Thirty-seven film consortia applied, and it was expected until yesterday that four applicants would receive money. But the Arts Council announced that only three met the criteria. Charles Denton, chairman of the council's film panel, refused to say why the 34 losers did not meet his criteria, which remain vague.
He said only that he was looking at track records, business sense, commitment and enthusiasm. The three winners are Pathe Productions, an alliance of six British producers responsible for such as Gandhi and Dangerous Liaisons with the French film company, receiving pounds 33m; The Film Consortium (pounds 30m), four production companies responsible for Land and Freedom and The Crying Game in association with Virgin Cinemas and including big names such as the director Ken Loach and the producers Stephen Woolley and Nik Powell; and DNA Film Limited (pounds 29m), a company formed by Duncan Kenworthy, producer of Four Weddings and a Funeral, and Andrew Macdonald, producer of Trainspotting.
All three applicants have been awarded the sums for which they applied.
Among consortia rejected by the Arts Council were companies including Elton John's Rocket Pictures, the producers Merchant Ivory and David Parfitt, producer of The Madness of King George.
Asked whether it was proper for National Lottery ticket buyers' money to be used to finance Pathe productions, which has a strong French interest, Mr Denton replied that all applicants had guaranteed that profits would be ploughed back into British films.
At a bad-tempered press conference, Alexander Walker, film critic of the London Evening Standard and a former governor of the British Film Institute, protested that one winner, The Film Consortium, included the people who ran Palace Pictures, which went into receivership five years ago. Mr Denton responded that the track records of that consortium had been examined from a business and creative point of view.
Andrew Curtis, chairman of The New Producers Alliance, representing 200 British producers, said he was appalled that Chris Smith, Secretary of State for National Heritage, and the Arts Council had come to Cannes "to divide the British film industry on the world stage".
George Faber, former head of BBC Films and head of a losing consortium which included the latter, had planned to make films with leading British actors based on books by prize-winning British novelists.
He said: "The brief for the application was unbelievably vague. None of the applicants has been interviewed, which surprises me."
The franchises are expected to produce more than 90 British films in six years, representing a total investment of more than pounds 460m of which lottery funding will represent about 20 per cent.
Mr Smith said: "As the Oscars showed, the British excel in products which depend on originality and innovation.
''But just 10 per cent of all British cinema attendances are for British films. I hope that we can double that. We will be talking to distributors and franchisees.''
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