Creative Industries: Film: Projecting into the future

Creative industry outlook: we're big on local heroes, but the challenge for sectors from film to software is to become a force on the global stage

UK revenues: pounds 468m

UK employment: 33,000

Forecast annual growth of UK industry to 2007: 10 to 20 per cent

MUCH excitement last week as Dame Judi Dench, Helena Bonham Carter, Julie Christie, and Kate Winslet captured four of the five best actress Oscar nominations. It was, however, the nomination of The Fully Monty for Best Picture that gave the game away - showing that at least some of the pride in the UK film industry's renaissance is ill-considered.

The Full Monty was British inspired, British made, British-shot. But it was financed in Hollywood by Rupert Murdoch's Fox. So Fox controls its worldwide rights and will take the overwhelming share of its profits.

This is not to say the UK film renaissance is fake. UK films are second only to Hollywood at the US box office, the largest market in the world. In 1996 (the last year for which full figures are available), film exports outstripped film imports, resulting in a surplus of pounds 91m. This compares with a deficit of pounds 10m in 1995.

There are three more positive indicators:

q UK films are becoming more popular in the UK - they took 20 per cent of the box office (pounds 102m) in 1997.

q UK talent is now more disposed to stay at home. UK-based writers such as Shawn Slovo and Alan Scott, who have devoted themselves to writing for Hollywood, are now returning to British films, lured by the prospect of having their projects made here and having more input in the process.

q The production, post-production, and exhibition sectors of the industry are all booming. The UK film industry is now making over 100 films a year. Production spend on UK films has risen from pounds 105m in 1989 to pounds 558m in 1997.

But there are problems:

q UK films still find it hard to secure theatrical distribution. Last year, Hollywood studios distributed 146 films. This left little room for other pictures. The negotiating power of UK independent distributors is weak. Just as The Full Monty was a bonanza for Fox, The English Patient was a hit for Buena Vista, while Bean enriched Dutch-owned Polygram

q Although UK-made films may be performing well at the box office, very little of the revenues generated trickle back to the producer. As a rule, 65 percent of gross box-office receipts go to the cinemas; 35 per cent to the distributor. This gross is invariably soaked up by commissions, promotion and advertising costs, and financing charges - with the result that many "successful" British films such as Shadowlands do not show a profit after three years. Nothing flows back to the producers, leaving them to start from scratch raising money for their next pictures. The Department of Culture is already tackling these problems. At Cannes last year, it announced that pounds 20m of lottery money would be set aside to back three British film consortia. The Government's idea, conceived with the help of David Puttnam, was to provide enough capital to British film makers to allow them to make films without pre-selling foreign rights. The idea, also, was to free British film makers from the anxiety that they lived or died on the success of their current productions.

The Government, however, might take further steps to help the industry realise its economic potential. It could improve film training. It could co-ordinate producers' computers and databases - giving them access to the kind of information Hollywood uses to select scripts and plan releases. The indystry's worry is that without such assistance the current renaissance could peter out in the same way that the 1960s' re-naissance, which brought forth Billy Liar, Room at the Top, and Saturday Night and Sunday Morning, did.

The Government could also back UK distributors like Entertainment, Film Four, and The Feature Film Company the way it has backed producers with lottery money. This would allow UK distributors to compete with the US majors on promotion and advertising. It could get a virtuous circle going - UK made films distributed by UK companies achieving sufficient box office success to build up a pool of UK film capital.