Changes in tax financing andcashflowing pre-production topped the list of key issues facing the productionsector at support body the UK Film Council's first industry forum.

Council chairman StewartTill, chief executive John Woodward and vice chair Andrew Eaton alsohighlighted deferred fees, producers' equity, or lack of it, and accessto capital as central issues. Aiming to build bridges with the industry, thetrio took the stage before a high-powered gathering including Working TitleFilms' Tim Bevan, BBC Films head David Thompson, Pathe distribution chiefIan George and Civilian Content managing director Chris Auty.

Facing repeated calls to enduncertainty over tax financing, the council said that little could be doneuntil after a general election next month but that it was ready to movequickly. The incumbent New Labour government has announced overhauls for theexisting support under Section 48 and Section 42, but without confirming whatwill replace them.

'We are right in themiddle of a general election and we have unfinished business,' Woodwardsaid.

Woodward said that, ifLabour wins the election, he expects a full scale consultation document to comeout in July. The target, Woodward said, would be to announce details of the newsystem in the government's pre-budget report in December.

The audience painted a bleakpicture for the UK this year, both in terms of inward investment from Hollywoodproductions and indigenous production. 'The situation for independentshas never been worse at any point in my career,' said leading Britishproducer Jeremy Thomas, echoing the gloomy mood of many in the sector.

Till said he did not thinkthe situation was 'as black or white' as that, arguing that inwardinvestment from large-scale US films was in a far worse situation than localproductions. 'The situation is very bad as far as big budget film areconcerned,' Till said. 'In terms of the British film industry, Idon't think 05 will be a worse year than 04.' Till said the currentfunding landscape was 'tough' but pointed to other sources ofNational Lottery financing from the council such as the Premiere Fund forcommercial films and the development fund's slate deals.

Speaking from the audience,Paul Webster, the former FilmFour chief who now runs the film arm of TVproducer Kudos, asked whether the council would relax the aggressive terms ofits production funds as an emergency measure while the tax situation isresolved. Till rejected that suggestion, saying that the council neededrevenues from its investments in production to plough back into its otheractivities, such as training.

One concession the councilhas made, however, is over the problem facing independent producers trying tocashflow films during pre-production. Last year the council denied thesituation had become any worse, but Woodward yesterday said it had been thesubject of a recent board discussion. 'There is a huge issue overpre-production cashflow,' he said.

Woodward added that there isalso a debate over whether the new tax support should be treated asproducer's equity in a film when it is introduced. On the distributionfront, the council has targeted addressing the UK market share of independents,access to capital, access to the US market and video on demand as key issues.Consolidation in the exhibition sector is also on the agenda.

'We don't know if this is a problem, but we arehearing a lot of nervous comments from distribution sector aboutconsolidation,' Woodward says. 'It certainly is an issue at themoment.'

Lastly, boostingbroadcasters' commitment to film is a priority. The council has proposeda fourfold increase in the BBC's spending and is looking for Channel 4 toraise its commitment as well.