Directors’ cut: the end of UKFC

In abolishing the UK Film Council, Jeremy Hunt has shown himself to be ignorant of history. David Pu

On 15 June 1990, I was one of 20 senior representatives of the British film world invited to 10 Downing Street by Margaret Thatcher to discuss the parlous state of the industry and to find out what her government might be able to do about it. Sitting alongside the prime minister was Lew Wasserman, head of Universal Studios and a man who, over almost six decades, had deployed a mix of business acumen and political guile to establish himself as by far the most powerful man in Hollywood.

It was Ronald Reagan who had recommend­ed that Wasserman, who was once his agent, be invited. Reagan used to say, "Lew, if only you'd got me a longer-running TV series, I wouldn't have had to run for president!" For some years, Reagan, a fan of British movies, had tried to persuade Mrs Thatcher that this was an industry with a lot to offer.

The seminar generated a series of proposals that eventually resulted in the establishment of a new quango, the British Film Commission, along with a £5m European Co-Production Fund and a dedicated tax break. A few years later, at the urging of Richard Attenborough, the then prime minister, John Major, agreed to National Lottery funds being used to support film production.

In retrospect, that seminar in 1990 can be seen as the beginning of the British film industry's long march back from the wilderness. Ironically, it was Thatcher's government that had cast the industry into the wilderness in the first place, with a series of hasty decisions driven very largely by ideological prejudice.

One of the most striking, and to me distressing, things about the coalition government's recent decision to abolish the Film Council is that it appears to have been taken without any examination of the way support for British cinema evolved over many decades. For it was the Conservatives who first introduced government support for the industry with the Cinematograph Films Act of 1927, which created an advisory committee and introduced quotas on distributors and cinemas.

However, it was only after the Second World War that the concept of public subsidy for film, and the need for a dedicated, independent and expert body to administer and disburse such funding, were recognised. It was Harold Wilson, then president of the Board of Trade, who was the moving spirit behind the initiative to create an organisation that would give "improved access to finance to qualified independent producers during the difficult period of postwar transition".

In 1949, Wilson's efforts led to the Cinema­tograph Film Production (Special Loans) Act and with it the creation of the National Film Finance Corporation, which can in many respects be seen as a forerunner of the UK Film Council. Its mandate was to support people who

. . . while having reasonable expectations of being able to arrange for the production and distribution of cinematograph films on a commercially successful basis, are not, for the time being, in a position to obtain adequate financial facilities for the purpose on reasonable terms from an appropriate source.

The first chairman of the NFFC was Lord Reith, and the corporation was able to borrow money from the Board of Trade which was then loaned to producers. Alexander Korda's company British Lion was an early and significant client. At the time, the creation of the NFFC led to predictable gibes from opposition benches about "casting couches across Whitehall", but the body quickly proved its worth.

It was supposed to have a lifespan of just five years but, following the Conservatives' election victory in 1951, and despite a broad antipathy to state intervention, Winston Churchill (a great film fan) set about strengthening the NFFC and putting it on a secure long-term footing. In 1952, the Tories passed legislation enabling the corporation to borrow an extra £2m from sources beyond the Board of Trade, and in 1954 further legislation extended the NFFC's lifespan - as well as introducing a scheme enabling loans to be written off.

It was also the Conservatives, under Harold Macmillan, who were responsible for the next significant piece of film legislation, the impact of which would be felt for almost three decades. And once again, they chose to build upon the foundations laid by Harold Wilson. In 1949, a Treasury official named Wilfred Eady had proposed an ingenious voluntary scheme for reducing the impact of the entertainments tax on cinema owners, while also rewarding producers of successful British films. Eady proposed that a proportion of the ticket price should be set aside, with half retained by cinemas (in effect a rebate on the tax) and half divided among producers of British films in proportion to the UK box-office takings that their movies achieved.

The Cinematograph Films Act 1957 placed the Eady Levy on a statutory basis. It specified that one-twelfth of the price of a cinema ticket would be paid to the British Film Fund Agency, and that the payments would be allocated to support the NFFC and the Children's Film Foundation. Support was later added for the British Film Institute Production Board and the National Film School.

From 1957 to 1984, the landscape of film policy remained broadly stable, underpinned by a cross-party consensus. To be sure, the Eady Levy had its fair share of critics - not least the cinema owners who believed it helped to drag down admissions, when it was really the impact of television, along with their appalling lack of investment in the fabric of the cinemas themselves, which led to the downturn.

During that period, the NFFC was well managed, productive and relatively well funded. It was also responsible for launching the careers of many outstanding British cinematic talents, including Alan Parker and Ridley Scott, both of whom got an early boost from the NFFC. A film that I produced called Stardust (1974) made sufficient money to encourage the corporation to invest in the making of Bugsy Malone (1976), directed by Parker. As a direct consequence of the success of that film, Paramount in the US offered to put $1m into the next project I was hoping to produce. That was The Duellists (1977), Ridley Scott's first feature.

On the basis of Paramount's offer, I was once again able to secure the balance of the finance from the NFFC, resulting in what Scott recently referred to as "a personal landmark". So, the support from the NFFC, along with that he'd received as a student at West Hartlepool College of Art and subsequently at the Royal College of Art in London, provides a vivid demonstration of the way in which public subsidy can nourish outstanding creative talents, offering them space in which to demonstrate their ability and, in doing so, providing the catalyst for hundreds of millions of pounds of inward investment.

But despite, or possibly because of, the state- owned corporation's comparative success, in 1984, Thatcher's government published a white paper in which it proposed to do away with both the NFFC and the Eady Levy. At the same time, the government introduced legislation abolishing the capital allowances which, following a decision by the Inland Revenue in 1979, had been used as a form of tax relief by the film production sector.

This combination of measures was regarded as a disaster by large parts of the industry (with the notable exception of the UK cinema owners). Even the Conservative minister Kenneth Baker confided to me at the time that he had severe doubts about the wisdom of the proposals.

The abolition was fiercely opposed in a campaign led by the Association of Independent Producers, which described the substitute proposals as little more than "interim measures and vague hopes for the future". Ignoring the criticism, in 1986 the Tory government created British Screen Finance, a private company to support British film-makers, with shareholders including Channel 4 and the Rank Organisation, topped up by an annual government grant of £1.5m. It quickly developed a decent track record of investment, helping to support such films as Stephen Frears's Prick Up Your Ears in 1987 and Mike Leigh's High Hopes in 1988. But its budget was far too small to enable it to make a meaningful difference to the overall levels of production. As a result, investment in British films declined from roughly £275m in 1984 to £137m by the end of 1990.

These were barren years for British film production. However, a meeting between a thoroughly enlightened arts minister, Richard Luce, and Richard Attenborough led to the idea for that Downing Street seminar. And together with John Major's subsequent decision to allow Lottery money to be used for film production, the meeting helped to put the industry on the road to recovery.

Consequently, when Labour assumed power in May 1997, the landscape for British cinema looked very different from the way it had been in 1990, before the Downing Street seminar. But film policy continued to lack any real strategic coherence. To remedy this, the incoming secretary of state, Chris Smith, set up a "film policy review" chaired by Stewart Till, then president of Polygram Filmed Entertainment. Among its many recommendations was the proposal to create a unifying body with strategic responsibility for film, which in turn led to the creation, in 2000, of the UK Film Council. (The idea for a "British Film Auth­ority" had in fact been proposed as early as 1976, by a working party created by none other than Harold Wilson, but it had never been taken further.)

Tragically, instead of building on everything that has been learned, the present government has set about destroying the UK Film Council - to little purpose and with even less of a plan. In doing so, the Culture Secretary, Jeremy Hunt, would appear to have acted without any sense of the role that his party, and Margaret Thatcher and John Major in particular, played in breathing new life into an industry that, in 1990, had still to recover from the blow dealt to it by the abolition of the Eady Levy and the withdrawal of tax allowances.

At some point, long after Hunt and his team have left the Department for Culture, Olym­pics, Media and Sport, the work of rebuilding a coherent film policy, organised and controlled by a single body, will have to start all over again. It would be extremely helpful, therefore, if the Secretary of State were prepared to debate with me and others in a public forum, so that we might better understand why he and his coalition partners, in making their decision to demolish the UK Film Council, failed to take account of any of the lessons of recent history.

David Puttnam is a former film producer and a Labour peer

This article first appeared in the 11 October 2010 issue of the New Statesman, Melvyn Bragg guest edit

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 11 October 2010 issue of the New Statesman, Melvyn Bragg guest edit