Films (Definition of ““British Film””)Order 2006

My Lords, I, too, thank the Minister for bringing forward the order. The British film industry has a lot to be proud of, as a major part of our creative economy and a valuable means of representing Britain to the world. The people who work in it are a great national asset. Here I declare an interest, because my cousin is Helena Bonham-Carter, whom I believe to be one of those great national assets, as is the noble Lord, Lord Puttnam—at least, before he went into politics. The British film industry is one to support. We welcome the announcement of a new tax credit system and the fact that it is designed to help smaller-budget films. Certification as a British film is the main gateway to that tax relief. Like the noble Lord, we welcome the introduction of a cultural test designed to ensure that certified films have greater cultural value for Britain and that any investment develops a broad range of skills in the domestic industry. However, I have a couple of queries. There is concern that the practitioner section of the test potentially overemphasises the importance of key personnel. Only two points are awarded for the majority of cast and crew, compared with 11 for directors, producers, lead actors and department heads. That seems slightly at odds with the stated goal of,"““maintaining a critical mass of UK infrastructure, creative and technical expertise””." We welcome the fact that the Chancellor last week reduced the percentage that a film would be required to spend in the UK to qualify for tax relief, from the previously proposed 40 per cent to 25 per cent. However, we think that the narrow definition of UK expenditure—namely, that it applies only to money spent within the UK rather than on UK elements abroad—has potentially negative consequences for co-production deals. Co-production deals are more often than not vital to secure sufficient capital for lower-budget and independent British films. This often means that British talent, making what are clearly British films, shoot them abroad. The present definition of UK expenditure will make it hard for such films to achieve the requisite UK spend for tax relief. Also, I believe that tax relief will not be permitted on the wages of British cast and crew shooting abroad. That seems to conflict with the stated aim of the DCMS for the cultural test, which is:"““The flexibility of the new system will allow producers to clock up points if they use UK content, facilities and personnel, but is not intended to penalise them if they look to source some of their film making outside of the UK””." It seems that a film could pass the cultural test for classification as a British film but not have any expenditure that qualifies as UK expenditure under this definition. The Government’s goal of a sustainable film production sector is laudable. We worry that this one definition has the potential to undermine its good work. With those questions, these Benches are happy to support the order.