“You live by the subsidy, you die by the subsidy”
This week the UK government shockingly abolished the UK Film Council. It was the go-to organization that supported UK films with lottery subsidies and other kinds of government funding. So why does this matter for the VFX industry?
I’ve mentioned in previous posts that government subsidies only artificialize the price of vfx and they ultimately lead to negative returns and little economic spillover. When countries like the UK are dealing with huge debts, the first thing politicians love to target is any funding for the arts. It’s sad but Hollywood is a favorite target for conservatives. For VFX facilities in the UK that depend on clients looking to cash in on government rebates, it could be very painful if the subsidy is abolished.
I pointed out before that some of the studies coming from the UK Film Council were completely bogus. They even released another fluff piece a week earlier as the austerity target found their backs. Now that they’re gone, the conservative government has assured that they intend to keep the 25% film tax subsidy.
But can they really afford to keep it? After all, the UK games industry was angered over the decision to scrap new subsidies for the gaming industry. Rich investors that used the subsidy as a tax shelter are being investigated. There are talks of giving the BBC the lottery subsidy money that the UKFC was responsible for awarding to UK filmmakers. All this leads to the main event in October when the government does its spending review. The new government has asked for budgets with 20-40% cuts and the 25% film subsidy look almost too tempting to pass up:
For one thing, the government has said it’s committed to maintaining film funding, and a popular production tax credit (at least for now; nothing is sacred under the approaching spending review, in which government departments are being asked to outline cuts of between 20 and 40 per cent.)
The irony in all of this is that the sacred UK film tax subsidy is mostly spent on US films for US studios, while the UK Film Council, which focused on funding UK films, was the first to be axed.
In Other News:
California continues to drain film jobs as other states and countries get into the film subsidy game:
The state has lost more than 36,000 jobs and $2.4 billion in wages over the last decade as production has migrated away
The Chicago Tribune wonders if all the public spending on big movies is worth it.
In New Mexico, the Albuquerque Studios, which lured Sony Pictures Imageworks to the state, have filed for bankruptcy. While the race for governor in the state heats up as the Republican candidate would order a review of New Mexico’s 25% film subsidy. Didn’t I say that Hollywood is a favorite target for conservatives?
Canada continues to thumb its nose at the UK over game subsidies:
Danielle Parr gave an unapologetic response to accusations that the Canadian industry is unfairly supported by government subsidies and is undermining the British games sector through aggressive recruitment of top software developers.
“All’s fair in love and war,” Parr told BBC’s popular Politics Show. “We’re just simply trying to promote the video game industry in general, promote what Canada has to offer. And we’ll take the best and the brightest, we’ll take your investment.”
Here is some advice for the Brits. If the Cameron government pulls the film subsidy, do what the US did to your countries airline industry: File a petition with the WTO against Canada. Subsidies used to injure a foreign market is a violation of trade law. Trade sanctions against an offending country would hurt for years.
Oh and the Aussies are also increasing their film subsidies.