UK Screen Alliance is the trade association that represents Visual Effects (VFX), TV & Film Studios, Post Production and Animation in the UK. It is the membership organisation for over 160 leading employers in this sector and its primary purpose is advocacy for its member companies and the wider screen industries.

UK Screen Alliance was formed in 2016 when two long-established organisations, the UK Screen Association, (founded in 2003) and Animation UK (founded in 2011) joined together to pursue mutually agreed goals on behalf of their members. These two constituencies have many common interests, such as workforce, skills development, business support, and the screen sector tax reliefs.

Scope of this submission of evidence

The UK Screen Alliance evidence, submitted here in this document, will concentrate on visual effects and post production and their contribution to the wider film and TV sector.

Animation UK, whilst an integral part of the UK Screen Alliance, operates as a separate brand and will make its own submission to this enquiry on the specific issues faced by animation and its contribution to the film and TV economy.

The Culture Media and Sport Committee have posed the following questions and below we indicate how these questions map to the evidence we have submitted in this document.

How attractive is the UK as a global destination for the production of film and high-end television?

What are the barriers to maintaining and increasing overseas investment in the sector? – We answer this in our section on VFX Tax Relief
What are the benefits and challenges of overseas investment for the UK’s film-making capacity? – We answer this in our section on VFX Tax Relief

What are the current challenges facing the UK’s independent film production sector?

What is the demand for and capacity for production of films with a clear British identity? – We are not offering evidence on this topic
Are the nations and regions of the UK adequately represented and supported in the production of British films? – We suggest an incentive to support VFX production in the regions and nations in our section on VFX Tax Relief

What more can be done to incentivise film and high-end television production in the UK?

Are the current funding routes, tax credits and governance for the industry fit for purpose? – We answer this in our section on VFX Tax Relief

What are the issues facing the UK’s film exhibition sector? – This is not in our remit, and we offer no evidence on this topic
What more can be done to protect and promote the UK’s screen heritage? – This is not in our remit, and we offer no evidence on this topic
What can the industry and Government do to ensure British film and high-end television can adapt for the future?

What should be prioritised to ensure a strong skills pipeline and retention in the film and high-end TV industry? – We answer this in our section on Access to Skilled Talent from Home and Abroad
What are the risks and benefits of artificial intelligence to the sector? – We answer this in our section on Artificial Intelligence
What needs to change to ensure the industry is supporting inclusivity and sustainability. – We answer this in our sections on diversity and sustainability

Introduction

Visual effects and post production companies in the UK turnover more than £1.3bn [1] and employ in excess of 12,000 people.[2]

Post production covers editing, colour grading, audio dubbing, picture finishing, and film processing, but by far the largest part of post production is visual effects, which very often is considered as a sector in its own right.

Visual Effects (VFX)[3] is the process where images from one or more live-action shots or CGI [4] elements are combined to produce a convincing composite shot. In some cases, the entire shot will be digitally generated. VFX is not just about creating digital fantasy creatures, spaceships, or apocryphal events. Less visible examples of VFX work include facial replacements for stunt doubles, digital aging or de-aging of cast members, and digital augmentation of the physical scenery, with skylines and buildings which fit the era in which the film is set. Film and HETV at every level now use VFX extensively. In a blockbuster film more than 80% of the film may be touched by VFX, making it the largest line item in the budget.

Within the £4.2bn of spending supported by the UK’s four film and TV tax incentives, VFX accounts for £363.5m (8.5%)[5]. In addition, there is £346.5m of spending on VFX for non-tax relief supported genres such as advertising [6]. In total VFX contributes £1.6bn in GVA to the economy each year [7].

VFX can be thought of as the R&D department of the film & TV industry, employing many technologists and software engineers, as well as artists, in the quest for an ever-increasing verisimilitude of digitally generated images, allowing audiences to suspend disbelief and become totally immersed in the story.

But VFX is about much more than just media and entertainment. There are many spin-off benefits from VFX techniques and innovation into other tech sectors, such as medical simulation, financial data 3D visualisation, and autonomous vehicles. The future of the internet will be based on immersive experiences and the creation of 3D visualisations will be at the heart of that. If the UK is serious about being a tech super-power, it should support VFX, so that the development of transferable high-tech skills can flourish, with the benefit of being funded by Hollywood dollars.

Summary of evidence

The UK has been very successful in attracting inward investment film and episodic TV production with a combination of tax relief, excellent crews, superb facilities, and iconic locations, but our evidence will demonstrate that while the tax reliefs have been effective in promoting growth for “filming” in the UK, they have been less effective for VFX. There is considerable unrealised potential which is being held back by unintended consequences of the structure of the tax reliefs which rather than attracting VFX work to the UK, very often drives it away. While HMT have promised to look at the case for further support for VFX later in 2023, there is now an urgency for the government to put the UK into a competitive position, ready to capture market share once the current actor’s strike in the USA is resolved, which has caused a hiatus in VFX work across the world.
UK Screen Alliance has made specific proposals to improve the UK’s tax incentive for VFX, which we believe would be self-funding and deliver over 3,000 new high tech, high productivity jobs, including 1,000 apprenticeships. Our proposals would deliver this growth across all regions and nations of the UK.
The UK’s education and skills system, rather than supporting the growth of home-grown talent for VFX, is actually at risk of undermining our skills pipeline. Government education policy of defunding existing level-3 qualifications in favour of T-Levels will impact some of the most successful 16-18 specialist education initiatives in our sector which are already delivering good outcomes.
There is insufficient strategic cooperation between universities and the VFX industry to ensure that teaching is kept up-to-date with current practices, let alone the rapidly developing area of AI. Closer collaboration is needed.
Since the end of free movement, our access to the best international skilled talent is being constricted by unaffordable visa costs, which is also contributing to skills shortages.
VFX and post production are considerably underserved by the voluntary industry training funds which are aimed at freelancers, whereas most people working in VFX and post production are employees of companies. There is a need for a new voluntary industry skills fund to specifically target the employees of VFX and post companies.

Context

The impact of the actors’ and writers’ strikes in USA

As we submit this evidence, the UK’s Film & TV sector, including VFX, has been heavily impacted by a sudden and severe slow down in demand, because of the actors’ and writers’ strikes in the USA, postponing or cancelling many productions. We have no control over this situation. The writer’s strike has been resolved but as yet we have no visibility of when the actor’s strike will be called off. The strikes are already causing or threatening significant temporary job losses in the UK’s VFX industry, along with a freeze on recruitment and investment.

It feels like Covid all over again, but this time without the support of furlough. A survey of UK Screen Alliance members in VFX has revealed the strong possibility of job losses reaching nearly 40% of the workforce. Job losses during Covid reached 23%.

As with Covid, the slowdown in VFX will be delayed compared to the current halt in filming, as companies finish current work in progress that was shot before the strikes. We would expect VFX work on productions that should have been shooting now, to be happening towards the end of 2023 and early in 2024. This is when the hole in order books will appear and when the worst of the job losses are likely to occur.

The impact of the strikes is global, and the UK’s competitors are equally badly affected, so it is important that when strong demand returns, as it surely will, that the UK is in the most competitive position to rebuild capacity and capture inward investment work for VFX especially, rather than being a destination of second choice due to uncompetitive incentives, which the UK is at risk of becoming.

VFX Tax Relief

The tax relief problem for VFX

When our tax reliefs were originally designed in 2007, the UK was bound by the EU Cinema Communication, which stipulated that tax relief should have a territorial cap. This was written into our Corporation Tax Act, such that productions receive 25% relief on their UK production expenditure, but once that spend exceeds 80% of their global budget, there is no further relief in the UK. The EU’s intention was to spread the work around member states, but in reality, it spread the work to other parts of the world, especially Canada.

Producers having shot in the UK and maximized our tax credit, will then seek further relief on the remaining 20% of their budget from other territories. Over a three-year period, on films and TV series which shot in the UK and claimed our tax credit, £1 billion of VFX was performed outside the UK. This has allowed those territories to build capacity and skills in the most technology-enabled part of the sector, whilst investment in the UK’s VFX industry has been stagnating.

Obviously, the UK is uncompetitive for VFX work if the cap binds, giving zero % relief, but even if a production has a substantial amount of foreign filming, such that there is still space below the 80% cap for UK based VFX work to be eligible, our rate of 25% cannot compete with rates of 35% to 50% available in territories such as Canada (Montréal and Vancouver), France and Australia. Removing the cap for VFX is an essential move but then we need to narrow the gap on the rate of incentive. It will not be necessary to beat the rates available in other territories, as the UK has other non-financial advantages that will then come back into play as a higher rate of UK relief puts us back into the window for competition.

Very often producers will say to UK VFX companies when replying to bids for work, “We love your creativity, your innovation and reliability. You have great people, and we love working in the UK, but we need the Canadian tax credit”.

The revisions to the UK’s screen sector incentives, due to be introduced in January 2024 when Audio Visual Expenditure Credits (AVEC) will replace the current system of corporation tax rebates, also have the same 80% cap structure, so the issue for VFX will persist.

The UK is exceptionally good at VFX, and companies based here have on numerous occasions won the VFX Oscar. Four of the world’s largest VFX companies were founded in the UK and are still headquartered here, but their recent investment has been overseas, especially in Canada (because of the tax incentive) and India (because of lower operating costs). The international expansion is not just limited to larger companies, in recent months several mid-sized UK VFX companies, rather than investing in the UK, have opened branches in France, Spain and Ireland, so that their clients can take advantage of tax incentives there. While investment in the UK has stagnated, over the last decade, the VFX industry in Montréal has grown by 1,500%. We are at risk of losing our position as a world leader in this area.

Both HMRC in their Creative Industry Tax Relief Evaluation [8] and HM Treasury in their Audio Visual Expenditure Credit consultation reply [9], have now recognised the problem for VFX in the UK with the 80% cap.

“There was a strong perception that the 80% cap on the reliefs – tax relief can only be claimed on 80% of the total budget – encourages the more portable aspects of production, such as visual effects (VFX), to move abroad. Inward investors in particular said this led them to routinely undertake their VFX work elsewhere, and this was considered to be disadvantaging the UK VFX industry.”
HMRC research report 684– Creative Industry Tax Reliefs Evaluation

Simply removing the 80% cap entirely would seem an obvious move, but as HMT hinted in the recent consultation, this could incentivise more than just VFX and would create deadweight. On productions with minimal VFX, this would unnecessarily give access to further incentives for filming work above the 80% cap, which may already be happening in the UK and thereby creating no additionality.

Our proposal for VFX tax relief

UK Screen Alliance’s proposal to reform the UK screen sector incentive is highly targeted, such that only the VFX spend would be immune from the cap, provided that at least 5% of a production’s budget is spent on VFX in the UK. There is also a big opportunity for levelling up, as 95% of VFX activity is currently in London. This is mostly due to historical precedent and there is no real reason why more work could not be done in the regions and nations. We propose that the net rates of relief for VFX should be 32% in Metro London and 37% outside of Metro London [10]. These would be competitive with the rates available internationally and provide a boost to the regions and nations.

Note that the introduction of Audio-Visual Expenditure Credits (AVEC) in January 2024, to replace our current system of screen sector tax rebates, will make the credits taxable at the main rate of Corporation Tax, so the headline rates of relief will need to be grossed-up to provide the same value. Therefore, our proposed equivalent AVEC rates for VFX are 43% in London and 49% outside of London.

Our proposal is not for a separate VFX tax credit. Instead, it would be a supplementary element of the new AVEC system and be subject to the generic measures such as the overall minimum UK spend requirement of 10% and qualification through the cultural tests or as an official co-production. Our proposal also has no impact on the attractiveness of the current incentives for filming and other non-VFX work, which remain unchanged.

We predict that this would attract £225 million in additional VFX spending, on top of the £370 million spend on VFX for film and HETV that currently exists. This will create £257 million in additional GVA [11] and 3,080 new jobs directly, and 4,380 when indirect and induced impacts are considered. VFX jobs are highly productive, generating £89,700 in GVA per head [12], well above the economy wide average of £66,100. Our proposal will be cost neutral to Treasury as the £97m cost of providing the incentive will be broadly offset by the tax receipts from the increased economic activity.

We have prepared a skills plan to underpin the expected growth, which pledges to create 1,000 apprenticeships, along with a commitment to inclusive recruitment, across all communities, social strata, and geographies of the UK.

The Secretary of State at DCMS, Lucy Frazer, has been supportive, and in a speech recently said she wanted to, “turbocharge growth and investment in sectors like…VFX”[13]. In the Creative Industries Sector Vision [14], published in June by DCMS, the text reiterates HMT’s statement from their AVEC consultation reply in March [15], saying , “the government is considering the case for further targeted support for visual effects work, and will provide an update on this later in the year”.

Currently as we submit this evidence, there has been no further statement by HMT regarding the nature of this support, or whether the UK Screen Alliance proposal is likely to be accepted. We await the Autumn Statement to see if it contains any relevant announcements. Decisions are being made now by film producers about where VFX work will be placed for the next two years. It is important that the UK is seen as a competitive destination for this work, otherwise our recovery from the current Hollywood strikes will be all the more difficult, so we urge HMT to clarify their intent.

Access to skilled talent from home and abroad

The UK Screen Alliance supplied information to the BFI Skills Survey in 2022. The Screen Sectors Skills Task Force was established in early 2023 to provide a response to the BFI Skills Survey and to set strategic direction for skills development across the screen sectors. Chaired by Georgia Brown, former Head of Amazon Studios Europe, the Task Force is a sector-wide collaboration, bringing together organisations from across the film and TV industries including broadcasters, platforms, production studios, screen agencies, membership bodies, unions and skills organisations. It will publish its report in November 2023.

UK Screen Alliance has been participating in the Task Force, but their report will concentrate mainly on physical production. A separate scoping study from the BFI is due to published imminently, covering the skills needs of digital production and will cover VFX, animation, post production, games and immersive.

Apprenticeships

96%[16] of the workforce within VFX and post-production companies are PAYE workers, either permanent or on fixed-term contracts. Therefore, the barriers to apprenticeships experienced in other parts of the creative industries, where freelance contracts are the norm, do not impact as heavily. VFX and post production companies made contributions to the apprenticeship levy that were estimated in 2022 to have been £1.4 million [17]. Despite this, in 2022 only £35,000 of levy funds were being utilised. Other factors have clearly been inhibiting take-up.

Since the introduction of apprenticeship standards in 2016, VFX employers have been closely engaged with the programme, and VFX standards were some of the earliest to be created. A standard for Post Production Technical Operators was also developed by employers and has successfully run for four years at London South Bank University.

VFX employers collaborate in apprentice recruitment, such that they fund a collective candidate assessment process and thereby ensure that viable cohorts can be established. This also connects with the industry supported pipeline from FE, offered by the NextGen Skills Academy. There were clear signs that these apprenticeships could bring much needed diversity to the workforce.

Employers were making steady progress in growing their apprentice intake prior to the pandemic, but the lack of production at the onset of Covid hit hard and caused 23% of the workforce in 2020 to be laid off, either through redundancy or through non-renewal of fixed term contracts. This completely halted recruitment and stalled the apprenticeship programme.

Once production restarted, there was a huge backlog of work and companies were busier than ever. The pandemic had required a switch to remote working, and this created problems for training of apprentices, since they were no longer working shoulder-to-shoulder with senior artists, so the natural osmosis of experience was not happening. The senior artists were themselves overwhelmed by the quantity of work and didn’t have spare time to manage apprentices. By September of 2022, 91% of the VFX workforce was either still working remotely, or working in a hybrid mode of two or three days per week on premises and the other days from home. Companies have since recognised the negative impact that remote and hybrid working has had on training and are striving to increase the number of days when workers are together in the office.

However, it is still proving difficult to regain the momentum of the apprenticeship programme, although this seems more feasible for the larger companies than it does for SMEs. Currently, the writers’ and actors’ strikes in the USA have severely dampened demand and again recruitment in some companies is frozen with redundancies looming. However, we are expecting a surge in demand for VFX around 3 to 6 months after the strikes end. This time we must ensure, after this hiatus, that that strategic recruitment and development of entry level staff is revitalised through the apprenticeship programme.

A complete suite of apprenticeship standards is already available in England for VFX and post-production, and the number of starts can be scaled-up. These apprenticeships range from Level-4 to Level-7. We do not need to create more apprenticeship standards, although they will need to be kept under frequent review to ensure that they are fit for purpose and keep pace with rapidly changing technologies like generative AI and virtual production. The IfATE process for approving and reviewing the content of standards needs to be made quicker and less arduous for employers.

Scaling-up the number of apprenticeship starts would be easier, if there were funding available to support posts within companies, to manage larger cohorts of apprentices. This would take the strain away from senior artists, who often do not have sufficient time to manage apprentices. These apprentice cohort managers would manage the complex sequencing of on-the-job experience with the formal training from external providers, to build a coherent training narrative. They would also provide the necessary pastoral support for entry-level workers. Currently it is not possible to use apprenticeship levy funds to cover apprenticeship administration costs within employers. Ideally the apprenticeship funding rules should be changed to allow this, or if not, an alternative funding stream is needed.

If the VFX industry receives a favourable increase in tax incentive, which attracts inward investment and boosts job numbers as outlined earlier, it will commit to creating 1,000 apprenticeships across the UK. These apprenticeships will be a mix at entry level, of junior creatives, production coordinators, junior technical support, and administrational jobs, plus some degree and masters level apprenticeships for CPD.

Voluntary industry training funds for VFX and Post Production

There are five industry training funds in the film and TV sector. They are the Film Skills Fund, the High-End TV Skills Fund, the Unscripted TV Skills Fund, the Children’s TV Skills Fund, and the Animation Skills Fund. They are all funded by contributions from industry and are managed by ScreenSkills. All the funds, except for the Unscripted TV fund, cover the areas that are supported by screen sector tax incentives, and although there is no obligation in law for recipients of the tax incentives to contribute to the relevant skills fund, there was a clear understanding between government and industry, that those benefiting from the tax incentives should make contributions, although they are voluntary.

The production companies making the contributions to these funds have set rules that their funds should either primarily or exclusively be for the benefit of freelancers, which is the dominant mode of employment in Film and TV production. However, two thirds of the workforce in post production and VFX are working in companies, and these are overwhelmingly staff posts on PAYE, either on permanent or fixed term contracts. It is mostly editors who make up the other third and they are routinely contracted directly to the production company as freelancers. Post production and VFX companies are therefore mostly excluded from access to the industry funds for the development of their employees, despite them being good training grounds for future freelancers.

During 2022, when the post-Covid surge in business was at its peak, production companies were regularly enticing staff away from post production and VFX companies to go freelance, with long-term offers of work on projects. This was particularly evident in edit assistant and production coordinator roles. The training of those who “jumped the fence” to client-side work showed the value producers perceive in the skills developed within these people, whose training had been funded entirely by post production and VFX companies, with minimal subsidy from the industry funds.

In 2023, the High-End TV Skills Fund will distribute approximately £10m. From that there is a £300k allocation for post production and VFX, but only 20% of that allocation (i.e., £60k) is allowed to be spent in companies, on the basis that short term contract workers will consider themselves to be freelance, even though they are being paid as PAYE employees. To date, there has been no formal allocation for VFX and post production from the Film Skills Fund.

VFX and post production are essential parts of the production process for film and TV, yet they are not being properly supported through the voluntary industry funds. £60k is nowhere near enough to create impactful skills development programmes across 12,000 employees.

Arguments have been made by the HETV Fund, that while post production and VFX companies do not contribute to the funds, they should not expect to receive training money from them. However, there would be little point in passing money to a fund, only to receive it back minus an administration fee, and it is not the post production or VFX companies who claim the screen tax incentives; it is the production companies. The HETV fund also argues that supply chain companies should be capable of funding and organising their own training. While this would be desirable, the reality is that any spending on training within a company, needs to come out of turnover from clients. Post production and VFX have very tight margins in a competitive sector. Producers want to see their money spent on the screen, so contributions to overheads, such as training, are often squeezed by the bidding process for work. In recent months, increases in other essential overheads such as energy costs have far exceeded most companies’ training budgets. Spend on training is often reduced or cut, as the immediate need to balance expenditure against income becomes critical.

While ScreenSkills administer the existing industry training funds, they do so on behalf of the producers who make contributions to these funds. It is the producers and content owners who set the rules on how the funds can be used, and as their primary experience of workforce is dealing with their own freelance crews, they have mostly disregarded the training issues of their supply chain companies, such as post production and VFX.

Proposal for a new Post Production and VFX skills fund

UK Screen Alliance sees the need for a new voluntary industry fund to be set up to cover training in post production and VFX companies, as it is being neglected by the other genre-specific funds which target freelancers specifically. The fund should seek contributions from those who ultimately benefit from the tax incentives and who make long-term profits from owning and exploiting the intellectual property created.

As with the other funds there should be an obligation, preferably voluntary and not mandated in law, to contribute to this fund if you are in receipt of UK screen sector tax incentives. This would especially be the case if specific VFX tax relief were to be introduced, although the setting up of a post production and VFX skills fund should not be conditional on this, as there is a current and ongoing need.

While VFX and post production can make use of the apprenticeship levy to train employees, there are many other scenarios for skills investment where alternatives to apprenticeships are more appropriate or practical. Without effective access to a voluntary industry fund, areas such as CPD or outreach to schools will be much more difficult to finance. This would leave significant gaps in what ought to be a comprehensive joined-up strategy, which supports skills pipeline development at all career stages.

The proposed new fund would be cross-genre and would be to support the training of company employees in post production and VFX. There is efficiency and value in coordinating this training across companies for the benefit of the sector and particularly for SMEs.

Higher Education and Degree Apprenticeships

More than 79% of people working in VFX or post production have at least a graduate degree, and 29% in VFX have a post-graduate qualification [18]. It’s a highly educated workforce, although a degree is not always necessary to succeed, as shown by our apprenticeship programmes. People get employed based on their ability and strength of their portfolio, and not on the level of their qualification. However, we do need to increase the quality and work readiness of UK graduates; a regular complaint of employers. 62% of UK VFX and animation workers are alumni of just 10 good UK universities [19], even though there are more than 80 HE institutions offering over 330 relevant courses [20].

The rapid rise of Artificial Intelligence (AI) and Virtual Production (VP) will mean that all education and training organisations, will need to be much more agile in curriculum development, to avoid teaching obsolete techniques for potentially redundant jobs, and to ensure that current and future practice is reflected in their courses. More strategic cooperation between employers and universities is needed at an industry-wide level, rather than relying on casual one-to-one networking between a few employers and a few course leaders.

UK Screen Alliance proposes to open its membership to relevant university courses, so that a strategic approach to cooperation between universities and employers can be encouraged through regular online forums and a new national annual symposium.

European universities and film schools are often cited by employers as producing more work-ready graduates than UK universities, mainly because of longer course durations. These alumni require minimal on-the-job training before they can slot into teams and work at the high standards required. However, the ending of free movement means that visas are now required, making it significantly less attractive to recruit entry-level talent from the EU, despite their good quality. We must learn from the methods and curriculum structures of European courses and replicate them in the UK.

As yet, degree apprenticeships have had no impact in VFX, even though a level 6 apprenticeship standard for VFX Technical Directors has been created by employers. This was designed as an 18-month top-up to a 2-year Level-5 university course and would deliver much-needed work experience as a key element of the learning. This should counter employers concerns that current UK graduates are not work ready. To date, no universities have offered this combination, and we encourage them to explore this possibility.

16-18 Education in Colleges and Schools (Level-3)

The Next Gen Skills Academy

To underpin the apprenticeship and graduate intakes, the VFX industry has made considerable investments over the last decade in its post-16 skills pipeline. The skills used in the VFX industry have a high degree of transferability with the video games and animation sectors and this allows a common approach to vocational level-3 education.

The NextGen Skills Academy was created in 2014 by a group of forward-thinking employers who were critical of the quality and relevance of many creative and digital media courses in HE and FE, which lacked the right combination of industry practice and essential skills such as maths, programming, and art. Together with AIM Qualifications, these employers created a publicly funded Level-3 Extended Diploma in Games Animation and Visual Effects Skills [21]. The NextGen Skills Academy was set up to provide affiliated FE colleges with a package of industry support for their teaching of this course. It is a prime example of employers taking the initiative and investing in the development of their future talent. In many ways it was a fore-runner of a T-Level, albeit with exemplary levels of employer engagement instead of employer placements.

Currently there are 650 students enrolled on the NextGen/AIM course in 15 FE colleges across England. Recent expansion includes a new cohort of 120 learners across 3 FE colleges in Northern Ireland, where the NextGen/AIM course has been identified by Northern Ireland Screen as a key element in enabling growth for screen industries in their region. We seek to work with the devolved administrations in Wales and Scotland to see if the qualification can be funded for delivery in colleges there.

The NextGen/AIM course supports progression to successful outcomes. 67% of alumni go on to Higher Education, where 93% study Games, Animation or VFX degrees. 13% progress directly into work or higher apprenticeships, and this percentage would definitely increase if there were more apprenticeship places available. Almost half of the successful applicants for VFX apprenticeships are NextGen alumni.

T-Levels and Level-3 funding policy

Currently the NextGen/AIM course is at serious risk of defunding by DfE, in their programme to simplify the Level 3 landscape and clear away any competition to T Levels. As NextGen/AIM is neither a T-Level nor an A-Level, its funding in England will cease in September 2026, unless it can navigate a tightrope to become one of the very few allowed exemptions. It cannot be converted to a T-Level, as they are built on level-3 occupational standards. There are no level-3 occupational standards in VFX, or animation, as the entry-level jobs require level-4 skills. While level-4 occupational standards do exist, mapping their content into T-Levels was not allowed by IfATE. To create level-3 occupational standards for VFX would require inventing job specifications for jobs that don’t exist, have never existed, and certainly won’t exist by 2026 when AI will be performing entry-level tasks. Creating and publishing occupational standards for “phantom” roles would also compromise the integrity of IfATE’s Occupational Maps [22], causing confusion for students, careers advisors and training providers about progression routes into the industry.

It is not at all clear if DfE would accept the NextGen/AIM course for future funding if it were to be converted to a large AAQ (Alternative Academic Qualification worth 3 A-levels), even though it meets the necessary criteria of being high-quality, employer-supported and leading to good outcomes.

In the context of Rishi Sunak’s speech on 17th April 2023, on the importance of maths teaching to 18 [23], a course that embodies the precise principles that he was espousing, should not have to find itself fighting for its existence. The PM even said in that speech, “you cannot make VFX without vectors and matrices”. To say that the NextGen/AIM course is the cornerstone of our skills pipeline is an understatement. To lose it would set us back years, at a time when we are poised to grow the economy and create highly-skilled and highly-productive jobs throughout the UK.

There is some post production content in the new Media Broadcast and Production (MBP) T-Level, but we are concerned that DfE are pursuing a highly dangerous strategy in defunding existing level-3 qualifications to clear the way for T-Levels before they have proven themselves. The introduction of Creative and Design route T-Levels, including MBP was due in September 2023, but they have been delayed by one year by the Secretary of State for Education, citing concerns that the content was not ready or of sufficient quality. There has subsequently been a change of awarding body from NCFE to Pearson. By August 2023, Pearson had yet to engage fully with industry, and need to finalise the content by January 2024 for delivery in September. This amount of time seems insufficient to make a significant improvement in the content.

The Secretary of State for Education, when delaying the MBP T-Level, did not also take the opportunity to delay the defunding of existing alternative qualifications, leaving only one cycle of dual-running. Given that it is a two-year course, it will not be possible to evaluate the effectiveness of the inaugural MBP T-Level by its final course exams in 2026, by which time alternative provision will already have been switched off. This is unnecessarily risky and the DfE has not given itself a safety net should things go wrong. If there are major problems with T-Levels, and clearly there are concerns over quality, and precedents with T-Levels that have already been introduced, there is a likely scenario where we are left with no viable vocational qualifications; a disaster for both industry and learners. We are not alone with these concerns. Both the Education Select Committee [24] and Ofsted [25] have expressed serious reservations about the Level-3 defunding process and the readiness of T-Levels.

We are not opposed to T-Levels and recognise reform is required to simplify a complex landscape of qualifications. We agree with the fundamental principle of T-Levels, that learners will benefit from receiving real-world meaningful work experience with employers in their chosen profession, although this has significant challenges for execution in the way it is currently being implemented. There are factors in the screen industries which make this especially difficult with the prevalence of project-based working.

The capacity for T-Levels will be limited by the number of employers willing and able to offer nine-week work placements. Within many cities, there may be enough screen sector employers to achieve this, but we still need more flexibility in the way placements can be delivered to ensure it. However, in areas where there are few screen sector companies for providers to partner with, the T-Level for Media, Broadcast and Production is unlikely to be offered, with no possible alternative if existing level-3 courses, which don’t require placements, are scrapped. Options for learners with a keen interest in joining the screen sector from the more rural areas of England will therefore be non-existent.

This geographical inequity of T-Levels will not be confined to the creative industries. The T-Levels available in a particular locale will, by design, be a function of the mix of industrial sectors indigenous to that region. Rather than seeding an area with the new skills required by emerging sectors, like VFX, and thereby attracting new companies and investment to an area, T-Levels are likely to perpetuate the existing local skillset, even if that is in economic sectors that are fading or have low productivity. The need to maintain some alternative qualifications which don’t require placements is really important to give flexibility in delivery options.

The rigid centralised curriculum of T-Levels leaves little scope to be agile in the face of rapid technological change or to respond to local needs. The written exams of T-Levels are not optimal in a sector where people will be assessed by their practical capability rather than their ability to write about the topic.

Many people in the creative industries are neurodiverse, as the ability to think differently often manifests itself in creativity. Such people tend to not perform well in written exams and may not achieve their potential by studying a T-Level, or may be discouraged from applying for the course in the first place. Some alternative qualifications to T Levels should be maintained to give flexibility in assessment methods that are more inclusive of the needs of neurodiverse people.

Quality of teaching provision for vocational skills

In all parts of the education system, there is a severe lack of teaching staff with the right level of current experience in film and TV. It is quite possible that a T-Level student returning from their compulsory nine-week industry placement, would have infinitely more real-world experience of working in the creative industries than their school teacher or college tutor, who may have none. Whilst some of this issue is exacerbated by poor retention of teaching staff, there is also a lack of CPD for tutors in vocational subjects.

Informal enquiries made by UK Screen Alliance indicate that companies in VFX and post production would be prepared to host tutor work experience placements. The constraining issue though is the willingness of colleges and schools to release tutors for placements, as there are backfill costs to cover the teaching post whilst the tutor is on a placement. Funding needs to be found or allocated for this purpose. The scheme could be further developed into a bi-directional exchange programme allowing experienced industry practitioners to work temporarily in education.

Immigration and Visas

As well as developing home-grown talent, the UK VFX industry seeks to attract the best experienced and emerging artists from around the world. The UK’s VFX workforce is highly cosmopolitan, with skilled workers from over 80 countries. 60% are UK citizens, 25% have EU Settled Status and 15% are from the rest of the world.

The Skilled Worker route (formerly Tier 2 General) has been used regularly by VFX companies to bring highly skilled talent to the UK. Recently announced increases in the cost of visa applications and an increase to the NHS immigration surcharge to £1,035 from £624 per year, have made the cost of employing internationally recognised VFX artists in the UK prohibitive. The outlay for visas and associated costs to relocate to the UK an experienced VFX artist, their partner and two children, amounts to £30,000 for 5-years, much of which is payable up-front, plus additional costs thereafter to convert to Indefinite Leave to Remain.

Currently almost all the key roles in VFX are on the Shortage Occupation List (SOL). VFX workers are not just in shortage in the UK; shortages exist across the world. The Migration Advisory Committee (MAC) have been reviewing the SOL and have recently announced their recommendations, which includes removing several VFX roles because the going rate salary is above the minimum general threshold for qualifying for a visa, making the advantage of being on the SOL marginal in this case.

However, the Skilled Worker visa is not the only part of the visa system that uses the SOL. Since Brexit, we have seen VFX companies make greater use of the Creative Worker visa to access EU skilled workers, to cover short term peaks in demand, as there are insufficient experienced workers available in the UK. Prior to leaving the EU in January 2021, there was almost no use of the Tier 5 (Creative) visa by VFX companies. Now, its replacement, the temporary Creative Worker Visa accounts for 6% of visas used by VFX workers, mostly from the EU. Applications for the Creative Worker visa are less administratively burdensome for roles that are on the SOL, as sponsors are exempt from having to show that the work could not be carried out by a settled worker. Now that MAC have recommended removing some VFX roles from the SOL, having to provide this evidence for Creative Worker temporary visas on a case-by-case basis would be time-consuming for sponsors and slow their agility to respond to short-term peaks in labour demand; potentially losing work in the process. We welcome MACs recommendation to remove the SOL exemption in the Creative Worker route and to allow any role that is eligible for the Skilled Worker route without the need for a labour market test. We note that MAC have recommended a minimum salary requirement for the Creative Worker Visa and request that they consult industry for evidence on the level at which it should be set.

The impact of Artificial Intelligence

Artificial Intelligence (AI) has become the hot topic of 2023, although machine learning (ML) a component of AI, has been in use for some time in VFX, and extensive R&D into its use is being undertaken by VFX companies.

We share the concerns of many in the creative industries about the indiscriminate scraping by AI engines of the internet for text, images and other copyright intellectual property without permission, compensation, or attribution. Unchecked by regulation, it will impact the viability of many creative occupations. The writer’s and actor’s strikes in the film and TV industry this year have been partly triggered by these issues.

There is legitimate concern about the re-use as AI training data without appropriate permissions, of previous performances and facial or full-body scans of actors. The process of creating digital performances from such data is complex, time consuming and currently expensive, but examples such as the de-aging by 40 years of Harrison Ford for the opening scenes in Indiana Jones: Dial of Destiny, or the use of convincing digital stunt doubles, give glimpses of what might be routinely achieved in future, although it is unlikely that it will be a viable technique to replace the entire cast with AI clones in the near term. However, AI generation of large background crowds has been in use for some time.

It is worth remembering the adage coined by the futurist Roy Amara [26], who said, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

Research firm, Gartner describes the adoption curve of new technologies using their Hype Cycle [27]. It describes five phases stemming from the Technology Trigger, leading to the Peak of Inflated Expectations, followed by the Trough of Disillusionment. Eventually there is the Slope of Enlightenment and finally the Plateau of Productivity. With AI, we are definitely in stage 2, the Peak of Expectations, where there are many unrealistic projections both in terms of its capability and the perceived risks that may stem from that. Although now is the right time to take measures and introduce regulation to limit the possibility for negative impacts from AI.

We may already be moving to stage three, the Trough of Disillusionment, as people discover the limitations of the current generation of AI technology. It is not infallible; it makes mistakes, it invents “facts”, and develops biases.

In counterpart to those risks and teething troubles, there is already considerable opportunity to use AI to augment creativity, increase efficiency and create new jobs. It’s ability to serendipitously juxtapose ideas quickly to give a range of new options, allows blue-skies creators to collaborate quickly with their clients towards an innovative solution. But this still requires human intervention to prompt the ideas and then select the most promising output that fits the brief. It allows unpromising ideas to fail quickly, to be eliminated from consideration before too much time is spent on developing them, and thereby allows artists to be more efficient. It invariably requires a human artist to then manually develop and fine tune the best ideas, but the use of AI means they can start to use their creative skills on productive output more quickly.

We are now seeing AI driven applications such as NVIDIA’s GauGAN [28] which can create photorealistic landscapes from simple drawings. Adobe’s Photoshop can already use generative AI to remove objects from still images and replace them with plausible backgrounds [29]. This can also be used to extend backgrounds beyond the original canvas with material that is entirely invented by AI. Recently previewed beta software from Adobe shows how these capabilities will soon be implemented for moving images. A machine learning methodology called Neural Radiance Fields (NeRF) allows 2D images, say from iPhone photos, to be transformed into objects in 3D digital environments, saving many days of traditional 3D modeling techniques. Morphing of mouth shapes by AI to match the lip-sync of audio dubbed into other languages may open new international markets for the cost-effective distribution of content. The transcribing, translating and contextual visual logging of substantial amounts of original material by AI, will aid the documentary filmmaking process, and the same techniques will assist moving image archivists in the cataloguing and retrieval of library footage.

There is no doubt that AI will have a profound effect on VFX and post production in years to come. Job roles will change, but the use of AI will deliver many new techniques in digital imagery which were until now too time consuming, too costly, or simply impossible. This will expand creative boundaries as well as making AI enhanced methods for image creation available to a wider range of film and TV output.

Preparatory tasks in VFX, such as rotoscoping [30] or match-move tracking [31] are more functional than creative. These jobs have been traditionally the first stepping-stones to a career in VFX, but they are prime candidates for replacement by AI within the next two years. Over the last decade many of these preparatory tasks were offshored to India for cost reasons, and this will lessen the impact on the UK’s entry level jobs as they transition to AI. As we have already found in the UK, the new entry level jobs are now a step higher in terms of creative skill than they used to be. UK universities have been slow to react to this trend with the development of their curricula. It will be vital that they become more agile to ensure they are teaching the required skills for the future, and not developing students for jobs that are already, or soon to be, redundant. Overall, the size of the workforce is likely to remain similar to what it is now, but skill level, productivity and job satisfaction will increase, as will the scope of productions that will be able to use these creative artists. We should not fear properly regulated AI, but any threat to job security will be felt most acutely by those that fail to adapt and embrace it.

Diversity and Inclusion

Digital VFX began to develop in the late 80s and early 90s and was a deeply technical discipline, but it really started to take off in the mid 90s. Therefore, VFX is barely 30 years old, and the early pioneers were almost exclusively white and male. This is still evident in the gender split and ethnicity percentages at the most senior levels in VFX. The lack of women is an embedded problem, as 25 years ago there were very few entering the industry and therefore, they have not progressed through the ranks in significant numbers. However, there are some highly successful women now running VFX companies.

In the last 15 years, there has been a conscious effort to diversify the intake of new recruits, and this has achieved some success. The UK Screen Alliance workforce survey from 2022, showed that women make up 32% of the VFX and post-production workforce. However, our survey showed that for VFX, in the 1st and 2nd pay quartiles, women now make up around 45% of the workforce. This falls to 30% in the 3rd quartile and 19% in the 4th. Over the next few years, we expect the number of women to reach parity in the lower quartiles, as recruitment becomes fully balanced, and for the percentage in the higher quartiles to increase, as the women who entered the industry in recent years progress to more senior roles.

We are particularly keen to attract more women to creative artist roles, as currently they only make up 23% of the VFX workforce in that department. This is balanced by women making up 66% of production management roles.

We are already taking steps to avoid losing women from the industry as a result of parental breaks in their careers, by providing returnships and flexible working.

Our workforce survey in 2022 also showed that 20% of the workforce were people of colour and this is in line with the BFI’s target for ethnicity representation, and slightly exceeds the 19.3% of people of colour in the working age population recorded by the UK Census 2021. The percentage of people of colour working in post production was 10% and this needs to increase, although our survey did not cover the freelance workforce in post production.

In 2019, our survey into inclusion and diversity in VFX, animation and post production [32] included an analysis of disability. The percentage reporting a disability was 12%, which is below the UK average of 17% for working age people.

2% of workers identified as having a physical disability (e.g., sensory or mobility impairment) and a further 1% identified with both physical and neurological conditions. 9% of the workforce identified as having at least one neurological condition, with Dyslexia being the most common (6.5%) followed by ADHD (2.2%), OCD (1.5%) and Autism (1.3%). It should not be surprising to find a relatively high percentage of neurodiversity in a creative industry sector, where the ability to think differently or to be attentive to minute detail is often an advantage.

UK Screen Alliance are currently performing a deeper analysis of diversity, equity, and inclusion in the post production, VFX and animation sectors and we expect to publish the results of this survey in November 2023. This should give us greater insights as a foundation for further action.

UK Screen Alliance is a founder member of the not-for-profit organisation Access:VFX, which champions all aspects of inclusion and diversity in VFX, animation and games. Their activities include careers advice for schools and entry level graduates, as well a successful online mentoring service.

Rise: Women in Broadcast has been particularly active in developing mentoring for women in post production and broadcast technology. They also run Rise Academy; a regular series of pop-up events and summer schools to introduce school age children to TV and Film production technology.

UK Screen Alliance welcomes the inception of CIISA [33] as an independent body to uphold and improve standards of behaviour in the creative industries. Research in 2022 by the Film & TV Charity [34] showed that 80% of respondents from film & TV sensed a positive change in culture and behaviours since the previous survey in 2020; however, 46% had experienced bullying, harassment, or discrimination in 2022. These figures are for the whole industry and the 2022 report does not contain sub sectoral break downs, but their initial report from 2019 showed that the instances of bullying and harassment were fewer in VFX and post production, than in production and development. This may be because the larger post production and VFX houses employ HR specialists and have developed behaviour at work programmes as part of their induction training. Contracts in VFX and post production are often for a longer period of time or permanent, rather than short term freelance working which may allow patterns of unacceptable behaviour to go undetected.

Sustainability

Unlike many parts of film and TV, visual effects and post production do not use large amounts of consumable materials, such as those found in set building. There is also a lower amount of work-related travel than you find in physical production, apart from regular commuting to the workplace. As most post production and VFX companies are based in cities, there is usually good access to public transport and as parking space is at a premium, car use is limited. Many companies promote cycle to work schemes or provide secure storage for bicycles.

The major carbon impact is through the electricity used by large numbers of workstations, servers, data storage clusters and associated air conditioning. Much of this infrastructure is now being relocated to the “cloud” or private data centres. Technology providers have sought to reduce costs as well as their carbon footprint by developing energy-efficient processing and storage devices, VFX and post production companies are switching to green energy as part of their CSR policies, and some are also achieving B-Corp status. It is commonplace for production companies to require an assessment of their suppliers’ carbon footprint as part of the contracting process.

Developments in Virtual Production using VFX techniques to create digital images projected onto very large high-quality OLED displays, can be used as dynamic scenery behind live action when filming in a studio. This reduces the need to travel to locations with large crews, thereby reducing carbon footprint. Using VFX to replace physical scenery also reduces the use of non-recyclable construction materials. The OLED displays which can be very bright, do consume a significant amount of electricity, but this is still a reduction compared to the use of high wattage lighting that was commonplace a few years ago.

Another aspect of virtual production is virtual scouting, where digital models of locations can be built using VFX techniques, allowing senior crew members from all the various departments such as camera, lighting, and production design to reconnoitrer and plan using virtual reality headsets without the need to travel to a location prior to actually shooting; thereby reducing carbon footprint.

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[2] ONS BRES SIC 5912 shows 11,400 employees, but UK Screen Alliance has determined that 2 large companies and several smaller companies are misclassified as 5911.

[3] VFX is often confused with Special Effects or SFX, which are physical effects that happen on set in front of the camera. Examples include fog, smoke, rain, wind, real explosions, special props, animatronics, prosthetics, and miniature sets. VFX on the other hand is all performed digitally in computers.

[4] CGI – Computer Generated Imagery. CGI and VFX are often incorrectly used as interchangeable terms. CGI is a subset of VFX which refers to digital creation of 2D or 3D assets for inclusion in the final shot. VFX also includes 2D compositing of picture elements to complete the final shot, and those elements could have been produced entirely in-camera and may not include CGI at all, but nonetheless are digitally combined using computers.

[10] ITL1 statistical regions do not align well with the geography of existing film and TV production clusters. For a more precise definition of area of influence of the capital, BFI used the term Metro London in its 2021 Screen Business Report. Metro London comprises the London Boroughs, plus Hertfordshire, Buckinghamshire, and Surrey.

[11] Estimates calculated using the same HM Treasury approved methodology utilised by the BFI Screen Business Report 2021.

[17] UK Screen Alliance data that was collected for the Screen Sector Task Force survey into skills investment.

[18] Inclusion and Diversity in UK Visual Effects, Animation and Post Production – UK Screen Alliance report, p 34

[20] Research commissioned by UK Screen Alliance using data from university and UCAS websites.