Does the taxman benefit from the UK Film Council?
5 August, 2010 - 16:45 -- Full Fact team
The Government's stated desire to abolish the UK Film Council has caused a stir amongst Britain's thespians. 55 of them wrote to The Telegraph this morning to complain about the move. But are the claims made more A-list than B-movie?
Some of the UK’s biggest stars of the silver screen took time out of their busy schedules to publish a letter in this morning’s Telegraph, expressing their concern at the proposed abolition of the UK Film Council (UKFC).
The move, announced by the Coalition Government last week, would see the Non-Departmental Public Body take its final curtain call in April 2012.
Campaigners argue that far from being a burden on public finances, Britain’s film industry actually contributes more money to Government coffers than it takes in grants and subsidies.
But does this notion pass the Full Fact review, or is it one for the blooper reel?
The Claim
In the letter, such Brit Flick luminaries as James McAvoy, Bill Nighy and Peter Postlethwaite put the case for the preservation of the Film Council.
They write: “The UKFC doesn't waste money, it makes it. For every pound it invests, the country gets £5 back.”
However the basis for such an assertion was called into question by one British Director, Chris Atkins. Speaking on Radio 4’s Today programme, Mr Atkins told Evan Davis that “a lot of these statistics don’t have a great amount of factual backing.”
So are these figures something of a horror show?
Analysis
As we found when we took a look behind the scenes, there is a great deal of confusion surrounding the source of the 5:1 ratio quoted in The Telegraph. Full Fact saw it applied to everything from lottery money to box office takings in a variety of combinations, something covered more widely on our blog.
However according to information published by the Council, total measured public funding for film in the financial year 2008/09 was £256 million.
This includes subsidies allowed under the Film Tax Relief (£110 million), Lottery funding (£32 million) and grants from the Department for Culture, Media and Sport (£30 million).
According to research by Oxford Economics commissioned by the Council, the British film industry contributes £1.21 billion back to the Treasury through its operations.
Most of this (£445 million) comes from direct taxation from film industry workers and companies, with £425 million raised from indirect sources, such as firms supplying production companies with goods. A further £210 million is generated by tourism associated with the film industry, and £107 million is made from merchandising.
The calculation of these figures is extremely contentious. As the Lords Communications Committee noted, for example, it is notoriously difficult to isolate the impact of a single industry on the money generated by such wide-ranging sources as tourism.
However, superficially at least the two figures (£256 million and £1.21 billion) do roughly match the 5:1 ratio quoted.
But the place of the Film Council itself in this calculation is far less certain.
By far the largest share of public investment in film comes through the Film Tax Relief awarded to production companies by HM Revenue and Customs, something which is not directly linked to UKFC, which the Government announced it intends to retain.
Equally, the largest generator of income for the Treasury is the taxes raised on businesses and employees working in film. Given that even the Film
Council itself recognises that a film industry of substantial size existed in the UK prior to the creation of the UKFC in 2000, it is difficult to attribute all of this revenue to the Council in the manner suggested by the Telegraph letter.
Conclusion
The film industry has clearly been a growing area of the UK economy over the 10 years in which the Film Council has been in existence. However this does not necessarily mean that the sort of cost/benefit analyses offered by the authors of this morning’s letter to The Telegraph enjoy the “factual backing” demanded by Mr Atkins.
Not only are the revenues of the UK film industry much broader than that which can be directly attributed to UKFC, but the Council itself only accounts for a reasonably small share of the grants and subsidies on offer to film-makers.
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