The British Film and Television Industries - Communications Committee Contents


SUMMARY






The film and television industries make an important contribution to the British economy. They contribute to national income and employment, and make a net contribution to exports, which has the capacity to grow. Despite the competition from abroad, particularly the US, UK-produced content on film and television has a strong international reputation and makes a major contribution to the entertainment and education of British audiences. This report looks at how these industries have developed, the challenges they are currently facing and what practical help might be provided to enable them to develop further.




Since its inception, the British film industry has experienced periods of boom and bust. From the early years, the Government has recognised its importance and sought to support and protect it, using a variety of tools, including quotas, levies and tax incentives. The industry has been profoundly influenced by the American film industry, built around the major Hollywood studios, which has been at different times an overwhelming competitor and a major investor in filmmaking in the UK. The policy of encouraging American investment has been successful to the point where some two thirds of spending on film production in the UK is on American funded and produced films.




The production arm of the British film industry is its strength. Unfortunately, American companies have always dominated the distribution sector, where much of the profit is to be made. Despite several attempts, no British company has been able to emulate the American model of vertically-integrated companies, which can finance the production of their own films and distribute their own and other companies' productions worldwide. We found this still to be the case, though the coming of digital distribution could offer opportunities for a different distribution model.




Since 2007, the Government has supported the film industry principally through tax relief on film production expenditure. Witnesses from the film industry said the new system had been successful, particularly in attracting big budget films. We recommend some adjustments to the system with the aim of giving more support to smaller films and allowing British films to be partly shot abroad without suffering a financial penalty. Independent filmmakers still face difficulties in financing their films. We recommend that the Government consider ways of encouraging private investment in film production.




The UK Film Council is the UK's strategic agency for film. We found widespread support for its work, but concern that part of its limited budget is being transferred to Olympics funding. We share this concern and question whether the Film Council should be substantially financed through the Lottery. We also question the case for a merger between the Film Council and the British Film Institute, which is currently under discussion.




A number of witnesses saw audiovisual piracy as the main threat to the film industry. We support the Government's decision to introduce measures to combat unlawful file sharing, and welcome the decision of some companies to develop new business models to meet the legitimate demands of their customers. We also recommend new legislation specifically targeted at making the recording of a film in a cinema by camcorder a criminal offence.



The funding of UK-originated content on television is also affected by recent technological and regulatory changes. The last ten years have seen greater competition in the industry, with a proliferation of channels, both subscription and advertising based. Revenue from subscription now exceeds advertising revenue and the competition for the latter now also comes from online.




Despite the increase in the number of channels, the vast majority of UK originated content is produced by the public service broadcasters (PSBs). The spending of the PSBs on UK-originated output fell by 15 per cent in real terms in the five years to 2008. The commercial PSBs are facing serious financial pressures, largely as a result of falling advertising revenue, and this is impacting on their programme budgets, particularly for certain programme genres.




We looked at ways in which this decline in investment could be reversed. We believe the role played by BBC Worldwide in distributing UK content overseas could be expanded, generating more revenue for investment. To this end, we recommend the sale of a part of BBC Worldwide, to create a public private company.




Other ways of encouraging greater production of UK content include a tax credit similar to the film tax credit. We recommend a trial of such a scheme in support of children's programming, which is one of the genres under threat. Other possibilities include the use of the proceeds of spectrum sale and sharing part of the BBC licence fee.




Expansion of online video on demand may provide opportunities for more profit to be made from UK content. One joint venture that would have enabled the PSBs to recoup the online value of their content was Project Kangaroo. This was blocked by the Competition Commission. As a result, American companies may soon take the lion's share of this value. We recommend government intervention in any similar cases in the future, to ensure that the full implications for the television industry are taken into account.




Finally, we looked at training provision across both industries. One of the strengths of the British film and television industries is the highly skilled workforce, both in front of and behind the camera. However, the provision of training is patchy and that there are some specific skills shortages. University courses are not delivering the skills required by the industry. Apprenticeships and internships would improve training in practical skills but are underused. There is also widespread use of unpaid work experience and informal entry routes into the industries, which discriminate against those without connections, while making it unlikely that those recruited are the most able.




The current economic conditions have caused companies in the industry to reduce their in-house training budgets and their contributions to Skillset, the industry training body. We particularly urge the Government to encourage the PSBs to revive their investment in training.



 
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