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The bankers cannot believe their luck

The disgrace of the political class has been the salvation of the bankers. And lax regulation has le

Until the drama over MPs’ expenses, workers in the financial services had been reeling from a succession of blows: collapsing banks, nationalisations, frozen bonuses, job losses and contemptuous, withering condemnation by the public and by opinion-formers in the media, church pulpits and parliament. An optimistic scenario was one of slow rehabilitation under a less permissive regime involving tougher regulation, partial public ownership of banks and a diminished, chastened City.

Now the bankers can’t believe their luck. A couple of days after the first revelations in the Daily Telegraph, the headline in the City’s free newspaper City AM was a shout of orgasmic release: “Now THEY can’t lecture US.” It said it all. Collapse of moral authority and politicians’ will. Back to business as usual.

The dangers of drift were highlighted in the speech given at Mansion House on 17 June by Mervyn King, governor of the Bank of England. He publicly expressed discomfort at the idea of banks that are “too big to fail”: he has concluded that such banks are simply too big. But the government is reluctant to tackle these banks, as the conduct of Lord Myners and the institutionalised passivity of UK Financial Investments Ltd (UKFI) – the Treasury-backed bank shareholder body – indicates. Instead, there seems to be a yearning to disengage government from the financial sector as quickly as possible. Political developments have made that disengagement easier to achieve, now that parliamentarians, including members of the Treasury select committee, have been collectively discredited, and power within the Labour government has shifted from a wounded Prime Minister to a revitalised Chancellor articulating the Treasury line.

It is deeply worrying that some of the most important policy questions for a generation are now being decided by default and in a political vacuum. How can a semi-nationalised banking system best serve the different but overlapping interests of UK bank borrowers, depositors and taxpayers, as well as private shareholders and bank executives? How should the systemic risks of banking – and the City generally – be managed through regulation, in order to safeguard the wider UK economy? Most important, is it actually possible for the UK to play host to a major financial service sector?

The response to all these questions is a lazy, uncritical, self-serving one: that, bar a few regulatory tweaks that will need to be made, the previous regime was essentially fine. The bankers’ view is that UK politicians need to get off their backs as quickly as possible and get the banks back into the private sector; to reverse “penal” (ie, 50 per cent) marginal tax rates; and to stop the European Commission, or more self-confident UK regulators, from “undermining the City’s competitiveness”. These arguments are winning.

Indeed, there is a danger that the counter-revolution could soon become a rout.

Yet it is only a matter of months since half of the British banking system collapsed and had to be rescued by the state through total or partial nationalisation. Thanks to that intervention, the banks have stabilised (if nothing more). Several small banks are now fully nationalised; RBS and the Lloyds Banking Group are partly nationalised; the two remaining global banks (HSBC and Barclays), along with the remainder of the sector, depend on a variety of implicit or explicit guarantees.

How we got to that point has been discussed elsewhere (including in my book The Storm): I am now concerned with the future. There is a bifurcation of paths opening up. One route builds on the experience of recent bank crises in Scan­dinavia, Israel, Korea and elsewhere, including the US, whose so-called Resolution Trust model helped to limit the savings and loans crisis of the late 1980s and early 1990s. Following this route, the state leads and manages a clean-up and restructuring of banks, usually within a decade or so. Approaches have varied, but there are some common elements: the wiping clean of the slate, in respect of losses incurred by existing private shareholders and the removal of failed management; fresh, taxpayer equity capital; structures to ensure that lending can continue unhindered to good, solvent borrowers; the valuation and active management of “bad” assets, in order to retrieve whatever value is left; then, in due course, the selling off of some or all publicly owned banks to achieve maximum return to the taxpayer and leave a varied ecology of properly regulated national banking institutions.

Some of us thought that was where the government was originally heading. After the October rescue, there were some tough-sounding conditions on new lending and curbing bonuses and, for a while, as it basked in the glow of in­ternational approval, the government seemed to be on the right track.

But it has gradually become apparent that we are being taken down a different route, where government money and guarantees are used to facilitate a quick return to “business as usual”. UKFI has been populated by financiers rather than business people with experience as bank customers. The public-sector shareholders seem to have had no quarrel with bank management’s efforts to build profitability and deleverage as quickly as possible.

The Asset Protection Scheme introduced in January also provides insurance cover for “toxic assets”, which means the government has taken on an open-ended risk without a corresponding “upside” for the taxpayer. This route was chosen in preference to fresh government equity capital precisely because it makes a quick return to private-sector ownership easier. There is now a danger of premature reprivatisation, which would leave the taxpayer with a vast toxic dump of losses and a poor price for the share sale. There are already rumours that Northern Rock is being lined up for a rapid sale.

If banks are to return to “normal” commercial operation under private ownership, the issue arises of how they should be regulated. The Cruickshank report on banking, commissioned by Gordon Brown a decade ago, posed the central question: why should banks be allowed to pursue the maximisation of shareholder value – and management bonuses – when they are underwritten by the taxpayer? This question has never been answered properly. Banks should either surrender their protection and compete like other firms, or be protected and have their profit regulated like utilities. In the wake of a banking crisis, the logic is even starker. In the past few weeks we have seen leading executives at Barclays awarding themselves millions while the bank ultimately remains dependent on government guarantees, despite its precarious independence. It is not surprising that executives of the semi-nationalised banks want to follow suit.

What has brought the issue to a head is the judgement that the major UK-based banks are “too big to fail” and have to be rescued in a financial emergency. This concept is an economic and democratic outrage. Either they must be subject to tight state control or they should be broken up so that they are not “too big to fail”. The point has been grasped, improbably, by ministers in banker-friendly countries such as Switzerland, and by our own central bank’s governor. Yet ministers today seem no less terrified of confronting the banks than when Brown initially fled the battlefield a decade ago.

One solution would be to restrict protection, including deposit protection, to “narrow banks”, confined to lending out no more than they receive in deposits. Other banks would operate competitively but be stripped of any protection. I, for one, am attracted to the concept; but it would involve a revolutionary change, a discontinuation of fractional banking altogether, and in the short run it is unlikely to be adopted.

Article continues below...

­Who said what about
the banking crisis

The financial services sector in Britain, and the City of London at the centre of it, is a great example of a highly skilled, high-value-added, talent-driven industry that shows how we can win in a world of global competition.
Gordon Brown, June 2007

When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.
Chuck Prince, Citigroup CEO, July 2007

We cannot have a situation where the banks are able to privatise their profits and nationalise their losses.
Vince Cable, April 2008

We can’t tell every bank what to do.
Alistair Darling, April 2008

Where there is excessive and irresponsible risk-taking, that has got to be punished. The day of big bonuses is over.
Gordon Brown, October 2008

We had ten years of record growth when I was prime minister. I have, unfortunately, come to the conclusion that it was luck.
Tony Blair, January 2009

The government is clearly playing for time in order to avoid doing anything to upset the bankers.
Vince Cable, February 2009

Royal Bank of Scotland has the largest balance sheet in world banking so it is critical that Stephen succeeds.
Sir Philip Hampton, RBS chairman, defends the pay deal for the new RBS CEO, Stephen Hester, worth up to £9.6m, June 2009

A less drastic way of dealing with overgrown banks would be to split off the investment banking arms of the main global banks – what Mervyn King calls the “casinos” – and to confine government protection to the remaining “traditional” banking wings. These would then operate as regulated utilities: the model that broadly prevailed in the United States before the repeal of the Glass-Steagall Act a decade ago. The urgent need to change our system is highlighted by the ambition of Barclays Capital to become “the premier global investment bank”: it is madness for the British taxpayer to be a last-resort guarantor for this kind of business. To be sure, the demarcation is not clear-cut: there is high-risk “traditional” banking and low-risk investment banking, and the separation of roles would not be straightforward. The big banks – HSBC and Barclays – argue that they would be stopped from tapping into the securitisation markets (which may, after recent disasters, not be quite the loss they believe it to be). There is also the implied threat that global banking operations will be withdrawn from the UK.

The government must face down this kind of blackmail. The British taxpayer simply should not be made responsible for the risks that global banks take outside our regulatory jurisdiction. There are undoubtedly technical difficulties in separating out those aspects of global banks that the government can guarantee and those it cannot, but these problems cannot be an excuse for bottling out completely.

One lesson of the financial crisis is that the “light-touch” regulatory approach was a failure. It may have failed in part because of the poor quality of bank supervision rather than the absence of regulation. And the rapid innovation of capital markets undoubtedly ran ahead of regulators’ capacity to monitor activity effectively. But the vast cost to the British taxpayer – and the wider economy – of the banks’ failure and the consequent bailout make it imperative that regulation be strengthened.

We are now at a crunch point. The need to strengthen and update the regulatory regime has collided with the financial institutions’ growing confidence that they can keep the state off their backs. Self-serving arguments are being employed, notably that regulation will suppress “innovation”. It will. It should. We need more financial “innovation” like a hole in the head.

The other argument is that regulation (and 50 per cent tax rates) will undermine the City’s “competitiveness” and “drive away” banking and non-bank financial institutions. This argument has to be met head-on; the idea of a regulatory race to the bottom does not square with political and economic reality. Co-operation rather than regulatory arbitrage between the main jurisdictions will always be best, but if that co-operation does not materialise, the UK should not chase business by offering low standards that create wider risks for the UK economy. The arguments about City “competitiveness” are bogus, self-serving and dangerous. It is profoundly to be hoped that Brown, Alistair Darling, Ed Balls and others who fell for them so haplessly in the past have now learned their lesson.

The new regulatory agenda espoused by Lord Turner, chairman of the Financial Services Authority, is sensible and not especially controversial. Indeed, many in the City see it as a minor irritation, followed by a green light to get back to business as “normal”. It contains sensible elements – such as “macro prudential regulation” that would focus on systemic risks, rather than regulation of individual banks – and more controversial but basically prudent ideas, such as limiting loan-to-value ratios and/or multiples of income for mortgage lending.

Lord Turner has also supported the argument that the most dangerous forms of risk-taking in banking institutions can be limited by paying bonuses not in cash but in stock, redeemable after a period of years. As stock prices are depressed and the capital gains tax payable is only 18 per cent, any half-sober City trader will have worked out he should be doing this in any event. But it is not a silver bullet – the bosses at both Lehman Brothers and Bear Stearns had huge equity-related incentives, and look where they are today. These issues require pause for thought: there are bigger regulatory battles shaping up.

One concerns the proposal to establish a clearing house for complex financial derivatives so that they can be traded, netted and regulated. Properly regulated, these activities can spread risk and, in a general sense, add to stability. What is much more dangerous, as the recent financial crisis has illustrated, is to have a vast pyramid of paper claims – as in the CDS/CDO (credit default swap/collateralised debt obligation) “markets” – which cannot be settled in an orderly way through a clearing house. Important lessons can be learned from the recent collapse of General Motors. CDS contracts with a value in excess of $35bn were netted down to $2.2bn, causing little more than a ripple in the overall CDS market. The danger is that nothing will be done, setting up a huge systemic risk – and the next big crash.

One practical remedy would be to establish a clearing-house system as soon as possible. Big banks that make a lot of money from OTC (“over-the-counter”) trading are not happy: if they were forced to use a regulated exchange they would lose this business. In practice, complex, structured derivatives would therefore be prevented. A second issue is whether the London Stock Exchange – and the Bank of England as the lender of last resort – are big and strong enough to support a clearing house dealing with transactions valued at many times the size of the world economy. Co-operation with the US is potentially important. And perhaps a European approach is required, in order to draw on the bigger firepower of the European Central Bank, but that may unleash some dangerous political demons.

Meanwhile, the European Union has precipitated another major regulatory battle by putting forward proposals, both for strengthening European co-operation over bank supervision – reluctantly conceded to by the UK – and for toughening the regulation of hedge funds and private equity. Britain’s financial community has a collective paranoia about Europe, and there is envy of London’s currently predominant role and a distaste for the freewheeling “Anglo-Saxon” model (not that German, Dutch or even French banks behaved very differently in the crisis).

However, it is surely eminently sensible to ask, as the European Commission is doing, whether these new forms of financial intermediation are healthy and adequately regulated. There are some critics who question the value of hedge funds altogether and would be happy to see them regulated out of existence. But a more relaxed view is that there is a role for specialist financiers who pursue high yield via high risk – provided they do not depend on taxpayers’ guarantees or indirectly contribute to the systemic risk that taxpayers underwrite. The former has not been a problem in the recent crisis (no hedge fund has asked for government help), but the latter undoubtedly is. There is a proper debate to be had as to how hedge funds should be regulated: to treat the tentative proposals of the European Commis­sion as akin to a Napoleonic invasion threat is simply idiotic.

There is a more fundamental argument about the scale of Britain’s financial services industry in relation to the UK economy. I wouldn’t expect the City to vote for contraction, or for curbs on its freedom to operate, any more than I would expect turkeys to vote for Christmas. But the poultry farmer – the Labour government – cannot just ask the turkeys what they want. He has to be willing to wield a knife and cut some throats. A combination of national, European and global regulation is necessary to ensure that the vast negative externalities associated with the City do not exceed the (genuine) benefits that the UK economy derives from a successful, internationally traded, financial services sector. In addition, there will have to be a major structural adjustment out of traded financial services into other services and manufacturing.

Unfortunately a weak, demoralised, delegitimised Labour government is in no shape to face this challenge, and a Tory government pumped up by City donations would have no need or inclination to take it on. The opportunity for reform and renewal is passing us by and, if it does, financial crises will return with even greater ferocity in years to come.

Vince Cable, economic spokesman for the Liberal Democrats, is the author of “The Storm: the World Economic Crisis and What It Means”, published by Atlantic Books (£14.99)

This article first appeared in the 29 June 2009 issue of the New Statesman, The Great Escape

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Can celluloid lovers like Christopher Nolan stop a digital-only future for film?

Despite proponents like the Dunkirk director, physical film is finding it tough in the modern age. 

“Chris Nolan is one of the few producing and directing films right now who could open that film. He is one of the all-time great filmmakers.”

No prizes for guessing which new release Vue CEO Tim Richards is talking about. Aside from its box office success, aside from its filmmaking craft, aside even from its early reception as an Oscar favourite, Dunkirk sees Nolan doing what Nolan does best: he has used his latest film to reopen the debate about celluloid.

Until relatively recently all film was projected from that old, classic medium of the film reel - a spool of celluloid run in front of a projector bulb throwing images on to a screen. It comes mainly in two forms: 35mm (standard theatrical presentations) or 70mm (larger, more detailed presentations most popular in the 60s and 70s). Fans say it provides a “warmer” colour palette, with more depth and saturation than modern digital formats.

But now it’s hard to even see movies on film to make the comparison. After George Lucas, godfather of the Star Wars franchise, shot Star Wars Episode II: Attack of the Clones entirely in digital rather than on physical film, the rollout of digital progressed with clinical efficacy. Within ten years, film was almost wiped out, deemed to be impractical and irrelevant. Modern cinema, it was argued, could be stored in a hard drive.

Christopher Nolan set out to change all that. He championed film as a medium against the industry trend, producing (The Dark Knight, The Dark Knight Rises, Interstellar) in super-detailed, super-sized IMAX 70mm. With Dunkirk, Nolan has taken that further by screening the film in 35mm, 70mm and IMAX 70mm.

Nolan is not the medium's only poster boy – it is symbolic that the new Star Wars trilogy, 15 years on from Attack’s groundbreaking digital filming, is now being shot on film once more. This summer, Dunkirk may well be seeing the biggest rollout of a 70mm presentation in cinemas for 25 years, but in 2015 Quentin Tarantino’s The Hateful Eight saw chains and independent cinemas having to retrofit 21st Century cinemas for a 20th Century presentation style. It was a difficult process, with only a handful of screens able to show the film as Tarantino intended – but it was a start.

Today, celluloid is, ostensibly, looking healthier. A recent deal struck between Hollywood big wigs and Kodak has helped. Kodak will now supply celluloid to Twentieth Century Fox, Disney, Warner Bros., Universal, Paramount and Sony. It’s a deal which is not only helping keep Kodak afloat, but also film alive.

Kodak has also gone a step further, launching an app to help audiences find 35mm screenings in local cinemas. Called ‘Reel Film’, it endeavours to back Nolan and co in ensuring that celluloid is still a viable method of film projection in the 21st century.

Even so, whether Nolan’s film fightback has actually had any impact is unclear. Independent cinemas still screen in film, and certainly Vue and Odeon both have film projectors in some of their flagship screens, but digital dominates. Meanwhile, key creatives are pushing hard for a digital future: Peter Jackson, James Cameron and the creative teams at Marvel are all pioneering in digital fields. Whether or not film can survive after over a decade of effacement is a difficult – and surpisingly emotionally charged – question.

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Paul Vickery, Head of Programming at the Prince Charles Cinema in London, is the kind of person you might expect to talk all about how physical film is a beautiful medium, key for preserving the history of cinema. History, he tells me, is important to the Prince Charles, but it's a surprise when he saysfilm is actually more practical for their operation. Because not every film they screen has been digitised, access to old reels is essential for their business.

“If you completely remove film as an option for presentation as a cinema that shows older films,” he says, “you effectively cut 75 per cent of the films that you could possibly show out of your options, and you can only focus on those that have been digitised.”

Vickery says the debate around film and digital often neglects the practicality of film. “It's always focusing on the idea of the romance of seeing films on film, but as much as it is that, it's also to have more options, to present more films. You need to be able to show them from all formats.”

That’s a key part of what makes the Prince Charles Cinema special. Sitting in London's movie-premier hub Leicester Square, the Prince Charles is renowned for its celluloid presentations of older films and has made a successful business out of its 35mm and 70mm screenings of both classics and niche films.

“If there is the option to show film and digital, we tend to take film as the option because it's also something you can't replicate at home,” he explains. “It's also just the nature of how film is seen on screen: its image clarity, its colour palette, the sound is just something that's very different to digital, and I think that's something that's very worth saving.

“Not many people have 35mm projectors at home. If you have it on Blu-Ray or DVD, to see it on film is a way of dragging someone out from their house to come and see it at the cinema.”

Currently screening is Stanley Kubrick’s 1968 epic 2001: A Space Odyssey in 70mm. It’s an incredible presentation of what Vickery says is a seven or eight year-old print struck from the film’s original negatives: the colour of the picture is far richer, while the fine detail in some close-up shots is on par with modern movies. Even more impressive, though, is that the screening is packed. “Fifteen years ago, there would be cinemas where that would be almost on a circuit,” laments Vickery. “We've just stayed the course, and that's something that's just fallen away and we're one of the last, along with the BFI, to show films from film.

“There’s still a bit kicking around, but as we do more and more of it, we seem to be pulling out those people who are looking for that and they seem to be coming back again and again. The repertory side of our programme is more popular than ever.”

That popularity is seemingly reflected in its audiences’ passion for celluloid. Vickery tells me that the PCC’s suggestions board and social media are always filled with requests for film screenings, with specific questions about the way it’s being projected.

For Vickery, it’s a mark of pride. “It sounds like inflated ego almost,” he begins, as if providing a disclaimer, “but it's why I think the work we do and the BFI do and any cinema that shows films from film is about history. By us continuing to show film on film, studios will continue to make their film print available and keep them going out. If people stop showing films on film, they'd just get rid of them.

“Once they're all gone, they only way we're ever gonna be able to see them is if they're taking these films and digitising them, which as you imagine, is always going to be the classic set of films, and then there'll be very select ones will get picked, but it's not gonna be every film.

“You have to keep showing films from film to keep the history of cinema alive in cinemas.”

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History is something that the BFI is committed to preserving. 40 per cent of their annual programming is projected on celluloid, and they loan around 200 prints to venues each year. Their new “BFI 2022” initiative will produce 100 new film prints in the next five years.

Most recently they have focussed on safeguarding their archive, the BFI’s creative director Heather Stewart tells me when we meet her in her office in the BFI’s artsy offices just off Tottenham Court Road.

“We got money from the government to renew our storage which was a big deal because the national collection really wasn't safe,” she says  “There was work at risk because it was warm and humid and we have bought a fantastic, sub-zero state of the art storage facility in Warwickshire in our big site there and our negatives are there. So our master materials are all in there safe - all the nitrate negatives and all that. In 200 years, people will be able to come back and make materials from those, whether digitising or analogue.”

Stewart tells me that it’s important to do both: “Do we at the BFI think that audiences need to see films in the way the filmmaker intended? Yes. That's not going away - that's what we're here for. Do we want as many audiences as possible to see the film? Yes. So of course we're interested in digital.”

The restoration and printing project is attracting lots of “international interest” according to Stewart: just one example is that the BFI are looking into partnering with Warner Bros in their labs in Burbank, California.

“We're becoming the only place left that actually loans film prints around the world so that you can see the films the way they were intended,” she says. “So if you don't have any kind of renewal programme, you'll eventually just have blanked out, scratchy old prints and you can't see them."

They're getting financial support too, she says: “There are people like Christopher Nolan, Quentin Tarantino, Paul Thomas Anderson [director of Oscar-winner There Will Be Blood whose 2012 film The Master was shot and screened in 70mm], a lot of people who are very committed to film, and so there's conversations going on elsewhere and with the film foundation about bringing other investments in so we can really go for it and have a fantastic collection of great great 35mm prints for audiences to look at.”

As a fan of the film reel, Stewart is passionate about this. I put to her the common suggestion that lay audiences can’t tell the difference between screening on film, and digital. “I don't agree with that", she says. "If you sit with people and look at it, they feel something that you might not be able to articulate.

“It's the realism the film gives you - that organic thing, the light going through the film is not the same as the binary of 0s and 1s. It's a different sensation. Which isn't to say that digital is 'lesser than', but it's a different effect. People know. They feel it in their bodies, the excitement becomes more real. There's that pleasure of film, of course but I don't want to be too geeky about it.”

Yet not every film print available is in good condition. “There's a live discussion,” says Stewart. “Is it better to show a scratched 35mm print of some great film, or a really excellent digital transfer?”

There’s no neat answer.

But Stewart is certainly driven by the idea of presenting films as closely as possible to the filmmakers’ true vision. “If you're interested in the artwork,” she explains, “that's what the artwork has to look like, and digital will be an approximation of that. If you spend a lot of money, and I mean really a lot of money, it can be an excellent approximation of that. But lots of digital transfers are not great - they're cheap. They're fine, but they're never going to be like the original.”

The process of restoration doesn’t end with digitisation. Keeping film copies in order to have originals is hugely important given how quickly digital media change. Film is a constant form of storage which does not alter. As Stewart defiantly puts it, “all archives worldwide are on the same page and the plan is to continue looking after analogue, so it ain't going anywhere.”

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The BFI were kind enough put on a display of how film projection works in practice. Tina McFarling, Media Advisor, and Dominic Simmons, Head of Technical, provide a tour of two screens at BFI Southbank. Chatting in the projection room above the screen which hosted the 70mm première of Dunkirk, their passion for celluloid was on display.

Standing next to two mammoth 70mm projectors, Simmons talks through the real-terms use of film, and the technical expertise behind it. “It's a lot more labour intensive than sticking digital prints on, but it's something we want to do,” he says.

One of the projection booths at the BFI

During the visit, the team are prepping a rare 35mm screening of the documentary I Am Cuba to be shown that afternoon. Simmons says that operating a celluloid projector is a “more complex operation” than digital. Looking at the endless labyrinth of film and sprockets, it's easy to believe.

“If you're screening from film in a cinema,” he says, “then you need engineers, technicians who are capable of doing it, whereas a lot of multiplexes have deskilled their operation.”

Simmons says that, while larger chains have one engineer to oversee every screen with the actual process of running the films centralised with a centre loading playlists, the BFI has twenty-two technicians, each closely overseeing the projection of a film when on duty.

“There's so much about the different elements of the presentation that you need to know that all comes together with the sound, the lighting and the rest of it.

“When you're starting a film, it's more of a manual operation. Someone needs to be there to press the buttons at the right time, manage the sound, operate the curtains, and attach the trailers to the feature.”

Having skilled operators is all very well, but of course you need to have the equipment to operate in the first place. “We have to make sure that the equipment is kept and utilised as well as making sure the prints are available, and then the skills will follow”, he says.

Simmons says many are likening the film fight back to vinyl’s resurrection, but has a rueful smile when he talks about film being described as “hipsterish” and “boutiquey”.

He also points out that the quaint touches that make film attractive to this new, younger audience – blemishes, the occasional scratch – are a headache for projectionists. “For me,” he says, “that's quite difficult because a bad print of a film is never a good thing, but if it's a bad print of a film that can't be seen any other way...” He trails off sadly.

The threat of damage to film prints is constant, he says. “Every time you run a film print through a projector there is some element of damage done to it. You're running it over sprockets at loads of feet per second.”

He switches a nearby projector on – it’s loud, quick and, after leaning in to look more closely, it’s easy to see that it’s violent. “It's a really physical process,” Simmons continues. “The film is starting and stopping 24 times a second.”

The idea that shooting on film, for which the very raw material is in short and ever-decreasing supply, is endangered is a tragic one. “There's a finite amount,” Simmons says. “People aren't striking new prints, so if you damage a print, the damage is there forever.”

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The Prince Charles and the BFI are in a privileged position to protect endangered film stock. A friendly partnership between them, which sees the BFI lending reels to the Prince Charles, as well as benefitting from the business of London’s rabidly cinephile audience, allow them to prioritise screening on film the majority of the time. Not every cinema is so lucky.

While the historic Ultimate Picture Palace in Oxford does have a 35mm projector, owner Becky Hallsmith says that it’s mainly the digital projector in use “for all sorts of logistic reasons”.

Though Dunkirk’s push for film projection was a welcome one, it still didn’t make sense for the UPP to screen it. “Certainly we thought about it, but I felt that if you're going to see it on celluloid, you probably want to see it on 70mm, so we decided not to get it on 35mm.”

Economic factors come into effect here too – the UPP, based just out of the city centre in Cowley, vies for Oxford’s filmgoers’ love with the Phoenix Picturehouse in nearby Jericho. While they do have slightly different markets, Hallsmith was aware that the Picturehouse was already set to screen Dunkirk in 35mm, leading her to decide not to.

 “It's not like I'm saying we never do it” she clarifies. “But there are reasons I haven't this time.”

Hallsmith was also aware that not all of her projectionists are trained in screening film, saying that, by screening Dunkirk in digital, she was “taking that little headache out of the equation”.

For the UPP, practicality of this kind trumps sentiment, given the cinema’s small operation. “I'd love it if I had the time to work out what films had beautiful 35mm prints and programme accordingly,” she says, “but I just don't have the time to put that amount of thought into details of programming. We're tiny. I'm doing all sorts of different jobs around the cinema as well. The programming is by no means the least important - it's the most important part of the job - but there is a limit to how much one can do and how much research one can do.”

Despite the practical issues related to 35mm, Hallsmith is still glad to have the option available, saying that when the digital projector was installed in 2012, there was enough room for the installation to account for the 35mm one – and to revamp it.

Despite many 35mm projectors being sent to an unceremonious death in skips, some projectors that are replaced for digital successors are cannibalised for parts. Hallsmith was a beneficiary. “Most of the bits on our 35mm projector are quite new,” she explains, “because they had all this stuff that they were taking out of other cinemas, so they upgraded our 35mm for us because they had all the parts to do it with.”

But Hallsmith is grounded when I ask her if having both projectors in operation is important. “It's important for me,” she laughs. “One of my real pleasures in life is to sit at the back near the projection room and to hear the film going through the sprocket. It's one of the most magical sounds in the world and always will be for me.

“But I know that for a lot of our customers, it is neither here nor there, so I have mixed feelings about it. It's not like I think everything should be on 35mm. I love it, but I can see the practicalities.”

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It is certainly practicality that’s governing cinema chains. Cineworld, Odeon and Vue have all seen huge expansions in recent years. Vue chief Tim Richards, says celluloid is a “niche product”, but the admission is tinged with sadness.

“The problem that we had,” he says about the 70mm screenings of Dunkirk, “with the conversion to digital that happened globally, there are literally no projectors left anywhere, and it's very, very hard to get one. We managed to find a projector and then we couldn't find anybody who actually knew how to run it. There are very real practical issues with the medium.

“To reinforce that we have a new look and feel to our head office, and I really wanted to have an old analogue 35mm projector in our reception and we couldn't find one. We had thousands of these things, and we had none left. We couldn't even get one for our reception!”

Even with a working projector and a trained projectionist, Richards says the format has “very obvious issues” with mass consumption. Again on the subject of Dunkirk, this time in 35mm, he says, “One of the prints that arrived was scratched. It's something that's been in the industry for a long time. If you have a big scratch, you simply can't screen it. You've got to get another print, especially when it will run through part of the film.”

It’s something that saddens Richards, who still says that projecting on film forms part of the “philosophy” of Vue. “We’re all big supporters [of film] and we love it. We've all been in the industry for between 25 and 30 years, the whole senior team. We genuinely love what we do, we genuinely love movies.”

That said, Richards, who is a governor of the BFI, is firmly committed to refining digital, more practical for Vue’s multiplexes. “If you go down and look at what we opened up in Leicester Square, our new flagship site, it's a 100 year old building where we shoehorned in new technology so it's not perfect, but it gives you an idea of what we're doing."

The new site has two Sony Finity 4K resolution projectors working in tandem – as well as the brand new Dolby Atmos sound system. The dual projection gives the screen a brighter, deeper hue. From a digital perspective, it is bleeding edge, and the set up is being rolled out across the UK and Germany, with 44 sites and counting. Richards is, as you would expect, enamoured with the results, claiming “that screen stands up to anything in the world”. What might be more surprising are the reactions he claims that it has elicited from celluloid devotees.

“There were a lot of old hardcore film fans there who were pleasantly surprised at the quality” he says. “People think of digital as being that new, TV-at-home which has got that clinical feel to it, and they don't feel it's got that warmth and colour saturation. This [Finity presentation] has that warmth of an old 35mm or 70mm, so I don't think the future is going back.”

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For Richards and Vue, the future appears to be as bright as that 4K Sony Finity screen in Leicester Square - for celluloid, not so much. While the appetite for watching movies on film might be growing at a promising rate for indie exhibitors, the list of technical and logistical problems is still insurmountable for many smaller venues - saying nothing of the race against time to preserve easily-damaged prints.

The main concern is an ephemeral one: the preservation of the knowledge needed to run a film projection. When the BFI’s Dominic Simmons speaks about the skills of his team and the need to pass those skills on, it evokes near forgotten skills such as thatching and forging. If the BFI and the PCC have anything to say about it, those projection skills will live on, but it’s unclear how far their voices can carry in a digital multiplex age.

As for the voice of celluloid-lover-supreme Christopher Nolan, even he too is shouting down what seems to be an unstoppable march towards a convenient digital future. But in a groundswell of growing interest and passion for the film reel, it seems that a director so obsessed with playing with time in his films seems to have bought exactly that for celluloid. Time is running out on the film reel, but there might be more of it left than we thought.

This article first appeared in the 29 June 2009 issue of the New Statesman, The Great Escape