17/02/2003

In spite of fewer local films being made, many experienced British professionals who weathered the film production crisis of the late 1980s are not worried about the current downturn in local film production. “We did loose some good sources of financing in 2002 with the closure of Film Four and Granada Films," commented Ken Loach’s habitual producer Rebecca O’Brien, "but I wouldn’t say we are in a production crisis". A similar point of view was expressed by producer Nik Powell: "Today there is more money in the UK than there has ever been before. Yes, the pre-sales market is weak, but the tax/subsidy-based market and the co-production market are very strong".
Indeed, public funding is now very much in the generous hands of the Film Council which pumps around £50m (Euros75m) annually – most of it Lottery money – mainly into film development and production. Regional film funds such as Scottish Screen, the Glasgow Film Fund, or the Isle of Man Film & TV Fund represent an alternative or complementary source of public financing for UK and foreign producers.
In 2002, 11 films were supported by the Film Council and the National Lottery franchises, including five European co-productions: the French/UK film Helen of Peckham and The Magic Roundabout, the UK/Luxembourg film The Girl With a Pearl Earring [+see also:
trailer
film profile], the Irish/UK film Intermission and the UK/Norwegian film One Love. The most dynamic Regional fund last year was Scottish Screen which used its annual £1.3m (Euros1.95m) budget to co-finance six films including two European co-productions: the UK/Norwegian film The Bum’s Rush and the Danish/UK co-production Skagerrak.
Over the last five years, tax breaks through sales and leaseback, or production equity schemes have also helped counterbalance the gradual disappearance of traditional equity financing and attract more foreign investors to the UK market. Over £1.6 billion (Euros2.4b) were raised by various tax-breaks in 2001. Since last summer, TV productions are no longer eligible for tax breaks and so the search for potential investors at home and abroad has further escalated.
Typically, the sales and leaseback scheme, Section 48 of the Finance Act introduced in 1997 and extended until July 2005, provides a 100 per cent first year write-off for investment in productions or acquisitions of British films with budgets under £15m. Section 42 offers less tax relief but doesn’t put a limit on budgets. Co-productions falling under official treaties with the UK (including France, Italy, Germany and Ireland) or under the European Cinematographic Convention only need to spend a minimum of 20 per cent of the production costs in the UK, and only 10 per cent for three-way co-productions.
If producers can secure valuable front-end financing for at least 10 per cent to 13 per cent of their budgets via sales and leaseback, they can then access other tax-based production schemes (which flourished in 2002) that claim to offer investors as much as 50 per cent of a given film’s budget in equity financing. Inside Track for instance, the new equity fund from established UK tax financier Ingenious Media, said it was ready to raise as much as £50m (Euros75m) to finance 15 films before the end of the current fiscal year in April 2003. In 2002, Inside Track backed two Pathé Pictures titles: Suzie Gold and Girl With a Pearl Earring, and the Icon Entertainment International film, Blackball. To attract a higher volume of foreign investors (notably from the Continent), Ingenious Media has just appointment Simon Perry, the former head of British Screen as their new director of co-production.