Few expect new breaks to be as generous as current ones

As U.K. chancellor Gordon Brown prepares to unveil new rules for film tax incentives in his prebudget scheme at the beginning of December, British producers are in a somber mood.

Few expect the new breaks to be as generous as the current ones and uncertainty over the changes has already rocked the industry hard.

In the immediate term, some warn there will be a hiatus in U.K.-based productions if the transition period between old and new schemes is not handled well.

“Unless we hear there is an extension of the old scheme and a clear timetable for the new tax regime by Christmas we’re closed for business in the U.K. next year,” comments Recorded Picture Co. managing director Peter Watson.

“If there’s a gap between the implementation of the new tax relief and the end of the old scheme, it will be impossible to put finance in place in time for summer shoots,” he explains.

Uncertainty over the new regime has dogged the industry since December, when Brown first announced the existing program was to be tightened after a government review found it inefficient and ineffective.

Exasperated by the lack of clarity, London-based RPC has shifted productions to the U.S., Canada, Australia and Italy for the coming 12 months. “Some of them could have been shot here but this stop-start situation, with its sudden announcements and 11th hour-extensions, is absolutely useless,” says Watson.

Producer Timothy Burrill concurs, noting, “I’m in limbo at the moment. I have no idea what will happen come March 31. Unless the old scheme is extended by at least six months, there is a real risk that there is going to be a hiatus in production six months hence.

“I’ve been approached by various French producers for upcoming projects but I can’t second-guess what the new rules will be and have no idea what I can offer in the future,” says the veteran producer, whose recent productions include “Oliver Twist” and “The Pianist.”

The film industry and government have been locked in consultations since the summer, but nobody — from the producers to the myriad of film finance firms that have sprung up around the existing incentives — knows exactly what Brown will announce.

Government proposals released earlier this year suggest that the new program would give a benefit of up to roughly 17% to films costing less than $35 million and between 2.5% to 7% to bigger-budget fare.

Most producers hold that if these proposals have been left intact the U.K. will be a no-go area for big studio productions. “Truly indigenous films will enjoy a relatively generous regime but the big floating productions that have previously gone to Pinewood or Shepperton will go elsewhere,” Watson says.

“Places like Eastern Europe are catching up with their skills base — it only takes a few big films. Britain used to be way ahead of the competition but other regions are catching up,” he adds.

Burrill fears a return to the financing climate of the 1970s if the new rules are too stringent. “When I produced ‘Tess’ with Claude Berri, I couldn’t raise a nickel in the U.K.,” he recalls. “I couldn’t even get a distributor to give me a minimum guarantee. It only found distribution in the U.K. following its Oscar nomination. It wasn’t until the event of the sale-and-lease-back scheme that I could come in as a serious partner.”

So are the good times at an end? “You should be careful about using the term ‘good times,’ ” says Burrill. “It implies we’ve all been rolling in clover for the past few years, which simply isn’t the case — even if the government would like to think so.”

Filed Under:

Follow @Variety on Twitter for breaking news, reviews and more