Films (Definition of ““British Film””) (No. 2) Order 2006

rose to move, That the draft order laid before the House on 28 November be approved [Third Report from the Statutory Instruments Committee]. The noble Lord said: My Lords, the Government wish to present the modifications to the definitionof a British film contained in Schedule 1 to the Films Act 1985 made by this draft order. These modifications have come as a result of discussions with the European Commission, and it is essential that they are made to ensure that aid given to film through the new tax reliefs is compatible with European law on state aid. That is the purpose of the order. As we stated in March of this year when the House approved the original cultural test, it remains our aim to promote the sustainable production of culturally British films, ensuring that films continue to playan important role in British life, representing and reflecting British culture in its most diverse sense. To do this, the Chancellor confirmed in yesterday’s Pre-Budget Report a generous new tax relief, available to those films certified as British by the Department for Culture, Media and Sport, against the criteria I will outline today. The original cultural test, introduced in April 2006, contained three categories for assessing the cultural benefit of a film: the cultural content, hubs and practitioners—in other words, what the film is about, what facilities were used in making it and the personnel who made it. The revised test we are debating adds a fourth category of cultural contribution. This category ensures that films which contribute to British culture in its widest sense will be able to be awarded points under the test. The revised test also shifts the weighting of the sections towards cultural content, rather than focusing on film-making elements. These modifications will ensure that the aid given is compatible with the rules on state aid. The revised test will not impose any extra burden on the film industry or the Civil Service. In fact, it should be less time-consuming and burdensome for film-makers to complete. The department carried out a full 12-week consultation on the existing cultural test in 2005, and developed and published the guidance on it in response to views expressed in that exercise. In drafting this order to implement the revised cultural test, we consulted with HM Treasury, HM Revenue and Customs and the UK Film Council. To pass the revised cultural test, a film will require 16 points out of a possible 31. There are four sections to the test. The first section assesses whether the content of the film is British against the following criteria. Up to four points will be awarded depending on how much of the film is set in the UK, or a representation of the UK. Up to four points will be awarded depending on the number of lead characters who are British. Four points will be awarded if the subject matter or the underlying material is British. Finally, up to four points will be awarded depending on how much of the film is in English, or in a recognised regional or minority language. In the second section, up to four points may be awarded in respect of the contribution to British culture made by the film. This section was introduced to give the test flexibility to reward contributions that a film may make by reflecting or representing British culture in its widest sense. This section will assess films under the following three headings: creativity, cultural heritage and cultural diversity. Up to three points will be awarded in the third section, cultural hubs, depending on the amount of film-making work that takes place in the UK. Finally, up to eight points will be awarded in the fourth section—cultural practitioners—depending on whether the personnel involved in making the film are British nationals or residents, or nationals or residents of the member states of the European Economic Area. There is one exception to the 16-point pass mark. Where a film scores all four points for being in English, and all available points in the cultural hubs and cultural practitioners sections—that is a total of 15 points—it must then score at least two points in one of the remaining parts of the cultural content section. This exception arose to address the European Commission’s concern that a film that achieved these 15 points, which do not reflect the purely cultural content aspects of film-making, could qualify with a minimal amount of British cultural content. Noble Lords will be interested to learn whether some of the most iconic films would have passed such a test. A whole raft of undeniably British films such as the ““Charlie and the Chocolate Factory”” and ““The Constant Gardener”” would do so because of their relevance to British culture. We will offer a system of interim approval for films applying under the test. The film industry is particularly keen on this, because it will offer more certainty to film-makers and help them to secure financing for their films. DCMS officials will also offer advice and assistance to film-makers when filling out the application form. The revised test will come into force on 1 January 2007. All films which commence principal photography after this date will be required to pass the test to be eligible for new film tax relief. In addition, the Treasury will make regulations under the Finance Act 2006 to provide that any film which commences principal photography before 1 January and is completed after this date, and passes the revised cultural test, will also be eligible for the new tax relief. I commend the order to the House. I beg to move. Moved, That the draft order laid before the House on 28 November be approved [Third Report from the Statutory Instruments Committee].—(Lord Evans of Temple Guiting.)