How to Fund Film in the UK? The Tax Credit System

The longstanding debate about film policy in the UK seems to have been reignited by the closure of the UK Film Council.  The latest addition has been producer Matthew Vaughn's call for changes to the Tax Credit system.  Under Vaughn's proposal, Tax Credit would be treated as capital investment and used to leverage a share of Hollywood profits back into the British industry.

The Tax Credit system was one of, if not the, central plank of New Labour's film policy, giving a 20% cash rebate to outside films (which in practice means Hollywood) that chose to spend money in the UK.  The rationale was that Hollywood is a global industry that will outsource production to countries with the most favourable conditions and therefore the strength of the British industry was dependent on getting a slice of this action.  This essentially sought to characterise the British film industry as a cheap service provider, particularly of post-production facilities but also of studio space, for runaway Hollywood productions.  In order to qualify films must be official British films or official co-productions (what qualifies as officially British deserves a post of its own) which encouraged Hollywood into linking up with British production companies.

It is this that allowed the UK Film Council to claim films like Harry Potter, The Dark Knight and Mama Mia! as successes of the British cinema, despite their obvious orientation to the international Hollywood-dominated market place and the fact that the primary beneficiaries of their profits are foreign-based companies.  It's the cinematic equivalent of the Chinese government claiming that its ability to provide cheap shoe-stitchers makes Nike a success story of the Chinese sports industry.

What Vaughn proposes is that the Credit system be treated as investment which can recoup a return to the Treasury which can then be channelled into independent British productions.  Vaughn argues that:

"the point is that the studios need capital and will pay for it, so the tax credit does not have to be free.  The studios will argue that asking for any kind of return will undermine the UK’s appeal as a location.  We disagree.  Certainly there are other jurisdictions with attractive incentives, but every incentive programme has its limits.  Looking at the UK’s position as a production centre, the country has a strong hand and should play to it.  In today’s cash-strapped world, 'soft equity' is a valuable commodity for studios and producers alike."

So could this work?  The first problem is that Hollywood will be loathe to accept even the principle that it should share its profits.  The Hollywood studios are well organised and quite capable of acting together when their collective interests are threatened.  The relative size of Hollywood productions means that shifting even a couple of them away from Britain will have serious consequences for the sections of the British industry which are dependent on such investment.  I expect Prague and Canada are waiting with bated breathe.  So it is a risky strategy.

Secondly, this does nothing to challenge the system through which Hollywood controls the international market, which is distribution.  That is where the real money lies.

Finally, even if it could be successfully applied, this plan would mean a change of policy.  It would require the political will to base film policy on the principle that the successful sections of the industry (Hollywood) should subsidise the less successful (independent British companies), essentially redistributing wealth from massive organisations like Fox and Disney to smaller organisations like Vaughn's company, Marv Films.  While Vaughn's proposals are relatively modest - he does not, for example, suggest that the money recouped would be channelled into non-commercial films - they still require interfering with what is a nice set-up for Hollywood.

Under the current policy-makers I just can't see it.

Should we Defend the UK Film Council Reprise

Like I said in the previous post, the New Left Project website is excellent.  And to prove it they have published my defence of the UK Film Council, a slightly revised version of an earlier post here.  Very nice of them.

Hollywood's Politics

There's a good interview with Matthew Alford over at the consistently excellent New Left Project website.  Alford has just written a book on Hollywood films as propaganda for the American empire.

This is a longstanding and interesting debate: the extent to which Hollywood is dominated by whinging pinko liberals, as the American Right has it, or whether it is best understood as the ideological arm of American capitalism and imperialism.  Or does it matter?  Film studies has tied itself up in knots with this stuff for years, from the rejection of all film narrative as inherently reactionary which was fashionable in film theory circles in the 1970s and 1980s to the more recent drive to resuscitate and depoliticise the concept of entertainment.

As a useful antidote to the more ludicrous intellectual contortions that have attempted to make sense of film and politics, Alford puts it simply: "Nothing is ‘just a story’ – films are part of a socialisation process, just as we read Fairy Tales in part to help children make sense of the world. Of course, if someone asks you what article you’re reading in newspaper, it would be rather truculent to reply ‘It’s a propaganda piece consistent with establishment interests’. It would be more worthwhile though if you investigated the content of that article, identified its sources and what it omits, how it fits in with other material in the same newspaper, and so on. It’s the same with Hollywood – it does not suit corporate owners when audiences recognise the obscenity or the idiocy of the political messages they provide but this is best exposed systematically."

As such, Alford notes that "The US first declared a ‘War on Terror’ in 1985. Hollywood has stuck closely to Washington’s line ever since, including the trend for Islamist villains in the mid-1990s (True Lies, Executive Decision), as the ‘clash of civilisations’ theory was gaining traction. More recently, we have had movies like Munich, Back Hawk Down and The Kingdom that support the notion of Western benevolence in the quest to stamp out Islamic terrorism.

With regard to 9/11 itself, no major studio has thought to question the government’s narrative despite the incredible popularity of alternate takes on that day’s events. The Pentagon and the White House warmly embraced United 93 and a string of other similar films."

But Alford, what about all the exceptions?  Doesn't Hollywood make many films that critique the myths of American capitalism and Empire?

"There are a few, but look what happens to them… Genuinely critical films such as John Cusack’s War, Inc and Brian de Palma’s Redacted opened in just a few dozen cinemas in New York and L.A. Disney told its subsidiary Miramax to ditch Fahrenheit 9/11, which led to Miramax’s bosses leaving to create a new company. CBS, NBC and ABC all refused to advertise Michael Moore’s DVD in between news programming. The pattern is familiar."

This looks like a solid, interesting and useful bit of research and Montagu can't wait to read it.

The Assault on the BBC

Steve Barnett has written a good critique of the current attack on the BBC and Public Service Broadcasting eminating from the Adam Smith Institute on the OurKingdom blog, reproduced below. This is a solid defence which Montagu fully endorses. Apart from some slightly dodgy stuff about income support. And the OurKingdom blog's nationalist bullshit. But apart from that it is well worth a read.  

Right-wing think tanks don’t like the BBC. Never have, never will. This latest attempt from the Adam Smith Institute to diagnose the BBC “problem” and then propose a “solution” is a disappointingly shallow and intellectually weak analysis which – surprise, surprise – concludes that the licence fee should be replaced with a voluntary subscription.

At the heart of its convoluted argument is a simple conviction which has defined every right of centre approach to the BBC since the Peacock Committee: private sector good, public sector bad. The right simply cannot abide publicly funded institutions, even ones that manifestly contribute to Britain’s social, economic and cultural welfare. If it’s funded by taxation, they start from the assumption that something is profoundly wrong. The notion that we might just have created an internationally admired and domestically effective institution through the simple expedient of an annual fee simply doesn’t bear thinking about. Something must be done.

It is curious that the purported aim of this report is to “elevate ambitions and liberate energies”. In fact, that’s just what the BBC does. But we read virtually nothing about what this actually means in terms of vibrant journalism or creative dynamism or cultural innovation before the report moves swiftly on to the familiar narrative about radical technological change demanding a radical policy response. And so it has been for at least 25 years since cable was first laid and the Hunt Report predicted a technological revolution. There is always another revolution coming, another transformed consumer experience, another excuse for dismantling a publicly funded institution which offends the right’s sensibilities. Deja vu, all over again.

There then follows a feeble and incomprehensible attempt to pre-empt the “defenders of the system” by outlining their arguments. This refers in abstract terms to the BBC’s news, education and welfare roles while either deliberately or lazily ignoring virtually every rationale for maintaining a strong, independent, internationally admired, publicly funded institution: barely a word about value for money, or the economic and export benefits, or the enormous cultural impact of programmes that are rooted in British identity and British lives, or the contribution to innovation and training, or the value of a universally available communicative space which is devoid of commercial messages and free at the point of delivery.

When it comes to radio, this supposedly radical set of ideas falls back on the hoary old notion of giving up Radios 1, 2 and 5 to advertising. No thought to how that would impact on the rest of the commercial radio sector, not a single mention of how a shift to commercial funding would transform the output of the stations. If the Adam Smith Institute really believes that a commercially funded Radio 1 would champion new bands, expand its playlist and give over chunks of airtime to news and documentary features, it clearly does not live in the real world.

Fairness is a recurrent theme, in particular fairness to the poor and fairness to the BBC’s competitors. While the Adam Smith Institute shows commendable concern for those who are being prosecuted for non-payment of the licence fee because they can’t afford it, their distress might be better directed towards alleviating poverty rather than one tiny symptom of its effects. Given that income support is available to all, and that the licence fee is included in the calculations of a basic living income, there is anyway no reason for not paying it. I doubt that the Adam Smith Institute would favour an increase in state hand-outs to assist those who struggle to pay their other bills.

More in tune with the Adam Smith Institute’s basic philosophy is the report’s concern for the health of private sector competitors. Of course the BBC restricts opportunities in the private sector, in much the same way that many Harley Street practitioners have their income potential severely constrained by the NHS. We don’t premise health debates on assumptions that the job of the public sector is to fill in gaps left by the private health insurance market, just as we don’t start debates about policing on the basis of enhancing opportunities for Group 4. We start with public policy objectives, and an essentially social democratic ideal of a public space, like libraries and public parks, which offers access to all and does not treat its users as consumers defined by the size of their wallet.

There are many other problems with this report. It refers to an “emerging consensus” about top-slicing the licence fee as if there had been barely a voice raised in anger against the last government’s daft proposals. Did the authors not read the responses to the Labour government’s plans for funding local news consortia from the licence fee? Do they really not understand how much James Murdoch, amongst others, despises the idea because it would enable the licence fee subsidy to leak out to other organisations rather than be contained within a single easy target? There is certainly no such consensus amongst policy analysts in academic circles who have seen the same discredited ideas being recycled for over 25 years.

And there is the same old nonsense about HBO, its wonderfully original drama, and its profitability. All of this is true – and tells us precisely nothing about the UK. HBO’s success in the US is directly attributable to the size and scale of the American market: over 300 million people and a potential universe of 115 million television household subscribers. That is five times the potential market in the UK in a country whose GDP is seven times ours. So of course it has the financial muscle to produce great drama. Which, of course, is all that HBO does. Even with its huge market potential, it does not produce high quality peak-time journalism, it doesn’t do radio or online, nor make ground-breaking documentaries nor stimulating children’s programmes. And that’s certainly not because the big networks are doing it.

If the Adam Smith Institute really wants a better understanding of how we can learn from American experience, it should turn to one of its fellow ideologues. According to Professor Robert Lichter, president of a Washington-based conservative pressure group and paid consultant to Fox Television, the free market is not the universal panacea so beloved by its devotees. He said a few years ago: “I've never been able to figure out how competition makes cars better and television worse. In other industries, competition creates new and different products. In television, it makes all the products look the same. That's weird”.

Weird maybe, but demonstrably true in every country which has pursued a free market, commodified view of broadcasting rather than starting with desirable public policy outcomes. The Adam Smith Institute’s “solution” would redefine public service programming as dull, worthy, low-rating programes which would be relegated to the margins. It would inevitably result in less of what people actually want. Less original high quality drama, less new comedy, less high quality news, less investment in British children’s programmes, less original investigative journalism, less innovation. And it would destroy one of the few remaining properly resourced, independent and internationally acclaimed journalistic operations.

Rather than taking a great British institution and vandalising it, wouldn’t it be wonderful if – just once – one of those dry, economistic policy think tanks could throw off their ideological straitjackets and actually celebrate the cultural, democratic and economic benefits which the BBC continues to bring to every British citizen? But that would mean the ultimate heresy – praise for a publicly funded institution. Pigs will fly first.

Damn straight Steve.

Join the Dots...

Four items caught Montagu's eye this week.

Firstly, a change in growth forecasts from the Bank of England shows that "Recent business surveys have suggested consumer and business confidence remain fragile and some experts are predicting a double-dip recession.  Companies in the dominant services sector say they are losing important public sector work and households are cutting back spending as they brace for job cuts."

Public sector austerity is not putting us on the road to recovery.

Secondly, a report in The Independent: "research by the employment consultancy Hewitt New Bridge Street shows that despite the feeble economic recovery executive pay at Britain's FTSE 100 companies continues to soar.  The median total remuneration for the highest paid directors in FTSE 100 companies is now just below £3m.  It has risen from £2.5m a year ago, even as leading companies have been implementing massive job cuts."

It continues: "Unemployment has risen in the period covered to nearly 2.5 million people out of work, and the average pay increase across the country, including bonuses, was just 2.7 per cent in the year to May, according to the Office for National Statistics."

Related?  This is just the beginning of the bite felt from the policies of Cameron's Big Society lie - the relative transfer of wealth from the poor to the rich.

What this is all really about is neatly explained in this little video posted on Lenin's Tomb:




Privatisation.

Finally, a useful summary of the Big Lie from Red Pepper.

Joining the dots between these things is important if people are to make sense of what the government is doing, what is at stake and how they can argue against it.  It is well put by David Wearing at the New Left Project when he says that "there is (at least from the point of view of the public, rather than elite interest) no emergency requiring this budget.  The emergency is the budget."

Jeremy Hunt Defends Closure of UK Film Council

Jeremy Hunt, the culture secretary responsbile for axing the UK Film Council, has responded to his critics in an article in the Observer.  A good opportunity to demonstrate that this was not an ideologically-driven slash-and-burn policy rushed out before any serious consideration of a replacment system could take place, you might think.  So did Hunt:

A) Reassure the British film industry that solid plans are in place to replace the UKFC?

B) Offer meaningless platitudes such as "we must step up our ambitions and make the UK the best country for nurturing and promoting its homegrown creative talent"?

BBC Factual Programs, Social History and Celebrity

Montagu’s Daughter recently had the opportunity to watch Who do You Think You Are? on BBC 1 with Irish actor Dervla Kirwan (it was a slow night).

Dervla is from Dublin and already knew she was the great grand-niece of Irish revolutionary leader Michael Collins. A particularly interesting subject for the show, you might think, and we do see her learning of her grandfather’s role in the Irish war of independence and subsequent support for partition. In fact the show glosses over this period, save for a few awkward references to the Irish Republican Army not being the same as the modern IRA, and a particularly poor description of the Black and Tans’ role in repressing the nationalist movement. The show steers clear of anything controversial. Perhaps the complexities of British imperial history and the Irish freedom movement are beyond the format?

More effective was the exploration of the life of Dervla’s maternal grandfather, a Polish Jew who escaped persecution to Ireland and married her Catholic grandmother. Both would have had to give up a lot for the sake of their relationship and were ostracised from their communities. Harry Kahn was later sentenced to one year’s hard labour by Sir Frederick Faulkner in a particularly nasty anti-Semitic miscarriage of justice. The case was taken all the way to the House of Commons and was probably the source for a passage in James Joyce’s Ulysses. A story of love among hardship, then.

Who Do You Think You Are? is a success story of British television. Now in its eighth series it regularly attracts audiences of six million, has its own BBC magazine, interactive section on family history of the BBC website, a 2010 BAFTA nomination for Best Factual Series and the format has exported to the US, Canada, Australia, Ireland, Poland, Sweden and South Africa.

It is also a good example of the way social history is packaged in contemporary British broadcasting. An edu-tainment hybrid, the show mixes a fascination with celebrity with popular genealogy and the traditional documentary-history format. Each show's narrative is constructed through a dramatisation of the research process with the subject visiting archives and meeting experts, adding a gloss of celebrity sparkle to the ordinarily dusty activity of sitting in libraries and searching micro fiche. The human reactions of otherwise unreachable stars – crying at the fate of their forebears/revelling at struggle in the face of adversity – provides the pay-off. And along the way we learn about social conditions for the working-classes in mid-Victorian Britain, say. It counts towards the BBC’s statutory commitment of factual programming (1295 hours in 2009/10) as part of its Public Service Remit, yet also connects with broad, mainstream audiences. Win-win?

For the celebrities there are obvious benefits. They get screen time and the opportunity to build upon their brand identity, ubiquity and marketability. The program makers get to tap in to this brand in their marketing – a good example of synergy. But this also reveals its limitations as a factual programme. How far are the didactic potentials of the show limited by the format? In organising the historical information around the narrative of one particularly successful individual – a successful narrative resolution, if you like – every episode tends to celebrate social mobility. Times were tough for my family, but through hard work and the unbridled opportunities provided by post-war capitalism, we got there in the end, shiny, happy and rich. When confronted with more genuinely challenging and less well understood historical events and issues, in this example at least, the program breaks under the pressure, unable to cope.

How to explain this? One answer is that people aren’t interested in complex representations of history and don’t want to learn ‘stuff’, preferring to be dazzled by simple stories with happy endings and shiny people (although I don’t know if Bruce Forsyth or Chris Moyles would fit into that category). So if program-makers can create a format which gives them that while sneaking in a bit of history, all the better.

Another answer, however, can explain modern factual broadcasting in terms of structural pressures towards commercialisation, of which cross-platform celebrity branding is a major part. While shows like this help the BBC fulfil its commitment to factual programming – a key thing that would be lost if the BBC went commercial – they must also be understood as a component of the commercial media landscape and the way that public service broadcasting is increasingly put under pressure to fulfil objectives in the interests of private business – in this case subsidising the development of celebrity-actor brands – at the expense of more complex but informative and useful understandings of history.

Which is it, A or B?