Finance (No. 2) Bill
Kerry McCarthy (Bristol East, Labour)
I thank the hon. Gentleman for his intervention, but seeing that he has just described me as a creature from “The Hobbit”, I might take it back. However, he was obviously talking about some of the Labour Members on the Benches behind me and not insulting me personally. I thank him for his clarification about the “Harry Potter” films. If he has his way, perhaps a film will be made in his constituency in which we all have starring roles.
There is indeed more to be done. An interesting House of Lords report into the communications industry made recommendations about what more could be done to support the film sector, despite the pressures on budgets. We have a situation in which the British Film Council is being axed and there are question marks over what will happen to support for the British film industry because of that. It is important that we recognise the incredibly valuable contribution that it makes economically as well as to the cultural life of this country and to how Britain is perceived overseas. It also has an effect on tourism in this country. It is important that we look at the wider picture.
I come now to the existing relief provided to companies that make culturally British films to be shown in cinemas, when at least 25% of qualifying expenditure will take place within the UK. Qualifying British expenditure is defined as services performed or goods supplied in the UK. I have referred to when the House of Lords Committee took evidence on that a few years ago. Most witnesses who gave evidence saw the relief as absolutely essential to the future and health of the British film industry. Tim Bevan, who was co-chairman of Working Title and went on to become chairman of the UK Film Council, said that the film tax credit was
“working brilliantly for inward investment in terms of bringing the studios into this country to make big films here”.
Michael Kuhn of Qwerty Films described it as “fantastic” and said that it had been designed “very cleverly, very effectively”. Lord Puttnam—a world-renowned producer—was slightly less effusive, saying that
“after three or four false starts…we have a system which seems to be fairly admired, which has been road-tested sufficiently”.
Gaynor Davenport, the chief executive officer of the UK Screen Association, thought that, compared with previous film support schemes, the film tax credit was
“a much simpler system which is more easily explained and more accessible for people who actually should be legitimately benefiting from the film tax incentive”.
Several witnesses noted the importance of the tax credit’s remaining competitive internationally if the UK were to continue to attract inward investment in film. It was also noted that the rates were more generous in places such as Australia, Canada and Ireland. The Lords recommended that the rate of the tax credit be kept under review by the Government, in consultation with the industry, to ensure that the UK does not become uncompetitive as a venue for international film making. Can the Minister say a few words on whether the Government intend to revisit that issue in future?
The specific provision in the Bill is a small, but still important, measure that will help to support the continuing success of the British film industry. Currently, film production companies that make films in which production spans two or more accounting periods, including some overseas expenditure, may suffer from an unintended restriction on their ability to surrender a loss for a tax credit if there is increased spending in the UK in the second or subsequent accounting periods. The clause introduces a revision to how the amount of the loss that is surrenderable for the tax credit is calculated, and thus removes the anomaly in the amount of tax credit claimable. As intended, the amount of film tax credit available is the same, regardless of the profile of the UK expenditure.
As such, we welcome the provision, but can the Minister say more about what he thinks the likely consequences of it will be? Are there any plans to do more to support the UK film industry and to keep the situation under review in years to come?