the things that Ministers will do, once they’ve allocated all the responsibilities-or as many as they want to preserve subsequent to this decision-is to step back and institute a strategic review of film policy, looking not just at the aftermath of UKFC and the advocacy role but key things like distribution, which is the kind of lost child in this whole discussion.

Everyone knows that we have a suboptimal distribution status in the UK because of the hugely dominant role of the US distributors. We need the Government to take the lead in instituting a full strategic review, and we hope that once the dust has settled on what is clearly, from some people’s point of view, not a desired outcome-but it is an outcome-that we get a chance to then all get together and have a much more constructive, forward-thinking five or 10-year sense of what do we want to do about UK film policy.

Ms Nevill: Can I just add to that? It is common knowledge that the BFI is one of the potential contenders and, in that context I would just like to echo what Tim says, which is I think that one of the most critical things going forward is that we don’t lose the coherence that we have had over the past 10 years, because they all affect one another. So your production, your exhibition, your distribution and your education and audience development, all of those policies need to work in tandem. I do believe they should stay in one place.

Secondly, to pick up on what David Elstein has said, wherever those live, hopefully in one coherent place, that organisation-and if it were the BFI we would expect to be the facilitator to ensure that there was that advocacy lead-whichever body it goes to, and I will be honest that I am hoping that the BFI is the strongest contender here, would have to change quite fundamentally from the board down, because what you’re going to have to bring in new people and new skills into the additional organisation to do that. So the BFI’s position is that it would expect to do that if it were decided that the BFI was to be the body to take on the majority of the portfolio that is no longer being carried out by the Film Council.

Q171 Jim Sheridan: The film director Mike Leigh has compared the abolition of the UKFC to the abolition of the NHS. Would you accept that?

Mr Bevan: I think it’s a bit strong.

Q172 Chair: Amanda, can I very quickly just touch on two slightly different things? The BFI film centre obviously would have been a great thing to have, but when it was announced that it wouldn’t go ahead, you didn’t seem hugely surprised. Obviously we regret it, but how important was the new BFI film centre to you?

Ms Nevill: I think in the context of the economic challenges facing the country, it was not at all been surprising. If you’ve got threats to hospitals and schools, a film centre sounds somewhat flippant in that context. It was a crushing thing, but given the environment, I think everybody realised that we were moving into a new world. I think the critical message is that the film centre was never a vanity project. It was a really carefully-and financially-worked out solution to a problem that is still there, and the problem is that the focus for film still exists in a building that was built in 1940 and is crumbling, so we’re going to be closing again at the end of November. We’re also existing in a building which John Paul Getty gave us, which is fantastic, but it’s a very expensive way to run an organisation.

So the point of the film centre was that we were going to raise three quarters of the money for it either from our own assets or from fundraising, but we needed that central Government support to make it happen. What you would end up with was a sustainable organisation that was able to reach out to more people and make more money, and that was living in a cost overhead that was considerably less than the overheads that are mounting year on year for the BFI now. So it was getting rid of a risk in a long-term, grown-up way.

In terms of not being surprised, of course in this environment, I wasn’t surprised at all but the problems are still there. So we have two options: either we hand over those problems to the next generation-and the problems will be that we will not have a national CinemaTech any more-or we have to look at every other way we can, perhaps in terms of phasing it or whether we can step up some of our fundraising in some way.

There is also a real industrial need. What is very interesting is that we’re in the middle of the BFI London film festival at the moment, and one of the biggest problems we have, even in getting the titles into that festival, is that we do not have the cinemas that we need. The Odeon West End-this is a detail-had a great 800-seater, but they were going to close down. We’ve had to move into the Vue cinema. That means for every gala night, we have to split the screening of that gala between two screens. You cannot do a Q&A in two screens at the same time, so it makes the whole experience very difficult. The building itself-the Vue cinema-is a great commercial cinema, but it doesn’t work for a film festival. You try getting Minnie Driver and Hilary Swank up a whole load of escalators with people crushing in and out. The studios don’t like it. It is not the sort of environment that says that Britain is one of the great leading centres for films in the world and, you know what, the London Film Festival wants to be the Cannes, the Berlin or the Toronto. We cannot do it in that sort of environment, so the film centre was also a long-term view to solving issues like that.

Q173 Chair: Premieres take place in Leicester Square on a weekly basis and the studios don’t seem to mind that too much.

Ms Nevill: Odeon Leicester Square is fantastic when we can get into it, but obviously the festival is over 16 days. We could not afford to take over the Odeon Leicester Square for 16 days, and there are not enough screens in there-there is the one big screen. So we’re upping the number; so last night we did Mike Leigh’s new film in there and we “satellited” it-I don’t know whether that is a verb-to 34 screens around the country. So there are ways of using a film centre in a way which doesn’t mean it is just about something that is happening in London. It enables you to start to be that digital hub. Only film is an art form, I would argue, that could exploit digital in that way.

Q174 Chair: Could I just ask you very quickly about one other point? The Committee, in its previous inquiries, expressed great concern about the future of the film archive. Is that now still secure?

Ms Nevill: I think it was about seven or eight years ago that the Committee was really instrumental in helping raise the profile of the need to put some capital moneys into the archive, and the good news is that we were allocated £25 million, which went down to £22 million in the cuts. Some £16 million of that is coming to the national archive, and we are just about to go into the ground to build a vault which will freeze the archive. You can still get at it, but what it means is that it halts deterioration of the film, so that is a very good and a very exciting story because it will mean that the films are absolutely safe.

Of course there is no point in having an archive if you can’t get it out there and one of the points of the aspiration of the project that we were doing was that all the data that told you what was in the archive would be on a commonly held database that would be available to the public, and that’s still going ahead. What has been cut, which is a shame, is that we wanted to start to populate that database with moving footage so that if the public go on, they don’t just start to get the name of the film but they can start to see at least clips and some of those films. So I suppose the next big challenge is how we then make that archive more readily available.

Q175 Dr Coffey: Have you spoken to the BBC about that, because they have invested in their archives and they still have more to do when they move out of TV Centre. I think they’ve put a lot of effort and money into that.

Ms Nevill: We have a great relationship with the BBC archives, with Roly Keating in particular, and Roly is on our working party for archives. So in the context of some of their emerging technology, we work very closely, particularly in the archiving of television. You can’t get away from the expense of digitising film. You have three problems, or challenges if you like. The cost of digitising is quite cheap, but there’s no point in digitising a film until you have preserved it and conserved it, otherwise what you are going to get to see isn’t going to be very exciting, and the costs of conserving titles is very expensive.

The second thing is we don’t own the rights to most of the material that we copy or digitise or make available. Of course, we make something like 12,000 titles available a year across the country, so we have whole teams of people who do nothing but negotiate rights. And with every rights negotiation, it is a gamble, because you have to pay for it, so you’re going to decide how long you are going to use that film for, are you going to release it on DVD or are you just going to release it into the cinemas. So, for every title you have to look at it and work that out, commercially, as tightly as you can, bearing in mind that we’re dealing with titles that the market isn’t releasing. We have to take a gamble on the sort of return that we’ll get from that. Then the third thing is obviously the cost of digitising it and getting the material out there.

But the end results are really, really worth it. Because another thing that came as a result of the inquiry that you had into the archive seven or eight years ago is that it sparked people’s interest in the archives. So, we’ve done lots of co-productions with BBC; we’ve got lots of ongoing relationships. We’ve got a big new series coming up with Discovery and another series coming up with the BBC-I think on home video. We’ve had a constant injection of co-productions using material from the archive, which is a great way for the public to see them.

Q176 Alan Keen: I shouldn’t be asking this question-it is nothing to do with the inquiry-but is that restaurant on the river frontage franchised? I’ve enjoyed films in the beer garden but I’ve never had anything as enjoyable as watching one night we were sitting there having a drink because from 10.35pm the staff were taking chairs and tables away, and people were going into the bar to get their drinks and when they got back there were no chairs and tables for them to sit on. It was absolutely hilarious. It would be a silent film-Charlie Chaplin-it wouldn’t need a writer. Is it franchised? It was ludicrous.

Ms Nevill: I think it’s a really, really good point because the other thing is if you look at BFI Southbank, which we invested fairly diddly-squat money in and got a lot from the private sector, the amount of money that we generate now means that we are running the whole of that Southbank for over a million people for less money than we were running it on 10 years ago. That is precisely because we have much more commercial. The restaurant Benugo-quick advert here, “Great food, come on down”-yes, we really need the income from them. Our self-earned income across the BFI has grown-I have it here-in the last five years from £16 million to £24 million, or in the last 10 years it’s grown from £12 million to £24 million, and that’s because we exploit all of those.

Q177 Alan Keen: If you didn’t run out of bitter in the bar inside so often, and if they didn’t take the tables and chairs away before closing time, you’d make even more.

Ms Nevill: I’m going to pass them that tip.

Chair: I am tempted to observe that if John Woodward had taken people to the BFI restaurant, he would have recycled the money.

Q178 Paul Farrelly: Just very briefly, Amanda, it sounds very much that if you’re successful in the bid to do what the Film Council is currently doing, or much of it, you have to reconstitute yourself and re-organise yourself so that you’re going to pretty much replicate what the Film Council is doing already. Is it correct that you would want to do that?

Ms Nevill: I don’t think that we would want to replicate. I think there’s a difference. The BFI fundamentally is a charity there to deliver to the public. The Film Council was the lead strategic agency for film. I think what we’re talking about is that we spent 18 months looking at the possibility of a merger-in other words, would there have been a more efficient way of running the two organisations if you put them together? For reasons that I don’t think there’s any value in going into now, there were definitely benefits that would have come about because of that. I think what we’re saying is pragmatically-and I don’t need to tell you this because this is what your inquiry is about-we’re living in an environment where there is a lot less money, so we are going to be delivering less across every single sector.

Our responsibility, or I feel that the BFI’s responsibility and I know Tim feels exactly the same for the Film Council, is that whatever comes out of the machinations that are going on, we have to use best endeavours to create an entity that can hang on to and build on as much of the legacy that the Film Council has generated over the last 10 years, and do as much as we can to ensure that the film industry in Britain as a competitive environment, and film culture, which is the bedrock of that industry, are protected as strongly as possible. One of the things that we haven’t talked about today, and which I can completely understand because there is so much going on in the film firmament, is that the BFI itself faces quite significant challenges to its funding. It will be even more challenging because, notwithstanding the great work of the Film Council over the last 10 years, actual funding to film has not grown very much if you compare it with the other sectors.

I am not whinging here. Greg Dyke, my chairman, always says, “Whinging is the end of the conversation,” and I agree with that, but the fact is the grant in aid to the BFI over the last seven years has stayed static to the penny. If you then fold into that a 25% cut, it’s a very significant erosion because we have already, in those seven years, done everything that we can to increase efficiencies, economies and productivity. So very, very crudely, you can look at the productivity of our staff just based on earned income in the last five years. Productivity per staff in 2005 was £38,000. Crudely, each member of staff was responsible indirectly for generating £38,000. This year, those same staff will generate £53,000, and in order to absorb the 25% cuts, we are going to have to push our income level so that the same member of staff generates £83,000. In other words, you are going to have fewer staff generating a lot of money. The film sector is going to be challenged going forward, which is why I think we have to use our best endeavours because we’re going to have to absorb, and we understand this, fairly significant cuts, almost certainly, and also the fact that the Film Council isn’t going to be there and we’re going to-

Q179 Paul Farrelly: You have anticipated my next request. It would be very helpful to us if all you guys could give us evidence setting out a comparative position and some context, and outlining to us what happens in other countries, in particular in Europe-Italy, France and Germany. Clearly, we know that Canada is a major centre in drawing production. That would be extremely useful for us just to see what other countries are doing.

A final question, Amanda, from what you’ve said about having looked at a possible merger previously. A decision has been made now and you have to live with it but it sounds like, from what you are saying, that your verdict is that the UK Film Council was pretty much doing a good job. Do you regret the decision that has been taken to abolish it and the manner in which it was taken?

Ms Nevill: I think the fact that we talked about mergers for 18 months before this decision was taken is an indication that we felt that there was a better way in the context of the BFI and the Film Council that we could have worked. I think the way in which the decision was taken was surprising and quick, and it would have been perhaps more productive to have had the time to think about things-because the decision was made so fast that it caused huge anxiety across the piece, whether it was the Film Council or even the BFI trying to hold the level of confidence in the environment, and I think that could have been avoided. I suppose I find it difficult to imagine in an environment where the economics are challenged so much that there wouldn’t have been a requirement in any case, like in any other sector, for film to look very comprehensively at how it could protect front-line services and perhaps work more effectively together behind. But whether that was abolishment or a merger, I think the debate is out.

Q180 Ms Bagshawe: Mr Bevan, in particular you’ve been very generous towards Ed Vaizey as in not blaming the bearer of bad news. I know he’s recently had discussions with various representatives from the UK film industry about the way forward after the abolition of the Film Council. How do all of you feel that those discussions between Government and the industry about future steps have been going?

Mr Bevan: I don’t know all the people he has seen. I know he’s seen all the trade organisations and all the rest of it, but one just wonders whether he’s seen the people who really punch hardest or not.

Q181 Ms Bagshawe: Are you talking about filmmakers?

Mr Bevan: Well, yes, I think it’s the filmmakers. If you look at the Film Council board, for instance, we’ve got Barbara Broccoli, a household film name; you have Elisabeth Murdoch, a household studio name; you have Josh Berger, who represents the biggest business in inward investment in this country from Warner Brothers; and you have me, who runs the biggest independent production company in this country. And I could add two or three other names to that who would make up the group of people who you think should really be listened to because we make our living out of it-we live it, breathe it, and all the rest of it. I’m not sure if those people have been seen or not. I don’t know.

Q182 Ms Bagshawe: Do you see a role for yourself, Working Title, and the other members of the Film Council board that we have talked about in a future working model?

Mr Bevan: I’m out of here. If this is the public sector and the way you get treated, I’m done, basically.

Ms Bagshawe: Okay.

Mr Bevan: Because I care passionately about film and I think I can make a much bigger contribution to it through the private sector.

Ms Bagshawe: Fine. And can I just say I think it’s a great shame?

Mr Elstein: It’s pointless to express a view about what’s already happened because we are dealing with the aftermath, which in many ways is more important. I can begin to understand why Ministers, if they’ve taken a view, would rather announce it than go through the charade of a consultation. I am more concerned about the speed of policy on the hoof that we’re experiencing which is, I guess, part of a consequence of announcing an abolition with an unrealistic 15month gap between pronouncement and execution. It’s just not going to be 15 months. So we’re all going through a very rapid consultation process and I’ll be seeing civil servants tomorrow to put in BSAC’s point of view. But that’s why I emphasise that, after you’ve rearranged the existing furniture and tossed out one or two pieces that have passed their sellby date, you really do need then, as Ministers, to institute a proper strategic review. It would be really regrettable if major industry figures felt so bruised by the way in which the UKFC was killed off that they couldn’t participate in that strategic review. So I understand Tim’s sense of huge relief-”Gosh, don’t have to do that anymore”-as well as saying, “Well, up yours, mate.” But it’s important, so I would ask him-if he is asked and it’s next year-that he participates in the same way as the rest of us will.

Q183 Ms Bagshawe: Clearly, there is a bit of work to do with Working Title there, and it will be awful for the industry if we lost your expertise, so please reconsider.

Amanda Nevill, you’ve talked a bit, reading between the lines, about the duplication of functions that you perceive between the BFI and the UK Film Council and the necessity that would have been presented of some sort of restructuring of the two bodies. What percentage of BFI funds do you expend on administration? We’ve had discrepancies between the figures we’ve been presented by civil servants as to administrative overheads and the figures that Mr Bevan has given us of only 10-we don’t want, if you like, to repeat any mistakes that were made. What percentage does the BFI currently spend on administration? Are you actively looking at ways to reduce it so that we can get money to film production directly?

Ms Nevill: I don’t know the exact percentage for the BFI, but I can let you have that. I’m pretty certain I know it, but I’d rather not say in case it’s very, very wrong.

In terms of what are we doing actively to reduce our overheads, we’ve been doing it for something like seven years. So every year we try and improve procurement, share services and cut staffing. Since I’ve been at the BFI, we’ve lost more than 100 staff, but we’re actually delivering more.

Q184 Ms Bagshawe: Your role is to expand, because, presumably, you’ll be taking on some of the functions that the Film Council used to do

Ms Nevill: Potentially.

Q185 Ms Bagshawe: It will be a different role; you’ll have different administrative costs. So when you look at it again you’ll need to look at it with a fresh eye because your own role will have changed. So are you clearly preparing to do that?

Ms Nevill: Absolutely. Definitely. Secondly, are we committed to an overhead of between 5% and 6%? Yes. The board’s instruction to the BFI is that we need to minimise the overhead so that we can maximise the funds. Potentially, if we become an agency that takes on more of the activities that were with the Film Council, I would hope that some of the expertise would come with it. And, again, I’m saddened, although I understand Tim’s position, but there are also board members on the Film Council who would be brilliant board members on the BFI.

Ms Bagshawe: Absolutely. Thank you.

Q186 Dr Coffey: I have a question for Mr Elstein. From the submission from the BSAC, I think the idea of having a fund manager and assistant fund manager for production making single decisions is of great merit. You make a point on the key points about, “successful creative and commercial risk-taking should be rewarded from public funds”, which to me seems to be a bit of a contradiction in terms. Damian was saying earlier that there are going to be some flops so you take a balanced approach, but can you tell me more about what you mean by that? I appreciate that the Government are always trying to get back their money. Are there other mechanisms like profit sharing and similar that should be looked at?

Mr Elstein: Well, what we’re saying there is that part of the argument that has taken place between the industry and Government over generations is about self-sustainability. Selfsustainability is like motherhood and apple pie-a wonderful aspiration, but unless you work towards it, how do you ever get there? Our suggestion is that the recoupment from successful Lottery-funded films should be adjusted in such a way that the film production people should share in the rewards more than being too far behind as a tail-end Charlie.

In other words, the emphasis on recoupment to the fund is at the expense of incentivising the people we want to become commercial filmmakers. It’s a kind of self-contradictory approach because what we really want these people to do is make successful films so that then they don’t need Lottery funds when they make their next one. So it’s a minor adjustment to the way in which recoupment has worked, but we think that the signal it will send out will be very important, if it can be made. Tim will understand better from detailed involvement as to the pressure that there has been on UKFC in recent years to maximise its own recoupment because it has so many other things it has to do. But, from the individual filmmaker’s point of view, if the recoupment priority is “fund, fund, fund, fund, filmmaker”, it’s just not encouraging enough. We need to readjust that-to recalibrate.

Q187 David Cairns : Just quickly, and it’s following on from Louise’s line of questioning and it’s to Tim. Given that we are where we are and you’ve obviously made a strong case that you thought the UK Film Council was doing the job perfectly well-or well-and given the very strong message that the functions ought to be kept together under the joinedup approach, do you think that the BFI would be the right people to take on this function and, if not, then who?

Mr Bevan: Possibly. I think there are two pretty good options. One is to shift the production and film certification functions into a unit that’s held within the Arts Council, which would be the same people who are working on that side of it at the Film Council at the moment. Then the BFI is certainly an option. We did go through 18 months of seeing whether a merger was a good idea or not, and it was definite that that was not what would be called a smooth road. There are definitely issues.

Q188 David Cairns : And what would they be?

Mr Bevan: I think if the BFI reconstituted itself, it needs a new board and probably-dare I say it-a new chief executive. It’s a very, very, very, very different function if it were to do the two things, basically. So if that was to happen, there may be merit to that.

Q189 David Cairns : Do you think there’s an alternative which has equal merit?

Mr Bevan: I think there are definitely options. I think what doesn’t have any merit is putting the production function inside a broadcaster. I think that’s a really stupid idea because what will happen is that the broadcaster would stop spending its own money on film production and start spending Lottery money. And also, I think, it’s very important that there’s a plurality of places to go to as an independent producer in Britain. The three-the BBC, Channel 4 and the Film Council-are a pretty good three places for producers to go. It would be great if we could add to that Sky, by the way. I don’t understand why Sky does not make a much larger contribution to British film in this country, as their counterpart in France does. Canal+ is the absolute backbone of the film industry there. In one fell swoop, if Sky were to make a proper contribution to British film in Britain and you upped the allocation that the BBC makes-and Channel 4 have recently upped theirs-I think that would make a significant difference to domestic film production.

Q190 Chair: I think it’s only fair that we put David’s question also to Amanda and to David.

Mr Elstein: Well, the view that BSAC took was that the key functions that need to be reallocated, which are the production fund and development fund, are probably best housed at BFI. BFI would need quite a lot of change to encompass all that, but they have the right culture, the right infrastructure and the right history to do that. We took the view that it was highly unlikely that any new structure was going to be created and we couldn’t see a better alternative. I know that Film London has been suggested as an option, but we do see Film London as much smaller-one tenth of the size of BFI-largely existing at the behest of the Mayor, and with inevitably a kind of inward investment London focus. So a very substantial transformation would have to take place in that, and it would have to be completely reconstituted, which seems to contravene the “no new body” type of view.

BFI has plenty of problems. Adding these functions is not going to make Amanda’s life any easier, but I think the BFI is ready to take on tasks and has steeled itself mentally to do what is required. I think it’s just more important to focus the core activities most optimally rather than say, “Well, nobody can do any of this,” and therefore give up. There are one or two functions that could stand alone without any new infrastructure, such as what we call the British Film Commission, which is the inward investment function that might sit with certification and so forth. All that is in our paper and we very carefully went through all the different functions and all the different options, and we stated what our preferences were.

But we are of the view that, as Tim said, the broadcaster housing is not going to work and doesn’t seem to be on the table anyway and that, of the available outlets and repositioning options, BFI has substantial advantages. What we would not want to see is any re-involvement in any significant way of ACE. The experience with Arts Council of England in the past was not a happy one.

Q191 Chair: Amanda, are you up to taking it on?

Ms Nevill: Yes, definitely. I think the first thing is that it’s a very different BFI. The last 10 years have been very interesting, I think across the whole sector. So what the Film Council did was it brought in a level of professionalism and a coherence that was really needed, but I would say in the same breath that the BFI changed from being a very worthy, slightly inward-looking organisation to one which is much more commercially acute and much more aware of its audiences-a very lively, lean machine.

I think the other thing that is really important is that in saying that we would be very happy to extend our portfolio further, what I’m saying is that the foundations of scale and the ability to take on activities of this scope and size are definitely there. What I absolutely agree on, and would never wish to stop emphasising, is that in so doing, you have to think about transforming the BFI to the next level. And absolutely, you would certainly want to bring different sorts of skills on to your board, and fortuitously we’ve got quite a few vacancies on the board anyway. Also, you would need to bring in skills that obviously we have not got in-house at the moment. Indeed, it would be profligate if those skills were just sitting there waiting for such an opportunity to come along.

But there is something else that goes beyond the practicalities that have been so eloquently put by Tim and David, which is that I think there is something exciting that could be created by bringing these activities closer together. If you look at the BFI and you look at film in the whole, the BFI has a great DVD label. It runs the BFI London film festival. It runs the great CinemaTech, which is a great focus. It is the largest distributor of cultural cinema in Britain. So, no matter what, you do have that cultural entity there which I think should be at the disposal of any of the filmmakers to whom we give public money, perhaps because of the environment which can nurture and incubate and help build that cultural crucible which results in the Ridley Scotts and whoever of the future. It also means, however, that for some titles-because of the nature of putting in public money-there is always going to be some risk. There are always going to be some titles that are perhaps not going to find the audiences that they hoped for in the beginning. The BFI does have some of those activities there that could ensure perhaps that there would be more opportunity for those if they were not picked up by the professional or commercial sector.

Chair: Thank you. A very quick last one.

Q192 Damian Collins: A very quick last one and it’s on your last remark, but I’d be interested in other people’s view. In terms of public support for making films in the future, do you think the issue is that, in terms of developing the industry and nurturing talent, it is about supporting films that are seen as too risky for commercial producers because you are either using untried and untested talent or the format or the concept might be considered too risky? Or do you think that, in general in the UK film industry, there is a lack of investment from the private sector meaning that there are perfectly good film ideas that are not necessarily viewed as commercially risky, but just struggle to get the level of financial support they need to be viable? Are there things that the Government could also do, not just looking at it in terms of public funding, but looking at trying to support the growth of markets, that would be a significant contribution as well?

Mr Elstein: The first thing to remember is that two thirds of films made in the UK receive no UKFC, BBC or Channel 4 funding, so there is a very substantial industry that is not dependent on specific injections of money in order to get made. Everyone is dependent on the 15% tax credit. That is a given. What we expect particularly the Lottery funds to do is to offer a dimension of additionality, which is spreading the cultural/commercial risk a little more adventurously. If all you are ever doing was backing winners, you wouldn’t be adding very much. Why would you need Lottery funding for that? So there has to be risk involved, and if all we ever had to do was to predict what would fail, we would get it right 90% of the time, because 90% of the time films don’t get their money back. So we just have to be careful about characterising the British film industry as being dependent on injections of specific amounts of public money. Above the level of the tax credit, it is a modest amount-most of it coming from broadcasters.

Mr Bevan: I think it is an argument for keeping the production side of the Film Council intact basically, because I had spent the last six months putting a new production side together, which I think is extremely well led by Tania Seghatchian now. It’s a very democratic way of getting through. It allocates its resources. Of the £15 million, I think 20% goes into project development, a couple of million is ring-fenced for artistic and more interesting films, and the balance is to go towards investing in more commercial cinema with a lean towards first and second-time directors. And that was after a great deal of consultation, talk, chitchat and all the rest of it and it seems to me that that is a pretty good mix and a very good team at the moment and they have a good list of projects on the go.

Ms Nevill: I think the one thing, just to pick up on something else that came up earlier, is that if you look at the box office in this country, something like 98% of it comes from fewer than 20 titles. So, if you’re saying that you are going to invest in British filmmaking, diversifying and bringing up new talent, you have to look at ways in which you can grow your audiences to be a little less conservative in their choices and to make sure that a broader diversity of cinema is available more broadly across the UK. So I also think that’s part of the equation of making a success.

Mr Bevan: Or we could just make good movies. That would be the alternative.

Chair: That would help. We need to move on. Can I thank the three of you very much?

Examination of Witnesses

Witnesses: Dr Simon Thurley, Chief Executive, English Heritage and Dame Fiona Reynolds, Director General, National Trust, gave evidence.

Chair: We turn to the second session this morning, in which we are concentrating on heritage. I apologise for keeping you waiting, but welcome to Dr Simon Thurley, the chief executive of English Heritage and Dame Fiona Reynolds, the director general of the National Trust.

Q193 Mr Sanders: Good afternoon-it is just afternoon. What have been the consequences of the reduction in English Heritage’s grant over the past ten years?

D r Thurley: You probably have the figures there of what we have had to deal with. I’m pleased to say that it hasn’t resulted in a significant reduction in the services that we provide to the public. It hasn’t resulted in a reduction in the services we provide to visitors at our sites. That is mainly for two reasons. First, we have embarked on an efficiency programme that has led to us, I think, being among the most efficient of the bodies in DCMS. We have also been very busy generating additional income. The income that we generate from our commercial activities now stands at £48 million a year, which is substantially more than it was 10 years ago, so a combination of additional income and efficiencies has meant that the services we have provided have not had to be cut.

But there have been two other consequences that I think have had a wider impact. The first is that we haven’t been able to invest in the conservation of the sites that are in our care, and there is currently a £56 million backlog in conservation. The second thing is that the grant money that is available for third parties has effectively been frozen for 10 years, and with the effects of building conservation costs being quite high-the inflation costs being quite high-this has meant there has been quite a lot less money available for us to grant out to third parties, particularly for heritage at risk but also for other types of heritage activity.

Q194 Mr Sanders: I think the figures show your administrative costs have fallen by 16% in the past three years, which is quite impressive, but can English Heritage make any further reductions to their administrative costs?

D r Thurley: Of course it is always possible to make further reductions and-no doubt after Thursday’s letter that I’ll be receiving from the Secretary of State-we will have to make further administrative cuts. Clearly, there comes a point when you reach a stage of efficiency from which it is difficult to make very substantial improvements. Some benchmarking work that we have done on things like the cost of our finance and HR functions does show that if you benchmark that against commercial companies of a similar size, we are more or less there in percentage terms. Therefore, the amount of the saving that we’re going to make from efficiencies and from administration obviously will be smaller than we would like.

Q195 Mr Sanders: You say that you are expecting a letter from the Government. Have you had any dialogue with Government in advance of the spending review?

D r Thurley: Almost ceaseless for the last three months.

Q196 Mr Sanders: Was that fruitful, do you think?

D r Thurley: I guess the letter on Thursday will show whether it was fruitful or not.

Q197 Mr Sanders: Was it a dialogue between two, or a one-way communication?

D r Thurley: Of course we have new Ministers. I had the privilege of knowing the Secretary of State when he was in opposition and I had the opportunity to show him various heritage sites. The heritage Minister-and we are very happy to have a heritage Minister, John Penrose-is someone who is new to the brief and it meant that we had to work very closely with him to bring him up to speed. I think that we have had a very fair and professional hearing from him, and I think that he has gone out of his way to understand the complexities of not only what English Heritage does, but what happens in the heritage sector.

Q198 Mr Sanders: Assuming the letter is the bearer of not particularly great news, how are you going to prioritise what are essential and non-essential activities and roles performed by English Heritage?

D r Thurley: There are some things that we are required to do by statute. Clearly, those have to come to the top of the list. There are also some things that only we do and, therefore, they also must be at the top of the priority list. Therefore, we will be very careful not to reduce the planning advice service that we give to local authorities. We will be very careful not to lose some of the expert technical expertise and advice we give to, for instance, churches and other types of specialised heritage. We will do our best to preserve the area of listing and scheduling heritage protection, which is at the core of what we do. So it is a question of looking at the core of our activities and protecting those above everything else.

Q199 Mr Sanders: Would it be better to encourage maintenance and preventative measures for deteriorating buildings rather than grant-aiding them when they are already in disrepair?

D r Thurley: Of course, yes, it would be, and there are a number of things that could be done. This Committee, in previous existences, will be familiar with the issue of VAT, and that is obviously a big issue. A lot of our expenditure and the expenditure of NGOs-the amenity societies and so on-is increasingly focused on helping people undertake satisfactory maintenance in the first place rather than waiting until there is a problem at the end. If you were to look, for instance, at the substantial amounts of money that English Heritage puts into helping places of worship, we have been rebalancing over the last few years the amounts of money we put into remedial work, to repairs, and the amount of money we’ve been putting into supporting congregations to understand how you maintain properly a 13th century building so that it doesn’t get into the sort of state where it has to come to English Heritage or the Heritage Lottery Fund for a grant.

Q200 Mr Sanders: A final question: in your dialogue with Government, did you raise the issue of VAT?

D r Thurley: We have raised the issue of VAT many times with the Government. In the context of the spending review, the conversation we’ve had with them has been about the listed places of worship VAT reclaim scheme, which is a sort of substitute scheme for the big decision that we would really like, which would reduce the burden of VAT on repairs to historic buildings.

Q201 Chair: Can I ask this, Dame Fiona? The National Trust is probably the most successful body in the country at attracting huge numbers of small donations from individuals to support cultural heritage activities. How important do you think it is that we continue to have public support for heritage through English Heritage?

Dame Fiona Reynolds: Thank you very much for that nice compliment. Yes, we do indeed raise very, very large sums of money through asking millions of people to give us what individually might be quite small levels of donation, but which add up to a huge contribution. The acquisition of Tyntesfield in early 2001-02 and Seaton Delaval Hall in Northumberland last year were very good recent examples of that. It’s obviously critical that there is public support for heritage. This is a country that is enormously rich in both our historic and natural environment-the treasures that we have. And it’s been public support, literally in our case for over 100 years, and many other bodies that have been around for a long time too, that have nurtured that public support so that we have the heritage that we know and love today. That does not mean, of course, that we do not need the Government to be critically engaged in a number of areas, both as regulator and as provider of the statutory framework within which we all operate. Indeed, in showing that the Government care about heritage too, that leadership is absolutely vital. But I see what the National Trust does, alongside many other organisations, as a very strong part of the picture of heritage in this country. We value our independence and we value what we can do, but we do not do it alone.

Q202 Chair: So you would share Dr Thurley’s anxiety if English Heritage was to suffer another significant cut in its income?

Dame Fiona Reynolds: It’s clearly critical that we have strong heritage statutory bodies in this country. We do an enormous amount with our 3.8 million members and hundreds of properties and huge landholdings, but we are not a statutory provider in the same way that English Heritage is. So we absolutely believe it is important that there are strong and effective statutory bodies and a strong and effective regulatory framework for everything that we and others do.

Q203 Chair: We will come on to the actual ownership, I think, in due course, but in terms of the grant-giving activities of both English Heritage and HLF?

Dame Fiona Reynolds: Yes, we receive small amounts of grant proportionately to our overall position. Our turnover is around £400 million a year, of which a very high proportion is from membership and donations, with well over half coming directly from the millions of people who support us. But those are small amounts of grant aid-last year it was just under £2 million from English Heritage-in relation to some very specific statutory obligations, which go back many decades in some cases around particular properties that were transferred to us with particular relationships and the commitment to grant aid their long-term maintenance. We get grant aid from HLF for, so it provides us, after a very lengthy and detailed application process, with grants for specific projects that we want to do and we compete with other bodies for those grants. I think last year HLF was just under £3 million, but it varies every year, clearly.

Q204 Chair: We’ve heard from Arts and Business about the Government’s wish to try and plug the gap by increasing private philanthropy. As the most successful organisation in the heritage sector at attracting voluntary donation, do you think there is further scope?

Dame Fiona Reynolds: There is certainly further scope in the sense that, as I said earlier, Government provides the framework within which the activities of the heritage sector take place and also the philanthropic climate. There are certainly things that could be done. For example, we’ve been calling for improvements to Gift Aid, which is a very significant source of income to us-a top-up of donations-and there are lots of discussions going on now about how that might be best achieved. We, for example, support the composite proposal, which is administratively simpler and certainly plays to the strengths we have in attracting large amounts of money from large numbers of people, rather than very small numbers of people and huge donations. There are other views on that subject, but that’s our view.

The other thing that would enormously strengthen the position is to enable people to give gifts during their lifetime. At the moment you can give money tax efficiently on your death through the AIL system (Acceptance in Lieu) and that’s enormously important, but you can’t-as you can in the States-give money tax efficiently during your life on either a capital or revenue basis. There’s lots of evidence that that would improve things, and not only for us but for many other charities. So, that wouldn’t be a substitute for statutory activity that takes place, for example by English Heritage, but it certainly would help things.

The final area, of course, is support for volunteering. We have an enormous contribution through gifts of time from our 61,000 volunteers. Again, the Government could make it easier for people to give time-for example by volunteering during work time. There’s a very small amount of support for that at the moment and it could easily be expanded. But I think there’s a risk that the Government sees the voluntary sector as simply able to pick up all the issues that may fall out-we don’t yet know-of the spending review. And I think there has to be a word of caution about that because all of us in the voluntary sector are very clear about our obligations and our responsibilities, and we cannot simply take over things that were Government funded without some very, very careful thought.

Q205 Alan Keen: Could I come to built heritage? I’ve lived in or close to the London borough of Hounslow-I now represent the western half-for 47 years. Luckily, from a political point of view, I represent not the posh end, so it is a virtual desert for built heritage. But we’ve got Osterley House, Syon House, Chiswick House, Gunnersbury House, which we share with Ealing, and Hogarth’s House. There’s been a very steep decline in conservation specialists in local authorities over the last so many years. It is very worrying and it is going to get worse with the cuts, presumably. What will be the consequences of that?

Dr Thurley: Well, this is a matter of extreme concern. A very important point I’d like to make to the Committee is that while English Heritage obviously plays an important role in channelling some parts of the Government’s expenditure towards heritage, the Government’s investment in heritage is much wider than the current £130 million that is the English Heritage grant in aid. An absolutely vital part of that, as you rightly point out, is the money that is spent on heritage by local government, particularly through the employment of conservation officers, who are the front-line troops in protecting heritage. They don’t spend the majority of their time protecting Syon House, Gunnersbury House or Chiswick House. It is the conservation areas; it is the pub on the corner; it is the listed telephone box; it is the milestone by the western avenue. It’s those things-the things that mean a lot to local people-in which local conservation officers are mainly engaged. What we know from our figures-from our surveys-is that since 2007 there’s been a 14% decrease in the number of conservation officers. What is undoubtedly happening, and is going to happen more, is that conservation officers are not being replaced when they leave and the type of specialist resource that has previously existed in planning departments is no longer there.

Now, the second part of your question is what does that mean? Well, it means that the danger is that when planning decisions are made that affect conservation, the local councillors who sit on the planning committees do not have the appropriate advice that will enable them to make sound decisions. That gives us all a problem. It gives local people a problem because heritage is one of the things that winds people up more than almost anything else in terms of planning. So, there is a looming issue and it is one of the issues that English Heritage is very much committed to addressing in partnership with not only local authorities but NGOs, the amenity societies and others.

Q206 Alan Keen: Have you got a scheme possibly for educating councillors, because they’re going to be under pressure? Their main aim is to look after the less well-off people and that’s got to be their priority. Traditionally, in Hounslow, we’ve got the aeroplanes coming over the top of us, so we’ve got plenty to worry about, and councillors tend not to be focused on the things that I care about and that you both especially care about. Have you got any scheme for educating local authority councillors?

Dr Thurley: Yes, we have two schemes. We have one for elected members which we call “Heritage Champions”, and our objective is to have as many heritage champions across the country as possible. We want one in each local authority. Ideally, we would like a cabinet member to be a heritage champion, so that’s an elected member who holds particularly the brief for keeping an eye on heritage and keeping an eye on the other side of what we do, which is supporting the necessary expertise at officer level. We have a very extensive training programme that we call “Helm”, which works across the country with the officers. So, we recognise that a really important part of dealing with the potential skills gap in local authorities is getting commitment from elected members and then working with possibly officers who don’t have a title “conservation officer”, but are in other parts of the planning department, to make sure that they have the necessary skills to provide the right advice to the planning committees when they consider heritage matters.

Q207 Alan Keen: So you fear, I suppose, that there won’t be any conservation? Well, maybe not, but if you take my own borough, you fear that we’ll end up with no experts and, therefore, you’re hoping you can get through to other council employees as well as councillors and give training. It’s not so much training as to make sure they’ve got the culture?

Dr Thurley: I doubt if we’ll ever get to a situation where there are no experts-I sincerely hope not. I think the question is making the argument that making good conservation decisions makes good places. Good places are places where people want to live. Good places are economically successful places. Therefore, the argument that we would put to local authorities is that this is a skill you need among your officers if you are going to create an environment where people are happy, where people are prosperous, where people are stable, where you have low levels of crime, where you have high levels of tourism. This is a core skill that you need, and that is the argument that we have to make and win.

Alan Keen: Another issue, of course, which helps attract local people to heritage issues is that-you had to sit through the previous session and be kept waiting-lots of those sites that I mentioned in Hounslow are used frequently for films and TV dramas. We link those together and help attract people to it. But you tend to get active groups for one house and an active group for another house. We don’t want to rely just on those people who do that. Thank you, that sounds encouraging.

Q208 Paul Farrelly: I’m very well aware of the gaps around the country just from my own experience of my own borough council-Newcastle-under-Lyme-in conservation expertise. Quite often you realise the value of something only when it has either fallen down, when it’s become uneconomic to repair and people say, “What a shame,” or when somebody has been stupid enough to allow something to be demolished because of a lack of expertise. I will declare this now: I’m the founding patron of an architectural design centre called Urban Vision in Staffordshire, which in part tries to fill the gap. It’s one of 20-plus of these regional centres around the country. The regional development agencies have now been abolished. Local government grants are coming under cuts, and all these bodies receive funding and are supported by the Commission for Architecture and the Built Environment-CABE-but there’s a question mark over the future of that organisation.

Just before we move on from English Heritage, I just wanted to ask about the situation with CABE and the discussions that you’ve had, because this is an area where you may be asked, if more quangos, as they call them, are merged, to be taking on more responsibilities. The core responsibility of CABE is in design review, which is not something that English Heritage does at the moment.

Dr Thurley: Well, obviously, it would be completely inappropriate for me to comment to the Committee on the future of another body, so I won’t do that. But what I can do is to say that there were discussions during the progress of the debates about the public bodies Bill about whether English Heritage and CABE could be appropriately merged. There were serious discussions about it on a philosophical level and I should say that not only I and Richard Simmons, the chief executive of CABE, but also our respective chairmen and commissions, felt that there was a fundamental conflict of interest in such a merger being pursued because the two bodies represent two very distinct constituencies. Those constituencies on occasions-not always but on occasions-do come into conflict, and it seemed to us and I think subsequently, seeing as we haven’t been merged so far, to Ministers that those conflicts perhaps should be resolved in public in a democratic forum rather than being resolved by a quango behind closed doors. Obviously what I mean is the balance between the quality of new design and preserving old buildings, and if there is a conflict between those they should be resolved by local elected councillors and not by two quangos sitting in London.

Q209 Paul Farrelly: One of the importances of design review as carried out by the local body, which also gives some conservation expertise as well, is that it tries to reconcile these sometimes conflicting differences. It’s a peer review process to improve the quality of design of new buildings in areas such as mine, like others around the country, where people have not really looked at the importance of design in the past. But again, it’s not something that you do. As well as the conflicts, do you have the expertise to do it if CABE was simply abolished and you were asked to take on the task?

Dr Thurley: Well, the core expertise that English Heritage has is in identifying what is significant-historically, architecturally, aesthetically-from our past and advising local councillors, owners and others on the best way to give that a sustainable use for the future. Now, that might involve, on occasion, making adaptations to buildings, sites or monuments that gives them a new and viable use, in which case we would advise on aspects of new design. But we really do not have the skills and expertise to comment on an entirely new building in a new setting that has no heritage aspect involved at all, and I think it would be inappropriate for us to do so.

Q210 Damian Collins: A question to both of you, really. Do you think there will be merit in asking English Heritage to concentrate on some of the preservation issues that have been discussed so that the visitor attractions that English Heritage runs could be run by the National Trust? In my area I think there are-I represent a constituency in the south-east-70 visitor attractions run by English Heritage. Do you think it would be better-I’m not saying you’re not doing a good job running them at all-in terms of simplifying the role that English Heritage, and do you think it might make sense to say the National Trust could run those sorts of visitor attractions, which are more like the sorts of attractions the National Trust runs already, meaning that English Heritage could focus on some of the conservation advice and protecting heritage sites that aren’t visitor attractions and for which there aren’t the amenities there to make them such?

Dr Thurley: I can-

Dame Fiona Reynolds: Yes, go on.

Dr Thurley: I will kick off and then hand over to Fiona. It might just be worth very briefly just setting out the background of why English Heritage runs visitor attractions as well. In the 1880s, the Government started collecting the most important ancient monuments in the country to form a national collection of ancient monuments. It started off collecting prehistoric monuments until about the 1920s. Through the 1920s, 1930s and up until the war, it collected a large number of mediaeval buildings, including ruined abbeys and castles. By 1945, the Ministry of Works-which basically was carrying out the functions that English Heritage now carries out, although, of course, there were fewer of them-already had in its care over 250 sites it had opened to the public.

After the war, it was realised that a huge number of country houses would fall vacant and that there was going to be a terrible problem with them, and the legislation that we all understand that set up the arrangements that allowed the National Trust to take on houses came into being. And with the exception of one country house, which was the one that the Government took, which is Audley End-which is the thing that frightened it-it then passed the legislation which allowed Blickling Hall, which was the first one the National Trust has, and the National Trust took on the houses. So, the Government’s legislation passed after the war was deliberately passed to prevent the situation of the state taking on all these country houses, which was obviously a genius idea and created the fabulous organisation that we know the National Trust is.

So, the buildings that English Heritage looks after are a carefully and deliberately constructed collection of buildings, just like the paintings in the National Gallery, that were collected by the state to illustrate British civilisation, because it obviously included buildings in Scotland and Wales at the time-they are now run by Historic Scotland and Cadw. So, there is a coherence with the collection there and, of course, that collection belongs to the public.

Now, the question about who manages them is quite easily answered, which is this is obviously a matter for Government and it is for the Government to decide who manages that national collection of sites. The national collection of sites does not belong in a freehold sense to the Government, with a very small number of exceptions. Most of them are in what is called guardianship, which means that the freehold is retained by a private member of the public, and the guardianship is vested in the Secretary of State. The Secretary of State could decide, if he so wished, to transfer the responsibility for running the national collection of ancient monuments to another body-to the National Trust. The Government could set up a new quango to do it and there could be various other arrangements. My understanding of the situation at the moment is that the Government believe that the current arrangements seem to be satisfactory, but I don’t know whether Fiona wants to add to that.

Dame Fiona Reynolds: Yes. Well, I think there’s a philosophical answer to the question and a practical one. The philosophical one is very much about this national collection, which is established as the responsibility of the Government-the Government will decide how they want that best managed. I think as we look at public bodies lists and all the rest of it, they do not seem to have made any dramatically different decisions, but it’s within their gift, ultimately, to make that decision. We accept that. That’s a philosophical view.

The practical one is does the National Trust want to run lots and lots of sites that are not at risk and are collected for a particular purpose? We have our own liabilities coming out of our ears, I should say, and our own responsibilities. We were set up as a charity to safeguard-and in many cases to rescue-places at risk. As Simon has described, there’s been a succession of those. Back in 1895, it was vernacular buildings and tiny patches of green space-Octavia Hill called them open-air sitting rooms for the poor-and then the country houses, then the coastline in the 1960s, and then, in the 1980s, great tracts of countryside, with Snowdon and Kinder Scout, and then more recently more what we call rather quaintly social acquisitions: the Workhouse, or more domestic buildings such as the Beatles’ houses. That’s our view as a charity of what we are set out to do and I think the two are quite different propositions.

Q211 Damian Collins: My constituency is in Kent, and if you look at somewhere like Dover Castle in my next-door constituency-I hasten to add I have not discussed this with the MP for Dover so I’ve no idea what his view is-that is a site you could see could be run by the National Trust probably just as easily as English Heritage. I suppose I wonder what other advantages there are, because are there things you can do as a charity and a trust that, given the way in which you are successfully commercially selffunding, could actually mean there might be some merit in saying some of the larger, more popular sites that English Heritage runs could sit quite well within the National Trust?

Dame Fiona Reynolds: At the margins I’m sure that’s right and I’m sure there will be a discussion over the years about whether there are those kinds of options. But I suppose what I was trying to emphasise is that we’re a very self-motivated organisation. We know what we are trying to achieve; we have a very clear strategy for the next 10 years. There are plenty of other things that would probably come higher on our list of priorities of things that we needed to do than taking on responsibilities that are already being very well looked after-and are very successful in their own terms-by Government agencies.

Q212 Damian Collins: A slight change of subject: do you think, looking at the way the National Trust runs and your experience of fundraising and attracting bequests, that there are lessons for the arts sector as a whole in the way you’ve gone about that work?

Dame Fiona Reynolds: Gosh, that’s a big question. It would be rather presumptive of me, I think, to say so. All I would say, though, is that there is something very special about being a charity, which I love. I’ve worked in the NGO sector for nearly all my career, and I think this ability to involve people through membership and subscriptions, and actually also through volunteering, is a very special characteristic of this country. I certainly believe that it’s one of the things that distinguishes us, and any Government need to ensure that charities thrive in a regulatory environment that is created by the Government. That can apply in any sector. It applies in the health sector as well as the arts and the heritage. It’s a very broad and successful part of what makes us as a country feel good about ourselves, I think. So, the lessons that we’ve learnt are possibly translatable in many other ways and, indeed, other charities do very interesting things, too, but I don’t think it’s a matter of just taking one proposition and plonking it down somewhere else. I think the reason why the trust is as successful as it is today is partly that long history, that record of delivery and the ability to inspire people, which I have to say I think is as important in the 21st century as it was back in 1895 when we were established.

Q213 Damian Collins: Do you think demographics are on your side-a growing ageing population with spare money and the time to go to Sissinghurst and Chartwell and everywhere else?

Dame Fiona Reynolds: Well, I certainly hope so. I’m not sure about the spare money. We’re all waiting to see what impact the spending review has on the very large number of supporters of the charitable sector. Actually, we’ve spent a lot of time in the last 10 years attracting young families as supporters, and very successfully, too. I think our aim is, frankly, to reach everyone. The charitable trust was established for the benefit of the nation, not just for one segment of society. So, we have a big challenge still in reaching more people.

Q214 Damian Collins: One final question on money: is it a recession-proof business? Have you found income steady through the recession?

Dame Fiona Reynolds: Well, so far, yes. The last financial year was our best year ever both in membership, in visits and in commercial profit from our shops and restaurants. This year is proving tougher and it’s a whole range of factors including the weather, which I have to say is a big factor in our business, but also I think that we’re definitely seeing belts tightening again at the moment; not in terms of people coming, because the National Trust membership subscription is fantastic value so people do come, but whether they spend or they bring picnics, which, of course, we encourage them to do. So I think we are seeing things hardening a bit. I think we have shown ourselves to be relatively recession-proof but the next couple of years I think we’re going to have to watch things very carefully.

Q215 Paul Farrelly: Just on that point, not much is asked about English Heritage’s membership side, but last week a couple of long-standing donations and subscriptions went in my latest-it was not a bonfire; it was a small funeral pyre of the debits. When Mrs Farrelly swings a less sentimental axe, I’m not sure that the National Trust family membership will survive, quite frankly. So, are there any concerns about the future of membership?

Dame Fiona Reynolds: Yes, very much so for exactly that reason. When people do take a good, hard look at their direct debits, they are bound to question. We just hope, and there is some evidence at the moment that this is still absolutely clear, that we represent such good value-£82 for a family membership for a year, which allows you free access to more than 300 sites scattered throughout the country, so there’s always somewhere near you. People do want to spend their leisure time in beautiful surroundings. There does seem to still be a real hunger for access to these beautiful places, so we’re just hoping that we can continue to provide that. But you’re right, this is a very difficult time we’re facing and we’re all going to be watching very carefully to see the impacts.

Q216 Paul Farrelly: And English Heritage, how important is your membership aspect?

Dr Thurley: Well, we’re about a million members calculated on the same basis as the National Trust does that, which is obviously a quarter of what it has. We’ve had a very rapid increase in membership. Over the last eight years, it has increased by 62%, which is a very steep increase. We are very keen on it because obviously it is a way of getting secure income. Most people who sign up remain members for at least three years and that is guaranteed income for us. It is really the backbone of what we do. Three years ago, for the first time, we made more money through membership than we did through admissions at the gate, which was an important turning point in terms of the structuring of our business.

Q217 Paul Farrelly: Finally, how are subscriptions faring at the moment?

Dr Thurley: Well, I think Fiona has really covered the ground. We are still doing very well. Last year was also the best year we’ve ever had. This year has been extremely good. Membership recruitment is still very high. People think that it is very good value. No doubt there are people who are having a sort out of their direct debits, but we haven’t noticed it. Membership is growing still very, very rapidly.

Q218 Chair: You heard the evidence, or the tail end of it, that we took from the film industry, where the reduction in the amount of Government money available has led to a complete reconfiguration-there is still uncertainty about how it will emerge-of the way in which the Government support film. Yet, in the case of heritage, it appears that despite some debate about separation of functions within English Heritage and whether or not the Lottery Fund and English Heritage might come together, it looks as if there isn’t going to be great change in the structure. Do you think that’s a good thing or a bad thing?

Dr Thurley: Well, I think that one has to organise the tools that you have in government in such a way that they are appropriate to meet the problems out there. I don’t think that there are new circumstances that really call for a major structural change to the way the Government organise their various bodies. Certainly, if you were to start with a clean sheet of paper now, you might not have English Heritage, the Heritage Lottery Fund, the Churches Conservation Trust, and various other bodies that happen to be in DCMS-you might not have it like that. But what was certainly revealed during the extensive discussions which led to the publication of the public bodies review was that structural change is extremely expensive and extremely time consuming. Fragmenting English Heritage-taking off the properties-would cost £27 million because, of course, all the services are shared within English Heritage. You would have to create two new bodies. It’s a very expensive activity. Merging English Heritage and National Trust? Again, a lot of costs; relatively small savings.

So, what I think very sensibly the Government have focused on is saying, “Look, what you should be doing is doing some rationalisation of who does what.” If you draw the Venn diagram between the various organisations, there are areas of overlap and you should concentrate on getting those areas of overlap eliminated and strengthening the unique aspects of the individual organisations. I must say that I do think not going for expensive and timeconsuming structural change right now is the right decision. That does not mean that when the economy is doing better-when there is more money around and there are fewer heritage problems out there-that might not be something that you might want to return to.

Q219 Chair: Is that the view of the National Trust as well?

Dame Fiona Reynolds: Well, yes, in the sense that we were obviously not in the mix because, gloriously independent as we are, we could watch from the sidelines on that. But again, I think the point is to what end would restructuring take place. We have pointed out in the past that there are somewhat anomalous structures at the moment in terms of the composition of the various bodies, but at this moment, in a very severe spending climate or real financial difficulty, to what end would any restructuring be? And I think the worry there is massive cost for little benefit at a time of great upheaval. So, in a sense, we watch from the sidelines but we have no great hunger ourselves to see a massive rearrangement of the deckchairs. As I said, it is in our interests that there are some very strong and effective heritage bodies delivering for the Government and providing the framework within which the rest of us work.

Chair: I think that is all we have for you. Thank you very much.

©Parliamentary copyright	Prepared 27th October 2010

Jonathan Stuart-Brown

www.savethebritishfilmindustry.com