Foreign film-makers are lured to Britain as industry enjoys boom

Colin Farrell might have dyed his hair blond to play Alexander the Great, but the sight of the armour-clad actor strutting between the stages at Pinewood Studios in Buckinghamshire yesterday barely raised an eyebrow.

Workers at Pinewood are used to seeing the likes of Farrell and his co-stars, Angelina Jolie and Sir Anthony Hopkins. Elsewhere on the site, the Hollywood director Joel Schumacher is shooting Phantom of the Opera and staff are working on Disney's King Arthur.

A few miles away in Elstree, in Hertfordshire, Gwyneth Paltrow is making a film version of the play, Proof, and at Shepperton, Renee Zellweger and Colin Firth are filming Bridget Jones: The Edge of Reason.

Having suffered after the 11 September terrorist attacks, the British film industry is enjoying a new golden era.

Sources at the UK Film Council revealed last night that 2003 would be a record year for investment in movies made in Britain. The total spent is to be about double last year's £440m and more than the £750m spent in the boom year of 2000.

A spokesman for the UK Film Council said: "We have been able to attract a whole lot of international productions, especially from the US. Only two years ago the industry was in a major slump."

But the good times have put the industry at odds with the BBC, which claims it is being forced out of Britain to make its big historical productions in Eastern Europe.

The film studios dotted around England's Home Counties are awash with American-funded productions. At Leavesdon studios, owned by the American company Warner Bros Entertainment, the third and fourth films in the Harry Potter series are being made. And Johnny Depp is at Ealing making Bride and Prejudice with Gurinder Chadha, the director of Bend it Like Beckham.

British film studios said US film-makers felt "more comfortable" working in and around London than in other countries competing for business from Hollywood.

The industry has also benefited from huge tax breaks introduced by the Government, which can reduce film budgets by 15 per cent and offset the disincentive of the strong pound.

But the BBC claimed that Hollywood's infatuation with British studios was forcing the corporation to leave the country to film. As a result, the BBC's four-part dramatic portrayal of the times of Charles II, Charles II: The Power and the Passion, was filmed in the Czech Republic after the BBC bought a warehouse outside Prague and used it to reconstruct 17th century Whitehall.

Jane Tranter, the BBC's head of drama, said she would have preferred to make films about British history in the UK, but was forced out by Hollywood. "Our big studios in the UK are basically Pinewood, Shepperton and Bra, maybe a bit of Ealing. There aren't that many of them," she said. "They are full up the whole time with American films."The US demand has also driven up costs for using the studios, making them too expensive for the BBC, she said.

The BBC claims it was six times cheaper to make the Charles II production in Prague. The production used 14 locations across the Czech Republic. Five Houses were built to create a London street scene, and a copy of the Holbein Gate, which once stood at the entrance to Whitehall Square, was also constructed.

Gunpowder, Treason and Plot, which was written by Jimmy McGovern and will be shown in four parts on BBC2 next year, was made 2,000 miles away in Romania. The decision to film in Romania caused consternation in Scotland, where much of the story is set.

Ms Tranter said that she was obliged to film at studios that offered the best deal for people who pay for television licences. "I'm not saying [British studios] are very unreasonable," she said.

"Although it might be more comfortable for us to film in one of the British studios, we have to look for the best value and over the past few years Eastern Europe has really opened up as a place of stunning value."

The BBC was following the example of ITV, which also went to Romania to film its historical blockbuster about Boudicca, Britain's warrior queen.

Some British-based feature films have also been made in Eastern Europe, such as From Hell, which starred Johnny Depp and was made in Prague.

Steve Norris, the British Film Commissioner, said: "Northern Europe is too generic from a film point of view. Ensuring that films that are set in Britain and made in Britain is crucial."

The boom in British film production has happened partly because of Treasury-introduced tax breaks that can result in savings of 10 per cent for film projects with budgets over £15m. A similar tax incentive for smaller-budget films can result in savings of up to 15 per cent, but the industry fears the Government might drop this in 2005.

Nick Smith, a marketing manager at Pinewood and Shepperton studios, said: "If we didn't have those tax incentives we wouldn't have a film industry. Ten years ago films were either being made in California or London - now they are being made everywhere."

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