Ex-UK Film Council Board member and former Chairman of Scottish Screen James Lee has called for the creation of a State-backed “British National Distribution Company.”

Lee has sent a copy of his memorandum, “Beyond The UK Film Council” to Culture Secretary Jeremy Hunt. In the 10-page document, Lee calls for radical change in the role that the public sector plays in support of the British Film Industry.

Lee argues that the new distribution company should be a largely private-sector initiative but one underpinned by Lottery funding. He calls for all or most of the available Lottery funding to be funnelled into the new distribution company on fair terms agreed with Ministers.

The memo was drafted in response to last month’s DCMS decision to abolish the UK Film Council (UKFC). Lee argues that a dedicated UK distribution company would fund development and then commission films from producers. It would handle distribution in all media and would have its own DVD label. The company would control its own marketing and also take the marketing investment risk including theatrical P&A.

“The distributor would negotiate global distribution deals and co-financing arrangements, so that producers would be offered “One-stop” funding and distribution, and be freed to concentrate on the creative and operational aspects of production, rather than identifying and negotiating sources of finance,” Lee writes. He describes the distribution company as potentially the linchpin of a new “studio system.”

BBC Films and Fillm4, as public sector broadcasters, would be obliged to distribute their output through the new distribution company.

The idea is that the Coalition Government would award a franchise for the National Film Studio.

The winning franchisee would be obliged to deliver all the working capital required to sustain the business of the new distribution company, including covering all the overheads associated with redistribution of the Lottery funds. It would also be obliged to commit to using a full “commissioning model”, so that all production will be commissioned from independent producers and produced by them.

Lee calls for “one-stop” financing for independent producers, on fair terms, to be negotiated with Pact [the producers group] and for a “fair and equitable basis for recouping and recycling lottery funding.”

The aim would be for the new company to become “sustainable and self financing within an agreed period of time, after which the need for public sector support would cease.”