November 14, 2012 11:09 pm

Film: Lights, camera but slightly less action

Dom Hemingway, currently in production and starring Jude Law and Richard E. Grant

On location: Dom Hemingway, currently in production and starring Jude Law and Richard E. Grant, was filmed partly on the island

The Isle of Man may be small but it is adaptable. It has featured as the slums of Victorian Bristol, the rolling hills of Ireland, the rugged coast of Cornwall and even urban locations such as Boston and Hamburg in some of the 100 films shot there since 1995.

Stars such as Johnny Depp (The Libertine) and Claire Danes (Me and Orson Welles) have set foot on the island, bringing a touch of glamour – and much-needed spending in its restaurants and hotels off-season.

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IN Doing Business in the Isle of Man 2012

The first film was The Brylcreem Boys, the 100th was Dom Hemingway, a gangster film with Jude Law and Richard E. Grant, that is still in production.

According to a report by Oxford Economics, the consultancy commissioned by the government, the film industry brought £81m in benefits and created 2,140 full-time equivalent job years.

The government has invested £170m (in 2011 prices), which has generated £85m from producers through the equity share of revenues and £375m from additional tax revenues.

However, changes to value-added tax rules that put an end to the island keeping the VAT earned on cinema screenings in the UK have hit the industry hard.

The UK and Ireland then extended their own tax breaks. It costs about £250,000 extra to make a production on the island. From a high of 12 in 1997, only two productions were made there in 2011. The number of days of filming has fallen from 830 in 1997 to 25 in 2011.

“The competitive offer of the Isle of Man to film producers is now relatively poor compared to its competitors, lagging both the UK and Ireland in terms of tax incentives, local cost structures, skills and the variety of image locations for film making,” Oxford Economics concluded. “Not only is the Isle of Man relatively uncompetitive when it comes to attracting film-makers, it is also operating in a declining market.”

Hilary Dugdale, who runs the government’s film unit, Isle of Man Film, says the government’s proactive help, such as closing roads and providing equity funding, was no longer sufficient to entice filmmakers. She says it is important to bring in the spending of film crews, which also provided temporary jobs for many on the island and that change is needed.

However, the path chosen has caused controversy, with seven members of Tynwald, the parliament, voting against and one minister being sacked for doing so in June. The government decided to take a stake in Pinewood Shepperton, the famous studios near London where James Bond movies are made, and allow it to use £25m of its publicly funded Media Development Fund (MDF) to invest in films. This gives Pinewood the ability to create demand for its studios, while many outdoor locations would be on the island. The plan to take a 19.99 per cent stake was reduced to 9.99 per cent and purchased for £12.2m at the end of October.

Pinewood was bought a year ago by John Whittaker, the billionaire chairman of Peel Holdings, the property, media and logistics group, who lives on the Isle of Man.

In 2007 management of the MDF was handed to CinemaNX, a Manx company, to run. Steve Christian, the co-founder of CinemaNX, has taken a board seat at Pinewood and four staff have transferred to the studios.

Mr Christian and Ivan Dunleavy, Pinewood Shepperton chief executive, have joined Prosper Capital which is already licensed by the Financial Services Authority, as well as registering Pinewood Film Advisers with the FSA.

The Public Accounts Committee (PAC) of Tynwald had criticised the governance arrangements of the MDF.

The Treasury waived the need to put the contract out to tender, a move the PAC said should not be repeated, while the attorney general ruled that CinemaNX did not need an investment licence.

It has refused to publish accounts, as it can legally do, although it gives 20 per cent of its profits to the government. One year’s accounts were published at the insistence of the PAC, which showed the bulk of CinemaNX’s revenues came from interest on the MDF.

The Liberal Vannin party, which has two members of parliament, is pressing for a further inquiry into the Pinewood deal. Kate Beecroft, one of them, says: “This is taxpayers’ money. There is a lack of transparency and accountability.”

Eddie Teare, treasury minister, admits the deal was controversial. “It has been an unusual step but ... it was quite clear that the offering we had was no longer attractive.

“Teaming up with a name such as Pinewood Shepperton gave us extra leverage and ... they recognised our strong position in the independent film sector and the expertise we have there. They wanted to diversify from the big budget films, the Bond films, to try to get other films as well. The initial indications have been very good.”

He could not outline what investment targets had been set. “We have got access to their [CinemaNX] accounts as treasury but we have got to recognise there has to be some degree of confidentiality.”

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