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Prano Bailey-Bond’s psychological horror “Censor,” which opens Sundance’s Midnight section Thursday, is a twisted, bloody love letter to the low-budget horror films of the 1980s. Variety spoke to the young British helmer, who was recently named as one of Variety’s “10 Directors to Watch.”

In “Censor,” a young woman, Enid, is seen at work as a film censor in Britain in the 1980s, a time when the growing popularity of VHS players had led to a boom in cheaply made horror films, which soon acquired the nickname “video nasties” in the tabloid press. After a gruesome killing, which the press claims was inspired by a horror film, Enid finds herself in the eye of a media storm, as she had passed the film for distribution.

Bailey-Bond places the media’s “hysterical reaction” to these “video nasties” against the backdrop of Margaret Thatcher’s Britain, a time of social and political strife. “You see ‘video nasties’ become the scapegoat for a lot of the problems going on in society… welfare cuts, mass unemployment and rising crime,” she says.

Enid, we discover, is still mourning the loss of her sister, who had disappeared in mysterious circumstances as a child. Enid, who had been with her at the time, recalls nothing but a dreamlike memory of a forest. She is convinced that her sibling is still alive. Her parents, on the other hand, want her to accept that her sister is dead. Meanwhile, Enid’s work as a censor gives her the illusion that she can protect people from the violence in the world.

“It felt like a way into the ‘video nasty’ world was through this family connection. The breakdown of the family unit fascinates me and reflects what goes on in society,” Bailey-Bond says. “Enid’s family haven’t really dealt with the problems in their lives; they haven’t spoken about them. And that comes back to the idea of censorship, and what we talk about openly with each other, and how society deals with bad things that go on.”

While watching a horror film, Enid finds the setting eerily familiar, and suspects its filmmaker could have been involved in her sister’s disappearance, so she dives into the blood-splattered demi-monde of horror filmmaking to investigate further.

During her research for “Censor,” and the similarly themed short film that preceded it, “Nasty,” Bailey-Bond came across the concept of “ambiguous loss,” which refers to when someone who has lost a loved one is unable to achieve closure as it is unclear what happened to them. Bailey-Bond, who co-wrote the script with Anthony Fletcher, says that she was intrigued by the idea that “if you don’t have an answer to what’s happened to somebody, then you fill in the gaps yourself in your imagination.”

She adds: “So it’s an exhausting fantasy of, ‘Are they dead?,’ and going through the grief of them being dead, and then going, ‘Actually, maybe they’re alive and they were kidnapped,’ and going through the grief of that, and you’re never finding the answers. So it felt like for Enid, she’s filling in the gaps all of the time, she’s creating a narrative basically of what might have happened to her sister, because she doesn’t have the answers.”

The journey of Enid, who appears in almost every scene of the film – from note-pad scribbling bureaucrat to crime-busting sleuth, slipping into the tacky world of exploitation movies – needed to be believable. Enid’s personality and perception of what is happening are central to the story. This required more than just a compelling performance by lead actress Niamh Algar; every department contributes to it. “It’s a massive collaboration with the heads of department, in terms of how you build her character. When I was talking to them, it was all very, very focused on character,” Bailey-Bond says. “So, for example, when you’re thinking about how we shoot this film, with the DP, then it’s all about how do we stay in Enid’s point of view? She’s seeing things differently [to the other characters], so how do we keep the audience with her?”

Abetted by cinematographer Annika Summerson, production designer Paulina Rzeszowska, costume designer Saffron Cullane, and the other HODs, Bailey-Bond crafted three worlds for Enid to inhabit: the claustrophobic, drab environment of the censors’ office; the luridly-lit crime scenes of the horror movies, inspired by such movies as Lucio Fulci’s “The Beyond”; and Enid’s dream world, where reality and fantasy are stitched together.

As the film progresses, Enid shuffles from the safety of her work life into the fairytale forest of the “video nasties,” with editor Mark Towns – who also worked on Rose Glass’ acclaimed horror film “Saint Maud,” as did Rzeszowska – helping the other HODs to fashion the authentic 1980s horror movie aesthetic.

As she progresses on her journey, Enid’s look alters. “To start off with, she’s dressed in similar colors to the censorship office. And then as she breaks away from that world, and moves more and more closely towards the ‘video nasty’ world, we start to see her in colors that don’t quite fit that [censorship office] background, and her hair’s becoming more scraggly and loose, and she’s visually losing that done-up-ness.”

Accompanying Enid on her descent is the music of Emilie Levienaise-Farrouch. Initially Bailey-Bond wanted the soundtrack to give a nod to the synth-soaked pop tunes of the 1980s, but the composer took it into weirder, eerier territory, meshing with the surreal sonic soundscape laid out by sound designer Tim Harrison.

“When I first heard Emilie’s music, it was not necessarily exactly what I imagined for the film, but there was something about it that just absolutely tuned into Enid’s trauma,” Bailey-Bond says, who lauds the composer for “staying true to Enid’s journey, her story and point of view.”

“Emily does the little details in the music that just bring out those moments in the film that tune us into Enid, or just highlight a beat in a scene. I think she’s just so in tune with the character. I know her process is to watch the film over and over and over again, and almost become part of the performance in a way, so she’s just playing the performance, which I think works fantastically.”

The horror is leavened by darkly comic moments sprouting from Enid’s fevered fantasy that her sister is still alive, and that a happy ending is possible. By entering the make-believe world of cinema Enid is able to achieve a form of catharsis that is impossible in the real world, and an alternative version of the truth emerges that verges on the absurd.

“The film is so much about the push and pull between fiction and reality, and what fiction can do for us, and Enid’s in this horrible ‘ambiguous loss’ situation. She’s never going to be able to find out what happened to her sister. So the only way she can get that catharsis is through fiction. And I think for me, it was about exploring what fiction does for us.”

Protagonist Pictures is handling international sales on the film, which is produced by Helen Jones at Silver Salt Films, with the support of Creative England, Ffilm Cymru Wales, the British Film Institute and Film4. The executive producers are Andy Starke for Rook Films, Ant Timpson at Timpson Films and Kim Newman.