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Shepperton Studios Planning Application for Growth 2018

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Shepperton Studios Planning Application for Growth 2018 09DOCUMENT Shepperton Studios Planning Application for Growth 2018 Expanding Shepperton Studios: The Economic Impact AUGUST 2018 Expanding Shepperton Studios: The Economic Impact Shepperton Studios Limited August 2018 Contents Executive Summary i 1. Introduction 1 2. Strategic Context 4 3. The Current Impact of Shepperton Studios 21 4. Reference Case 32 5. The Proposed Development 34 6. The Future Economic Impact of Shepperton Studios 36 7. Spillover Effects 43 8. Net Additional Impacts of the Proposed Development 46 9. Social Value impacts 51 10. Conclusion 54 Appendix 1: References 59 Contact Richard Laming [email protected] Client Shepperton Studios Limited Our reference PINR3003 August 2018 Executive Summary Shepperton Studios is a key asset for the UK film industry 1.1 Since its foundation in 1931, over 1,000 films have been made at Shepperton Studios, winning 126 BAFTAS and 81 Oscars. Major inward investment films produced at Shepperton in the last five years include Gravity, Guardians of the Galaxy, Into the Woods, Doctor Strange, Beauty and the Beast, The Mummy, Mary Poppins Returns, Mamma Mia: Here We Go Again and The Voyage of Doctor Dolittle. During the same period, Shepperton has also hosted films such as Mandela: Long Walk to Freedom. Lady in the Van, Florence Foster Jenkins and Christopher Robin. The UK film industry is a success story and is growing 1. Over the last decade the UK’s film sector has grown exponentially. Total spend on film production in the UK in the twelve months between July 2017 and June 2018 was £1,858 million. This is more than double the amount spent 2011/12 (£845.3 million)1. It is inward investment which has accounted for the vast majority of the overall increase. Inward investment on UK film production currently accounts for 82% of all spending. 2. The growth of the UK’s film sector reflects wider global market trends2. In order for the UK to be able to position itself and capture a share of this prospering sector, the UK Government has made several highly successful strategic decisions to attract further inward-investment over the past ten years which have enhanced the appeal of the UK to overseas film and high-end television (HETV) investors. The UK Government fully supports future growth of the film industry 3. The implementation of the ‘Creative Industries Tax Relief’ was the first big step to encourage international production firms to the UK market. The tax relief, implemented in 2007 allows film companies to claim a rebate of up to 25% of the total amount spent on production. Between 2007 and 2017, HMRC paid £2.3 billion in Film Tax Relief, representing almost £9 billion spent on making films in the UK3. 4. The Government’s Industrial Strategy published in 2017 and the Creative Industries Sector Deal (2018) unequivocally reaffirm the priority that the UK Government places on growing the film sector. The Industrial Strategy promotes five key areas to boost the productivity and earning power of people throughout the UK. The Creative Industries – a group of sectors which includes film and HETV – is one of the five chosen pillars within the Industrial Strategy. 5. More recently, in March 2018, the UK Government launched the ‘Creative Industries Sector Deal’, which notes that, dependent on investment in studio space and skills, the UK film and HETV sectors have potential for further growth: “with substantial increases in studio capacity and investment in skills, it is feasible that in the period to 2025 our 1 BFI (2018), BFI Research and Statistics Unit: Film, high end television and animation programmes production in the UK: full year 2017 2 Please see the accompanying PwC report (2018), Shepperton Studios Review of the UK film & high-end TV production facility market: Supporting Evidence, which focuses on global trends and the market demand for studio space in film and TV 3 ONS (2017), Paddington, Star Wars and the rise of the UK film industry i revenues could nearly double to approximately £4bn a year4”. This provides critical context for understanding the need for the proposed expansion of Shepperton Studios. 6. Support for enhancing the growth of the film and HETV sectors is not just confined to national Government level. The Enterprise M3 Local Enterprise Partnership5 (LEP) has also expressed strong support for the sector. The LEP’s Strategic Economic Plan 2014- 2020: Working for a Smarter Future focuses on sectors which play to the area’s strengths. ‘Entertainment technologies’, which includes film, are identified as a ‘niche specialism’ which can contribute positively to realising the area’s economic potential and which the LEP will seek to support6. At the local level, Spelthorne Borough also acknowledges the important economic contribution made by Shepperton Studios. For example, the Council’s current Local Economic Assessment 2017-22 highlights Shepperton Studios as being amongst the local area’s biggest employers7. Therefore it is clear that there is strong and consistent policy and strategy support for the development of the UK film industry at all levels and Shepperton Studios is acknowledged as a key economic asset in furthering growth. Delivering more studio space in the “West London cluster” is critical to meeting the UK Government’s growth targets for inward investment 7. Market demand research undertaken by PwC evidences a West London cluster of film and HETV production facilities of which Shepperton Studios, together with Pinewood Studios and Warner Brothers Leavesden, is one of the only three that is large enough to accommodate major inward investment productions. 8. The West London cluster also includes other types of businesses in the film and HETV supply chain, such as post-production and marketing businesses. The cluster predominantly attracts international multi-million pound production companies to make films in the UK. These film companies locate in these studios because of the draw of several key factors: • Infrastructure – for instance, ultra-fast fibre network; FACT accredited data centre; stages with up to 60,000 sq ft of space; • Skills – specialist skills such as production management; set construction; special effects; lighting. • Services – niche services including equipment hire and sale, graphic design, industry associations and organisations; • Location – proximity to London as a world class city, and Heathrow Airport for accessibility worldwide; • Financial incentives – tax incentives and cost support for creative industries across the political spectrum. 9. Outside the West London area, regional studio spaces serve different markets for smaller film, TV and HETV productions. The location, scale of facilities and infrastructure, supply chain, international accessibility and skills attributes that make 4 HM Government (2018), Industrial Strategy Creative Industries Sector Deal 5 Shepperton Studios is located within the Enterprise M3 LEP area 6 Ibid. p. 13 7 Ibid. p. 86 ii West London the first choice for large inward investment film productions are not replicated in regional locations. Thus, large film productions that cannot find studio space in the West London cluster cannot simply transfer to a regional location outsider the cluster. In such circumstances, the UK is competing globally for investment and if the Greater London cluster cannot provide sufficient space, investment is lost to the UK. Demand for space in the West London cluster far outstrips supply 10. Research by PwC finds that in the absence of sufficient studio space in the West London area larger production companies choose instead to locate in comparable studio spaces on the international scale, for instance the USA or Canada, rather than choose regional studios in the UK8. This represents a significant economic opportunity cost for the UK and highlights that the provision of more studio space within the West London cluster is a pre-requisite of the Government’s £4 billion inward investment target by 2025 being met. An expanded Shepperton Studios can make a significant contribution to growth of the UK film and HETV industry 11. Shepperton Studios has a pivotal role to play in the future growth of the film sector in the UK. However, Shepperton Studios is unable to accommodate more production activity than it already does, as the Studio has been operating at full capacity for the past ten years. 12. Shepperton Studios must expand, and it has submitted this proposed development for planning permission in order to keep pace with growing demand sustainably for the long term future. 13. This report assesses and presents the Studios’ current economic contribution and the forecast impact that the Studios would have should planning permission be granted for expansion. The assessment considers the economic impact across four economic impact areas: Spelthorne Borough, the Enterprise M3 LEP, the West London cluster, and the UK. MEASURING ECONOMIC CONTRIBUTION Current Impacts Shepperton Studios is already a major employer, making a positive and substantial contribution to productivity at a national level and delivering a range of social and economic benefits 14. Shepperton Studios currently supports 1,507 FTE jobs on site. 8 PwC (2018), Shepperton Studios, Review of the UK film & high-end TV production facility market: Supporting Evidence iii 15. In addition to direct jobs, Shepperton Studios indirectly supports a further 1,507 FTE jobs through its supply chain and the spending of wages in the economy. 16. Shepperton Studios currently contributes a total of £181.7 million Gross Value Added to UK economy per annum. 17. Shepperton Studios creates positive “spillover” economic impacts on other sectors including merchandise, tourism and UK brand promotion. Shepperton Studios currently supports a 633 FTE jobs across the UK economy through the “spillover” effects associated with its operations. 18. Shepperton Studios currently contributes £17.3 million per annum to the Exchequer. 19. Shepperton Studios currently contributes £41.8 million per annum to UK exports. 20. The current economic benefits that Shepperton Studios creates are significant in their own right and support local and UK economic prosperity.
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