Funding of the arts and heritage

Written evid ence submitted by Robin Jacob (a rts 18)

With reference to the ongoing discussion  about the UK Film Council. Below are my suggestions which are now being publicized.

The recent news of the intended demise of the UK Film Council is well overdue. It is an ineffectual organization populated by, with the exception of Tim Bevin (recent recruit) clueless individuals earning ridiculous sums of money. Now there are some that will herald a few successes as champions of the UK film industry but the successes are too few and far in-between to make any difference to the industry.

 

The question now arises what will replace it, what will the replacement organization contribute to the British Film Industry, which to frank is and has been in a shambles for decades.

 

Again, too many focus on one aspect of the industry and do not wish or have the capacity to grasp the BIG PICTURE. The core problem in the UK is the attitude of banks, hedge funds, financial institutions, etc towards film investment; they regard the film industry as a losing proposition, and quite honestly have little or no real experience in it. So when they do get involved they behave in the time honoured fashion of screwing the film makers, and attaching themselves to the perceived industry leaders who are as much responsible for the demise of the UK film industry as the banks, government and talent agents.

 

A new approach is needed, one that acknowledges the need for government assistance, especially at the early stage of development, script, budgeting, locations, etc. and the involvement of the private sector or 'High Net Worth Individual' as the source of major funding. What shape would the government entity take and who would run it? Well, 'Film UK' would be an appropriate title; it should be run by film makers with good legal and accounting support. Where would its funding come from? At the moment the lottery fund is the main source however, I would propose that 'bums on seats' should be the main funding source. A percentage of all income from Theatre ticket sales should go to Film UK. VAT is currently at 17.5%, 5%  should go to the Film UK, 12.5% to the government. In 2008 theatre income was £850M, the 5% Vat would mean approximately £36M in funding.  A similar approach for DVDs would contribute another £62M to the coffers.

The total available would be £98M P/A on average. A similar approach to other delivery formats might net another £30-40M. (I believe the Lottery money should go to other causes, medical research, etc.)

 

The question is then just how many people do you need to run Film UK approximately 10 experienced professionals plus legal & accounting and no one gets a salary of more than £80K P/A.

 

The second phase of the new approach is to create an environment where investors can garner tax relief on their investment in a feature movie. This involves the co-operation of Companies House and HMRC. A new classification of company should be installed, 'Film Public Limited Company'. It is only for films or documentaries of no less than 80 minutes in length. The minimum capitalization should be £10K and the shares should be split into two entities - foundation shares, 'A' shares belonging to the owners of the intellectual copyright of the film and 'B' shares, the investors. B share investors would be able to get 30% tax break on all money invested in a film project (minimum buy in £1,000) on the year of investment. If they sell the shares within 3 years they would pay capital gains on any profit made. No capital gains to pay if they sold the shares after 3 years. Companies' house would issue a special film company number and HMRC would issue their own special tax number showing that any investor buying shares in the company can claim tax back in the appropriate year. Once all funds have been raised the project is closed to funding and on completion HMRC must receive audited accounts, DVD of the finished project, etc. There should be no limit on how many or how much an investor can put into a film(s) projects.

 

The combination of increased funding available for development through the Film UK and the opportunity for investors to garner a tax relief on investment would increase the number of film projects undertaken but moreover it would give the film maker the control of the funding and take it away from certain film funds that have abused the tax system, screwed a number of HNWI and most of all screwed the film makers who have often had to give away the rights to the product just to get it made.

 

The added bonus is that if you shoot in the UK there is a UK VAT tax rebate on all UK spend be it talent, location, etc. This incentive should remain in place.

 

The real idea here is to generate more UK made movies, which in turn gives the UK more films to sell overseas where the real money is. It will generate employment, encourage young and first time film makers, hopefully also allow more on the job training and create more tax payers

August 2010