Screen Business, a new independent report published today by the BFI, reveals the highest ever return on investment to the UK economy of £13.48 billion (GVA) from the UK’s government’s screen tax reliefs from 2017-2019. The in-depth triennial report shows the tax reliefs generated record-breaking levels of production and jobs; grew local businesses and infrastructure expansion across the UK’s nations and England’s regions; attracted record levels of inward investment; boosted exports of UK productions and services internationally; and created wider economic benefits for other industries, including tourism and retail.
The report underlines how the strength and resilience of the screen industries pre-pandemic has enabled the production sector to bounce back so effectively and become one of the UK’s strongest booming industries with £4.7bn production spend on film and high-end television alone from January to September 2021. Over the three year period of the report, direct spend on screen production in the UK has increased by 74% between 2017 and 2019 to reach £13.86 billion (£7.94 billion, 2014-2016).
“The UK is home to some of the best creative talent in the world,” said Chancellor Rishi Sunak, “and our TV and film industry is a jewel in our crown, driving hundreds of thousands of jobs and billions for the economy. We’ve ensured the sector has had our support throughout the pandemic, with the furlough and self-employment schemes, and the £500 million Film and TV production Restart Scheme is now helping productions get back up and running. We continue to support the creative sector – our tax reliefs make the UK an attractive place to film and are driving a wave of private investment, and our Plan for Jobs is helping more people to enter the industry through apprenticeships, traineeships and the Kickstart scheme.”
“This report shows just how important government action has been in driving unprecedented growth across the screen industries,” said Culture Secretary Nadine Dorries. “UK content not only keeps audiences at home and around the world entertained but also provides a huge boost to our economy. We have backed our incredible screen sector during the pandemic, through the UK Film & TV Production Restart Scheme and the Culture Recovery Fund, to ensure the country cements its reputation as being the best place in the world to shoot high end film and TV.”
“We work with industry and government to build the UK screen sector,” said Ben Roberts, BFI Chief Executive, ”and Screen Business is evidence of the strength of the tax reliefs and how they have supported a staggering level of production and jobs, and built business across the UK’s nations and regions. It’s a testament to this strength that our screen industries have bounced back faster than almost any other industry post pandemic. As we look to the future we need to ensure that we stay on top of our game – by building the skilled workforce this level of production critically needs and increasing investment in areas across the UK where there are opportunities for growth and innovation.”
Screen Business analyses film and TV production and video games development spend over the latest three-year period of full data, 2017-2019. The report reveals that an estimated £1.02 billion in tax relief seeded £5.11 billion in direct production spend in 2019, a 61% increase on 2016, and led to an additional £6.43 billion in GVA for the UK economy. UK-made productions generated £13.48 billion in overall GVA, a 23.7% increase between 2017and 2019.
This GVA yielded £3.60 billion in tax revenues for the Exchequer in 2019, a 27% increase since 2017. Production spend on film, high-end, children’s television and animation which would not take place without the tax reliefs, known as additionality, was worth £6.14 billion in 2019.
Direct spend on production generated record £5.11 billion in 2019 across all screen sectors, up from £4.31 billion in 2017:
- £2.08 billion from high-end TV production (HETV), a 70% increase on 2017;
- £2.02 billion from film production; spend consistently exceeding £2 billion a year
- £860.4 million (est.) from video games development supported by tax relief, 23% up from £700.8 million (est.) in 2017
- £86.0 million from children’s TV programme production, a 16% increase on 2017
- £65.3 million from animation programme production, a 27% decrease on 2017
- inward investment and co-production spend for film, high-end TV, animation and children’s programmes is driving boom with £3.45 billion in 2019, 81% of total spend
Screen Business: How tax incentives power economic growth across the UK is a comprehensive analysis of the economic contribution of the tax reliefs for film, high-end television video games, TV animation programmes and children’s TV programmes. The report uses the latest complete dataset available from 2017-2019.
The report has been produced by the international consultancy Olsberg SPI with Nordicity and commissioned by the BFI, supported by industry partners including the British Film Commission (BFC), Pact, Pinewood Group, TIGA, Ukie, the UK Screen Alliance and Animation UK. The analysis is consistent with the 2018 edition of Screen Business and applies HM Treasury Green Book principles and best practice economic modelling to accurately estimated the impact of these important revenue-generating tax reliefs for the economy. 2019 is the latest year that full data can be provided to calculate and analyse the complete economic contribution of the screen sectors.
Screen Business report findings in detail
UK HETV production now delivers the highest spend (40.7%) across the UK screen sectors, recording £2.08 billion in 2019, more than five times its spend of £392.8 million in 2013, the year the tax relief was introduced.
Expenditure on feature film production in the UK has consistently topped £2 billion for three years and has more than doubled in the 12 years since the film tax relief was introduced, from £849.2 million in 2007 to £2.02 billion in 2019.
The video games tax relief, which came into effect in 2014, supported an estimated £860.4 million of development expenditure in 2019, a 22.8% increase from £700.8 million in 2017.
The children’s television and animation tax reliefs have helped these smaller but culturally vital sectors develop and generate expenditure of £86.0 million and £65.3 million respectively. Animation work is also incorporated into feature films, high-end television and children’s programmes supported by other screen sector tax reliefs and therefore also contributes to the spend and GVA for those reliefs.
With its cutting-edge digital skills, the UK’s VFX sector is major contributor to the screen sector’s growth. Direct spend on VFX across all tax relief production is estimated to have been £363.5 million in 2019, a 32% increase on £239.8 million in 2016. The overall economic contribution across the screen sector value chain attributable to VFX was £891.0 million in 2019. Over the three years of the report the total VFX GVA is £3.18 billion.
Studio expansion and investment
The growth in film and television production activity and expenditure has attracted investment from private and public investors into the sector’s production infrastructure, particular studio developments. Whilst investment in film and TV studios has been mainly centred on the Metro London cluster, recent years have seen planning, development and investment in all UK nations and in several of England’s regions. The report details an estimated £131.6m spent on building or expanding UK studios between 2017 and 2019 – also providing jobs for other industries – and a further £785.4 million for developments which had received planning permission by the end of 2020.
Since the 2018 edition of Screen Business, new studios have opened UK-wide including Wolf Studios in Wales, First Stage in Scotland, Belfast Harbour Studios in Northern Ireland and The Depot in England. Planned investments for further studio expansion including Eastbrook Studios (East London), Pinewood and Shepperton and Sky Studios, Elstree.
The tax reliefs are also supporting innovation which attracts investment and boosts the UK’s competitiveness in a global sector. With technology and creativity at their core, the screen sectors are at the cutting-edge of innovation with the products they create and the technology, processes and skills involved in making them.
The report looks at a number of case studies, such as leading VFX and animation studio Jellyfish Pictures which has established its first studio outside London, in Sheffield. World-leading facility Industrial Light & Magic (ILM) opened the largest volumetric stage in the UK at Pinewood Studios this year and has innovated on the original ground-breaking LED technology developed for The Mandalorian in 2018. Leading UK VFX companies Framestore, MPC (Moving Picture Company) and DNEG are developing their virtual production capability reducing environmental impact, more efficient production workflows and creating new jobs for new roles.
Growth, jobs, productivity and tax revenues
Over three years the tax reliefs have driven an 18.4% growth in actual production spend to reach £5.11 billion in 2019. Production and video games development activity and content generated by the tax relief sectors created 156,030 direct, indirect and induced FTEs of employment specifically in production/development in 2019, 18% higher than 132,300 in 2017. When spillover impacts of the screen sector such as tourism, merchandise licensing and sales, brand promotion and esports are taken into account, the overall employment impact increases to 218,790 FTEs in 2019 up from 181,850 in 2017, and a 45% increase on 150,550 in 2016.
All screen sector tax reliefs generate a return on investment through GVA. In 2019 screen production supported by the tax reliefs generated £13.48 billion in GVA for the UK economy, a 23.7% increase over the three years 2017-2019. Film was the largest contributor generating £7.68 billion GVA followed by high-end TV generating £4.17 billion GVA.
In terms of return on investment (RoI), every pound of film tax relief generates £8.30 additional GVA; HETV tax relief generates £6.44 additional GVA; animation tax relief generates £4.53 additional GVA; children’s television tax relief generates £3.20 additional GVA; and video games tax relief generates £1.72 GVA.
Production spend and related job creation across tax relief supported production and video games development has helped generate significant tax revenues for government. The report estimates that tax revenues have grown by 27% from £2.84 billion in 2017 to £3.60 billion in 2019.
The growth in spend and investment within the UK screen infrastructure is stimulating further need for skilled people. The BFI’s £19 million skills investment plan launched in 2017 supported through the National Lottery, set out to address the need for 10,000 new entrants to keep the UK in the pole position of global film production over the next five years. The growth in screen production halted the first months of the pandemic shutdown in 2020 but has accelerated over the past 12 months, creating an even higher demand for skilled workers and an opportunity for the sector to power the UK’s wider recovery.
The rate of productivity (the amount of economic output, GVA, per FTE across the tax relief screen sectors) across the tax relief supported screen sectors ranges from £81,550 per FTE for film, high-end TV and children’s programmes to £84,000 for animation, £89,743 for VFX and £121,000 for video games. All of these productivity rates are much higher than the average for the UK economy as a whole (£66,100).
The tax reliefs play a crucial role supporting the UK’s competitiveness as a creative destination, attracting international inward investment production in the face of strong global competition. They have also helped lead to a repatriation of film and high-end TV productions which would otherwise have been made outside the UK.
Attracted to the UK’s world-class skills, facilities and diverse locations, film, HETV, children’s and animation production supported by the tax reliefs attracted £3.45 billion of inward investment and international co-production in 2019 – almost a three-fold increase on £2.20 billion in 2016 – including projects from the US, Europe and other markets. The inward investment and co-production share accounts for 67% of the total spend in those areas of production in 2019.
HETV attracted £1.60 billion of inward investment and international co-production expenditure in 2019, 76% of the total spend, almost a threefold increase on £612.2 million in 2016. Film attracted £1.81 billion, or 87.9% of the total spend, and an 17% increase on £1.55 billion 2016. Animation programmes generated £31.8 million of inward investment and co-production in 2019, 48.7% of the total spend of £65.3 million.
An estimated £860.4 million was spent in the UK in 2019 on the development of video games supported by tax relief, representing 31% of the total estimated turnover (£2.77 billion) of UK video games.
In addition to the macro-economic impacts generated by the screen sector, the report also examines specific micro-economic benefits generated by film and HETV production for other business sectors, generally categorised as the ‘ripple effect’. Forensic analysis of the production budgets of three productions was undertaken and revealed that between 40% and 60% of expenditure was spent in the general economy in sectors including local resources, such as travel and transport, construction, hospitality and catering. Budgeted production findings related to below-the-line spend include:
- An independent feature film (£20 million budget) – 7.76% on business support/supplies; 7.33% on digital services; 6.28% on construction; 6.09% million on travel and transport; 5.95% million on hospitality and catering; 2.22% on local labour; 2.13% on fashion and beauty; and 5.07% on studios/locations.
- An international feature film (£50 million budget) – 11.70% on construction; 9.82% on travel and transport; 9.71% on studios/locations; 6.49% on hospitality and catering; 4.20% on business support/supplies; 3.08% on local labour; 2.28% on music and performing arts; 2.22% on fashion and beauty; and 2.07% on digital services.
- A UK multi-part TV drama series (£5 million budget) – 8.09% on studios/locations; 7.27% on business support/supplies; 5.04% on travel and transport; 4.30% on hospitality and catering; 3.49% on music and performing arts; 3.45% on construction; 1.01% on fashion and beauty; and 0.41% on local labour.
A significant amount of HETV production takes place in the UK nations and England’s regions, with an estimated £1.56 billion in production spend, or around 33% of the UK total, being undertaken outside of Metro London between 2017–2019.
In 2019, HETV spend generated 33,548 FTE jobs in Metro London and 15,612 throughout the rest of the UK. Taking into consideration the wider impacts of the HETV content value chain, 45,240 FTE jobs were created in Metro London in 2019 and 19,070 throughout the rest of the UK.
HETV spend generated £1.67 billion in GVA in Metro London in 2019 and £778.3 million throughout the rest of the UK. The total impact of the HETV content value chain generated £2.64 billion in GVA in Metro London in 2019 and £1.04 billion throughout the rest of the UK.
Film production has also been more focused around Metro London which has a highly-developed base of specialist facilities and services. However, the report shows significant impacts across the UK, with around £1.18 billion spent outside Metro London over 2017-2019. This represents around 19% of the total.
In 2019, this spend generated 37,685 FTE jobs in Metro London and 7,775 FTEs throughout the rest of the UK. When the wider impacts of the film content value chain are taken into consideration, 49,845 FTE jobs were created in Metro London in 2019 and 19,085 throughout the rest of the UK.
Film spend generated £1.96 billion in GVA in Metro London in 2019 and £404.1 million throughout the rest of the UK. The wider total impact shows that £3.74 billion in GVA was generated in Metro London in 2019 and £1.24 billion throughout the rest of the UK.
Global comparison of production incentives
In 2019, global expenditure on feature film and television production – ie investment in scripted film and television and documentaries, but not sport, news or commercials – was estimated to have reached $177 billion. As a result, the screen sector is a powerful economic driver – particularly in jurisdictions, such as the UK, which have a highly-developed development and production offer and a stable incentives base.
The UK screen sector tax reliefs are among around 100 automatic incentives on offer around the world. Screen Business provides a technical overview of a range of global incentives including those in established European Union (EU) markets, including France and Germany; incentives with innovative approaches to attracting longer-term infrastructure investment; and incentives with particularly attractive headline incentive rates. It also notes incentives for video games development and VFX activity.
Data analysis in the Screen Business report has been conducted in line with HMT ‘Green Book’ methodology and focuses specifically on production activity generated in those sectors supported by tax reliefs, rather than the total value of all. It therefore excludes non-UK content produced, distributed, sold, viewed or exhibited in the UK.