A levy was first proposed by Harold Wilson, then president of the Board of Trade, in 1949. The levy was intended to assist producers of British film. A direct governmental payment to British-based producers would have qualified as a subsidy under the terms of the General Agreement on Tariffs and Trade, and would have led to objections from American film producers. An indirect levy did not qualify as a subsidy, and so was a suitable way of providing additional funding for the UK film industry whilst avoiding criticism from abroad.
The Eady Levy came into effect on 9 September 1950 but was not established on a statutory basis until its incorporation in the Cinematograph Films Act 1957. It had the effect of both assisting the film industry, and reducing the effect of entertainment tax on film exhibition, to which all the cinema industry was opposed.
In the Eady Levy, a proportion of the ticket price was to be pooled – half to be retained by exhibitors (i.e. effectively a rebate on the tax) and half to be divided among qualifying 'British' films in proportion to UK box office revenue, with no obligation to invest in further production. The Finance Act 1950 had previously made the necessary changes in the entertainments tax. The levy was collected by HM Customs and Excise and administered by the British Film Fund Agency.
The rise in British cinema (including the James Bond movies) during the 1960s caused by an influx of American producers can be attributed to the Eady Levy – and also to the cheaper production facilities – making it cost far less in the UK to achieve the same quality of production. A number of American film makers worked in Britain in this period on a near-permanent basis, including Sidney Lumet, Stanley Donen, and John Huston. Stanley Kubrick moved to Britain in the early sixties to make Lolita, Dr. Strangelove, 2001: A Space Odyssey and A Clockwork Orange amongst others. Another expatriate American, Richard Lester, directed The Beatles' films A Hard Day's Night and Help!.
To qualify as a British film no less than 85 per cent of the film had to be shot in the United Kingdom or the Commonwealth, and only three non-British individual salaries could be excluded from the costs of the film, ensuring the employment of British actors, technicians and film crew.
It was not only American film makers who came; a number of distinguished European directors also made films in Britain. These included Roman Polanski, François Truffaut (who made Fahrenheit 451) and Jean-Luc Godard.
The Eady Levy also provided funding for the National Film and Television School, which trained a number of directors and actors still in work today.
The Eady Levy was a tax on box office receipts, and was intended to support UK film production. However, in a White Paper in 1984, the British Government recognised that the levy was no longer fulfilling its original purpose, with much of the payment going directly to distributors rather than producers, and proving an unreasonable burden on the exhibition sector. The Eady Levy was terminated in 1985.
- p.202 Mirisch, Walter I Thought We Were Making Movies, Not History Univ of Wisconsin Press, 27/02/2008
- UK Valuation Office Agency Operational Instructions
- Terra Media – Quotas and Levies
- Close Up – British Popular Cinema