DCMS comprehensive spending review: BECTU response to the paper on film policy

1 September 1998

Introduction


1. BECTU welcomes the opportunity to respond to the DCMS consultation on film policy - and specifically to the recent paper proposing a new Film Council. Our broader views on film policy are set out in the BECTU submission to the Film Policy Review (1997). Our current response builds on those views, recognising subsequent developments, including the publication of 'A Bigger Picture' and the other activity of the Film Policy Review Group (FPRG).
   
   
2. We recognise that the DCMS paper is put forward in the broader context of the DCMS public funding announcement covering the next three years. While welcoming the increases announced for other areas in which we have an interest (e.g. the arts, museums and galleries), we note that the spending review announcement made no specific reference to increased public funding for film. Our response to the film document, while certainly addressing the issue of funding, will therefore treat the film proposals as self-contained and without current provision for significant extra public funds.
   
   Delivering film policy through the Film Council
   
   
3. We note the DCMS paper's key proposal for a new Film Council overseeing both industrial and cultural objectives for the film industry. We further note that key elements in its industrial role would be to act as a "lead body" offering strategic guidance; to encourage support for development, production, distribution and marketing; and to facilitate skill supply/exports and inward investment/and a developing audience. We are clear that, under the proposal, the activities of existing film bodies (BFI, British Film Commission, British Screen, ACE lottery funding for film) would be subsumed by or closely co-ordinated with the Film Council.
   
   
4. BECTU's overall response is to welcome the proposal. While we have a number of specific concerns set out below, we are clear that the creation of a simple strategic agency or lead body for the film industry has the potential to bring a much-needed forceful and dynamic approach to the implementation of film policy in the UK. The fragmented approach under the status quo demonstrably has not worked - neither industrially nor culturally. An emphasis on infrastructure and strategy is badly needed in an industry notorious for fragmentation and narrowly focused decision-making.
   
   
5. In supporting the core proposal for the Film Council, we are equally clear however, that such a body should have, from the start, both the right priorities in its strategy for "sustainable industry structures" and the potential resources to implement this strategy. A new lead body without the right industrial strategy and the necessary availability of funding will be simply the form without the content, the style without the substance. In our submission, therefore, we wish to address both these areas. We accept that this broadens our response beyond the very specific questions raised in the consultation paper but in our view the proposed Film Council will only work effectively if it is established and developed in the right context.
   
   Industrial strategy
   
   
6. The very recognition of the need for a strategic lead body with a concern for industry infrastructure is a welcome step forward. At times in the past, the British approach to film policy has given undue emphasis to ad hoc support for individual productions, without serious attention to the broader context which makes such an approach self-defeating.
   
   
7. Historically, as recognised in 'A Bigger Picture', our film sector has developed as a production-led, fragmented, undercapitalised cottage industry - overdependent on exchange rate factors and Hollywood-based decision-making, with chronic cyclical fluctuations and no stable domestic base. Clear progress has been made in achieving a general recognition that this must change. The Film Council, armed with the right strategy, can be one means of achieving this.
   
   
8. Before indicating where we think the Film Council's strategic priorities should be we wish to emphasise one point which is very close to the concerns of BECTU as a trade union in the industry. As indicated at greater length in our submission to the Film Policy Review, we believe the record shows that the cost of skilled and creative labour in the UK, far from being a disincentive to production investment, is actually among the lowest in Europe (especially given the higher social insurance requirements elsewhere in the EU). UK labour costs are emphatically not a disincentive to inward investment and indeed the availability of the UK's highly skilled and experienced film industry workforce is perhaps the industry's single greatest asset - deserving in our view of the expectations of a reasonable quality threshold for all fiscally-assisted production investment covering good industry practice on the terms and conditions and health and safety of the workforce. The film industry labour force - both on grounds of cost and of flexibility - is part of the solution, not part of the problem for our industry.
   
   
9. The consultation paper refers to the Film Council's key role in 'encouraging the emergence of sustainable industry structures (i.e. support for development, production, distribution, and marketing)'. One key measure which the Film Council could usefully support is the extending of the tax break on film production to all qualifying productions (i.e. up to the first £15m of all levels of budgets - failing the lifting of the cap altogether). However, in terms of strategic priorities for the Film Council, we believe there should be a clear emphasis on distribution as a focus for strategic thinking and for infrastructural investment.
   
   
10. We readily recognise that 'A Bigger Picture' emphasises that "We need to encourage the emergence of a distribution-led industrial process: better capitalised companies which can integrate production with distribution. We need a strong domestic distribution sector." We believe it follows that distribution should be clearly identified as the key industrial priority for the proposed Film Council.
    
    
11. The structural problems of UK distribution have been well analysed: the fragmented production process without any ongoing link to a separate distribution process overwhelmingly dominated by US majors; the distributors' advantage in access to revenue flows; the distributors' strong links to and interest in the production and marketing of Hollywood productions. The results are well documented: US films predominate in British cinemas and very many British productions achieve no significant distribution even in the UK. The previous industry fashion for deferred payments films was a spectacular failure in this respect - most found no significant distribution and almost all failed commercially.
    
    
12. We recognise the potential value of the new initiative for the use of lottery funds for supporting the distribution of qualifying films, through a matching funding approach and with an emphasis on expenditure on prints and advertising, as well as marketing/promotion.
    
    
13. We believe, however, that the proposed Film Council should be prepared to consider further measures to address the problems of distribution. The predominance of US majors in the international marketplace is certainly, for the foreseeable future, beyond serious challenge. However, it should be possible, with a clear strategic focus on distribution, to make real progress in this area.
    
    
14. In our evidence to the Film Policy Review, we advocated the formation of a single joint venture in distribution among the three production franchise winners. We further believe that a broader case can be made for the establishment of some kind of national British distribution company dedicated to the dissemination of indigenous product. Such an organisation would have to make its choices based on commercial judgement but it could get behind any British film showing distribution potential anywhere in the world. It could forge alliances with exhibitors, both at home and abroad, to give British product a genuine chance in the marketplace. It should not attempt to be a world power (an unrealistic aim), but could develop close ties with distributors throughout the world, who would have the expertise to distribute the film in their own territories. If such a focused and dynamic entity could be developed, it need cost the industry comparatively little (the producers take the high risk) and could eventually save the misdirected funding of films with little or no distribution potential. Its world-wide earnings could be channelled back into a British production fund - thus developing a sustainable ecology for our industry.
    
    
15. In addition to any such UK distribution initiative, we should also give consideration to encouraging the majors to distribute a higher proportion of British films - especially if they, as companies, wish to benefit from British fiscal incentives. One option would be to set a voluntary target for the increased distribution of British films by the majors. If this manifestly failed, consideration could be given to a more interventionist approach - not excluding quotas - to secure the distribution of British product.
    
    
16. Finally, we recognise the need - as does the FPRG - for a distribution led strategy to be accompanied by an increased focus on marketing, and we would support the proposed establishment of a Film Marketing Agency. We also acknowledge the need - in terms of exhibition - for increased attention to the accessibility of cinema screens to the cinema going public: both in terms of the number and quality of screens available locally and the location of cinemas near other social attractions.
    
    Funding
    
    
17. As indicated above, we believe the availability of adequate funding will be essential to the success of a proposed strategic lead body such as the Film Council in implementing its objectives. A switch in emphasis from production investment to infrastructural investment is welcome - but this begs the question of how much funding will be available and from where?
    
    
18. The DCMS paper refers to the possibility of funding from grant-in-aid, the Lottery and commercial/sponsorship income working together with industry funding to deliver the strategy. We are still unclear - in terms of the public funding element - whether increased resources will be made available through the Spending Review or whether the proposal relies on the rationalisation of existing bodies to free funding for strategic purposes. Even worse, there is a concern that public funding in the form of Lottery money for film may actually be reduced - with serious implications for single project funding, the Greenlight Fund and other adhoc initiatives. Greater clarity and hopefully reassurance on this would be welcome.
    
    
19. Whatever the proposal for public funding, however, we are clear that the availability of significant industry funding will be vital to the Film Council's prospects for success. We fully and strongly support the FPRG proposal for an All-Industry Fund (AIF) based on a contribution of 0.5% of film-related revenue. The infrastructural investment which this could make possible (in distribution, marketing etc.) would benefit all sides of industry and would make available public goods which the market would not of itself deliver.
    
    
20. It is depressingly predictable that there should be resistance to this proposal from some sides of industry. In our view this is a narrow, short sighted and blatantly self-interested view from companies who simply do not want to pay a 0.5% contribution - even thought he FPRG's general analysis of why such a fund is necessary has not in any way been successfully challenged. We believe the Government should strongly resist any attempt to block or water-down the AIF proposals - and this is a key early test of how strongly committed the DCMS is to implementing the well thought out strategic ideas put forward in 'A Bigger Picture'.
    
    
21. The industry now faces a tremendous opportunity to tackle the infrastructural problems which have dogged it for decades. If, faced with a sympathetic Government which has already introduced extra fiscal incentives to production, the necessary funding is not voluntarily provided to implement the strategy, then it is difficult to envisage when it ever will be. In our view the implication is clear - the industry has the opportunity of using the reasonable and voluntary mechanism of the AIF. If key players refuse to co-operate they should be faced with the real prospect in the medium term of more interventionist and compulsory measures - including the barring of any public funding/fiscal support for non-contributors; and reconsideration of previous proposals such as 'blockbuster tax' or para-fiscal levy on US majors (which remit large European revenue as profit to the US), a blank tape levy, film depository receipts, and other measures geared to the compulsory redirection of a proportion of industry revenue into necessary infrastructural investment. Compulsory reinvestment of this kind should only be considered if the voluntary approach of the AIF fails but it should certainly not be ruled out in principle. Self-interested arguments to the contrary should be treated with due caution.
    
    
22. In parallel to the AIF debate, we continue to strongly support the separate proposal for a Skills Investment Fund (SIF) based on a voluntary contribution set at a fixed proportion of production costs. The training needs and training priorities for which the SIF is earmarked have been well analysed by the FPRG and by industry bodies such as Skillset. Self-interested arguments to undermine or water-down the proposed SIF (e.g. by placing a ceiling on contributions) are, in our view, no more justified than the parallel arguments against the AIF. Again, we urge the Government to resist any weakening of the SIF proposal.
    
    Union Representation
    
    
23. The DCMS paper specifically seeks comments on the establishment and constitution of the Film Council. Our primary concern in this area is straightforward and strongly-felt: we want to see trade union representation on the proposed Film Council at the highest level. Our previous experience of industry bodies such as the British Film Commission or indeed the FPRG is that trade union representation is often absent, marginalised or only obtained after specific lobbying. We would not like to see this pattern repeated.
    
    
24. Why should trade unions be represented? We are, above all, a labour-intensive industry. Our major asset - both in attracting inward investment and making a success of domestic production - is our skilled and creative labour force. Too often this legitimate labour force interest seems to be ignored or downplayed in industry bodies. Corporate interests are traditionally well represented. We understand why this has to be (although crude self-interest and short term thinking is a persistent characteristic from some quarters). Organisations whose representativeness is questionable - such as the New Producers Alliance - have also been conspicuous by their presence on lead bodies. We simply ask that trade unions be given the same opportunity - from the start not at a second stage; on the most senior body, not a subsidiary - to contribute to the Film Council, whose aims we strongly support.
    
    
25. Finally, we wish to make a specific point in relation to employees of those bodies due to be directly subsumed into the proposed Film Council. We would not wish such a rationalisation to lead to yet further redundancies (for example, at the BFI) and we would ask that due consultation is undertaken in order to avoid job losses in any rationalisation exercise.
    
    Conclusion
    
    
26. We support the key proposal for the establishment of the Film Council as the strategic lead body for the industry. The success of such a body will of course depend on setting the right strategic priorities (which, in our view, should involve an emphasis on distribution) and on securing the necessary funding for their implementation. Continued strong support for the proposed All-Industry Fund will be necessary to achieve this. The Film Council itself should represent all sides of industry - and should specifically include trade union representation on behalf of the key labour force interest. We look forward to the further development of the proposal and to its successful implementation.