Vaizey says Lottery funding to increase to £43m/year, regional agencies move under Creative England, new Ministerial Film Forum to be launched in January.

At a speech in London this morning, UK Culture Minister Ed Vaizey confirmed industry speculation that Lottery funding of film, tax credit certification, support in the nations and regions, audience development/education, the MEDIA desk and other UK Film Council activities will now be part of “a new BFI.”

The revamped British Film Institute will be “the lead strategic body on film and the distributor of Lottery funds to UK film makers,” Vaizey said. Transition details are expected in the New Year and transitions in place by April 2011.

Vaizey noted that the BFI would have to change to meet the needs of today’s industry – “Today’s decision will be the start of a new page rather than a simple development in the Institute’s history. The BFI will change fundamentally. It will become more open to partnerships with others, more engaged with the nations and the regions, more able to realise an exciting vision of a coherent, joined up film industry. These plans will involve a renewed BFI Board and senior management structure reflecting the BFI’s new responsibilities.”

The BFI’s current board vacancies (said to be three or four positions) will be filled soon, with the BFI expected to recruit film industry experts. BFI Chairman Greg Dyke said in a statement: “For some time we have deliberately held back from making new appointments to the BFI Board, but now that we understand the full scope of our new responsibilities, we can begin the process of recruiting the new Board members. In particular we will be looking to appoint new Governors who are active in the film industry.”

The share for film of Lottery funds will increase from around £27 million to around £43 million annually by 2014, Vaizey said. It is not yet spelled out where the extra Lottery funding will come from, although non-Olympic funding will increase after 2012 and the Government is returning the Lottery to “its original good causes,” which means more funding for arts across the board.   

The DCMS is expected to now house the existing UKFC’s Film Fund unit, led by Tanya Seghatchian, although specific staff moves weren’t able to be confirmed today as the organisations just begin due diligence. The DCMS also noted that it would work with the BFI to lead a review of how to build a more sustainable British film industry, and would be reviewing priorities for Lottery distribution and recoupment, including careful consideration of the groundbreaking proposal put forward by producers group Pact. So if the process and priorities of Lottery Funding will change as it moves from the UKFC to the BFI is not yet known.

Vaizey noted there would be no gap in Lottery funding as UKFC responsibilities are transferred to the BFI, and all past funding commitments would be honoured during this time.

Greg Dyke, Chair of the BFI, said: “This decision is a great vote of confidence in the BFI. It is a bold move to create a single champion for film in the UK and we welcome it. We want to achieve greater coherence across the whole film sector and to strike a balance between cultural and commercial. We see an opportunity to reduce overhead costs which in turn will allow us to put more of the Lottery funds into frontline activities and provide greater public value. It is our aim to increase the Production budget for film from £15 million to £18 million in the coming year. This is possible because of the cut in overhead costs.”

Industry sources questioned that £3m could come from overhead cuts, and wondered where the BFI savings would materialise. A BFI spokesman said it would be too early to say where those savings would come from, but it was the BFI’s ambition to realise them.

It is not yet known how much of the BFI’s royal charter will need to be adapted. Vaizey himself said that he didn’t think there were “significant ramifications” in having Lottery money go through the charitable organisation.

Vaizey also announced plans for the existing regional screen agencies to be combined into the new umbrella Creative England, which will have concentrations in the North, Midlands and South.

The BFI will also work with Film London, Bafta and BBC Worldwide to consider how Bafta and BBC Worldwide can help support the export of British films abroad, specifically in the US. No concrete details were revealed about on how those bodies will work together on export.

Also, Film London will take on the UK’s inward investment activities (currently the office of the British Film Commissioner sits under the UKFC) (See separate story)

Nothing is expected to change with the current, and popular, tax credit, except for certifications now being handled via the BFI rather than the unit at the UKFC.

The Minister also noted that Lottery money would still be earmarked for training bodies such as Skillset and First Light until March 2012.

Vaizey got a mostly warm response from the industry figures and press assembled at BAFTA this morning for the speech and question-and-answer session. Although most attendees pointed out that there are still a great many questions to be answered, about the future of the UKFC digital innovation fund, the future of the UKFC’s statistics work, the future of the P&A fund for the distribution of specialised films (Vaizey noting that he’d personally like for it “not to have a separate fund, to have one fund from development and production through to distribution”), and specifics about management structure, staffing changes/redundancies and office space allocation.

The BFI currently employs just under 400 staff; the UK Film Council’s current staff count is 73 (the announcement that the UKFC would be abolished came at the end of July). The UKFC and BFI had been instructed by the previous government to merge in mid-2009 but negotiations stalled and the merger ultimately fell apart and was officially called off in June 2010.

“The goal of a sustainable, independent British film industry remains as elusive as ever,” Vaizey said in his opening remarks. “I recognise change is always difficult and I know the last few months have created uncertainty as we have engaged widely with stakeholders on how best to move forward. But I believe the proposals I am setting out today will help us to begin to address some of the endemic problems within the industry.”

Vaizey did acknowledge that much work was yet to be done: “A new BFI, increased funding from the Lottery, the establishment of Creative England, an increased commitment from Film4 and the BBC, support from Odeon, a Digital Funding Partnership – these are all good news stories. But this is the beginning of a process, not the end.”

Along those lines, key industry groups and individuals to be represented at a new Ministerial Film Forum, which will meet at least every six months, starting in January. Vaizey said the group would be “relatively flexible” and would start with a “run around the houses to address key issues.”

More industry reaction will be on later this afternoon.

Vaizey’s full speech is available here.

Full coverage on Screen:

Vaizey’s full plans

Film London’s new role

UK industry’s response

Creative England, what will jobs impact be?

Vaizey calls for Sky film investment