British film studios fret about future
Nicole Smith

LONDON—“Pride and Prejudice”, the latest British box office hit, is packing out movie theatres across the country, but appearances are deceptive. The British movie industry is in bad health: production is declining and jobs are disappearing.
The number of films produced in Britain plummeted by one third in 2004, with 132 productions costing a total of 807.9 million pounds (1.2 billion euros, 1.4 billion dollars), compared to 173 films and 1.1 billion pounds in 2003. Productions that are 100 percent British are an endangered species.
Since the start of the year the cameras have started rolling on only two Hollywood productions, the adaptation of “The Da Vinci Code” for the big screen and the sequel to the hit “Basic Instinct”, at Pinewood Studios, west of London. The James Bond, Pink Panther, Superman, Batman, Alien and Bridget Jones movies were all made at Pinewood.
The industry is particularly worried about the fate of tax credits which were granted in 1997 and have helped to reduce costs by up to 20 percent. In March, the government opened the system to consultation with the aim of renewing them, but some people fear the process could lead to the benefit being scrapped.
In June, Paramount gave up production in Britain. Rumour has it that “The Watchmen,” a 120-million-dollar blockbuster, and the next Harry Potter film could ditch Pinewood for eastern Europe. “Britain has one of the deepest skill bases in the world for making movies, and some of the best facilities,” Pinewood Studios chairman Michael Grade said in the Financial Times newspaper.
“The problem is that the time it is taking for a replacement fiscal regime to be put in place, and the resulting uncertainty, is losing business for the UK and giving comfort to our competitors,” he said. The impact is also seen in job losses. Even though employment is much higher than it was ten years ago, the industry lost one employee out of five in 2004, with barely 25,000 people in production, compared to 31,000 in 2003.
It is a loss which can more generally be explained by under-investment in British-made movies and their rare profits, apart from surprises like “The Full Monty” and “Bend it Like Beckham.” Robert Scherr, commercial banking manager at Bank Leumi, a leading debt finance group for film projects, said the British cinema industry is under severe constraints.
“It’s operating very much as a cottage industry with no major players and certainly nothing to attract City money either from institutional investors, venture capitalists or the equity markets,” Scherr told newsmen.
“It’s an issue that the UK film industry is trying to address at the moment,” he said. He expects the British government to provide new fiscal incentives capable of retaining Hollywood producers, and believes that competition from central and eastern Europe, especially new European Union members, may only be temporary.
“They only have a short window of opportunity to work outside the EU legislation on subsidies,” he said. “After 2007, the only structure they can have for attracting films will have to be comparable with other EU countries. It’s potentially a problem,” he said.