We Have Been Here Before

By Margaret Dickinson

The phrase ‘incentives for British’ films has a historic ring to it which fits well with the Department of National Heritage. In a theme park for British culture it might be posted up at intervals in World War II lettering and boomed from speakers in a 50s BBC accent.

“Sir, Where will animated photography stop? A few nights ago I was at a kinematograph entertainment when a film was shown depicting the body of a fisherman being cast up by the tide. Surely this is too revolting to be popular with the crowd, and too morbid to be termed ‘entertaining’. If it served any good purpose none would object, but the tragedy of the sea is too well known to need any reminder in this way. A few months ago I saw a kinematograph picture, which, if anything, was even more morbid than the one I have just mentioned: a scene in a lunatic asylum. Yet another, that of a suicide by hanging. A considerable sensation was created a short time ago by a series on “The Birth of Christ”. To say the least it was indelicate and from a religious standpoint blasphemous. At the time I expected some protest, but none came. Personally I feel there is a need for a strong expression of public opinion on the subject.

I am, etc.,

G.S.B” – Letter in the Kinematograph and Lantern Weekly

“The cinema is one of the greatest powers placed in the hands of humanity by scientific invention. Yet it is in the main a power prostituted. Myriads of lives are touched, and to some degree influenced by it daily: yet sociologists, scientists, authors, artists, all who have a serious or beautiful message to give to these myriads are scarcely represented on the films, or represented only by travesties. At the same time ‘penny dreadfuls’ and sentimental romances have sprung up in thousands of varieties, and are more prolific than ever.” – The Bioscope

As the quotes above suggest, the English language has changed more than ideas since the question of how to encourage a British film industry was first raised. No doubt this reflects the persistence of the underlying structure of the international entertainment business which, despite a series of technological revolutions is still dominated by corporations descended, roughly speaking, from the old Hollywood majors.

However, in Britain, the sense of déjà vu is accentuated by a tendency to collective amnesia which allows old remedies to be dressed up from time to time as dramatic new cures. As both Government and Opposition are now making statements on a new round of treatment, it may be useful to provide a snapshot reminder of what was and was not done in the past.

The Regime of Aid

From 1927 to 1985 a system of aid was in force comprising a regulatory body and a varying combination of quotas, subsidies and special loans for production.

The Regulatory Body

This was conceived as a forum where compromises could be worked out between representatives from the three sectors of the trade – production, exhibition, distribution – and independent members appointed to look after aspects of public interest. Its function was to advise on policy, the composition of the body was a constant bone of contention. Should ‘trade’ mean management (‘employers’ in the jargon of the time) or should employees have a say? Should trade voices dominate?

Key Dates

1927 – Advisory Committee set up with eight trade employer and five independent members
1938 – Advisory Committee replaced by Cinematograph Films Council with eight trade employer, two trade employee and 11 independent members
1948 – Composition changed to 11 trade employer, four trade employee and seven independent members
1985 – Abolished


The idea was to ensure outlets for British films by obliging distributors and exhibitors to distribute and exhibit a percentage of British films. The rules varied for different kinds of films and the following is a somewhat simplified picture of arrangements applying to feature films.

Distributors’ (or Renters’) Quota

1927 – Introduced with percentage set initially at 7.5%
1938 – Extended with quota set to rise from 15%
1948 – Abolished under pressure from GATT

Exhibitors’ (or Screen) Quota

1927 – Introduced with percentage set initially at 7.5%
1938 – Extended and set to rise from 12.5%
1948 – Raised to 45%
1949 – Dropped to 40%
1950 – Set at 30% which remained the norm
1983 – Suspended


The idea was to boost the receipts of British films by raising a levy on all cinema takings and handing back the proceeds to makers of British films. Despite its subsidy-like character, the British Government insisted it was something else and called it the Eady Levy, Eady being the name of the Treasury official who suggested it.

1950 – Introduced as a voluntary arrangement, agreed by the trade in return for a reduction in entertainments tax
1957 – Made statutory
1985 – Abolished

Production Loans

These were provided by a specialised film bank set up with a revolving fund from the Treasury. A contradictory brief required the bank to operate commercially and yet avoid competing with private capital. Otherwise decisions were left to the discretion of the management.

1949 – National film Finance Corporation (NFFC) established with £5m capital (in 1949 the average cost of a first feature was estimated as just under £200,000; the total cost of film production as £15m)
1950 – Capital increased to £6m
1952 – Borrowing powers increased by £2m (by this time, £3m had been effectively lost through the bankruptcy of Alexander Korda’s company, British Lion)
1970 – New funds made available but not advanced
1981 – Restructured
1985 – Abolished
1986 – British Screen set up as a private company with funds of £2m per year, plus £2m for projects related to European cooperation

Meaning of ‘British’

This was a key to how the aid would work. The definition, later adapted by substituting references to Britain by references to the European Union, was based on two criteria: labour costs (a certain proportion of the labour costs of the film had to be paid to British nationals) and the management structure of the production company (it had to be registered in Britain and a majority of the directors had to be British subjects). Under these rules it was quite possible for a film to qualify even if scriptwriter, director and major stars were American.

Other Measures


A 75% tariff on foreign films was imposed in 1947 and hastily withdrawn in 1948 after the American distributors imposed a boycott on the British market.

Tax Concessions

1978 to 1984 – Capital allowances enabled producers to write off production costs over a shorter period than was permitted for other forms of capital investment.

Action Against Monopoly

One of the main complaints against the trade has been that the market is fixed. Even before the war a large proportion of cinemas was owned by a few companies, some of which had their own production interests and links with American distributors. It was assumed that they favoured their own films and those of their American associates. The situation became worse as the number of large circuits shrank to two and changes in ownership and policy left neither investing in British films.

A Board of Trade committee investigated monopolistic tendencies in the business in1944, and the Monopolies and Mergers Commission investigated in 1966, 1983 and 1994. The resulting reports confirmed that the trade was monopolistic. Some anti-monopoly provisions were included in the early Film Acts. The 1927 Act made it illegal for distributors to rent films unseen or as packages including failures along with successes. The 1948 act introduced a short-lived appeal system whereby, in theory, it was possible to oblige a circuit to book a film if a selection committee ruled that it deserved a booking.

No action was taken to separate cinemas from production interests, as had been done in the USA, and little was done to restrict the growth of the circuits. (Although powers to do so were enacted in 1948.)

Measures Frequently Proposed but not Adopted

In detail this list could be very long but one important theme, reiterated in proposals from the 40s to the 70s, was the need for more effective intervention. The most extreme version was the 1973 Association of Cinematograph, Television and Allied Technicians (ACTT) call for nationalisation of the whole industry. More moderate ideas including replacing the Films Council by an independent body with wider powers; increasing the NFFC’s capital and giving the management a freer brief; setting up a publicly owned distribution company and/or a circuit of nationally owned cinemas. Some proposals suggested linking the NFFC, distribution arm and cinema circuit to form an integrated state sector.

Results of the Aid Regime

The effects of aid were always hard to disentangle from other factors – changes in the pattern of cinema-going or in the structure and strategy of the American industry. And the British industry was so small and volatile that the box-office career of particular films or the personalities of key personnel could be influential.

However, a few comments can be made which do not require volumes of supporting argument.

The regulatory body helped to open up the debate about the industry by making a range of information publicly available. However, its composition ensured that its advice would not diverge markedly from that offered by the trade.

The quota led to increased production when they were introduced and the distributors’ quota was influential up to the time it was abolished. The screen quota continued to be significant until at least the 50s and was probably a factor in attracting American investment into the industry in the 60s. At the time it was suspended, the screen quota was having little direct effect because it was regularly exceeded.

The Levy almost certainly helped boost production during the 50s but it is less clear that its withdrawal in 1985 caused a slump. Production was unstable during the previous decade and bald figures for annual investment and number of films registered do not show a sharp, continuing drop after 1985 although they certainly do not rise as might be expected with the surge in cinema attendances. In terms of trade structures, the Levy was a conservative influence. It was paid out in proportion to a film’s box-office earnings and so tended to boost the profits of successful films rather than enabling marginal ones to break even. Since circuit bookings were one of the keys to success, the films which received most were likely to be those in which the circuits had an interest, very often those with American backing. Partly to answer criticism of this kind, small sums from the proceeds were hived off in the 70s as grants, first for the National Film School, and later for a number of film-related good causes.

The aid regime as a whole did not make the industry more open to competition nor strengthen British interests in it. On the contrary, during the period of its operation, the circuits became more influential and American interests in both production and exhibition increased.

What aid achieved in cultural terms was a perennial subject of dispute. If the question is whether it encouraged production or exhibition of films which were good, interesting, distinctively British, or possessed other specific qualities, the short answer is that the regime was not designed to address such questions. The subsidy and quota were automatic, the only requirement being a definition of nationality which could be fulfilled by producers of almost any kind of film. The same applied to the short-lived tax concessions. None of these arrangements had any direct relevance to creative decisions.

The role of the NFFC was a little different in that there was an element of discretion. The brief was to take into account commercial considerations only, but in practice this allowed for some flexibility. No one can ever be sure what constitutes commercial potential and critical preferences could enter into decisions in just the same way as they might with a private financier. So, unlike Levy, funds could to some extent be targeted and did help to encourage independent production. When first established the NFFC had sufficient capital – representing a third of annual production expenditure – to give it real clout. During the first 15 years of its life it invested in a total of 640 long films, the lowest number in any year being 27, the highest 63. After 1964 its declining funds were eclipsed by inflation in film costs and the influx of American investment.

Margaret Dickinson is a filmmaker and writer, co-author (with Sarah Street) of Cinema And State: The Film Industry And The British Government 1927-84