Urgent action needed to protect distinctly British film and TV content, says committee

Tax breaks and a streamer levy should be on the table as part of an urgent package of support for the UK's crisis-hit high quality drama sector, MPs say today, in a wide-ranging report which urges the Government to step up the assistance it provides for all elements of British film and high-end television.

Today's report from the Culture, Media and Sport Committee welcomes the Government's stated ambition to make the UK the best place to make film and high-end television, but warns that there must be no complacency over its status as a global production hub and calls for a regular assessment of tax incentives to maintain investment from overseas.

At the same time, the report recommends a series of measures to halt the decline of domestic production of culturally distinct British film and programmes, which has failed to keep pace with the headline-grabbing growth of big box office productions financed and controlled from outside the UK. While the introduction last year of the Independent Film Tax Credit – as called for by the previous committee in the last Parliament – was a welcome first step for the film industry, the report says the Government should go further, or producers will continue to struggle to develop and raise finance for films, and those that are made will not be seen by audiences. The Committee calls for a tax credit to support the distribution of lower-budget films, among other measures to support independent film.

The Committee further warns that without urgent intervention, the problems seen in independent film will extend to the domestic high-end TV sector, where competition from high-budget overseas production is driving up costs, revenue models are changing due to the terms offered by streamers and commissioning budgets of public service broadcasters are being squeezed by a fall in the licence fee and drop in advertising revenue. The report outlines evidence that this has put distinctly British content, which is vital to the UK's identity, national conversations and talent pipeline, under threat. Evidence to the inquiry from ‘Wolf Hall' director Peter Kosminsky warned that recent hit ‘The Mirror and the Light' would not have been made today due to funding challenges, while ‘Black Doves' and ‘Kaos' producer Jane Featherstone told the Committee that the business models of streamers dictate that shows need to have global appeal to be made.

The Committee's report therefore calls for enhanced tax incentives for domestic high-end TV, and for streamers, such as Netflix, Amazon, Apple TV+ and Disney+, which benefit from the creativity of British producers, to put their money where their mouth is by committing to pay 5% of their UK subscriber revenue into a cultural fund to help finance drama with a specific interest to British audiences. The report also makes a range of recommendations on how to bolster skills and worker rights in the industry, citing the many hardworking and talented people who work in the sector as a key reason for its success. It reinforces the recommendation of the last committee for the Government to appoint a Freelancers' Commissioner. On support for cinemas, the Committee says the Government should introduce a core funding model for culturally significant independent cinemas to mitigate the cost pressures, changing audience behaviours and under-investment in people and infrastructure that have threatened many communities' cinemas.

The report also says that the Government should require licensing of creative works in all cases where they are used to train AI models.

Dame Caroline Dinenage MP, Chair of the CMS Committee, said:

“Big box-office blockbusters made in Britain have showcased the UK's world-class film and high-end television industry like never before. But the boom in inward investment of recent years now risks crowding out our many talented independent British producers. While streamers like Netflix and Amazon have proved a valuable addition for the industry and economy, unless the Government urgently intervenes to rebalance the playing field, for every ‘Adolescence' adding to the national conversation, there will be countless distinctly British stories that never make it to our screens.

From independent production through to cinemas, all parts of our film and high-end TV sector, and the talented people that make it such a success, are going through a turbulent time. To neglect just one part puts the entire ecosystem at risk, so it's therefore vital that the Government goes further and faster across the board to support an industry that is so important to both our economy and our soft power overseas.

Today's report sets out a way forward for the Government to put the name of the UK film and television industry up in lights around the world as the very best place to do business and to work, by offering the right tax incentives, tackling skills shortages, improving worker rights and making sure the rise of AI is a positive force, not a disincentive to investment.”

The report's key findings and recommendations

The future of British film – page 7

• The Independent Film Tax Credit is a gamechanger for domestic production and a welcome sign of continued Government commitment to the sector. But it is not a silver bullet for all the problems facing independent British film. Without further intervention, producers will still struggle to develop and raise finance for films, and the films that are made will not be seen by audiences.

• On tax changes, the report makes recommendations on amending the definition of R&D for tax relief purposes for the creative industries and introducing tax relief for the print and advertising costs of films to support distribution and exhibition.

• On funding, there should also be a review of the impact of changes to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme and an increase in the budget for the UK Global Screen Fund, with the UK looking to rejoin Creative Europe as an associate member.

The crisis in domestic high-end television – page 17

• Domestic HETV needs to be supported through enhanced tax incentives just as independent film has been. The BFI should urgently conduct analysis on the potential design and return on investment of a targeted uplift to HETV AVEC for domestic productions with budgets of £1 million to £3 million per hour. The Government should commit to introducing the measure at the next fiscal event if the projected return on investment and impact on domestic production is found to be positive.

• The dynamic between independent producers and streamers is not sustainable, and successful production companies are being gutted by deals that deny them the ability to fully monetise their intellectual property. The Government should consider ways that British producers can retain a greater share of IP rights when working with streaming platforms.

• Streamers laud the UK's mixed production ecology, with public service broadcasters and independent producers at its heart, but their business practices are putting that at risk. They need to step up their support for the making of culturally British content, and not just reap the cultural and training benefits it provides. All streaming platforms that operate in the UK should pay a 5% levy on their UK subscriber revenue into a cultural fund administered by the BFI to support domestic production. If the industry does not voluntarily establish the fund within a year, the Government should introduce a statutory levy.

Incentivising inward investment - page 28

• Twice a year, the Government should compare the UK's film and HETV tax incentives with those of other countries. Where the UK's offer is found to be less competitive, the Government should bring forward any changes to maintain overall competitiveness.

Supporting the workforce – page 39

• From our world-class actors, writers, composers and directors to our highly skilled VFX artists and dedicated, hair and make-up professionals, costume designers and technical crew members, the people that make, distribute and exhibit British films and HETV programmes are a key reason the industry is a global success story.

• The Committee is not convinced ScreenSkills is up to the challenge of delivering meaningful action on skills and training and the Government should link any future public funding to specific, measurable outcomes based on it publishing and meeting ambitious and robust performance indicators.

• The Committee is surprised that major streamers and studios could not give a straight answer on how much they spend on training. There should be a statutory requirement for the entire film and HETV production industry to report their spending on skills and training as a percentage of their production budgets every financial year.

• The range of roles required to make film and HETV means entire cohorts of sixth-form students could find jobs in the industry that fit their skills and interests. The Government and BFI should launch a national awareness campaign highlighting the employment opportunities offered by film and HETV, and the range of skills the industry requires.

• The British film and HETV industry benefits hugely from the flexibility afforded by a predominantly freelance workforce, but in return both it and the Government need to do more to support freelancers when they are out of work. The Government should set out specific measures to address pay precarity and the Committee repeats the call of the predecessor committee for the appointment of a Freelancers' Commissioner.

• It is in the film and HETV industry's interests to tackle bullying and harassment through effective self-regulation. All parts of the creative industries under the remit of the Creative Industries Independent Standards Authority (CIISA) should commit to unconditional, long-term funding within six months. In the meantime, the Government should explore all options for funding CIISA in case the industry does not deliver a voluntary solution.

Cinema exhibition – page 63

• The Government should review the impact of a permanent cut to VAT on entry to cultural events, including cinema tickets, to identify whether it would support the growth of the creative industries.

• The Government should fund the BFI's proposals to deliver core funding, similar to Arts Council England's National Portfolio Organisation model, for independent cinemas. This should include a capital funding pot to upgrade cinemas' infrastructure and improve their energy efficiency.

Impact of Artificial Intelligence - page 73

• Industry guidelines based around protecting human creativity in the use of generative AI are welcome, but the film and TV sectors are calling out for help to embrace the growth potential of generative AI in a way that is fair, responsible and legally compliant. At the Spending Review, the Government should fund the BFI's development of an AI observatory and tech demonstrator hub.

• Getting the balance between AI development and copyright wrong will undermine the growth of our film and HETV sectors, and wider creative industries. Proceeding with an 'opt-out' regime stands to damage the UK's reputation among inward investors for our previously gold-standard copyright and IP framework.

The work of the BFI - page 83

• Too often the BFI's responsibilities have been expanded by the Government without a commensurate, long-term increase in the grant-in-aid support available to it. That has put the UK's reputation with inward investors at risk and could undermine the growth of the vital sectors under its remit.

• The Government should review how National Lottery returns for good causes are allocated between distributing bodies by the end of the 2025-26 financial year.

• To safeguard our national collection of film and TV, and increase public access to it, the Government should introduce and resource a statutory deposit scheme for the moving image, as a first step conducting and publishing research into how it would operate.

Report (pdf): British film and high-end television

Report (html): British film and high-end television