Good news: we're making movies. Bad news: they're all American

What the British film industry has to offer was perfectly showcased in one of its greatest recent successes. Four Weddings and a Funeral starred a handsome English hero - Hugh Grant - a host of quirky and talented supporting actors, a slew of gorgeous period locations and a great script wirtten by a former head boy of Harrow.

These qualities, theatrically trained actors and stunning settings, are part of the reason for the recent resurgence of the British film industry, gaining from the trend away from high-budget, high-action blockbusters. Pinewood is busier than it has been for 12 years. Channel 4 is making an unprecedented number of feature films; cinema attendances are the highest since 1984.

Audiences and film-makers have had their faith restored in the potential of the British movie after a string of recent critical and commercial successes : The Crying Game, The Madness of King George , Shallow Grave, Four Weddings, Trainspotting (out this week) and Sense and Sensibility.

Britain has long had great film-making talent. That was confirmed again yesterday when a string of British actors and film-makers were nominated for Oscars.

Among them, Emma Thompson won nominations for best actress and best adapted screenplay for Sense and Sensibility. Kate Winslet, her co-star, was nominated as best supporting actress. The animator Nick Park, the creator of Wallace and Gromit, was again nominated for best animated short film for A Close Shave. Sir Anthony Hopkins is in for best actor for Nixon, British director Michael Radford won three nominations for Il Postino (The Postman) and Mike Figgis was nominated for best director for Leaving Las Vegas.

Yet despite that roll call, Britain has failed to turn its bank of talent into an indigenous industry.

By coincidence, yesterday there was another development which suggested that, after several false dawns, all that might be about to change. Once again Britain appears on the verge of becoming a player in the global film business.

Yesterday Warner Brothers and MAI, the media group headed by Lord Hollick, announced they had teamed up to build a pounds 225m theme park and film studio complex in Hillingdon, west London. It is the largest investment in film production for decades; the first new film studio to be built in Britain since the Second World War. It is scheduled to open in 1999, and will employ perhaps 3,500 people, drawing on the skills of the film and television professionals who live and work close to Pinewood studios (currently working to capacity) and Shepperton (in the midst of renovation). Plans were recently announced for a new production complex, the Third Milennium Studios, on an old aerodrome in Hertfordshire.

Could these developments create an infrastructure of production facilities and skills that could create the base for a thriving new British industry?

There is no mistaking the confidence about the industry. "We have more feature films in production than than at any time in our history," says David Aukin, head of drama at Channel 4, and widely acclaimed in the film industry for being responsible for hits including Shallow Grave and The Madness of King George. "We have 20 feature films on the go, which is unprecedented. More money is available for British films because audiences go to see them: we have a huge reservoir of talent."

Certainly the figures are good. Cinema attendances have risen every year since 1984, from 54 million to 123.5 million in 1994 - the highest attendance since 1978. That year the UK boasted 1,969 cinema screens and 734 cinemas; sales of video films have rocketed from pounds 35m in 1983 to well over pounds 643m.

But all is not as rosy as it appears on the surface. Away from the smiles of Emma Thompson and the antics of Gromit and Grant, there are indications of the British industry's weakness.

To those in the know, the British film industry divides sharply in two. One half consists of the industry that provides the infrastructure - technicians, actors, locations, studios, a shared language, pleasant living conditions - to make American-financed movies in Britain. This industry is flourishing, with recent examples such as the Julia Roberts movie Mary Reilly, and Princess Caraboo. British production costs have fallen sharply in the last decade, as the accompanying graphs show.

The other half consists of the pure British film industry: movies that not only star British people and use British technicians, but are backed by British money. In other words, their profits go back to Britain, rather than America, Europe - Holland in the case of Four Weddings - or even Malaysia. These are not flourishing at all.

"That side of the industry is in a sorry state," remarks Sir Sydney Samuelson, the British Film Commissioner. "It takes a long, long time to get money together to make a film and pretty well every indigenous production is low budget. I think The Madness of King George cost pounds 5m. In US budget terms that's nothing - I believe the average is pounds 20m."

Wilf Stevenson, head of the British Film Institute, agrees. "We don't make cinema films. Our main bread and butter is TV films for the BBC and Channel 4."

For the truth is that while the British studios are flourishing, the films made in them, are almost all American. As a result, British talent almost invariably migrates to where the money is. It is our good fortune, that Nick Park and his crew, the internationally acclaimed animators of Wallace and Gromit, have so far resisted the allure of Hollywood.

The film industry is fond of blaming its poor state in large part upon the Government's reluctance to offer tax concessions similar to those available elsewhere. In Ireland film investors get generous tax concessions. In Britain, it takes three years to write off such an investment against tax. As a result, Britain has lost films to the Irish in recent years.

The only significant thing the Government has done for the industry in recent years is to give lottery money towards it. Last September the Arts Council gave pounds 300,000 to a pounds 4m blockbuster called Crimetime and a further five films ranging in size from feature movies to 15-minute shorts, a hand-out totalling pounds 2.3m. This year it hopes to spend closer to pounds 5m, but although welcome, it is a pretty paltry offering. The film industry, which wants tax concessions to match the Irish, is pining for a Labour government, which it believes, perhaps mistakenly, would be more ready to provide it with backing.

In the end there are two views of the future. For the traditionalists in the British film business it is important there should be a British financed and backed industry which owns the facilities and reaps the profits from the films. The same argument was deployed in other sectors, such as car manufacturing, which is now almost totally foreign owned. As yet there are no signs that foreign investment has weakened it. On the contrary, it is producing more cars than it did 20 years ago.

This model of a thriving but foreign-financed industry is a much more likely future. There would be an industry making films in Britain, employing thousands of people and with a growing world reputation but not necessarily a strong British film industry.

The British Oscars roll-call

1975 Barry Lyndon - Cinematography,

Art Direction/Set Decoration

Great - Best Animated Short

1976 Network - Best Actor

1977 Julia - Best Supporting Actress

1978 Death on the Nile - Best Costume Design

California Suite - Best Supporting Actress

1981 Chariots of Fire - Best Film,

Best Original Screenplay

Arthur - Best Supporting Actor

1982 Gandhi - Best Film, Best Director,

Cinematography, Editing,

Art Direction/Set Decoration, Costume Design

1984 The Killing Fields - Cinematography, Editing

1985 A Passage to India - Best Supporting Actress

1986 Room with a View - Best Adapted Screenplay,

Best Art Direction, Best Costume Design

Hannah and her Sisters - Best Supporting

Actor

1987 The Last Emperor - Best Film,

Original Score, Sound,

Costume Design

1988 Dangerous Liaisons - Best

Adapted Screenplay,

Art Direction

1989 Henry V - Best

Costume Design

My Left Foot - Best Actor

Driving Miss Daisy -

Best Actress

1990 Creature Comforts - Best

Animated Short

Reversal of Fortune - Best Actor

1991 Silence of the Lambs - Best

Actor

1992 The Crying Game - Best Original

Screenplay

Howard's End - Best Actress,

Best Adapted Screenplay,

Set Decoration

1993 The Wrong Trousers - Best

Animated Short