UK film financing is stillploughing through choppy waters as the consultation period for the new taxbreaks comes to an end this Friday (Oct 21).
And while producers andfinanciers at Screen International's UK Film Finance Summit in London onTuesday were hardly talking up doomsday scenarios, they did foresee uncertaintyahead, followed by new schemes that are unlikely to be as lucrative as currentmodels.
High on the agenda was thefinancial landscape after the end of sale-and-leaseback and the Section 42 andSection 48 schemes.
John Graydon,director of the film unit at Tenon Media, noted that currentlya producer could get a 15% benefit through sale-and-leaseback schemes,regardless of how much of the spend is in the UK.
He argued that to get asimilar rate under the new laws, a producer would have to spend more than 70%of a film's budget in the UK , making UK co-productions less attractive toforeign producers. With a 20% UK spend, such a production would get less than10% in breaks, he projected.
Graydon added that the scenario would be even worse for£20m-plus ($35.7m) features, with tax benefits that used to be worth 20% - nowvalued at 8-9% - shrinking to less than 4% on a typical 50-50 co-production.
And it's at this larger endof the market that Margaret Matheson, head of Bard Entertainments andvice-chair at producers' body PACT, sees the potential for real trouble.
"There's a very strongfeeling that the level of benefit for higher budget pictures will not producebig inward investment at all," she told the conference. Her other worriesincluded uncertainty during the transitional period. "There could be a glitchnext summer when we won't have any productions."
Stephen Margolis, jointmanaging director of Future Films, warned that bigger budget features -including lucrative Hollywood co-productions - would face a tougher battlethanks to the new cultural test devised by the Department of Culture, Media andSport as to what constitutes a British film.
But others saw room forhope. FilmFour head Tessa Ross pointed to its planfor earlier recoupment, through which producersworking with the company would enjoy a 10% advance of FilmFour'sown equity position, realising their share of net profits sooner than usual.
One of the day's most fieryexchanges came during a panel on the use of UK Film Council funds. PeterWatson, managing director of Recorded Picture Company, said that the FilmCouncil's Development Fund is "the one making a difference. I can feel thatit's delivering a real change structurally".
But he questioned theefficiency of the Premiere Fund (geared towards bigger budget and morecommercial features), noting that its annual budget of about £8m ($14.3m) couldonly account for around one per cent of the entire UK production spend. "Itcan't possibly deliver on its aspirations," he added.
Rather he suggested thatFilm Council resources would be better directed towards other types of funding."What is the point of a government fund trying to second guess themarketplace'" he asked, before suggesting that the fund was only recouping forthe Film Council and not sustaining the industry.
Responding from theaudience, Premiere Fund head Sally Caplan, said thatshe would rather have a larger budget for the fund to make more of an impact,but that it still had an important role and was successful in "trying tosupport films that otherwise wouldn't get made".
Other issues touched onduring the conference included the role of private equity, the future of UKsales agents in the wake of the demise of Element X and Renaissance, theresponsibility of broadcasters towards film investment and the potential forcuts in feature funding as the UK government skews cultural investment towardsthe 2012 Olympics.