Two of Britain’s leading animators have warned that business will be leached away from this country because the industry cannot compete with generous tax breaks offered overseas.

Blue-zoo, the maker of Kerwhizz and the Bafta nominated Blue Cow, and Chapman Entertainment, which created Bob the Builder, yesterday told The Times that foreign animation companies are winning an increasing number of lucrative projects because the cost of operating in Britain is so much higher than abroad.

To date, the production of a number of animation brands such as Noddy, Muffin the Mule, Thomas the Tank Engine, Bob the Builder, Fireman Sam, the Mr Men, Pinky and Perky, Angelina Ballerina and Denis the Menace have been moved overseas because the cost of making them in the UK is so prohibitive, Blue-zoo claims.

Oli Hyatt, founder of Blue-zoo, said: “The tax breaks elsewhere in countries such as France, Ireland and Spain mean that it is becoming increasingly difficult to fight for new work.”

He added: “We need a level playing field. There is a real risk that the talent pool of animators in the UK will transfer abroad to follow the work.”

Mr Hyatt explained that there are no tax breaks in Britain to nurture the animation industry: “In Ireland, Dublin reimburses the company a sum equivalent to 28 per cent of an eligible project spend upfront — on the first day. We want to be able to compete with that, but it’s not a level playing field.”

Britain is a world leader in animation and represents one of the key creative industries that Gordon Brown is hoping will define the UK’s new digital economy.

More than 300 universities and colleges across the country offer specific courses in animation, that currently provide a wealth of talent in production, illustration, narration skills and software development.

According to the Department for Business, Innovation & Skills, the UK has more than 300 animation companies, providing employment for about 4,700 people throughout the country who specialise in short film animation, such as the Wallace & Gromit series, to the computer generated visual feature film effects showcased in the Harry Potter films.

Greg Lynn, Managing Director and Executive Producer of Chapman Entertainment, which also created Roary the Racing Car, said yesterday: “It’s not that Britain will be short of good animators, it’s that the work for animators in this country will be less and the courses will dwindle.”

He added: “This is a business full of very clever, skilled people and we are woefully unsupported by the Government. They should recognise homegrown talent.”

Tim Westcott at Screen Digest, the media analyst, said that it was difficult to value Britain’s animation industry — which is estimated to be worth $70 billion (£43 billion) globally — because revenue streams are derived from diverse sources such as licensing revenues, the advertising it attracts, and sales from merchandise.

Mr Hyatt, whose company is based in Great Portland Street, central London, said that animation projects are already being leached abroad. He cited statistics from Screen Digest which showed that at the beginning of 2004, about 84 per cent of all animated television shows for children were made in the UK, but that number had dropped to 28 per cent over the five-year period to 2009. Mr Hyatt said that he believed the number had since decreased further.

Mr Hyatt complained that in the Digital Britain report, published last week, there was scant reference to the animation industry, a sign which he interpreted as their lack of relevance to the Government.

Mr Hyatt explained: “The Government help would not have to come in the form of tax breaks, there were some suggestions of creating an animation fund where it would invest money that could be distributed across eight projects in the UK and take a small stake in each project that would then be repaid.”

The animated market

$70bn estimated value of the world’s animation market

£4.5m average budget to make one animated television series

1 number of times animation is mentioned in Digital Britain report

28% value of immediate refund of eligible spend paid to animation company by Irish Government Animated market

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