Media production and consumption is a truly global business and digital technology means that production work is highly portable geographically – and to my mind production is a good example of a near perfect competitive market.
The main imperfection, however, stems from the wide range of highly attractive tax breaks used by many other countries to support employment in their TV production and animation sectors. As an independent UK-based rights owner and producer, our natural desire is to get our animation made as close to home as possible, preferably right in our backyard. Clearly, this is more cost effective and far less complex to manage than producing abroad, however expert and skillful our international colleagues may be.
The dilemma facing the UK media industry is that there is a marked lack of funding and support in this country; many producers are forced to raise finance overseas instead in order to make their projects. Why doesn't the UK government introduce a system of tax credits for the industry, similar to the one used in so many other territories? Tax credits bulk up the funding pot and would make the UK overall proposition far more competitive and attractive.
We should also look to secure new cash inflow into the creative industries. Typically driven by debt financing to a large degree, the continuing trauma in the banking sector has left a major gap in the traditional production finance plans of independent producers. This needs to be replaced and bringing more equity into the funding mix is one solution.
However, equity is intelligent money and investors needs to be sure of the risks facing such an enterprise and also an appreciation of how risks have been minimised or mitigated. The UK's Enterprise Investment Scheme provides huge additional incentive for UK tax-paying equity investors to invest in higher risk prospects. The ceiling on investment is already being raised to £10m in the forthcoming fiscal year which is fantastic. However, to make such sums really workable for the UK TV and animation industry, the operating regulations of the EIS incentive need to be reviewed as these can conflict greatly with the commercial realities facing the media production.
The UK creative industries are a major global player and a major UK export force. It provides something in the order of 3% Gross Added Value and represent more than 10% of the UK's total export of services. The UK’s creative people are amongst the best in the world, producing some of the highest quality, iconic TV and animation. As a business owner, I just don't want to feel that we're based in the wrong country and, given that we're no longer a start-up, that our next business decision should be to leave the UK. That just doesn't feel right. So let's have a level-playing field and a 20% tax credit for UK producers, operated on a basis that works for producers and UK plc.