‘The role of government is not to pick favourites and subsidise them or protect them.’ So says the government’s industrial strategy, published last year — a document which was supposed to distinguish between a free-market approach and the interventionism favoured by Jeremy Corbyn. Yet in one industry, at least, the government is doing exactly what it says it should not: it is showering firms with subsidies in the hope of generating growth.
This week the British Film Institute (BFI) published a report making grand claims for the government’s ‘tax reliefs’ for the film industry. Under this scheme — which is misnamed because it involves subsidies paid out whether or not a company has a tax liability — taxpayers stump up 25 per cent of the cost of making a film so long as 80 per cent of the budget is spent in Britain. This scheme, claims the BFI, cost taxpayers £632 million in 2016 but ‘helped’ the film industry generate £2 billion in tax revenues. These two figures are put together to suggest that, without the taxpayer support, such tax revenues would not have been forthcoming.
Dig deeper, and a different picture emerges. The ‘tax reliefs’ are available to all films made in the Britain – either Hollywood blockbusters or genuinely British films, with home-grown creative teams. As for the British films how many actually make a profit? We have an answer because the BFI presented some figures in 2013. Of 613 British films made between 2003 and 2010, just 43 — a mere seven per cent — actually made a profit. Taxpayers, in other words, are being obliged to subsidise a business whose output results in financial failure 93 per cent of the time.
Of the films that did manage to recover their costs, we are not told how many would have been made without subsidies.
Comments
Join the debate for just £1 a month
Be part of the conversation with other Spectator readers by getting your first three months for £3.
UNLOCK ACCESS Just £1 a monthAlready a subscriber? Log in