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.
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33 Responses to “The economic madness of abolishing the UK Film Council”
StephenH
@MatthewTaylor
I’m sure the author can defend himself– my gripe was with Guidos ideological prejudice that if its not worth a private investment then its not worth government investment.
Matt London
@Mike: The Tories believe Private sector good public sector bad – just dogma
As a Disraelian tory I’d say that that wasn’t so much a dogma as a response to old Labour – and post 2005 GBrown – who believed, dogmatically, “Public sector good, private sector bad”.
Look at Conservatism over the 150 or so years of its existence and when it was opposed principally by the (laissez faire, low tax) Liberals it was often more ready to accept the public spending/ public sector/public intervention solution. Conservatives in my experience are pragmatic – not idealogically driven: look at the long years of Butskellism, look at the actual levels of public expenditure year on year under Mrs Thatcher.
But because they are not so idealogically committed to public sector spending as labour they need to be convinced that the public sector solution is the most appropriate one and offers best value for money.
Matthew Taylor’s analysis makes sound sense – Mr Burton-Cartlidge’s analysis is pathetic.
C H Ingoldby
Your figures assume that the films would not have been made without the subsidy and attribute all revenues from the films to the subsidies.
That is clearly absurd. It isn’t even taking account of the difference between revenue and profit.
Frankly if this is the best defence of the UK Film Council then good riddance.
Matthew Taylor (MTPT)
@StephenH: In principle I share Guido’s view/prejudice, but in practice (until we manage to achieve an anarcho-capitalist world) there can be a case for “spend to make” on the basis you suggest.
I am unclear, however, why the film industry is treated as a special case. At a gross over-simplification, any economic activity which actually costs £X, could return tax revenue of >£Y, but which will not be conducted if it costs more than £X-Y, could recieve government funding of £Y to enable it to take place, with a net profit to the government. Frankly, funding films seems less efficent than, say, funding training courses for plumbers or chemists.
(I appreciate that in reality the “creative industries” get this money for complex combination of reasons – including politician’s vanity and desire to associate themselves with the magic of the movies, EU rules on state aid, international rules on state aid, and the (ab)use of the existing tax reliefs.)
’tis interesting in passing to note that many of the same people who make noise about the “subsidy” enjoyed by private schools constituted as charities do not appear to have the same objections to film production enjoying tax reliefs. Direct funding by the state (or the lottery) has to be considered in the context of the tax regime, and more broadly in terms of direct and indirect subsidy of the film industry by state institutions like the BBC and Channel 4.
Matthew Taylor
Interesting discussions under this @LeftFootForward piece http://bit.ly/cL8H19 and this @CharonQC post http://bit.ly/arDTou.