Carry-on among the movie makers

British film industry goes to war over funds for new studios

The post-Oscar glow of mutual goodwill which enveloped the British film industry has evaporated in the chill wind of a scramble for lottery handouts.

With pounds 156m earmarked to set up new mini-studios, perhaps some jostling was inevitable. One of the leading film consortiums bidding for the money claimed yesterday that some of the competing groups were only partly British and the lottery cash would go to fund films whose profits would go abroad.

Thirty-seven consortiums of financiers, producers and directors are bidding to be among the lucky four who will receive pounds 39m each from the Arts Council lottery fund to make new British films. The four winners will be announced at next month's Cannes film festival.

The big names competing for the money include the best- known British film producers and distributors backed by organisations as diverse as EMI Music and Coutts Bank and celebrities such as Elton John and Lenny Henry.

But a number of consortiums have foreign investors from the United States and Europe as well as well-known British names. A consortium involving the Canadian company Alliance Communications includes BBC Films and actors such as Trainspotting star Ewan McGregor.

Columbia TriStar is part of UK Filmworks, with major British film figures such as Mike Newell, director of Four Weddings And A Funeral, and David Parfitt, producer of The Madness Of King George.

Allied Image Partners, headed by music promoter Harvey Goldsmith, a Lloyd's insurance broker, and risk managers Screen Partners, claimed that some big name consortia lining up for film lottery money would in fact channel profits abroad.

Kent Walwin, director of Allied Image Partners, said the public who paid for lottery tickets expected profits to stay in the country, but one major bidder for the film money was backed by an American company Columbia TriStar, and another by Alliance, a Canadian film company.

"Lottery money must be used to enhance both the fabric of the culture and the finances of Britain," he said. "It would be unacceptable if franchises were awarded where the very life-blood of the industry - notably the profits - go overseas and all that happens is a few actors and technicians are more gainfully employed."

He made a point of turning on multi-Oscar winner The English Patient. "The confusion," he says, "arises from what qualifies as a British film, The English Patient being a perfect example. While no one questions the undoubted contribution that British talent has made to its success, the profits will go to Miramax, its Hollywood financiers. Let's hope that the next film patient will be British-owned as well as British made."

The Department of National Heritage is also concerned. A spokesman for the department said yesterday: "The definition is not just of academic interest. There are tax benefits to being a British film, and it does now have a lottery resonance. With the new lottery franchises, whether a film is British could be a significant factor."

Confusion over what is a British film is now so marked that the Department of National Heritage has set up a committee of inquiry into what constitutes a British film. A ruling will be made later this summer.

David Parfitt, of UK Filmworks, said yesterday: "We're an international industry. We have managed to find new money abroad but we will guarantee the profits will stay in the UK."

Sarah Keene, a leading film publicist, who promoted The English Patient, said: "It is unfortunate but perhaps inevitable that there is rancour breaking out over the lottery franchises. But the pounds 156m of lottery money will have a dramatic effect on the British film industry, and it is no surprise that competition is very intense.

"In the case of The English Patient we never claimed it was a British film. We claimed it was a British-led film."

An Arts Council spokeswoman said: "There are no ownership restrictions, but franchisees must use lottery money to make British films and they must show a commitment to re-invest in British films. It would be expected that the majority of the money comes back to Britain."