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July 3, 2016

What does a post-Brexit UK film industry look like?

post-Brexit UK film 400Right now, the UK film industry is trying to understand what the UK leaving the EU (“Brexit”) means for its future.  A small number of things in a post-Brexit UK film industry are certain, but the vast majority are open to opinion, conjecture and downright guessing.  I don’t profess to have a magic method of seeing the future, nor am I necessarily any good at disentangling scare tactics from useful predictions. However, I am keen to move the debate to a more useful, practical phase where we as an industry can start making sense of this uncharted territory.

So to help with this I have spent the last week talking to a number of people, running a survey of the industry and reading through the small print on various contentious issues.  Below I have shared my findings, and I will continue to update the article as my knowledge increases.  My hope is that this piece can act as a non-partisan reading of where we are currently at.  I will do my best to keep my own views out of it and I am hoping this creates a civil, open discussion in the comments section.  Seeing as denial is not an option, let’s see how quickly the industry can move past anger, bargaining and depression to reach acceptance.

Note: For the sake of ease I’m going to assume that the UK government does exit the EU but that the terms of such an exit are unknowable. This isn’t my opinion or a prediction, it’s just much easier to discuss how a post-Brexit UK film industry might look if we assume that the referendum result will be carried out.

A snapshot of the UK film industry, one week after the Brexit vote

I ran a survey of 156 film professionals, all of whom have attended a major film market (Cannes, Berlin or AFM) in the past five years.  I asked them a number of questions about Brexit and what the UK film industry should do next. 

As per other surveys of film professionals, the vast majority were against the UK leaving the EU.  68% said they were “strongly against” Brexit, 14% were “mildly against”, 2% were “mildly for”, 3% were “strongly for” and 13% were either undecided or didn’t feel they had enough information to express a view.

Around a third of my respondents were in the UK, a third were in other EU countries and the final third were based further afield.  Although this was largely by chance, it gives us a nice basis for comparing the views of film professionals around the world.  None of the respondents in EU countries were in favour of the UK leaving, only 7% of UK respondents were pro-Brexit and 11% of those outside the UK and EU were in favour.

Post-Brexit UK film opinions by country

Those working on the biggest budgets were the most pleased with the Brexit decision, with almost a fifth of the people working on budgets over $30 million in favour of the UK leaving the EU.

Post-Brexit UK film opinions by budget

I asked my respondents how they thought Brexit would affect various aspects of the UK film industry. Overall, they felt that Production and Finance would be the hardest hit.  The least affected by Brexit were felt to be Marketing and Legal / Accounting.

Post-Brexit UK film industry 2

A way to view the UK film industry

Post Brexit uk film indutsry viewpointsMany of the people I spoke to were having a hard time deciphering what Brexit could mean for the UK film industry.  This was in part because “the UK film industry” is not one entity but a collection of third parties co-existing. There is even one viewpoint, championed by ‘Kingsman’ director Matthew Vaughn, that the UK film industry doesn’t exist at all.  In order to help people form a view of what we as an industry should do next, let me put forward a way of looking at the UK film industry and then discuss how it looks like Brexit will affect it.

If we ask the question, “What is the purpose of the film industry?” then we can group the answers into three broad categories…

  • Industrial.  This views UK film in the light of its financial impact on the UK, which is considerable.  Last year, film productions spent £1.475 billion in the UK, UK cinemas collected £1.1 billion at the box office and overall UK film contributed over £4.6 billion to UK GDP.  When Star Wars decides to shoot in the UK then those who subscribe to the Industrial viewpoint rejoice as it means an influx of money, jobs, training and contributions to the tax coffers.
  • Artistic. UK film could also be seen as a cultural enterprise in which we tell stories about who we are and how we see the world. Cultural watchers judge the strength of the UK film industry by the work it produces and accolades such as Ken Loach’s ‘I, Daniel Blake’ winning the Palme d’Or in Cannes this year.
  • Promotion of Britain. Films showing British stories, characters and locations act as a powerful driver of tourism.  A study Creative England did concluded that ‘screen tourists’ brought between £100 million and £140 million to the UK economy in 2014 and there’s no doubt that the Harry Potter cinematic universe has brought many people to Britain.

So how may Brexit affect each of these viewpoints?

  • Post brexit uk film harry potterIndustrial
    • Positive post-Brexit outlook – If the current tax breaks continue then we can still expect the UK to be an attractive base for US studio productions.  We have well-trained crews, top-notch studios, a thriving post-production industry, a positive time difference when compared to Asia and a lot of institutional experience working on US-UK productions.  Furthermore, if the pound continues to perform weakly against the US dollar then the studios are set to get much more for their money.
    • Negative post-Brexit outlook – A post-Brexit UK will need to negotiate new trade deals with other countries and the US government could put pressure on the UK to weaken its tax incentives in order to reduce the number of ‘runaway productions’ (i.e. US films shooting in the UK). I won’t pretend to know much about international trade agreements but it certainly seems feasible that US pressure groups may lobby to protect American jobs.
  • I-Daniel-Blake-2016-Ken-Loach-04Artistic
    • Positive post-Brexit outlook – It’s difficult to see any obvious way that Brexit will help the artistic side of UK film.  At a stretch, it’s possible that the UK government could choose to use some of the “saved” money from not paying EU membership bills to support the artistic side of UK film. 
    • Negative post-Brexit outlook – The loss of the MEDIA money and knowledge will be a blow to the artistic side of UK film.  It was spent in almost every area of the UK film industry, including training, development, production, sales, distribution (including UK films in Europe) and exhibition (including bringing European films to UK cinemas).  In addition, many of the larger British ‘art films’ are funded by complicated arrangements between European partners.  This means producers of films by the likes of Ken Loach and Mike Leigh will need to invent new ways of financing their projects.
  • Bond skyfallPromotion of Britain
    • Positive post-Brexit outlook – Arguably, this is the side of ‘UK Film’ which will be least affected by Brexit.  The vast majority of films which act as adverts to tourists are, by definition, the largest films with the widest distribution such as Harry Potter and Paddington.  These projects rely far more on US money than EU support.
    • Negative post-Brexit outlook – If Brexit leads to fewer major films set in the UK (due to poor trade deals being struck, etc), then the UK tourist industry would lose some of its strongest promotional weapons.

Based on this way of viewing the industry, it looks like Brexit will negatively affect the artistic side of UK film far more than the industrial or promotional aspects of the industry.  

But this is just my current reading of the facts – what’s your opinion?  Add your thoughts in the comments below.  I will update this article to correct mistakes and to add any salient new facts which come to mind.  Feel free to also add your own ways of viewing ‘UK Film’ and therefore what effect Brexit may have.

What’s next?

Here are the main things I’ve learned from talking to the industry this week…

  • UnknownWe can expect uncertainty in the short term. No one has a clear idea of what the next few years will bring and so this will force everyone to take fewer risks and be cautious in their deals.
  • In the long term, the UK film industry will be more affected by global trends than in the recent past.  Being part of the EU and thereby restricted by its plethora of rules and regulations has meant that the film industry was less open to short-term swings of fortune. In a post-Brexit world, if the film industry is thriving due to a weak pound then a few unconnected changes in the global landscape could wipe away that advantage at a stroke. In short, the film industry will be far more susceptible to global events and trends.
  • Legally-speaking, official co-productions are not at risk from Brexit.  Co-productions between UK and EU countries are governed by the European Convention on Cinematographic Co-Production, which involves the Council of Europe, not the EU.  Therefore, in a post-Brexit UK film industry, co-productions with European countries will continue as before.
  • This is a chance to amend the UK Film Tax Relief (FTR) to only favour truly British productions.  All EU nations are bound by rules on State Aid and so the current FTR’s Cultural Test treats all EU nationalities and languages equally.  For example, you get points if your film features characters who are “British or EEA citizens or residents“, if your film is set in “the UK or EEA“, has dialogue “recorded mainly in English or UK indigenous language or EEA language” etc.  Some industry people I spoke to see Brexit as a chance to better target UK tax relief towards UK projects.
  • Wolf of Wall Street moneyThe film industry must lobby for money to replace lost MEDIA funding.  Between 2007-13, the EU’s MEDIA scheme provided over €100 million towards various aspects of the UK film industry, which would be missing in a post-Brexit world (see last week’s article for a full breakdown of where the money went).  As a member of the EU, the UK sent hundreds of millions of pounds to the EU each week (the exact figure was a bone of contention during the campaign, with Leave campaigners claiming it to be £350 million a week while other voices put it nearer £136 million a week). Even if we take the lower figure, the amount we received via MEDIA funding was less than a quarter of one percent of the money we paid to the EU over the seven years. There will be a huge number of industries pressuring the government for additional funds, and so the UK film industry needs to start planning now how it will make its case. 
  • There is considerable pressure on the UK government and the BFI to find a way for the UK to be part of European film bodies.  These include remaining a part of Creative Europe (which includes MEDIA) and to join Eurimages.  This is perhaps unfair on the government bodies because the wider geopolitical situation both in the UK and the EU will define what’s possible.
  • We need to invent new patterns of business. Right now the loss of old structures are being felt and the new structures are not yet apparent. But this could be seen as a period of creative destruction and an opportunity for innovative and entrepreneurial producers to build new patterns of business. Historically, the film industry has been very good at creating interesting new funding models to fund films (on either side of the law!)

Epilogue

play niceLast week I wrote a politics-free piece on possible outcomes of Brexit and I received messages (publicly and privately) criticising me on both sides of the debate.  Some thought I was being too light on a post-Brexit film industry while others accused me of scaremongering.  This was a bit discouraging as I had done my best to be even-handed and unbiased.  On the other hand, it was nice to see that the vast majority of messages and comments were on topic and also trying to understand this new, unexpected future.  

Please do add your comments below if you want to correct an error, point something out that’s missing or in any way add to the intellectual debate.  However, if you just want to blindly vent your anger and frustration then please don’t.  That’s what’s Facebook is for.  Likewise, insults and name-calling are best flung on Twitter and if you just need to find a way to cope with a crippling sadness then may I suggest booze and/or religion.  

In short, let’s play nice and work together to make the debate welcoming to all and to bring out the best in each of us.

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13 Responses

  1. SS July 4, 2016 at 9:36 am #

    Thanks Stephen. I’d rather the Government cut company tax for all companies, than use our taxes to hand out grants/funding/subsidies/corporate welfare. The depreciation in the pound will make us very attractive to the big studios as you pointed out previously – thus any reduction in local output will be picked up by the big studios.

  2. Roy- M. Martens July 4, 2016 at 1:04 pm #

    Gr8 job, and it is very unfortunate that ever single statement finds critics on both sides of the spectrum.

    Thank you!

    • Roy- M. Martens July 4, 2016 at 1:07 pm #

      P.S. I shared the original article widely on TheFilmPortal, and is was extremely well received by our (very) professional membership!

  3. DS July 4, 2016 at 1:47 pm #

    “The film industry must lobby for money to replace lost MEDIA funding.” This is by far the most important factor here. If we can get that £ that was sent to Europe and came back to us via MEDIA funding then all well and good.

  4. Andrew Mills July 4, 2016 at 5:51 pm #

    Clearest take I’ve read yet and reflects many conversations I’ve had and turns seen over the past week. Thank you.

  5. Tiziana Callari July 4, 2016 at 7:51 pm #

    looks very dark.

  6. Hilary Edge July 5, 2016 at 6:51 am #

    It’s the PEOPLE themselves who breed success!!!

  7. Christopher Figg July 5, 2016 at 1:02 pm #

    As we have to get on with it – here’s a thought (excl VAT)…
    A return to an Eady Levy with 0.1% tax on box office receipts of £1.1 billion (£11,000,000) would yield a healthy amount (administered by BFI) to allocate to development, regional subsidy, distribution and exhibition per year. This is almost the same as 100m euros between 2007-2013…….
    I haven’t mentioned production because presumably the lottery funding will still be in place.
    A levy of 0.1% on the average cinema ticket is about 15p.

  8. Dominic July 7, 2016 at 7:32 am #

    Following on from Matthew Vaughn’s comment, I have said for the last twenty years the UK does not have a film industry. This is only possible if we are financing films ourselves. Since the only films financed with any real frequency (and this is still fairly recent) is SEIS-funded predominantly gangster (and downright awful) movies that seem to result in criminal charges against their producers, I think it’s reasonable to ignore them. What we have is a film *service* industry. The insistence that we have a film industry is born out of three views; 1) Ignorance – those people who simply don’t know better, 2) ego – those who like to believe we have one so they’ll feel part of something important, 3) personal agenda – those who stand to benefit personally from saying it regardless of the positive or negative impact it would have on the potential for a future industry (the Film Council was guilty of this which is why I was glad to see it go). With the above in mind, common sense dictates that those working on Hollywood-funded films shooting here stand to benefit while those favouring UK- funded films would not. It’s a good article you’ve done but the conclusions have been self-evident for several decades. So how do we change that? Answer: We don’t. Because while it’s possible, if the UK film *service* industry could figure out how to turn itself into a film industry, it would have done it decades ago. There is *one* way to do it. But I don’t ever see it happening. (Hint: it’s all about the software) So I reckon we will just carry on as we’ve always done and bumble along while Hollywood throws wages at us then takes all the proceeds (btw: The Harry Potter films were not British films either as they were financed by Warner Brothers). Incidentally, I have never been an exponent of things like the BCT. These are a ball and chain for UK filmmakers (yes, we have those even if they rarely get to do anything) – short-sighted and ignorant, and with daft ideas like that dictating who will and will not get funding, it’s another reason we cannot have a film industry.

  9. Tom Harvey July 16, 2016 at 10:00 am #

    Thanks so much Stephen for driving this debate.

    Firstly, this ‘service economy’ red herring. Gravity was a Warners film and obviously a British film, not part of a ‘service economy’. Framestore made it with talent from all over the world both European and non European. The ability to fund and profit from large scale industrial product is increasingly resting with the larger global brands. The UK, London in particular, is home to some of the best and most diverse talent in the world. We should focus the debate on championing, keeping and protecting our creative talent, wherever they are from, not trying to demean them by claiming a film is not made by them because the money comes from elsewhere.

    Secondly, though European funding has resulted in some brilliant films as Stephen outlines, it has also resulted in an incredibly complicated development, production and distribution journey for many producers. Witness the numerous European companies and individuals often getting producer credits on many modern films. We now have a great opportunity to simplify film funding.

    Like Chris Figg, I can remember the Eady Levy, apart from recycling funding, it meant we had a short film industry that solved 75% of the training and new talent issues we now face. It was also a simple approach. Bring it back.

    We have a thriving commercial film sector, the Brexit issues for it are free movement of talent and keeping London an attractive place for Europeans to live and work, now we have slapped them in the face and told them they are not wanted. We are all sorry, it’s shocking and embarrassing.

    We need a simpler approach to developing the less commercial sector, something Arts Council England does very well for other art forms. Brexit will result in ACE getting more funding from government. The film industry should perhaps consider aligning with ACE and a new Eady levy. (though learn the lessons from the last time ACE had film funding.) The industry and government must concentrate on simplicity. Complexity is the enemy of creativity.

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