Britain’s booming film industry has a growth lesson for Rishi Sunak

LONDON – Four new sound stages are sprouting up in fields about a half hour’s drive west of London’s Heathrow Airport, a rare bright spot for Britain’s ailing economy.

The expansion at Shinfield Studios, reported to be hosting a new Walt Disney Star Wars production, is set to draw in investment of £600 million (S$997 million) a year for film and TV work by end-2023.

It’s part of a broader boom across Britain’s film industry that provides both a lesson and a warning for Prime Minister Rishi Sunak’s government on how to stimulate growth. Buoyed by carefully targeted tax credits rolled out in 2007 and extended in 2013, the production ecosystem is growing at a record rate, feeding a surge in demand for content. The industry is expanding so quickly it’s struggling to hire enough workers.

“Given the challenges faced by businesses in the wake of the pandemic, this level of industry growth is remarkable and one of the great British success stories,” said Ms Shevaun Haviland, director-general of the British Chambers of Commerce.

In all, spending on British film and high-end television productions hit a record £5.72 billion in the year through June, up 3 per cent from the previous year, according to the British Film Institute. Inward investment – from foreign production companies working in Britain – accounted for 83 per cent of the total. It’s gaining on the US$66 billion (S$89 billion) expense that the US film industry racks up each year, according to Census Bureau data.

Success story

The creative industries are key for Britain. Film crews have mushroomed and, with funding from streaming giants such as Amazon.com, Apple and Netflix, British high-end TV production has grown at an average annual rate of 19 per cent since 2013.

“It’s been happening quite quietly over the past five to eight years,” said Mr Nick Smith, the co-managing director of Shinfield Studios, who decided to build the site in Reading, west of London. “You could see the likes of Netflix, Apple and Amazon coming along, but all the studios were full. I thought, ‘Where are all these people going to go now?’”

The industry that created blockbusters, including Tom Cruise’s Mission Impossible series and Johnny Depp’s Pirates Of The Caribbean is set to add almost 2.7 million sq ft of sound stage space by 2025, according to research by Nordicity and Saffery Champness. That’s the equivalent space occupied by five stadiums the size of Wembley in north London.

Those facilities will have the potential to draw in more than £2 billion a year in film and TV production. It’s an important source of inward investment at a time when Britain’s departure from the European Union raised concerns about declining trade and exports.

What Sunak needs to do

That success wasn’t always certain. Britain’s film industry hit a lull around the turn of the century, with competition from other cities across Europe luring away productions.

Mr Gordon Brown, who served as prime minister from 2007 to 2010, first gave the industry a boost with a tax credit for film makers. That was expanded six years later under Mr David Cameron, who allowed television and streaming companies to qualify.

The credit grants a 25 per cent discount on every £1 spent on production activities in Britain and has helped make the nation a magnet for big-budget media companies.

Today, the film industry’s work is an increasingly rare example of where the government listened to what companies need to invest and provided incentives that tipped the balance in Britain’s favour.

Across Britain, from the City of London’s financial district, to music producers and the arts, executives are complaining that Mr Sunak’s government has no strategy to foster growth in the economy or in their industries. Business investment trailed the rest of the Group of Seven nations since Britain decided to leave the European Union in 2016.

The Confederation of British Industry has warned that Britain is headed into a long recession without any strategy for recovery.

“The country does not have a plan for growth,” said Mr Tony Danker, director-general of the CBI, Britain’s biggest business lobby group. “Government needs to play a role in changing that.” BLOOMBERG