Martyn Drake's Blog

With the announcement that Disney are to shoot Star Wars VII in the UK – with George Osborne taking full credit for his film tax incentives – it’s re-enforced my views that film and TV tax credits are an enormous waste of time and money to the UK taxypayer unless the subsidies system is reworked to favour UK (and possibly EU) private investors and NOT Hollywood.

Before Disney’s announcement that it was to take over Lucasfilm and start making new Star Wars films, I knew that they had taken over a substantial part of Pinewood Studios. It was clear that Disney had intended to ramp up production over here on various projects, but it was unclear at the time what those projects were. We now know.

My question is: what do UK funded British productions (financed here with British crew) get to film their projects when our studios are being occupied by American-financed productions?

The problem with the current film and TV tax incentive system is that:

1) The majority of Hollywood studios have already substantial amounts of money in the bank. It’s not as though they cannot afford the full cost of making a film domestically (or abroad if the requirements dictate it). The movies that they make – regardless of wherever they are shot or whatever tax incentives are given – rake in substantial profits. There are a few exceptions to this (John Carter being one of them), but certainly the majority of movies made over here with US money go on to make the studio significant amounts of profit.

So I ask: why offer tax incentives to these large studios at all? Studios and the UK government will claim that such productions add millions, if not billions, to the UK economy – which is nice for us (although short term) – but it will take jobs away from US domestic film companies reliant on income from movies being made there. See points 2 and 3.

2) The studios use tax incentives as leverage. As we have already seen with Warner Bros. and Harry Potter and The Hobbit, if they don’t get their way – they threaten to withdraw support to the country where they originally intended to make the film. In essence: remove, reduce or fail to increase tax subsidies and they’ll go looking for other countries which will offer them massive discounts – a bit like a mad coupon-collecting shopper – who then asks for further discounts.

We keep hearing from the likes of Hollywood (and our own film industry) that Britain has the finest filmmaking talent in the world. If this is the case, Hollywood, why are you so insistant of your tax subsidies and incentives? Surely you’d pay the full taxable rate to get the talent you want rather than simply keep asking for handouts?

This is practically the same with corporations who have been accused by the UK government of not paying full corporation tax. They have huffed and puffed and have stated that they will take away their products and services from the UK economy if they are forced to pay any more tax. It’s ironic (and also moronic) that George Osborne has said that he’ll go after those so-called tax avoiders and yet will happily allow multi-billion Hollywood film studios receive a sizeable chunk off their tax bill.

All this happened during my time in the film industry and I remember that my employers (at the time) were extremely nervous of what would happen if the UK government did NOT increase tax subsidies to the likes of Warner Bros. As such I’m very glad not to be working in post production now because it is..

3) A rush to the bottom. As large studios find the cheapest route to profitability, vendors such as VFX and post-production open shops in different countries. My former employers, MPC, have opened shops in Canada (two locations I believe), the US, India and through a subsidiary company, China. Other Soho VFX companies have done the same – and some of them have even had to let people go from the Soho facilities if employees weren’t prepared to work in offices abroad – where employment benefit is radically different to those domestically. We have lost some good VFX companies over the past few years thanks to tax incentives: Digital Domain, Rhythm and Hues, and Pixomondo have recently shut several offices in the US and London.

My proposal is to stick two fingers to foreign film studios with an annual turnover of X million dollars and instead prioritise them to UK production companies with a much smaller turnover in order to ensure that the money spent remains fully within the UK economy – and not being pumped back out to studios who may see Canada or Eastern Europe as their next target for investment.

In the same way our housing market was affected by US banks, our film industry cannot follow the same path. We UK filmmakers must take charge over our own film industry and not be too reliant on others – for if Hollywood fails, we will fail too. No one country should be this reliant on another.

It is a selfish need, but I believe a necessary one.