A new proposal to make the UK tax credit recoupable seems to ignore the fact that virtually every other country in the world is lining up to steal big productions away from the UK.

Among the more eyebrow-raising proposals on revamping the UK funding system is the plan that recently came to light for a UK government film fund originated by Matthew Vaughn, the director of Stardust and Kick-Ass.

The proposal suggests that the 16% tax credit which incentivizes producers, including Hollywood studios, to shoot in the UK should be recouped like any other investment “after the studio has recovered its own outlay”. The UK should also receive a profit share of any film which has received the tax credit, it posits. This recouped money would then be poured into a matching fund for UK independent producers.

I won’t go into too much detail because the proposal seems to have been thought up in a moment of fantasy, imagining a world where US studios are so desperate to shoot in the UK that they forego the scores of other countries knocking on their doors with attractive tax incentive offers – which aren’t recoupable.

Canada, for one. Ireland. South Africa. New Zealand. Australia. And those are just the English-speaking ones. Germany has never been more attractive. That’s where The Ghost Writer,Speed Racer and Inglourious Basterds shot to name a few. There’s Hungary, Czech Republic, Romania, Bulgaria. Oh, and France and Italy recently joined the fray.

The Vaughn proposal gives no reason why the studios would favour the UK over these myriad other countries, even though they would have to pay back their tax credit. The UK’s superb crafts and production community, perhaps? The common language and attractions of London? The locations? The food?

The reality, of course, is that the dollar is everything, and the studios would select another country in a heartbeat should a proposal like this one be taken up.

Maybe I am being naïve. Maybe Vaughn really means to suggest between the lines that the studios would never really return the tax credit. We all know stories about net profit participants never seeing a dime from studio productions which consume all the profits to pay back their own marketing expenditure or pieces of overhead cost. Perhaps that’s the point. The government will look good for ostensibly eliciting concessions from Hollywood companies but they will never actually see a cent.

But, apparently not. The proposal imagines a large production fund made up of recouped tax credit monies.

Let’s hope the new UK government doesn’t take an arrogant proposal like this seriously because, should it be implemented, Warner Bros wouldn’t be setting up its next franchise a la Harry Potter anywhere near Leavesden Studios. It doesn’t matter if that franchise is an all-English production set in London, Yorkshire or Hogwarts.

Movies are illusion after all and other countries can double perfectly for the UK. The Lion, The Witch And The Wardrobe felt authentically English to me and it shot in New Zealand and eastern Europe. Likewise Oliver Twist (shot in the Czech Republic), Being Julia (Budapest) or the UK sections of Munich (Budapest). As for studio-bound productions like Hugo Cabret, Clash Of The Titans or Charlie And The Chocolate Factory, there would be no reason for them to stay whatsoever. Indeed, Vaughn himself is in production at the moment on X-Men: First Class at Pinewood. Sans tax credit, I imagine the film would be based in Canada (like the first X-Men) or Australia and New Zealand (like Wolverine).

And in one fell swoop, the UK could lose the tens of millions of dollars of inward investment that these productions entail. Not to mention the jobs they provide, the prestige they bring and the employment of a rich tradition of British stages, craftsmanship, actors and crews.

The UK shouldn’t fool itself. Hollywood might like to shoot there but if the price is right, studio space will be booked in Prague, Budapest or Sydney before you can say the words runaway production.