UK FilmCouncil chief executive John Woodward has written a strongly worded letter toMichael Kuhn following the ex-Polygram Filmed Entertainment boss' speech to UKproducer's association, PACT.

In his Mayspeech, titled 'UK Film Crisis And What Can Be Done', Kuhn argued that Britishproducers currently face the "bleakest prospects" since the mid-1980s.

In response,Woodward wrote a four page memo to Kuhn late last month which has since beenleaked to Screen International.

Woodward calledthe remarks made by Kuhn in his speech "unrealistic" and "unhelpful to thecause of the film industry at this delicate time'The reality gap between yourdemands and what the Government is going to be able to provide the UK filmindustry with in terms of support is vast and unbridgeable," Woodward states.

Kuhn's speechcalled the Film Council "a Janus-like body...helpless in light of, andblindsided by, recent tax changes, not hearing criticism because it is the mostpowerful dispenser of patronage."

However, Kuhn'sremedies for kick-starting the industry - which included continuing tax breaks,EIS tax shelters, gap funding, a publicly funded borrowing facility, and publicinvestment in VoD rights - would, Woodward calculates, cost about £3billion a year.

"In truth, I thinkyour proposals are unsustainable and unjustifiable. The British government issimply not going to provide £3 billion or £2 billion or £1 billion of publicsubsidy," Woodward observes.

Pointing outthat the Section 48 tax break is still running and will operate into 2006 aswell as the fact that around 50 independent films had gone into production inthe UK by May of this year, Woodward questions whether the British productionsector in 2005 really is in crisis. "2006 may be different," the Film Councilboss concedes, acknowledging the impact of the continuing uncertainty aboutwhat form the new tax break, possibly a tax credit, may take. (Details of thenew tax credit are expected to be announced shortly.)

Woodward alsopoints to "the very big problem facing our film infrastructure sector this yearwith the $ exchange rate and the Section 42 rationalisation". But he notesKuhn's speech "dismissed that $1 billion industry sector in one line."

He challengesKuhn's idea that Section 48 should be defended rather than scrapped. "I don'tknow how you can have failed to realise that the economic inefficiency of saleand leaseback, coupled with the massive abuse which took place over the lastfew years, has destroyed all political credibility in the mechanism," Woodwardwrites.

The UK Film Council, Woodward asserts, does indeed have avision "for a more sustainable film industry" in which lottery money and taxcredits will continue to play a part, but he insists that the Council is "nevergoing to be privy to private scams perpetrated between accountants, tax fundsand producers."

Woodward goes onto express surprise that at no point did Kuhn "seriously reflect on thestructural problems of the independent production sector and its disconnectwith both the distribution sector and the capital markets."

When contactedby Screen International, Kuhn stated he would not comment on private correspondence orrespond to leaked information.

See thisweek's Screen International for full story and an analysis of the state of UKproduction in the first half of 2005.

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