The UK Film Council (UKFC) is proposing to merge its Premiere, New Cinema and Development funds to create a $25m (£15m) Film Production Fund, as part of a major overhaul of the organisation following its $41.9m (£25m) budget cut.

The new fund will be used to support all production but will have an emphasis on first and second time film-makers, and will also support experimental, innovative and digital film-making.  The UKFC has launched a three month public consultation into the plans today (November 17).

The $25.1m (£15m) budget for the new fund is $3.3m (£2m) lower than the total allocated to the three separate funds, although any money recouped by the UKFC from their investments will now go directly back into the Production Fund.

According to UKFC chief executive John Woodward, the fund is expected to at least equal the current spend on the three funds, as a result of the reinvestment: “Instead of recoupment going back into the top of the Film Council, the money will go directly back into the production fund, so my expectation is that in three years time there will be slightly more money in the pot than there is now.”

The fund will be led by four distinctive gatekeepers who will be appointed by April 2010. Woodward said that its emphasis on first and second time directors was because “the market is becoming more and more risk averse, so it’s the job of the film council to start taking more risks with film-makers.”

Tim Bevan, UKFC chairman added: “Second time film-makers are our biggest problem in this country. People make a decent first movie and then choke on their second film. It is very important to get them up and running.”

The UKFC is also planning to introduce a producer equity scheme that will see producers being given a 30% cut of the money recouped by the UKFC on films they have invested in.

The plans also propose a new $8.4m (£5m) Innovation Fund that will promote new business models and aims to ensure UK film’s transition into the digital age; but other funds will be reduced or scrapped completely including the Film Skills Fund, which will be reduced from $11.7m (£7m) to £5.6m (£3.5m) and the P&A Fund which will be cut from $6.7m (£4m) to $3.3m (£2m). The digital archive fund will be closed down altogether. The UKFC’s diversity budget will not be cut.

Meanwhile, the Regional Screen Agencies look set to lose out in the reorganisation – their UKFC budgets will be cut by 20% - but there is a new minimum target of 25% for non-London film production.

As part of the reorganisation, the UKFC will cut its overheads by 20% and it has confirmed that around 22 jobs will be cut, including 3 from its Los Angeles office. The UKFC’s total budget will now be $99.2m (£59.1m) over the next three years, down from $117.5m (£70m).

The UKFC has been receiving around 46% of its budget coming from lottery funds, 40% from government support through grants, and the remainder from investments and other sources; however, it has been forced to make cuts as lottery cash is now being diverted to the London 2012 Olympic Games.

Tim Bevan, UKFC chairman, said: “The support the UK Film Council has given film culture and the film industry over the past ten years has been enormous, but we’re now operating in a very different environment and we need to adapt to meet the needs of a new generation of audiences and film-makers. To do that when the UKFC itself is having to find savings of $41.9 (£25m) over the next three years is a real challenge. But it’s now more important than ever to ensure we invest as much money as possible in film production, in creative and cultural excellence, and in helping UK film make a successful transition into the digital age – and that’s exactly what we’re proposing to do.”

John Woodward added that the reorganisation takes into account the economic downturn, the lack of finance for new production and the collapse of the traditional business model as well as the cuts in budget. He said the priority was to “protect the money for development and production funding”.

According to Woodward, the overhaul remains separate from the proposed BFI merger. The BFI’s budget is $27m (£16m) a year and if the merger goes ahead, there will be savings from shared costs, he said.