Fessing Up

Like the comedian Jimmy Carr, I too have to fess up.

You know all those dodgy investments in the film industry? The ones where people make loans to movies that are never going to make money, and get massive tax write-offs? The schemes where footballers, tycoons and comedians avoid paying the same tax rate as poor people? Well, I’m just a teeny bit responsible.

20 years ago, I was surprised to find myself elected chair of PACT, the trade body representing Britain’s film and television producers. This surprise was derived from the fact that, although I had a certain amount of experience in television, I had no track record in cinema. Like any movie-goer, though, I was concerned about the moribund state of our industry: around 95% of films in our cinemas were American and only a handful of low budget British arthouse films managed to make it to distribution each year.

It wasn’t for lack of talent: Hollywood was full of British technicians and actors, while the industry back home was on its last legs. This was culturally disastrous, so I asked my film colleagues how to get British films kick started, and they unanimously replied: “tax breaks”. They needed new sources of external investment, and were lobbying government for incentives to persuade companies and rich individuals to back them. The producers wanted to make commercial movies, and maybe get rich in the process; I thought it a good idea because I didn’t want my children being brought up on a diet of Americana.

But PACT knew that neither case would wash with government. What we needed was a good financial argument that commercial British films would be good for Britain. We worked out that £20million in tax breaks would generate hundreds of millions of extra revenue for Britain through the employment of crews, the technical services and studios, the hotels and restaurants in the locations we filmed in, and, ultimately, the revenue that returned through tax on profits. Surely it was worth a little tax concession to get the ball rolling?

So we started a campaign. It was called Impact, and we launched it at a rather grand breakfast in London’s Savoy Hotel. Like any celebrity event we got plenty of publicity – I was even grilled by John Humphrys on the Today programme about why on earth we luvvies should get special treatment. To the Tory government of the day our campaign fell on deaf ears. So instead we targeted Gordon Brown, and built a robust financial model to prove the case.

Four years later our tax breaks were one of the first things he announced as the new Chancellor. The extraordinary thing was, it worked. British films thrived and money flowed into Britain. There was one problem: a lot of individuals who didn’t really have the film industry at their heart jumped on the bandwagon and created schemes solely for the tax breaks. And then persuaded comedians and footballers to put their money in. And they still do. Sorry about that, everyone.

Of course, one of the reasons people use these schemes is because our British tax system is so darned complicated. I count myself as reasonably intelligent and numerate, yet every year when my accountant sends me my tax return with a letter saying “Please check the contents and, if you are happy, sign”, I’ve never been able to understand a single word it says. So I trust that his substantial fees reflect his genius for doing what is right and legal, and I sign anyway. Which is presumably what Jimmy Carr did. Except it wasn’t right, was it?

Britain would probably be a lot better off if we just simplified the whole process. Let’s have a £10,000 tax-free allowance for everyone, then a single 30% tax rate, withheld at source, for wages, services, businesses, investments, everything. Meanwhile, scrap stamp duty, inheritance tax and other unnecessary complications. Of course the result would be thousands of redundant tax inspectors and accountants. Maybe they could set up a film company? They could call it ‘21st Century Tax’. Somehow I doubt they’d find any investors.

Saving The Film Industry

In 1993 I was invited to become chairman of PACT, the body that represents every film and television producer in the UK. Although my experience was limited to the small screen, I had to write to the membership setting out a strategy for helping both sides of the production spectrum.

TV was easy: as someone who’d left the north east after school and spent his entire career in London, I wanted to help my colleagues who’d remained in the regions. So we started a campaign that led directly to the BBC and Channel 4 quotas for programmes produced outside the M25: they exist to this day, and have resulted in thousands of hours of regional production.

Film policy was tougher to get my head around, because I knew nothing about the politics of the industry. I asked the chief executive of PACT, John Woodward, what British cinema needed most. He said simply, “More British films”. Apparently more than 95% of all films shown in UK cinemas were American. “What we need are tax incentives to bring money into UK film production”.

“Well, that’s easy”, I said naively, “all our MPs will find it appalling that we’re feeding our children a diet of American movies. It’s a cultural argument.”

John shook his head. It wasn’t as simple as it looked. The Conservatives had never looked kindly on film luvvies: many of our stars names were openly left of centre and frequently showed up at Labour fund-raising events. And the cultural argument was a non-starter: one only had to look at the isolationist French film industry, producing esoteric films at a huge cost in public subsidy. Nor could we use anti-American sentiment: our cinemas were controlled by the American distributors, so we had to carry Hollywood with us.

This needed to be a commercial, not cultural, argument. There were huge financial benefits to the economy from film production, and we had to convince the government that our industry was capable of making big profitable blockbusters as well as art house classics.

So one morning in 1994 John and I hosted a press conference in the Savoy Hotel, with Michael Winner on one side, Tim Bevan of Working Title on the other, and men in ties from Warner Brothers and Paramount nodding tacit approval; together we launched a campaign for tax breaks for British films.

It was the first time the entire film industry had come together with a united voice. But it took many years of lobbying and a change of government before the campaign succeeded. To persuade Gordon Brown, we produced a complex financial model that showed the economic benefits that would derive from a relatively modest tax concession.

We got our sums right. Since the breaks were brought in, the proportion of UK films shown in our cinemas has more than tripled to 17% and British films now contribute £4.3 billion a year to our economy.

So it’s not surprising there’s been such a universal outcry to the knee-jerk decision of the Culture Secretary, Jeremy Hunt, to axe the body set up to make the whole thing work: the UK Film Council. Run by the very same John Woodward who masterminded our original PACT campaign, the organisation was set up in 2000 as the cornerstone of the revitalised industry. Since then box office takings have increased by 60%, and, more importantly, over 8% of that revenue has been spent on British “indie” films. Currently 44,000 people are directly employed in film, with a further 95,000 working on ancillary services. It’s a multi-billion industry that’s the envy of the rest of the world.

Now, thanks to one ill-judged government announcement, the future of British film is in jeopardy. It’s no wonder that stars, technicians and film-lovers everywhere are up in arms.

Television Is Dead...

On Saturday night at the Sage in Gateshead the North East’s media elite assembled for the annual Royal Television Society Awards. It wasn’t quite the Oscars, but it was still an impressive shindig, with nearly 600 guests, ranging from veteran producers and local celebrities, to hopeful media students. Every UK region holds its own television awards ceremony, but ours is by far the largest, an astonishing fact considering our producers make the least number of programmes.

Last week Northern Film & Media, our local screen agency, launched a campaign to save our local production industry. It's not a moment too soon. They showed us some pretty bleak statistics: Wales, with a population only slightly larger than ours, produces thousands of hours for the UK’s broadcasting networks, whereas we produce almost none. In this region we fork out £134 million a year in licence fees, but the BBC commissions not a single North East network programme. It’s a shameful state of affairs. This region has creative talent spilling out of every pore, but its television industry is invisible in the national marketplace.

Blame for this decline has been laid largely at the door of ITV; I’m not sure this is fair. I think I know how the rot set in. It was in 1992 when, as newly elected chair of the film and television producer’s body PACT, I decided to launch a campaign for regional production.

I guess it was mainly guilt. Having been brought up on Tyneside, and leaving to join the BBC at the age of 21, it didn’t occur to me to return to my roots to work in the region. Like so many northern professionals, ambition and family had settled me in London, but I wanted to do something for my colleagues back home, because I knew how hard it was for them to breach the walls of Television Centre to get their ideas commissioned. Here I was in London, with hundreds of hours of juicy programmes, and my regional colleagues were getting the scraps.

So almost the first thing I did as chairman was ring up John Birt, who had just become the BBC’s director-general. I’ll never forget the call, or the circumstances. I was in The Ivy (where else??), and he called me back after I'd left a message with his assistant. I'm only setting the context, because what he told me on the phone was so utterly shocking I can still picture myself reeling with disappointment against the wooden panelling. I told John that we wanted the BBC to do something to increase the commissions for producers from outside London. He replied, “It’s not the BBC’s job to protect regional production; that’s what ITV is for”. I probably ordered a very large glass of champagne to calm me down.

That simple sentence sounded the first death knell for regional producers. As if to underline his point, shortly afterwards he closed down all the thriving local BBC features departments, the source of wonderful local programmes over the years, and more importantly the training ground for budding producers, directors and cameramen who, by an unfortunate quirk of fate, found themselves born north of Watford. The features department used to have direct links to the networks; now all BBC regional programmes were to come through the news division. Basically, if it wasn't a factual documentary which fitted in with the news agenda, they weren't interested. No entertainment, no features, and certainly no drama or music programmes. It was the beginning of the end.

This response fired our regional campaign, which we won hands down: the BBC was forced to set aside 30% of all its production spend for non-London producers, and in 1998 this quota was extended to Channel Four. But despite having an obligation to commission, the BBC accepted no responsibility for maintaining the supply chain. It had already destroyed its regional infrastructure of training and support that was essential to nurture local producers into the network fold, and it didn't offer anything in exchange.

Leaving the job to ITV ultimately proved disastrous: for when Tyne Tees was bought by Yorkshire, and then both became part of Granada, it was inevitable that network production would be focused on the larger companies, rather than the remoter corners of the empire. As a network force, the home of The Tube, Highway, Supergran, and hundreds of hours of network production, including quality drama, the spirit of Tyne Tees withered away. They shut their big network studios on City Road and moved their
news operation into an office block in an industrial park.

From then on Tyne Tees could only offer our producers a meagre supply of local documentaries (produced on budgets less than 10% of network prices). A friend of mine has made 30 documentaries over the last few years for Tyne Tees at an average budget of just £12,000. Last year I made a single non-broadcast pilot for a network show which cost £600,000. And I doubt the series will ever be made. That's the chasm between us.

Local producers have worked wonders with these derisory resources, but recently the axe fell on even this small consolation. ITV is no longer commissioning local documentaries, so from now on they’re on their own.

So on Saturday night, as the final batch of regional programmes competed against each other and Wire in the Blood received its last ever nomination for Best Drama, there was anxious talk across the ham and pease pudding canapés about the future.

Yet, amazingly, it wasn’t all gloom; there was a real determination to fight on together. One well known actress from Emmerdale stood up on stage and issued a rallying cry for us to keep on going, even though by then she'd clearly had more than a couple of glasses of RTS champagne, she brought the house down. It was a theme echoed by all the award-winners throughout the evening.

Our producers now need the support of all our politicians and opinion formers. The creative industries will be the heart of what the government proudly calls Digital Britain; it’s vital that our region will be part of that future. Watch this space.

In Praise of Village Shops

[The Post Office has announced the closure of thousands of rural post offices. Northumberland has been hit particularly hard]

It’s frustrating trying to get the ear of a deaf government. When I chaired the producers’ trade body in the 90's, we tried to persuade Whitehall to give tax breaks to help the film industry. It was like teaching a goldfish to speak French.

So I feel for the rural post office campaigners. We know the government won’t back down: the horse has bolted and the stable door has already been thrown into a skip. Sure, the odd vocal campaign might deliver a short stay of execution, but the government has decided that the social arguments for post offices don’t outweigh the economic. So shut them down.

The response from individual communities has been special pleading. Take Belsay, for example. Last Thursday The Journal gave their campaign a whole page. Now I agree Belsay is a special case that deserves support. But I’m not sure it’s going to cut much ice, because the Post Office isn’t the real target.

They’re not going to be interested in the claim that “rural businesses depend on the post office for mail and banking”. Besides, as an argument it doesn't really stand scrutiny. Unless a business uses cash (in other words, is retail), it probably won’t need retail “banking services”. Apart from a cafe, and the village post office itself, there's not much need for retain. Most postal services can be delivered online, so the main commercial complaint is probably the ten minutes it takes to drive to the sorting office in Ponteland to drop off parcels. Not much of a financial case, really.

No, this debate isn’t commercial but societal. Belsay is one of the very best examples around. If Michelin published a village shop guide, Belsay would have three stars. I frequently divert there to pick up some fish (they’re supplied by Ridleys of Corbridge) or quality organic meat, or something interesting from their well-stocked deli. It’s obvious that the thriving Belsay shop is the epicentre of village life and its loss would destroy the heart of a community that the Belsay Trust has spent years trying to preserve. The post office occupies a small section of the shop and presumably contributes to its income. If its demise leads to the death of the shop, it would be a tragic loss.

So how should rural communities fight this deaf administration? I hope that Belsay wins its special case status. But what of the others? Perhaps when this war is lost, as it surely will be, they should regroup on a new battleground. The Post Office used purely commercial reasoning when it persuaded the government to lift its obligations towards rural post offices. However this battle is not about whether or not old people can get their pensions, but about the soul of village life itself. Imagine the national reaction if BT went to the government with a commercial argument for reducing the number of people they had to supply with telephones, or councils decided some people lived too far away from the council tip to have their dustbins collected, or the BBC decided it was too expensive to broadcast to people who live outside the major cities? It’s inconceivable because we all agree (for now) these are fundamental services that should be readily accessible to all. Now the government has decided the post offices are no longer essential. But what about a village shop? Can we argue that this is a human right? And if so, can we also create a financial argument for it?

That’s what we did with the film industry. We had a strong cultural argument: our children were being brought up on a diet of American movies, although much of the world’s filmmaking talent was British. It got a lot of backbench support, but the argument was too sentimental to get government backing. To make the Treasury listen, we created a robust financial model to prove that a thriving film industry would be a good thing for Britain. We eventually got our tax breaks, and the British film industry is now soaring. Today it was announced that home-grown movies earned £1.6billion around the world and the top 20 UK films grossed £244million at the British box office. Best of all, UK movies accounted for almost a third of all cinema tickets sold in Britain, up from one in twenty at the start of our campaign.

Surely a flourishing rural economy has got to be good for Britain too. So much of what is wrong in Britain is city-based. More people than ever want to go rural, but they want to live in communities not ghost villages. So maybe it’s the shop in Belsay, not the post office, which needs the help. Perhaps there should be special incentives to encourage investment in all kinds of village services, from pubs to hairdressers. The social argument is blindingly obvious. But to get government to listen, you need to demonstrate the economic benefits. To achieve this, we’d need to develop a financial model which proves how these services directly encourage inward investment and wealth, thereby safeguarding the future of rural England.