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

  The UK film industry is served by some of the best creative talent in the world. Equity's members are a crucial attraction to investors seeking to produce films in Britain, whether British-made or otherwise. We want to ensure therefore, that the UK film industry is both sustainable and fully able to compete in a global market.

  Apart from the obvious cultural benefits of a domestic film industry making films in the UK and for a UK audience, the industry makes a real contribution to the UK economy. The main contribution is through the creation of employment. This is not just related to performers or those creative personnel involved in the physicality of filmmaking, but those involved in the distribution, advertisement and exhibition of the final product. These employment opportunities are an important factor when calculating the economic value of the industry, and are the most important reason that the industry should be sustainable. A healthy film industry will create more employment opportunities, that will in turn generate more consumer spending which will then support the UK economy as a whole.

  Employment opportunities are not restricted to skills directly related to films. Cinemas are no longer just venues that operate to show films; they are often part of a much larger multi-purpose venue supporting restaurants, bars and other leisure activities (such as bowling or health centres) that also rely on the attraction of people to the cinema to survive. Similarly, the films themselves generate tourist opportunities. Visit Britain has, for example, built a significant tourist initiative on the sites used for filming Harry Potter. These tourists then make use of nearby facilities, including hotels and shops that have indirectly benefited from the creation of a film. Finally, as the consumption of films continues to grow and mediums diverge, companies who offer video and DVD rental or sale, whether on the High Street or on the Internet, will benefit from the sustained growth of the UK film industry.

2.  Is it important to seek to preserve a capacity to make British films about Britain in the UK?

  Equity would strongly support any initiative that would seek to protect and promote the production of British films about Britain and made in the UK, not least because of the infrastructure benefits outlined above. The UK's cultural heritage is as much dependent on the creation of films as it is on the maintenance of museums and galleries. Films such as Oh What a Lovely War! and A Clockwork Orange, are part of our cultural legacy and might not otherwise be recorded on film were it not for the capacity of the UK to make them. Additionally, many of the world's most significant performers such as Dame Judi Dench and Sir Ian McKellan were able to develop film-acting skills through the British film and television industry, as were many directors, producers and writers. Canada has recently asked itself a similar question and concluded that as a result of inward investment, from America in particular, Canadian culture and identity has been lost through Americanisation. The only real investment in film and television in Canada for a number of years had been foreign, and as a result the Canadian production base was severely diminished because it was unable to compete.

  Additionally, it is important to ask who would choose to make British films about British culture, if Britain was unable to do so itself. Films such as My Beautiful Launderette, East is East and Bend it like Beckham that look at Asian culture in the UK, and Dirty Pretty Things that looked at the life of a Nigerian UK immigrant, are unlikely to have been made because they are unlikely to have huge commercial appeal. Despite that, these films, particularly the latter, have won much critical acclaim and it would have been a significant loss if they had not been made at all.

3.  What is the relationship between the film industry and the rest of the creative industries, including the broadcasters?

4.  What should the relationship be between British broadcasters and the film industry?

  Film and television are closely linked, and it is natural to assume that broadcasters should play an active role in film-making. They both employ similar techniques and personnel, and broadcasters are therefore in a financial position to invest or offset minor losses if projects fail. There is therefore a valid argument for the broadcasters to take more of an active role in film, particularly in investment and the development of a sustainable skills-base, an argument that seems to have already been accepted by the Government through the Communications Bill. Currently, the BBC invests less than 1% of its entire budget into UK feature film production and ITV, Channel 5 and Sky invest even less than that. Two key broadcasters have also recently scaled back their investment in production: FilmFour and Granada.

  However, Equity members are employed by both broadcasters and film-makers, and as such we would not necessarily want the broadcasters, to divert money away from television production in favour of film or vice-versa. As it seems that broadcasters may not be in a position to actively support the film industry, or that the industry cannot rely on sustained investment by the broadcasters, Equity believes the question should not be what British broadcasters should do, but who should British financiers should be? We do not want the British film industry to be entirely dependent on the broadcasters but we would not want the industry to cease to exist. Through the creation of a more fully-rounded UK film industry, with production, distribution and exhibition sectors, it is likely that more, diverse companies could choose to invest in British films.

5.  Does the film industry merit support from the Government, if so, how can existing support be improved?

  The Government has an important and strategic role in a sustainable and competitive UK film industry. While the UK is unable to offer a viable alternative to the domination of distribution and exhibition of film by America, the Government, whether through the Film Council, or fiscal incentives, must play a vital role in the survival of the industry. At present, incentives have focused on production. While Equity would support the continuation of the Sections 42 and 48 fiscal incentives that sustain production, we would also argue that measures need to be taken to develop UK distribution, without which, films that are produced may never be seen. Sir Alan Parker, speaking in November 2002 identified distribution as one of the key areas that needs to be addressed if the UK film industry is to survive. He argued that the UK needs UK-based distributors and sales agents who want to invest in British film and ensure that they are globally competitive.

  Equity would suggest therefore that the Government should maintain production-based incentives, at the same time developing a tax break or levy that gives incentives to distributors to invest in and acquire British films. The UK needs to develop production units similar to those models used by American studios. If they existed, we would be in a better position to influence distribution and exhibition, but the present climate does not allow for this situation to develop.

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

  We have largely addressed this question in our response above. We have already indicated that we believe that the British film industry is very production focused, largely because of American dominance in distribution and exhibition. British films cannot be seen by the British public if they cannot raise the money to produce it, cannot afford it to be advertised and cannot find anywhere to show it? One solution might be to impose a quota on exhibitors in the UK for British (or European) films similar to that on British broadcasters through Television without Frontiers. Alternatively, as discussed above, tax breaks or penalties could be introduced so that exhibitors have a financial incentive to show domestic films.

  Finance is another problem. For a film to be made in the UK, unlike in America where there is a mutually beneficial arrangement between production and distribution, producers must raise all the finance before they make the film to pay for development, production and marketing. They do this knowing that they may not be able to get the film distributed. British companies could not have raised the money for Harry Potter or Bond. Equity would like to see this situation reversed, so that the money generated from films such as these can be invested back into the UK. This is a particular problem for independent production companies. It is unlikely that the finance raised will come from a single source, or from a single country.

  However, Equity does not want a British film industry entirely dependent on inward investment. We would wish it to be self-sustaining.

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

  The Film Council has taken significant steps to recognise the failings of the UK film industry, and it is now beginning to address them. Alan Parker's speech has set out the agenda for the Film Council, and we largely agree with the problems it has identified. Equity supports the efforts made by the Film Council, and note that at present it is trying to make fundamental changes to the structure of the UK film industry without much support. Equity would want to see Government takes those steps we have outlined above and in doing so, give strategic support to the Film Council so that it can have a real chance to fulfil the objectives it has outlined.

June 2003