Hertfordshire’s film and TV sector is in the pink with a Barbie boom, but one studio's chief has warned Jeremy Hunt’s Autumn Statement was a “missed opportunity” to ease its property tax burden.

After a government revaluation in 2023, the “rateable values” of Hertfordshire’s biggest film studios have shot up by as much as 372.4 per cent.

HM Treasury has promised to slash the taxes which audio-visual firms pay on their profits.

But studios still face paying high business rates and council chiefs fear having to issue refunds worth thousands of pounds to some of the world’s biggest production companies if they successfully challenge their new bills.

“The government has said it wants to bolster international investment and yet another part of the same government would be allowed to put up business rates by up to five times the current level,” Councillor Jeremy Newmark told the Local Democracy Reporting Service.

“It is the opposite of joined-up thinking.”

The Labour councillor, who is Elstree Film Studios’ chair and leader of Hertsmere Borough Council, added the studios' sector can “breathe a sigh of relief” following the Chancellor’s speech in Parliament, made on Wednesday, November 22.

Watford Observer: Elstree Studios in Borehamwood, Hertfordshire, which was the production base for The Crown and the original Star Wars.Elstree Studios in Borehamwood, Hertfordshire, which was the production base for The Crown and the original Star Wars. (Image: Will Durrant/LDRS)

Cllr Newmark said: “The whole statement in relation to studios is a mixed bag. The piece around tax relief and strengthening that is welcome.”

The Autumn Statement included a plan to “increase the generosity of the Audio-Visual Expenditure Credit” – a tax benefit for production firms.

The government has also amended a plan to cap tax relief on “connected party” profits – when companies sell services to one another.

Instead, film companies will have to declare these transactions and charge their connected parties at an arm’s length price.

“But it’s a missed opportunity,” Cllr Newmark added. “We are facing a double whammy. At Hertsmere, we are a collection authority, so we have to make suitable provision for business rate appeals, but on the other hand, the increase in rates has impacted on our council-owned Elstree Film Studios.”

Home of Barbie faces 359.3 per cent rate rise

Elstree, which was the original Star Wars production base and remains home to iconic TV shows including Strictly Come Dancing, has seen its rateable value rise from £635,000 to £3million, according to the Valuation Office Agency - a jump of 372.4 per cent between 2022/23 and 2023/24.

The new Platinum Studios at Elstree, which is a separate listing, faced a 195 per cent rise in its rate.

Warner Bros. Studios Leavesden, production base for Barbie, Harry Potter and the upcoming Wonka film starring Timothée Chalamet, faced a 359.3 per cent hike.

At BBC Elstree Centre, home of the long-running EastEnders soap, the rise stood at 210.3 per cent.

To ease the increase, the amount which businesses pay could not have risen by more than 30 per cent in 2023/24 because of a rule known as "transitional relief".

Watford Observer: Ryan Gosling and Margot Robbie attend the Barbie European Premiere in Leicester Square, London. Much of the filming took place at Warner Bros Studios Leavesden in Hertfordshire.Ryan Gosling and Margot Robbie attend the Barbie European Premiere in Leicester Square, London. Much of the filming took place at Warner Bros Studios Leavesden in Hertfordshire. (Image: PA)

Sky Studios Elstree opened its last sound stage in Borehamwood on March 9, 2023, and its valuation is £29.9m – which could put its business rate around the £15m mark. Sky analysts have previously called for business rates reform.

“A supportive business rates environment is imperative to ensure new studio space remains a viable investment – and indeed, so that existing studios can continue to be operational,” they wrote in their 2022 economic impact report.

“We specifically urge the Valuation Office Agency to rethink the ‘studio tax’, which will see British film and TV studios hit by potentially exponential increases in property tax bills.”

Companies can check, challenge or appeal their business rates bill, and could get a refund from their council if they have been overcharged. Between April 2017 and September 2022, there were 681,760 first-stage checks in England and firms were able to cut the rate they paid in almost a fifth of cases.

Jeremy Hunt: VFX needs government ‘generosity’

Conservative MP Mr Hunt said in the House of Commons: “Our choice is not big government, high spending and high tax, because we know that that leads to less growth, not more.

"Instead, we reduce debt, cut taxes and reward work. We deliver world-class education, we build domestic sustainable energy, and we back British business with 110 growth measures.”

The Chancellor added: “Our creative industries already support Europe’s largest film and TV sector. This year’s all-Californian blockbuster ‘Barbie’ was filmed in the constituency of my honourable friend the member for Watford [Dean Russell MP] where, of course, the sun always shines.

Even more could be invested in visual effects if we increased the generosity of the film and high-end TV tax credits, so I will today launch a call for evidence on how to make that happen.”

But the Liberal Democrat Mayor of Watford said the government must support councils to support growth.

“When I speak to people working in the film industry they often highlight the need to invest in infrastructure to support their growth, so that we have people with the right skills, better transport connections and good quality local services,” Peter Taylor said.

“This Autumn Statement was a missed opportunity and included almost nothing about investing in education, health or transport services.”

He added: “The film industry is very important to the economy in our region, so I welcome any government support for the sector.

Watford Observer: Warner Bros Studio Tour London is in Watford, Hertfordshire where, of course, the sun always shines.Warner Bros Studio Tour London is in Watford, Hertfordshire where, of course, the sun always shines. (Image: PA)

“However, this Autumn Statement felt very much like a desperate attempt to generate some good news stories ahead of a General Election, rather than a serious attempt to tackle the big challenges facing our country.”

Watford Borough Council must plug a £1.310m gap in its day-to-day services budget by the end of the financial year, which it plans to fill using “rainy day” funds known as reserves.

The Local Government Association has warned that across the local government space, councils in England and Wales face a funding black hole of around £4billion over the next two years.

“Councils are the largest public funder of culture, which make up the lifeblood of a local community,” an LGA spokesperson said.

“However, rising demand for statutory services – such as adult and children's social care [provided by county councils in areas like Hertfordshire] – and the extra costs to provide them means councils face a funding gap of almost £4bn over the next two years.

This is leaving even less funding for discretionary services, including cultural provision.

The government needs to come up with a plan to provide greater long-term funding certainty so they can help places to thrive and pass this certainty on to the grassroots cultural groups they work with and invest for the future.”