Clause 32
Finance (No. 2) Bill
12:00 pm
Edward Balls (Economic Secretary, HM Treasury; Normanton, Labour)
I hoped that I had made that clear already. It is common practice for there to be co-productions and for film makers to work in “partnership” in its colloquial sense. As for the legal use of the term applied for tax purposes, partnerships in that sense will not qualify for the enhanced relief. To qualify, a company must be a film production company as defined in clause 32. I am grateful to my hon. Friend for allowing me to make that absolutely clear, as I hope it now is.
Having spent a few minutes bringing you up to date and clarifying a few of the points debated on Tuesday, Mr. Benton, I shall deal with some of the outstanding points made by the hon. Lady and others on Tuesday.
The hon. Lady suggested that the approach to defining UK expenditure in clause 35 was in some way determined by the European Commission. There was absolutely no truth in her statement. On the contrary, the definition of UK expenditure reflects our policy aim of encouraging producers to make full use of film-making skills, facilities and infrastructure in the UK.
It is true that, as is required, we have been discussing with the Commission the securing of state aids approval for the new relief, but the Commission has not indicated any concerns about how we define UK expenditure, nor requested that we change the definition in any way. We have, for example, reduced the qualifying limit from 40 per cent. to 25 per cent., and we made that decision on the basis of the points put to us during the consultation. In our view, the definition is well within the ambit and requirements of the state aids rules. We are confident that those discussions will proceed apace.
The hon. Lady also referred to a recent British film, which she suggested would have difficulty qualifying for the new relief because it was filmed largely outside the UK. I cannot comment on any individual film, at least in so far as it might or might not benefit from tax reliefs in future. On Tuesday, comments were made on films that we had and had not seen and enjoyed, but I shall not refer back to those discussions; at times, they became a little lurid.
I cannot comment on any individual film, nor speculate on whether it might have taken advantage of tax relief in the past. However, productions for which filming has taken place predominantly or wholly overseas will be entitled to a level of benefit lower than that of productions filmed in the UK. That is entirely in line with the Government’s policy aim, set out clearly in the legislation, of encouraging film makers to make full use of facilities and infrastructure in the UK. This is an enhanced tax relief for making British films in Britain, so it is not our intention to support overseas film industries.