10/10/2003

In response to the film industry's many challenges and 'long standing chronic difficulties', the Select Committee identified a number of key areas that need to be addressed by the Government, with two key priorities:

-the continuation -and improvement- of the current tax regime for film
-the need to increase the level of investment from public broadcasters.

Introduced in 1997, the Section 48 scheme gives 100% tax relief for investment in production or acquisition of British qualifying films with budgets less than £15m and can represent around 12-14% of production budgets. As stressed by the Committee, "for the Hollywood studios and other foreign film-makers, these tax reliefs seem to have created a level playing field between the UK and other popular destinations for film-making such as Canada, Ireland, Australia, New-Zealand and the Czech Republic".

For indigenous UK films, the tax deferral has also given them something to bring to negotiations as veteran producer Jeremy Thomas explained to the Committee. " Section 48 has now developed an enormous amount of money for independent producers so they can come to the table and say: I can put 20% down. Let's make a deal. For the first time that I can remember, there is a negotiating weapon for British entrepreneurial producers and to lose that would be everybody shooting themselves in the foot again".

Based on all evidences received from UK and US professionals, the Committee thus concluded that the current tax incentives are of 'indispensable importance in maintaining a healthy throughput of large productions from overseas and of equal importance in promoting a critical mass of indigenous film-making'. The MPs also urged the Government to speed up the debate over the future of the Section 48 tax relief -supposed to expire in July 2005- but also to commit to its 'evolution' into a so-called 'son of 48' which would include a new focus on distribution. The British Screen Advisory Council (BSAC) told the Committee that the current tax incentives "should be evolved by tying the distribution function and its marketing sensibilities into production decisions by tailoring tax breaks in such a way that you get that relationship going so much earlier". Barry Jenkins from the Cinema Exhibition Association also stressed that "more should be given to distributors to spend on prints and advertising because if there is an injection of money into distributors to bring out more prints of specialised product certainly there are enough screens out there in the country now to show that product". This 'son of 48' tax relief concept is actually being discussed by the BSAC, the DCMS, the UK Film Council and the Treasury, and will be unveiled later on.

In terms of support from UK public broadcasters, the Select Committee said that they wanted to see it increased in particular the BBC's commitment. It was suggested that the newly reconstituted Ofcom (the media regulating body) could play a meaningful action to improve relationships between the UK TV channels and the local film industry, using for instance the Statements of Programme Policy required from the broadcasters.

The report finally praised the work achieved by the Film Council, reiterated the crucial role of the British Film Institute as a guardian of film and TV archives, and recommended the Government to provide adequate funding for both agencies for them to meet their respective objectives. The main UK industry bodies enthusiastically welcomed the report that will now be considered by Ministers. UK professionals are now hoping that the government will endorse the recommendations, just like a previous report from the Select Committee that led to the introduction of tax concessions for UK film investors.