Several funerals and an opportunity

As the British can't make popular movies, we should subcontract our film industry to Hollywood

Most people, when offered pounds 84m of lottery money, would be thrilled. Evidently this is not so in the film business. Sir David Puttnam, film producer and member of the Arts Council National Lottery board, dismissed the package announced this week as "one shoe of a pair". He added: "It is enough to keep us hopping along for a few months." In addition, he wanted tax breaks in the next Budget, in which he was apparently supported by Chris Smith, the shadow Heritage Secretary, who said, in a line borrowed from Casablanca, the money did not amount to "a hill of beans".

There is a temptation to assume that these are examples of luvvie hypocrisy and lefty hyperbole. Yet both detractors have half a point in that pounds 84m, to be disbursed over five years, is a tiny amount by the standards of the global film industry. However useful it might be as seed capital, it would make three, maybe four Hollywood movies. It is less than the profits from one really successful film.

Implicit in this snootiness towards a mere pounds 84m, however, is the assumption that if only the British film industry received more subsidy, be it from the lottery or taxpayers, it could improve its performance on world markets.

This relatively poor performance is to many people a puzzle and a worry. In the theatre, in pop music and especially in musicals, the British share of the world market is substantial. In films it is tiny. We have the language. We have the talent. We ought to be doing better than we are. What's wrong?

The two most popular complaints from the luvvies are that the Government does not provide enough subsidy and the City does not give enough finance. One has only to look to continental Europe to see the catastrophe that reliance on public subsidy has wrought. In Germany, it has resulted in an industry trained to produce films designed to attract subsidy rather than one that produces films which people actually want to see. Nearly half the films made in Germany between 1985 and 1991 were never seen by a paying audience at the box office.

In France, subsidy has resulted in a fossilised industry. Awaiting the Phoenix, a report last year on the European film industry by Martin Dale, pointed out that in 1960 the average age of French film directors was 28. In 1993, it was 55. More than 85 per cent of French film directors were over the age of 50. Young people do not make films in France, so it is hardly surprising that French youth prefer the American product.

As for moans about lack of support from the City, these miss the point that money is not only an international commodity, but the most international commodity of all. Risk capital is infinitely available anywhere in the world for projects which seem likely to make a profit. London manages more cross-border money than anywhere else in the globe, and it is hardly credible that a place which provides risk money to emerging economies in East Asia or Eastern Europe should not want to provide risk capital at home if the rewards are there. But even if London financiers were peculiarly myopic, that would not matter: would-be film-makers could go anywhere in the world for cash if they had an attractive proposition. This happens in practice: Four Weddings and a Funeral was principally financed by PolyGram, a Dutch-owned, London-based company.

So these two complaints cannot really be key factors in our film industry's lack of success. If we look at the movie business as just another world industry and examine the UK competitive position, there are four problems and one important opportunity: four funerals, so to speak, and a wedding.

The problems are, first, the economies of scale of the US industry. Hollywood is the only place that matters in world terms (sure, India and China produce vast numbers of films, but the financial turnover of the business is tiny by comparison). Most people think of Hollywood as being dominated by the giant studios, but actually it is an agglomeration of small specialist businesses - writers, actors, publicists, as well as production teams - which are pulled together by one or other studio in a loose association.

Making a movie is an assembly job. The vast scale of the business ensures that all the services are there; it also enables the large studios to produce a dozen or more major films a year, which in turn enables them to hedge their bets. Because one hit will pay for five misses, a studio needs volume.

Scale also means that the talented people are physically in the same place and can interact. That is not intended as a smutty point, though the love-life of the stars is an important part of their global publicity appeal. Physical proximity gives vibrancy: it means that creative people can enhance each others' creativity. By contrast to this global film-making factory, British films are being made by a cottage industry.

Funeral two is markets: half the world market is the US. To be a world player one must make products which sell there. Sir Andrew Lloyd Webber knows that. Elton John knows it. So do our top popular authors. But at the moment our would-be film-makers either ignore this or up sticks and go to Hollywood. Those who ignore it miss the market. Those who go, undermine the domestic industry.

Funeral number three leads on from this: culture. The money is in producing films for a world market and people do not want to watch British culture in the way they want to watch American culture. Or rather they do not want English culture. So our films are sometimes successful by mocking English twittiness (witness Four Weddings or A Fish called Wanda) or by emphasising instead Scottish or Irish heroism. True, there is a limited market in top-of-the-range Merchant Ivory stuff, but the money is small.

This leads to the final problem, British film-makers' attitudes. As the most successful Briton in Hollywood, Barry Isaacson, vice-president at Universal Pictures, puts it: "There is a kind of middle-class embarrassment among the arts establishment in Britain about the relationship between movies and popular culture. They think popular culture is degrading." So we get movie directors wanting to make films for their peer group: films that will make them admired by the cognoscenti rather than make them (and their backers) money. That in turn leads to the hunt for subsidy. Barry Isaacson again: "Too much time is spent trooping to Downing Street and complaining to whoever happens to be minister for the arts."

If all this appears glum, there is the wedding, the way forward, which is to make a virtue of our relationship with the US industry: to become more of a subcontractor to it. This is the "Hollywood East" option. We should use the fact that we have a wealth of talented people and relatively low costs to sell services into a US-based world industry. As technology develops, it will matter less and less where films are finally assembled: the value can be added anywhere. And if that means some modest tax sweeteners are needed to encourage the development of our satellite status (like the inducements we gave to the Japanese to build motor plants here), then so be it. Maybe Sir David and Chris Smith have half a point there, too.