Friday, March 16, 2012

Back to Dutch Auctioneering

I'm indebted to a correspondent who passed me on a clipping from today's Financial Times.

In it Political Editor George Parker asserts that UK Chancellor George Osborne will introduce a new tax break for UK TV production in next week's budget.

His article refers to the high volume of British television drama that has been shot in other countries, including Ireland. Camelot and Game of Thrones are both referenced in the piece although they missed the fact that the latter, while filmed in Northern Ireland, did considerable post production in the Republic backed by Section 481.

There can be no doubt that if this new tax break is introduced in the UK the volume of high-end TV work coming to Ireland from (or co-produced with) the UK will almost certainly dry up.

So what to do? It calls to mind former minister John O'Donoghue's references to the 'dutch auction' character of competition for offshore production among European Union member states.

If we're not careful we just race to the bottom in terms of state munificence to producers. Added to which is the prospect of 'double-dipping' where subsidies are hoovered up in multiple jurisdictions by producers.

The main problem for us as a country, as always, is that little of lasting value is created in terms of rights or sales revenue for Irish companies doing this co-production work. They earn fees. There's periodic employment for technicians. Then the circus moves on and leaves a bare patch of grass in its wake.

The first three pars of today's FT article.

Update (20/03/2012):
The Irish Times carries a piece by Ronan McGreevy on the issue today.

Speaking through his hat an IBEC spokesman responded that the 12.5% corporation tax rate offers our industry some advantage, and that "we have got to stay competitive." He may as well have said that the Film Board is going to devalue the Euro.

We will see tomorrow what shape the new UK tax break takes. I wonder if the Irish authorities will nudge the European Commission into having a close look at the scheme.

If there's a budget floor of £1m per hour how will they avoid budgets/fees being inflated to reach that floor?

Doubtless there will be the usual guff about culture (really it's window-dressing for territorialising state aid) to bolster the logic for the new tax break being geared to local spend.

And there's the question of competitive corporate advantage being allowed to the broadcasters by enabling them to write off some of their tax liability for financing their own output.

Lastly, there is the likelihood that co-productions originated outside the UK will seek UK broadcast partners in order to avail of the tax break and so will shoot in the UK instead of their home jurisdictions.


Anonymous said...

What Ireland needs is an Eric Rohmer. Making the same small, quality film over and over on the cheap. Most big-budget films made here are complete crap and trying to keep people working on these rubbish movies is silly!

irish film portal said...

Not so sure about Rohmer, maybe Chabrol, Beneix, Besson, Ozon, Chéreau, Leconte, et les autres might be better role models.

Anonymous said...

Well done Ted on your fine work on this blog. The Irish film industry reminds me a lot of the building industry from a few years back, a small cosy little cartel who could have bought changes did nothing instead went on telling everyone everything was going to be fine. The film industry has been poorly managed and it has rode its luck for the past 10 years. Just like the housing sector those in charge are quick to blame the economic downturn in the markets for lack of international business. A quick examination of the UK industry, will tell you that business has never been better in recent years, and Budapest and Prague both have invested in new state of the art studios and have gained the rewards. In fairness the IFB went out and captured 4 TV series at the start of this year from the UK through the benefit of our tax incentives which allows investment in TV production. Just think what the industry would be like in Ireland right now without those productions? But as we see from this weekend’s papers George Osbourne is none too happy with this loss of work to Ireland, and he would like to bring about the changes so UK is better prepared to keep those productions and capture the larger scale TV production such as The Vikings too. Can the industry here rise to that challenge? It’s very difficult to see given the lack of vision to date.
The new studios at Ashford are indeed state of the art, a good start to entice quality productions in here, but so too have the UK, Budapest and Prague and many other countries. For all Joe O’Connell’s investment it may come to nought. I hear producers are considering an agreement with craft unions to pay 1 hour travel time each way to Ashford. In money terms that would be over 400k for productions similar in scale to the Vikings - that’s before any filming is done, some might say that is ludicrous but from what I have seen in the past it is very plausible. Starting with a half a million handicap do you think it is likely that Ballyhenry will appear attractive say over Budapest? Add in that George Osbourne is about to level the tax incentives playing field - our only trump card - the situation is beginning to look very bleak.
SPI in recent years to taken easy money through European co and tri productions agreement’s with the help of the IFB, that pool will dry up if there is not a good rate of return from government investment - 2015 is coming around very soon. Unless SPI can get a more flexible working agreement with construction unions, then I’m afraid the cream of the work will continue to elude us.

irish film portal said...

Compliments aside there's a lot of sense in what you say. The prospect of a Faustian Pact on Ballyhenry per diems and travel time and allowances is just madness.

Anonymous said...

Ted , I know for fact that last comment made regarding the Craft Unions trying to secure travel time to and from Ballyhenry is untrue . The Unions went into talks armed with the fact from BECTU Official who arrived in Dublin that by comparison our Craftsmen were already cheaper by far to Craftsmen in UK . Regarding travel time and other terms , they also went into talks with a buyout option on a burden sharing basis with the Employers . This was a very attractive proposition to the employers as the majority of the burden fell on the employees and gave the Employers what they allways said they wanted , one nice clean number with no hidden penalties or payments to show to overseas Producers . I really wish people who make these comments would get their facts right !!! Or would last commentor have his/her own agenda to have a swipe at the Unions . It's ironic I seem to recall reading similar worded article recently in Paper and other blog ??