UK Financing Now Beyond Second Star on the Left
The most dramatic way to fight potential government regulation changes is to throw out a really really really big number that would generally cause a citizenry to protest a decision. Or at least make reelection of affirmative voting legislative members more difficult. The cable industry in the United States was first with $115 billion.
And now the British film industry has thrown out 3.1 billion Pounds (which is nearly twice that in dollars), and a very big number for that country. Why are they up in arms? Back in August, the UK government released its initial proposal for the scheme to replace the current tax incentive system, news which was quickly followed up by analysis indicating that future expected benefits would be of a magnitude less than those available today.
Perhaps in anticipation of this attack, Variety carried an article in early September discussing the implication of the new regulations on limiting UK production and film restrictions:
"The danger, however, is that this will also discourage British producers with a legitimate creative and commercial ambition to tell stories that are not purely or even predominantly British."However, this soft approach has been bested by the report from the Oxford Economic Forecasting that claims that "the [UK] Treasury would lose about £328m a year in revenue if the industry was to vanish," as reported by BBC News. And to draw further evidence of the harsh response to tax scheme changes, OEF further attributes the decline of 20% of the jobs in the industry in 2004 to the loss of Section 48 which "closed a tax loophole which allowed some producers to claim tax relief more than once for the same production."
The Financial Times lent its support to the reports implications prior to release and then dutifully reported the loss of 300 million Pounds of production in 2004 and estimated loss of the same in 2005.
With consultation for the new scheme ending October 21st, British producers are pressing hard for a continuation of the benefits currently available, which have brought in the dollars and impact of studio movies. As noted in Variety, "The report, by Oxford Economic Forecasting, reveals that most of this benefit came from Hollywood movies shooting in the U.K."