If the UK TV and film industry was a movie in itself, it would be the story of a plucky underdog who punches above his weight and triumphs over adversity. It's James Bond, Mission: Impossible and Harry Potter all rolled into one, with the Bridgerton accents just for good measure.
While the US dominates the filmmaking rankings with about 25,000 produced and released as of June 2024, according to Statista, the UK takes the number two slot with almost 4,600. Producers at the big Hollywood studios and the TV streaming giants consistently cite the UK as an attractive place to make films.
Its highly skilled labour force, well-developed studio network, picturesque locations, logistical connectivity and favourable tax regime have persuaded Netflix and Amazon to double down on their investments in the UK in recent years.
But while production companies like operating in the UK, is the country really making the most of its opportunities?
Production success
Its headline success is such that British Prime Minister Keir Starmer chose Pinewood Studios to launch the government's Plan for Change with a keynote speech this month. Nestled in the English countryside just outside London, Pinewood and its sister location Shepperton Studios have been central to the British film and TV industry for decades. Several movie franchises have been produced at Pinewood including James Bond and Star Wars, as well as several Marvel and Disney films such as Snow White and The Fantastic Four. The studios have won 174 Oscars and 236 Baftas.
Mr Starmer described the studios as "a beacon to the world of British creative brilliance", but the strength of UK filmmaking is not the preserve of Pinewood alone. UK government figures show the country's film sector is worth £1.36 billion ($1.71 billion) and employs more than 195,000 people. According to Statista, in 2023 films made or co-produced in the UK made up more than a fifth (22.5 per cent) of gross box office receipts in 23 markets across the world. Back in 2009 that figure was less than 7 per cent. British-made films grossed about $6.1 billion in 2023, up from $3.4 billion a year earlier, but still well below the pre-Covid record of $10.3 billion set in 2019.
But while the headline gross box office figures are impressive, production spending numbers in the UK have been falling. Part of this was down to the strikes which crippled Hollywood production for months over the summer of 2023, but much was attributed to the rising inflation, higher interest rates and soaring labour costs of the past few years. The combined spending by film and high-end television (HETV) production in the UK reached £4.23 billion in 2023, 32 per cent lower than in 2022, according to figures from the British Film Institute (BFI).
But analysts say the drop also highlights the stress of the immediate post-pandemic boom in the global film industry. In 2022, total production spending by the Hollywood studios and the big streamers like Netflix and Amazon was in the order of $100 billion, at a time when many of the companies had yet to turn a profit. As such, a general reining in of spending was bound to happen, according to John McVay, the chief executive of the UK's Producers Alliance for Television and Cinema (Pact).
"Budgets have been cut," he told The National. "There's been a correction to what they're going to spend on, how they spend and where they spend. I remember saying in 2022, 'this is unsustainable. This is not how the world should be; this out of control'."
Figures from the BFI show the vast majority (78 per cent) of the money invested in UK big budget films and TV came from overseas, principally from the US. Foreign inward investment now "dominates" the UK film and HETV industry, said Dr Dominic Lees of Reading University.
"Pre-pandemic this was a booming part of our film economy," he told The National. "We had a huge increase in investment from the [United] States. That has now decreased and has not bounced back to the same levels but is still, in terms of the overall expenditure on film and high-end television production, completely dominant."
Roll the credits
While the UK has an exceptional pool of talent both in front of and behind the camera, a system of tax incentives also acts as a magnet for attracting foreign investment. There are different levels of tax relief for qualifying British productions depending on a film's overall budget. Most productions can claim 25.5 per cent tax relief on qualifying expenditure through a standard Audio-Visual Expenditure Credit (Avec). But tax relief for smaller, low-budget independent UK films is much higher.
The eagerly anticipated Independent Film Tax Credit (IFTC) was brought in by the Labour government at the end of October. Officially this is the enhanced Avec for low budget films and means a movie with a budget of less than £15 million can claim up to 53 per cent tax relief on qualifying expenditure. There's then a sliding scale of tax relief up to films costing up to £23.5 million.
At the time, Amy Jackson, producer of Oscar-nominated Aftersun, The Outfit and The End We Start From, described the IFTC as a "vital intervention" and said it would "make UK indie film a more attractive investment prospect for international partners and co-producers facilitating more creative collaboration and bringing much-needed backing to the independent sector across the board".
For Dr Lees, while the glossy high budget end of the UK film and TV industry has great strength, thanks largely to American money, the British filmmaker has not been enjoying the same action. "This is why the previous government introduced the independent film tax credit," he told The National. "The policy is to try to stem the decline of British film and at the same time continue to encourage inward investment, which is the dominant part of our industry now."
"If you're an independent British film producer, with a local scriptwriter and a local director wanting to make a film, getting your hands on budget is very difficult. It's now been made much, much better by this independent film tax credit, so the landscape for producers today in the UK is much better than it was just a few months ago."
Double-edged sword?
However, while the government has made the tax environment easier for UK filmmakers, other cost concerns continue to weigh on the industry. For some analysts, while on balance the big investment money coming from the US is overwhelmingly an economic plus for the UK, for independent British filmmakers there's an element of the double-edged sword, because labour costs are increasing as the supply of talent and crew becomes squeezed.
"A problem British film producers face is being priced out of the ability to afford the crews they need to make British films," Dr Lees told The National. "So British films have become more expensive to make because the supply of talent is not enough to go round. It is absolutely the case that a British film producer, for instance, making the debut feature film of a new British film director could have made it for £1.5 million a few years ago, but will now have spend £3 million. That's because the crew are busy working on films for the streamers and their big American investors."
For Mr McVay, while the tax credits are making more things possible, close attention to rising costs needs to be paid, because for the US studios and streamers, it's all about the bottom line. "Our competitiveness has become difficult because our labour costs have gone up disproportionately in the past few years, so we have to be conscious that the cost of making something [in the UK] is something those people take into account and if the costs outweigh the benefit, then they'll move that production elsewhere."
On the other hand, Jay Burnley, the head of film finance at Slated, feels the new tax incentives are "enormously attractive" and should counteract the supply and labour cost issues to the extent that the trickle-down effect from the big studio and streamers' money will benefit "midsize and smaller players".
Studio supply
Meanwhile, developments in the physical infrastructure of the UK film and TV industry could be pointing optimistically toward the future. Earlier this year, Amazon bought Bray Studios, the home of the Hammer films, the iconic horror and fantasy filmmaking company. Twenty-six miles west of central London on the banks of the Thames, Bray has five sound stages spread across 4,980 square metres of shooting space. The Rocky Horror Picture Show was shot at Bray and it's where Ridley Scott filmed the miniatures for his Oscar winning sci-fi classic Alien.
Not that Amazon was a stranger to Bray – the studios have been home to the production of Prime Video's second series of Lord of the Rings: The Rings of Power since 2022. The second series of the spy thriller, Citadel, is currently being filmed there. When Amazon bought Bray, Mike Hopkins, the head of Prime Video and Amazon MGM Studios, said it would empower the company to "produce more film and television in the UK", as well as unveil "a wealth of opportunities in the local community with respect to jobs and skills training at all levels of the production process”.
Amazon also has a long lease at Shepperton Studios, as does Netflix, while Disney has a similar arrangement at Pinewood (which also owns Shepperton). But while all three studios, and dozens more around the UK, have been in operation for decades, others are relative newcomers after demand for shooting spaces and sound stages intensified following the pandemic. A £750 million project to build a studio near Reading, west of London, is in its final stages of planning and could get the go-ahead from the government as soon as next month. The proposed Marlow Film Studios, which will have 44,000 sq m of sound stages, has the backing of at least two famous filmmakers, 1917 director Sam Mendes, and James Cameron, director of Titanic and Avatar.
For Robert Laycock, the co-founder of Marlow Studios, the UK film industry needs more cutting-edge facilities with up-to-date technology to continue attracting the big US investments. "The three things that matter are our talent, an embracing regulatory and tax environment, and the facilities that studios now need for the films they want to make," he told The National. "We are doing well on the first two. But we’re a way off providing the best working facilities that producers now expect."
For Prof Lees, the Amazon purchase of Bray was "really significant, because they obviously think that for decades to come they're going to be producing a lot of film and high-end television in the UK". However, others think with film production spending not as buoyant as it was a few years ago, there's a risk that demand for studio space might not be as robust. "I assume we will soon have a glut of studio space without productions to fill it," British producer Tom Harberd told The National. "Too many people take an 'if you build it, they will come' approach to industry infrastructure, and I’m very dubious that will actually come to pass.”
Predictions of doom and gloom within the UK film studio sector may be slightly premature, according to Mr McVay, if only because of the nature of the business. "We've nearly got as much studio square footage across the UK as Hollywood has," he told The National. "In 2022, there wasn't enough studio space, because there was a boom following the pandemic. Now maybe not all that studio space is being used. But things can change very quickly. These things are always a risk."
'Roar back'
In a report this year, the Broadcasting Entertainment Communications and Theatre Union (Bectu), which represents workers across the UK's film and TV industry, described the sector as being "in crisis". As part of the report, a survey found 68 per cent of film and TV workers were not working in February, a small improvement since September 2023 when 74 per cent were out of work. About the same time, a survey of independent producers by Indielab found 70 per cent would not be around after May next year if the market didn't improve.
Much of this was down to an earlier slump in commissioning, but as the year draws to a close there is some cautious optimism seeping back in, especially since the tax credit increases for low-budget films. "We have definitely heard of increased activity in production and commissioning, and small indies back in production again," the founder and chief executive of Indielab, Victoria Powell, told The National, "and we hope that very definitely continues into 2025," she added.
Likewise, Mr Burnley feels the UK film industry is set for a better year in 2025. "The industry's prospects for next year are outstanding. The UK should roar back from the depressed production levels of 2023-2024. That output will make its way on to screens worldwide for years to come," he told The National.
Insiders feel the US studios and streamers are set to continue their fruitful relationship with UK film and TV industry. The ocean of talent and skills available, the common language, the transport links and the tax system are part of the attraction of producing movies in Britain, where "experienced and cosmopolitan players abound at every level", Mr Burnley said.
But the decades-old connection should not be an excuse for the industry to rest on its laurels and take any inward investment for granted, Mr Harberd told The National. "We do exist in a global ecosystem where the product offering needs to be competitive, and we probably can no longer rely as much as we used to on historic ties with the US. If other countries, for example Canada, were to become more aggressive with their tax credits, then we might indeed see a fair amount of shrinkage."
Mr McVay agrees the UK film industry should take nothing for granted when it comes to the investment decisions of the American giants. "Ultimately, they will run a slide rule over costs and if they think they can make something to the same quality, but maybe cheaper in Hungary, they'll make it in Hungary," he said. "We don't have a special relationship – we have a number of other advantages, which clearly they do think about."
For now, the UK industry will hope the cameras keep rolling.
