Northern Film & Media CEO Tom Harvey put forward a new recoupment model for low-budget British films to a gathering of producers, investors and government reps in Newcastle upon Tyne on Monday night.

Harvey revealed that regional screen agency NFM is planning to fully fund films at the $382,000 (£250,000) budget level in a model that will divide all net profits into thirds — one third for the public funder itself, a third for the producer(s), and a third to be split by cast and crew members.

“We really wanted to try to give producers a commercial base,” Harvey said. He added that such a model would mean “public money is working harder to build a production base.”

He said: “It’s a model that starts to pay out in different ways and looks more investible from outside.”

Producers in attendance — including Ipso Facto’s Christine Alderson (SoulBoy), Pinball Films’ Ashley Horner (brilliantlove), and Third Films’ Samm Haillay (Better Things) — were certainly supportive of Harvey’s ideas about producers recouping 30% of a film’s profits. But they very vocally disputed some of Harvey’s other points. Producers especially balked at the idea that a film budgeted at £250,000 could see an average profit of £600,000 (there was no case study presented of any similar film that has earned that much in the UK).

Harvey countered that new distribution models, such as VOD or other non-theatrical platforms, will start to earn more for low-budget films than traditional cinema-led releases.

Producers were also resistent to the idea that a producer will lower a film’s budget from a more typical level of £1.5-£2m to the quarter-million-pound mark (and cut out producer’s usual fees in that budget) to make a larger cut of profits that may never come (for themselves or cast and crew).

Harvey encouraged filmmakers to embrace changes in the industry. “I think we’re using a slightly outdated model,” he said. “We’ve got to find a way to do it differently…We’ve got to be much more innovative.”

The evening started on a high note, celebrating NFM’s eight film investments in the past year, including Ipso Facto’s SoulBoy, which recently had its world premiere at the Edinburgh International Film Festival. The film’s backing included £150,000 from Finance for Business - North East Creative Content Fund.

The £2.4m Fund was launched in February 2010 with venture capital partner NorthStar Equity Investors to back film, TV, games, interactive media and music industries with investments ranging from £50,000 to £250,000.

The Fund has invested recently in Ashley Horner’s brilliantlove, thriller Rising Tide (and its sequel), James Erskine’s One Night In Turin, Gustavo Ron’s Ways To Live Forever, Gillian Wearing’s Self Made and Richard Heslop’s Frank (now in pre-production).

Total investments of £650,000 have resulted in £2.6m in local spend and created 47 jobs, Harvey noted.