This week's tax clampdown in the UK has come as a shock to the local industry. From the highs of the awards season in which the Brits were again out in force, the territory's industry is now back down in the dumps (see In Focus, p6).

What happened was familiar to many territories in recent years. There was a rush to exploit a tax loophole that was then abruptly closed off when politicians began to calculate the sums involved in nurses' pay rises and winnable votes.

There is no question that there have been victims in the UK this week. The partnerships that pushed through the so-called Gaap finance schemes have been bruised, but the real pain will be for those preparing to work on films that may now be delayed or even dropped. At least the government listened to protests and exempted sale-and-leaseback schemes which had been caught up in the clampdown.

A sense of international perspective will seem like the coldest of comfort here but Screen will not play the hypocrite.

But earlier this year, we wrote: "When the tax loophole is more important than the product, there is little hope for growth, and in this post-Enron world, governments are far less likely to leave the back door unlocked for the smart or unscrupulous to steal in ... Waiting for the next big loophole boom is a dead end that will do nothing to build that sustainable business."

Right now that is probably an unpopular position, but when the smoke clears there may yet be positives for the UK and any other territory looking to the future.

Gaap was in some ways the most dangerous of all the loophole arrangements we are talking about. It relied on what is called sideways loss relief, which is based on the premise that films make a loss and therefore are good for investors as a neat write-off.

There is no discredit to producers for using it, or in our view to partnerships that have chanced their arm in trying to get it through tax authorities. One cannot reasonably expect such companies to sacrifice their self-interest to the good of a rather ill-defined concept called the 'film industry'. But we can argue the effect of that self-interest has been damaging to all. If film can only exist through the largesse of the state or as a tax write-off for wealthy investors, then where is the beef'

It may be naive, but it is surely better if investors see film as a potential, albeit risky, profit centre. Happily, there are others banking on that idea: Dresdner Kleinwort's slate financing proposal, for example, or the establishment of Visible Films, which pools three of the UK's leading producers to encourage private equity to back commercial films. The difference in those cases is that they promise potential profits, not assured losses.

The UK will recover, not least because, like Germany, it now has an attractive and stable tax credit, for all its cultural test weirdness. It will also be supported because, after all this week's tough talking, politicians know film is good for business - every business. The Queen, just like the royal family it portrays, is a unique way of putting Britain on the map, as even republicans must admit.

If there is any doubt about that, just look to the US. Individual states are falling over themselves to introduce tax breaks not only to keep the local films that had once been prone to run away, but increasingly to win foreign production. Their calculations are not sentimental, just good, hard business sense.

If we are talking about film as a potential profit-maker with a calculable cultural, social and economic value, then we have an industry. But a hard-luck case waiting for the taxman to steal the welfare cheque is a charity.

It is no consolation to the producer desperately seeking finance, but the future still looks bright from our perspective.