The abolition of the UK Film Council a curious decision; indeed, the government’s decision to scrap the UKFC is not just an act of artistic philistinism - it’s a case of economic vandalism too.
Our guest writer is Phil Burton-Cartledge, a blogger and jobless academic; he writes regularly on political, social and cultural issues, and is the political education and trade union liaison officer for Stoke Central Labour Party
The abolition of the UK Film Council a curious decision. This particular move will save the treasury all of £15 million a year, and was probably chosen because ‘it’s the arts’ and apart from liberal/luvvy-types, no one will give a toss. But this is a stupid decision from the standpoint of building on the economic recovery and securing tax receipts.
Since the UK Film Council was set up in 2000, some £160m of government money has been invested in film production. This money has been unevenly spread across approximately 900 pictures, which, according to the UKFC, has generated £700m in worldwide box office receipts.
Of course, the total number of receipts cannot be considered the return on the government’s outlay. The UKFC oversees the distribution of lottery money too, and it is very rare to find a film funded solely by this and tax monies. To borrow a phrase from another area of government, UKFC-funded films are public/private partnerships to varying degrees.
Permit me this small unscientific exercise; suppose all 900 films received an equal slice of public money. Of the £160m, each receives approximately £177,778 as a subsidy. If we treat this as capital, the economic criteria from the state’s point of view would be to receive a profit on that in terms of tax revenue generated.
The table below lists 11 well-known films that have received UKFC financial backing of some sort, with their budgets, worldwide box office takings, and gross profits:
|
Film |
Budget |
Box office |
Gross profit |
|
St. Trinian’s |
£7.11m |
£12.89m |
£5.78m |
| Happy-Go-Lucky | £1.41m | £8.77m | £6.22m |
| Man on Wire | £1.20m | £9.00m | £7.80m |
| The Wind That Shakes the Barley | £4.20m | £12.05m | £7.85m |
| Bend It Like Beckham | £6.00m | £50.00m | £44.00m |
| The Last King of Scotland | £3.16m | £25.45m | £22.29m |
| In the Loop | £0.61m | £1.50m | £0.88m |
| Streetdance 3D | £4.50m | £11.59m | £7.09m |
| This is England | £0.79m | £4.30m | £3.51m |
| The Constant Gardener | £13.90m | £45.81m | £31.91m |
| Gosford Park | £14.14m | £62.68m | £48.54m |
This yields a total gross of £185.87m.
Calculating the tax payable on this is a difficult business. The government taxes the companies that own the films, not the individual pictures themselves – but for illustrative reasons, let us suppose each film is equivalent to a firm taxable at the 28 per cent corporation tax rate.
Applying a corporation tax rate of 28 per cent gives us £52.04m that goes to the Treasury. That works out as an average of £4.34m per film, or a return of £24 for every pound of taxpayers’ money the UKFC invested.
Further, let us estimate the wage bill of these films account for 70 per cent of their budget. The total budget was £57.02m, of which £39.91m went out in wages. Assuming all staff were basic income tax rate payers (which, of course they’re not, but some actors and production staff are foreign nationals and/or not domiciled in Britain, they do not pay tax on earnings here – it serves as a rough equaliser), a further £7.98m makes its way back to the treasury.
That’s £60m off just 12 films. And that’s without counting the multiplier effects this has had in terms of their supply chain, VAT take, cast and crew’s spending, etc.
Nor does it account for future multipliers. Take Kiera Knightley, for example. Bend it Like Beckham catapulted her into the A-List and helped her become a big box office draw. Not only does the treasury benefit from the large fees she’s able to command, but also the cut it gets from monsters like Pride and Prejudice, Atonement, and Love Actually.
Her case shows the return on the UKFC’s initial Bend It investment will pay dividends for as long as Kiera makes films, and beyond. The same is true of other actors, directors, crews and studios whose pictures have received tax payers’ assistance, whether they meet the short-term criteria of returning a profit to the treasury or not – and returning to the short term, even if all the other 888 films were commercial failures they too had their multiplier effects.
The government’s decision to scrap the UKFC is not just an act of artistic philistinism. It’s a case of economic vandalism too.
33 Responses to “The economic madness of abolishing the UK Film Council”
neil coley
RT @leftfootfwd: The economic madness of abolishing the UK Film Council: http://bit.ly/bXcAWg #ConDemNation #FalseEconomy
Neil O'Brien
Feels like there is a missing question here: how many of these films would have gone ahead anyway? What is additional about it?
Guido Fawkes
That isn’t unscientific, it is bollocks. If the yield is so good the private sector will do it.
You talk about the multiplier forgetting it goes both ways, the taxes to pay for the subsidy reduced the same multiplier effect elsewhere – the net effect is negative because of the transaction costs inherent in the bureaucracy.
What makes you think a quango is better than a producer at picking winners for films? A lot of public money was wasted on lemons that only happened because of the subsidy.
Louise King
RT @leftfootfwd The economic madness of abolishing the UK Film Council: http://bit.ly/bXcAWg #ConDemNation #FalseEconomy
StephenH
‘That isn’t unscientific, it is bollocks. If the yield is so good the private sector will do it.”
@Guido
There are a lot of ‘ifs’ in that analysis– but your statement is closer to bollocks– because a private investment wont recoup 25% of the wage earnings plus any VAT spent on the total project (not just its input) — and it wont necessarily benefit from seeding future success whereas the government definitely does.
So yes these are guesstimates but if you stop to think for a microsecond you can see that there are often investments that are worthwhile for government but not private companies.