17th April 2025

Written by Alastair Mavor

Introduction

The Culture, Media and Sport Select Committee (Committee) published its report last week, on Thursday 10th April, on the state of the British film and high-end television (HETV) industry (Report).

The Committee drew on extensive oral and written evidence from influential industry figures including Jane Featherstone (Founder of Sister Pictures), Ben Roberts (CEO of the BFI) and Jay Hunt (Chair of the BFI and Creative Director at Apple). Comprising 124 pages, the report makes a makes a number of conclusions about the key challenges the UK industry is facing as well as recommendations for government action.

Key Topics and Outcomes of the Report

The Report has 7 key areas of focus:

1. 1. The Future of British Film – the Report acknowledges that independent British films are in a “precarious position”, with domestic films accounting for just 9% of total spend on film production in the UK in 2024 and just 6.9% of gross box office. The enhanced Independent Film Tax Credit (IFTC) has had a positive introduction although the precise impact is unlikely to be clear until 2027 and as the Report states, it is “not a silver bullet for all the problems facing independent British Film”. Key recommendations of the Report include:
   1. Development – R&D tax relief should become applicable to typical development activities undertaken by film and HETV production companies.
   2. Finance – The regulatory framework around EIS and SEIS should be looked at again in the context for raising finance for film & HETV.
   3. Distribution – the government should introduce 25% tax relief on prints and advertising (P&A) costs of films claiming the IFTC to promote the distribution and exploitation of British films in the UK.

1. 2. The crisis in domestic HETV – the HETV sector is facing significant challenges, with increased production costs coming at a time where public sector broadcasters (PSBs) have seen their own commissioning budgets squeezed. This has resulted in particular challenges in financing domestic tv and 2024 saw a 27% reduction in the number of domestic HETV productions made in the UK and a 25% fall in spend. There is also significant concern over the UK industry becoming dominated by servicing the US streamers and studios and giving up all intellectual property (IP) rights in their programmes. Key recommendations therefore include:
   1. Terms of Trade for Streamers – the government should look into regulatory measures to protect UK production companies’ ownership of IP rights on deals with streamers to counteract the current market crisis.
   2. Streamer Levy – all streamers operating in the UK should pay a 5% levy on their UK subscriber revenue into a cultural fund run by the BFI. Notably, the Report suggests that this should be established by the industry on a voluntary basis however should be legislated for by the government if there is not ‘full compliance’ within 12-months.

1. 3. Incentivising Inward Investing – the Report flags the key importance of inward investment to the industry and the ‘ripple effect’ on the wider UK economy and spillover into tourism and the UK’s soft power. While 2024 saw an increase in inward investment from 2023 (which was depressed in part due to the Hollywood writer and actor Strikes), there is still significant concern about the resilience of this and the following recommendations are therefore made:
   1. Enhanced HETV Tax Credit – the government should consider an enhanced tax credit for HETV.
   2. Regionality – there should be an ongoing analysis of the breakdown in spending between different regions through the new Audio-Visual Expenditure Credit (AVEC) which could be used in the future to support policy intervention to support the regions.

1. 4. Supporting the workforce – the freelancer crisis is acknowledged by the Report as a major issue for the industry as well as issues with working practices and a skills/training shortage. ScreenSkills comes in for particular criticism and a number of recommendations are made, including a statutory requirement for the film and tv industry to report on their spending on skills and training as a % of their production budgets each year and a ‘Freelancer Commission’ to be set up.

1. 5. Cinema exhibition – the Report identifies an absence of high-quality independent films released commercially in cinemas in the UK and insufficiency of marketing spend on them. It makes a number of key recommendations to improve this state of affairs, including:
   1. Distribution Tax Relief.
   2. VAT Cuts (albeit there is some concern that any such change might not be passed onto consumers).

1. 6. Impact of Artificial Intelligence (AI) – there is clearly major concern across the industry that getting the balance wrong between AI development and copyright will undermine the growth of the film and tv sector and the report acknowledges that proceeding with an ‘opt out’ regime will damage the UK’s ‘gold standard’ for copyright and IP protection. Various key recommendations by the Committee include:
   1. AI Data Mining Exception – the government should abandon its preference for a data mining exception for AI training and instead pursue a licence model where AI training platforms have to licence in any copyrighted works before using them to train their software.
   2. Potential CDPA Changes – the government should review the Copyright, Designs and Patents Act 1988 (CDPA) and consider any further changes needed to prevent unlicensed use of data for AI purposes (in addition to looking at this in the context of protecting performers’ rights).

1. 7. The work of the BFI – the expanded role of the BFI is acknowledged by the Report, which concludes that government funding has not been increased sufficiently to reflect this role. Key recommendations consist of:
   1. Headline Funding – a review into the amount of National Lottery Funding available to the BFI including potential increases to reflect its expanded role and a potential uplift in funding to the Global Screen Fund.
   2. Certification Unit – an increase in grant-in-aid funding for the Certification Unit, notably to ensure it is able to certify projects in a timely manner.

What this all means for you – Our take

This is a substantial report with several eye-catching conclusions and calls for government intervention. Importantly though, this Report is not legislation and how far the government goes in following the recommendations of the Committee is still to be seen.

The headlines have (perhaps rightly) been around the proposed introduction of a Streamer Levy (which, of course, follows the approach some other European countries have taken) and the recommendation of a form of Terms of Trade for Streamers, although it is notable that the Committee’s preference is for the industry itself to try to come up with a voluntary solution on these proposals first and whether this is achievable or indeed whether the government would actually be prepared to legislate on this is questionable. It will be interesting to see how the climate around global tariffs could impact upon this too (albeit it is worth noting that the US Government’s tariffs do not apply to services).

We are entering a world where there is likely to be government intervention/legislation around AI and possible changes to the CDPA. Production companies and creatives should keep a close eye on this as the legal landscape develops in the coming months.

There were several other proposals which could, if introduced, have a positive influence on production companies and financiers. These range from the proposals to ensure the Certifications Unit is properly staffed so it can issue interim cultural certificates for the IFTC/AVEC in a timely manner (particularly important for independent producers on film and HETV projects who often have to wait several months between submitting an application and receiving their interim cultural certificate which can result in a delay to closing finance), to a potential uplift in funding to the Global Screen Fund (which has replaced the historic funding available to UK film producers from Creative Europe).

Read more about our experience in television here.