IS THERE A BRITISH FILM INDUSTRY?

BACKGROUND

  The Association of Independent Film Exhibitors (AIFE) is the representative body of the existing network of specialised cinemas, which has been successfully servicing regional audiences with varied and challenging programmes of international films for many years.

  The primary function of the AIFE is to promote—through the media and in governmental circles—the long-term achievements of its member cinemas in developing a strong public interest in specialised films throughout the UK.

  AIFE considers that its member cinemas are uniquely placed to continue to provide a viable public service in their specific local communities. This on-going commitment from established specialised cinemas will complement the Film Council's stated aims to broaden the availability of specialised films with particular reference to multiplex audiences.

  AIFE is committed to the continued development of the existing network of independent venues whose primary function is to present the broadest possible range of specialised films to the general public. AIFE venues will continue to provide a vital public service commitment to those audiences that prefer to see specialised films within a specialised independent venue rather than a multiplex environment.

  AIFE acknowledges that the increasing frequency of major arthouse releases appearing in the commercial multiplex environment offers a significant growth opportunity for specialised exhibition and distribution. Such a development both grows the overall audience for arthouse cross-over hits and creates greater consumer interest in films beyond the arthouse mainstream.

  AIFE and its member cinemas are committed to exploiting this potential market growth by continuing to offer the broadest possible range of films within their specific localities. AIFE and its members perceive their role in the specialised sector in terms of research and development. AIFE cinemas research and develop the specialised marketplace by offering new films and filmmakers from a diverse range of cultures.

  The secondary function of AIFE is to act as a new focal point for specialised distribution beyond the arthouse mainstream. AIFE and its members will continue to work closely with existing specialised distributors to maximise the audience impact of specialised films being brought into conventional distribution.

  Utilising the specific thematic interests and diverse skills of its regional membership, AIFE also works to bring more films into temporary UK distribution through curated seasons and festivals touring the widest range of member venues. It is this specific interest in specialised distribution that AIFE wishes to explore as a priority with the officers in the Film Council's new Specialised Distribution and Exhibition Department.

PRINCIPAL AIMS OF AIFE

—  To represent the interests of the UK's independent "specialised" film exhibitors to the Department for Culture, Media and Sport, the Film Council, the British Film Institute, National Arts Councils and other UK public bodies; and within the film industry.

—  To increase the range of world cinema available to UK audiences.

—  To actively develop audiences for the widest possible range of films and moving image culture.

—  To promote the cultural, social and economic value of the Independent film exhibition sector.

  A list of AIFE members is given in the Annex below.

  In considering the questions posed by the Select Committee, AIFE believe that the evidence relating to the whole industry will be well provided for by the Film Council, the DCMS and the commercial sector as a whole. The evidence supplied by AIFE consequently focuses on what its core remit which is independent cultural exhibition.

What direct and indirect contribution does the film industry make to the UK economy?

  AIFE believes that the film industry makes an important contribution to the UK economy. This will be well documented by the DCMS and the Film Council. What must be acknowledged is that the independent cultural exhibition sector accounts for three million admissions during 2001-02 which is 2% of total admissions. Although this is a relatively small market share it accounts for the vast majority of "specialised" admissions, ie non-Hollywood and it is therefore a sector that is vital to UK film culture.

  Within the value chain of the UK film industry independent specialised exhibition has a crucial and unique place. This sector is critical in supporting emerging film-making talent and ensuring diversity of film culture. It is a vital part of the research and development engine of the UK film industry. Emerging and experienced film-makers learn about film history, film culture from classics and from world cinema in independent cultural exhibition venues. These venues also support the work of emerging film-makers ensuring that their work is seen and audiences are developed for future projects. Given their unique R&D role this sector makes a vital contribution to the film industry in the UK and therefore to the UK economy.

  For many film-makers and distributors independent cultural exhibition venues and festivals are critical to the financial success of the films and ultimately their businesses. It is widely acknowledged by distributors, film-makers, and the Film Council that specialised film (ie the majority of foreign language film, independent film, art film etc) generate the highest admissions and income in a specialised venue. These venues, the members of AIFE, are therefore central to the financial health and long-term development of diversity in the UK film industry.

  Access to independent cultural exhibition venues and festivals are vital to regional film industries they provide a focal point for networks, idea development and training. Their wide ranging education programmes, central to their work, provide access to resources, high quality speakers and tutors in the regions. They combine this work with programmes for schools, young and older audiences, director talks and a wide range of education events. Activity extends beyond that supported by the commercial market in order to nurture and develop new talent, promote new work and to provide access to the widest range of film to the widest range of audiences.

  In addition to the industrial and education roles played by independent cultural exhibition, all of the cinemas that are in membership of the AIFE screen a wider range of films than their commercial equivalents promoting the best of British and world cinema. This is a vital cultural function of these organisations that makes them significant regional cultural facilities.

  The recent KPMG report produced for the Film Council on the specialised exhibition and distribution sector makes a strong case for intervention in the specialised cinema sector. "If a vision of access for all to a wide range of films is to be realised, significant and well-targeted intervention in the specialised cinema sector needs to take place. Specialised cinema exists to meet the desire of audiences to see a wide range of films, at a variety of cinemas or other locations. Typically venues exhibit a majority of specialised films and are often driven by a broad educational remit. The free market will not deliver a sustainable specialised sector nor fulfil the many important public policy objectives associate with the sector."

  Despite the importance of the independent cultural exhibition sector, both culturally and to the industry, regional delivery is being effected by cuts in revenue funding from the Regional Screen Agencies (RSAs). RSAs were given funding responsibility for regional exhibition when they were established during 2001-02. The problem is that this extra layer of administration has been established without any increase in treasury funding. Consequently, a number these new organisations have had to fund their overheads through cutting grants to cultural organisations or using Lottery funding, for example all cultural clients in the North West of England are being cut by up to 10% to fund the overheads of North West Vision the RSA for the region. Closure of BFI regional programme unit during March 2003 will exacerbate the problem as venues outside of London will no longer be able to take advantage of the subsidised booking service it offered thereby increasing costs by 50% or more.

EXISTING SUPPORT CAN BE IMPROVED THROUGH:

  The Film Council and RSAs do not have enough resources to the job that needs to be done. Although there is some Lottery funding available to help develop exhibition it is the shortfall in treasury funding that is the problem. It is the view of the AIFE that this is because the cultural value of film is not fully articulated to the Government by the cultural agencies. During 2002, the Arts funding system via the Arts Council received a significant and justifiable settlement from the DCMS in recognition of the value the arts have to the culture of the UK in addition to the economic benefits. The language of industry is constantly used to describe film activity yet culturally it is very significant in celebrating the diversity of cultural in the UK, embracing cultures from outside the UK and generating debate and learning. It is vital that if film culture in the UK is not to become "dumbed down" there must be a wider recognition of the cultural value and significant role of film.

  Improvements can come through:

—  Fully acknowledging the cultural function of film in the UK. If this is incompatible with developing the UK film industry, consideration could be given to transferring this function from the Film Council to the Arts Council.

—  Continued and improved funding for exhibitors and distributors operating in areas beyond that operating in the commercial market place.

—  Continued and improved advocacy for specialised exhibition—approximately 80% of UK cinema box office is accounted for by US based distributors with largely mainstream product. UK audiences have access to a very limited range of films.

—  Adequate support for regional screen agencies and a commitment by them to promote and support exhibition on a par with production.

—  Targeted capital investment in specialised exhibition. The AIFE welcomes the Film Council's move away from their proposal to lease screens in multiplexes and the new approach to developing a network of digital cinemas.

—  By targeting public funds to support areas of market failure.

—  By ensuring that there is a clear focus on the regions and regional audiences—and through celebrating regional identity, provide equally for audiences outside London.

Q: How can the production, distribution and exhibition of British films be improved in the UK? Is the right balance being struck between these elements of the industry?

  There is a symbiotic relationship between production, distribution and exhibition. This is particularly so in the specialised sector. Specialised distributors know that specialised venues will find the audiences for their films. However, if the support for independent cultural exhibition is limited it is even worse for specialised distribution. If film culture in the UK is to develop, specialised distribution must be developed alongside independent cultural exhibition.

  The AIFE would like to see:

—  Support for smaller distributors—especially those who will take on non-mainstream/non-Hollywood films; support the taking of risk; build marketing and publicity campaigns and provide resources to support this.

—  Support the PA and fund established by the Film Council, but would like to ensure that this fund is built up over the coming years, £1 million is a good start but it's a drop in the ocean in the global market.

—  Support specialised exhibitors—research has shown that specialised films do best in specialised cinemas.

—  Develop digital projection in specialised cinemas.

  At present the support for production, exhibition, distribution in the UK is imbalanced with the vast majority of funding and support being given to production. This imbalance must be redressed, but not at the expense of any one sector, but through securing additional resources and support wherever possible.

Q: How effectively has the Film Council contributed to a sustainable film industry since 2000? Does the Council have the right strategy and approach?

  It is too early to say as the Film Council and in particular the Regional Screen Agencies are still new organisations. The AIFE believes that they are important and wants to work with these institutions for the long-term benefit of film culture and the film industry in the UK. However, as a direct result of their under funding and high overheads, the existence of the Film Council and RSAs has brought at best uncertainty and at worst reduced revenue funding support for independent cultural exhibition. Although business performance in the independent cultural exhibition sector is good there are still strong underlying concerns caused by the downward trend in revenue funding and continued delays and policy changes in exhibition policy. This is not mitigated when the Film Council's annual report and accounts for the year ended 31 March 2002 is examined. It reveals:

—  Operating expenses £7.84 million (up 35% on the previous year).

—  Salaries totalling £3,922,000 (inc. employer's NI).

—  Number of staff: 80.

—  Average salary: £44,825 (inc. pensions) (Not including a significant number of consultants permanently engaged on large retainers.)

—  Total capital and reserves as at 31 March 2002: £91,124,000.

—  Interest/income earned on reserves: £3,000,000 plus.

  To organisation being squeezed by the centre it appears that the original concept of a lean organisation has grown and that a disproportionate about of funding is being spent on bureaucracy.

  Until recently there has not been a representative from exhibition on the Board of the Film Council. The AIFE hope that the appointment of Steve Knibbs will help to redress the balance, and that he and the other members of the board will take the views of and issues facing specialised exhibition into consideration in their planning.

  At present the published Specialised Exhibition and Distribution Strategy (SEDS) is the Film Council's policy document for this area of work. Despite being under funded it has a number of strengths. The investment in the P&A fund should make a difference and Digital Fund is also timely albeit again too little to make a big impact. However, the proposal to lease screens in multiplex cinemas is not a good use of Capital funds from the Lottery nor will it have the impact predicted. The AIFE understands that the Film Council is considering changing this aspect of SEDS and investigating installing a network of digital projection equipment in partnership with venues across the UK. The AIFE would welcome this change in strategy as it could increase the range of work available in specialised screens, reduce distribution costs and give the UK an advantage in international markets.

Q: What has the Film Council contributed to education about, and access to, the moving image?

  All of the venues and festivals funded by the Film Council via the RSAs have education as a core function. Furthermore, Film Council funding of Screen Education has also contributed to education about and access to the moving image. AIFE members are the main delivery mechanism for this work.

  AIFE understands that the Film Council has earmarked an additional £1,000,000 for education. AIFE is still awaiting news as to how this will be spent. Currently there is no Education Officer in the Film Council.

Q: What should the Film Council do with the bfi and MoMI?

  Closure of the bfi's programme unit will be a blow and a cost to a significant number of small exhibitors. Many of these relied upon the bfi to provide booking services for their programme. Sourcing this service on the open market will be far more expensive and will have critical budget consequences for some organisations. It also brings into question how the bfi will continue to have any regional impact.

  The bfi should be powerful agency for the promotion of film culture through education, research, publication, archives, and specialised exhibition projects. The bfi can do this if it:

—  Develops a new and effect strategy under its new leadership.

—  Brings its financial situation under control.

—  Works in partnership with regional organisations.

—  Builds stronger links with the formal education sector.

—  Embraces new technology.

—  Devolves education to the regions.

  The AIFE has been lead to understand that MoMI is closed on a permanent basis. Perhaps the most appropriate action would be to transfer the collection to the National Museum of Film and Photography in Bradford which provides an excellent service. The remaining space at the South Bank Centre can then be used to bring about improvements to the NFT.