Nick Cohen has an excellent piece on the taxpayer rip-off which is the tax break to British film makers:

Between 1997 and 2005, the government piled the plate of the British film industry with billions of pounds of public funds. It was money which came from working-and middle-class taxpayers who didn't hire accountants but paid as they earned. It was money which might have been spent on schools, hospitals, the army or other fripperies.

Instead, a part did indeed go up the noses of Soho. More went down the drain. More still went up the wall. And further portions went to Premier League footballers, partners in City law and accountancy firms, Hollywood and the tax havens of the Cayman and Channel islands. What was left was spent on making movies.

The Treasury and the Inland Revenue are furious and have every right to be, although you would never guess it from the obsequious coverage the film industry has received from the broadsheets and Radio 4.

...How much public money has been frittered away since 1997 is anyone's guess. Michael Kuhn said that tax breaks were worth £5 billion in cash terms between 2003 and 2005, far more than the £323m the Film Council has taken from the lottery to give us such classics as Sex Lives of the Potato Men. But the Treasury and the Inland Revenue say the tax dodging was so ingenious they may never be able to find out how much has been lost.

Quite why anyone should be surprised is beyond me. Let's leave aside the whole issue of whether or not it should be the government's business to prop up the film industry (which, of course, it shouldn't). The real lesson here is a demonstration not so much of the law of unintended consequences - the most important of all laws of public policy - as the law of unforeseen consequences. Even if one grants the idea that the government should indeed take taxpayers' money and hand it over to film makers to subsidise their productions, the lesson of all such attempts is that the money will not do what it is intended to do.

This absurd waste of our money is as clear an example as there could be of the limits of New Labour's understanding the market and the proper use of taxation.

UPDATE: A reader has pointed out to me something equally unsurprising: that the LibDems are fervent in their support of these tax breaks:

Responding to the Government's decision to stamp out the tax relief offered to film investors in the UK, Don Foster MP, Liberal Democrat Spokesman for Culture, Media and Sport said:

"It's ludicrous to bring in tax legislation without a moment's notice. The Government proudly tells us they fully support UK film, and now they've stopped the show mid-reel.

"Last year Estelle Morris gave clear support to the tax break system. Now we're witnessing another Government U-turn on an industry in need of real support."

Who'd have believed it, eh?