Examination of Witnesses (Questions 620
- 622)
TUESDAY 24 JUNE 2003
SIR ALAN
PARKER, CBE, MR
JOHN WOODWARD,
MR STEVE
NORRIS AND
MS MARCIA
WILLIAMS
Q620 Michael Fabricant: Very much
like a no win, no fee.
Mr Woodward: I too am thinking
out loud, I think as an incremental measure that might well work.
I am not sure whether it solves the problem that my colleague
Mr Norris has in here, which is to attract the money, whether
it is for a small indigenous film or for Tomb Raider or
Harry Potter into the United Kingdom. Substantially what
film finances need to see is an up-front saving in the budget,
they want to be able to find a way of allowing the United Kingdom
to reduce the negative cost of the film so that we are at least
within spitting distance of the mechanisms that do exactly that
in Australia, Canada or Prague. There may well be merit in what
you are proposing, to squeeze more out of the current system or
a new system, if you based an entire fiscal incentive on that
approach my instinct is that is might not be enough to attract
that international money in to the United Kingdom in the first
place.
Q621 Michael Fabricant: On a cashflow
basis it would benefit the film company in the first few months
but it might not in the longer term. Besides on a no win, no fee
basis the Chancellor may say this is the sort of deal I am not
prepared to take a risk on. The other alternative is that you
say to the Chancellor, we will try and make a suggestion that
there be an incentive for distribution, and that includes advertising,
not just the cost of the film but promoting the film as well.
We experienced in the United States the argument that it is no
good actually producing prints if you do not heavily promote movies.
It was also pointed out to us that the United Kingdom is the most
expensive country in the world at advertising by cost per thousand,
far more than that of the United States or any other county. My
question is this, if I am being pessimistic and think that the
Chancellor is not going to want to give any more of a tax break
to the film industry and there were going to be some sort of split
between the tax break given, and this will not be held against
you, to distribution and advertising on the one hand and the production
on the order, how should that tax break be split, 50/50, 70/30?
How do you see it going?
Mr Woodward: We are exploring
a range of models inside the Film Council at the moment. Treasury
and the Inland Revenue officials made it very clear to us there
is no done deal in any way, shape or form. Treasury's view is
that section 48 sunsets in 2005. The policy case has to be made
to extend the tax breaks. The issue then is what is the best mechanism,
is it section 48, is it the son of section 48 or is it something
along the lines you are talking about? My instinct, to answer
your question, is that the balance of the tax relief, the majority
of the balance of the tax relief, logically should sit with production
rather than distribution because production is the point at which
the risk is highest. Where you have a finished film it is easier
to make a risk assessment of the product that you have, that is
what distributors do for a living. While one could attempt to
justify a distribution relief in order to expand and accelerate
distribution logically it is the production process that possibly
will not happen, so you do not have a product to take a view on
as a distributor, that requires most attention and therefore logically
more subsidy, whether that is in the form of a government grant
or lottery money.
Q622 Michael Fabricant: Forgive me
if this question has already been asked, you mentioned that as
far as the Treasury are concerned section 48 sunsets in 2005.
If it does sunset where does that leave the British film industry?
Sir Alan Parker: It will be a
catastrophe.
Michael Fabricant: A catastrophe.
Chairman: Sir Alan, that is quite an
ending, even your films do not always end like that—in fact
the Life of David Gale did have an ending like that. Thank
you very much indeed, we are most grateful to you. That concludes
the public session of our inquiry.
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