Culture select committee proposes measures at lower end of high-end budgets to support PSBs; alongside 5% charge to SVoDs

MPs have demanded “urgent action” from the government to introduce enhanced tax incentives for domestic high-end TV (HETV) and a 5% streamer levy.

The call was made in the Culture, Media and Sport Committee’s (CMSC) British Film and HETV report, published today, which follows two inquiries across successive governments into the challenges facing a sector “under threat”.

It suggested HETV needs to be supported just as the film industry has been with the “game-changing” Independent Film Tax Credit (IFTC), which gives indie films of £15m budgets a 40% tax credit. The government improved tax relief for HETV projects to around 25.5% last year.

Specifically, the committee called on government to focus increases in HETV tax relief to benefit public service broadcasters and independent producers against the dominance of deep-pocketed streamers.

Among their recommendations was a targeted uplift to HETV productions at the lower-budget end – costing between £1m and £3m per hour – which it said could best benefit PSBs and indies rather than incentivising streamers to spend more on productions.

“Culturally British domestic HETV is vital to the UK’s identity, national conversations and talent pipeline, but it is under threat,” the report said. “Without urgent intervention, history will repeat itself and the problems that have been seen in independent film will extend to our once vibrant domestic television sector.

“Anything that undermines our PSBs is also a threat to inward investment.”

It cautioned that further work is needed to build the economic case for this intervention, and recommended the BFI conducts analysis on the potential return on investment of an HETV tax relief uplift. If the impact is positive, government should introduce the measure “at the next fiscal event”.

It further recommended that the government should compare the UK’s film and HETV tax incentives with those of other countries twice a year, and where the UK’s offer is found to be less competitive, bring forward any changes to maintain overall competitiveness.

Streamer levy and IP rights

The report also backed calls for the introduction of a streamer levy, which would see the likes of Netflix, Amazon, Apple TV+ and Disney+, pay 5% of their UK subscriber revenue into a cultural fund to help finance drama that has a specific interest to British audiences.

“It is time for streamers to put their money where their mouth is,” said the report. “They laud the UK’s mixed production ecology, with PSBs and independent producers at its heart, but their business practices are putting that at risk.

“They need to step up their support for the making of culturally British content, and not just reap the cultural and training benefits it provides. Ultimately, they should then benefit from a healthier supply of PSB-made shows that they can license for their platforms.”

BBC chair Samir Shah called for a streamer levy last month, not as part of the HETV inquiry, but in an interview with the Sunday Times. It has long been the call from Wolf Hall creative Peter Kosminsky, although the report notes is “no cross-sector consensus on issuing a levy on SVoD services”.

In his evidence to the inquiry, minister for media, tourism and creative industries Chris Bryant said the government is ”not looking at changing” policy for introducing a levy, but it would look at proposals if “people are coming forward with evidence from the sector”.

“I am trying to avoid too many levies if I possibly can,” he said at the time. “I also note that others have made the argument to [CMSC] that you should increase the high-end television tax credit.

“I think Peter Kosminsky is opposed to that, because he thinks that the downside is that it would simply be giving more money to the streamers. It is not for us to write the contracts and the terms between the streamers and individual production companies in the UK, but I would like to see more of a mix.”

In response to the levy proposal, Netflix any measure would “diminish competitiveness” and would impact audiences. 

A Netflix spokesperson said: “The UK is Netflix’s biggest production hub outside of North America – and we want it to stay that way. 

“But in an increasingly competitive global market, it’s key to create a business environment that incentivises rather than penalises investment, risk taking and success. Levies diminish competitiveness and penalise audiences who ultimately bear the increased costs.”

Bectu chief Philippa Childs welcomed the streamer levy proposal, saying the industry “does not become skewed towards large streamers”.

“Public sector broadcasting is at the heart of this, and it is crucial that we have a level playing field that allows them to take risks and commission quintessentially British content,” she said. “A secure future for public sector broadcasting, which sits at the heart of the UK film and TV ecosystem is essential.”

However, the Association for Commercial Broadcasters and On-demand Services (COBA), urged more focus on the “enhanced tax relief”, suggesting a levy could harm inward investment.

“The levels of investment from streamers in UK content are the envy of many countries,” said COBA executive director Adam Minns. “We urge policymakers to find ways to support the parts of the sector that need further support, without damaging existing investment – as a levy risks doing.

“Some may argue a levy will not impact streamers, but that is pure cakeism. Especially in this economic climate, a levy risks impacting existing content budgets for UK shows, jobs, and growth, along with raising costs for businesses. Ironically, it could actually damage PSB dramas by reducing co-production budgets at streamers.”

Elsewhere, the report made early noises towards the potential for government to introduce terms of trade legislation for streamers, noting producers’ lack of secondary monetisation opportunities when working with SVoD platforms.

“We recommend the government immediately commissions research on how regulatory measures, akin to the PSB terms of trade, could be applied to SVoD platforms to ensure that independent production companies developing IP in the UK maintain a minimum level of ownership over those rights,” it said.

The report insisted that “similar mechanisms” must be considered by government, while acknowledging PSBs and streamers’ differing business models mean it “may not be appropriate” to extend the existing terms of trade.

This article first appeared on our sister site, Broadcast.