FILM IS A visual medium. The maxim is “show, don’t tell”. Nothing demonstrates more the contrasting fortunes of the Irish property and film industries than the fate of Clancy Quays in Islandbridge, Dublin.

Built in one of the prime locations in the city, within walking distance of the Irish National War Memorial Gardens, the Liffey and Heuston station, this €600 million development, where one-bedroom flats were going off-plans for €370,000, is not what it was supposed to be.

The hoardings outside feature beautiful people and the buzzwords of the Celtic Tiger – “lifestyle”, “leisure”, “desire” and “shops”.

The reality is entirely different. Not a single one of the shops or outlets to fulfil this aspirational lifestyle has been built and nearly all the apartments are being let out by the developer because they cannot be sold.

Behind the hoardings, though, in a secluded part of the old Victorian Clancy barracks saved from the bulldozer, Ripper Street, one of the BBC’s premier dramas, is being made.

To casual passers-by, there is no evidence that the fogbound streets of 19th century Whitechapel in east London are being recreated on a deserted Dublin square.

While so many sectors of the economy have crashed since the recession struck in 2008, the Irish audio-visual sector has continued to thrive. In 2007, total expenditure on the Irish film and television industry was €182 million; in 2010, the last year for which figures are available, it was €358 million and 2011 will show a figure in excess of that.

The doubling in the size of the industry is coming not from domestic productions but from overseas ones, and the big driver is television drama. Spending on television drama in Ireland was €241 million in 2010, more than twice that of film. Camelot and The Tudors, in particular, have been huge successes.

Ripper Street is one of three major BBC dramas being filmed in Dublin this year.

Together with Vexed and Loving Miss Hatto, it will be worth €13 million to the Irish economy; that’s €13 million of British licence-fee payers’ money being spent in Ireland on British dramas. ITV is making Thirteen Steps Down, a two-part dramatisation of Ruth Rendell’s novel, following on from the relocation of its successful drama Primeval to Ireland in 2009.

These dramas are not here for the craic, the locations, the warm and friendly people, the world-class film crews or the Guinness; they are here primarily, if not exclusively, for the tax breaks.

The Government’s decision to retain section 481 tax breaks for television productions as well as film has proved to be of critical strategic importance in attracting British television drama to Ireland.

Television dramas can recover 22 per cent of the costs of their spend in Ireland (28 per cent of 80 per cent of total spend) through section 481, which allows the dwindling number of high-worth individuals to write off a portion of their tax by funding television and film projects.

This makes the decision by the British chancellor George Osborne to introduce tax breaks for high-end television dramas in an effort to repatriate them back to the UK a potential hammer blow for the Irish audio-visual industry.

The UK was one of the few countries which did not offer tax breaks for the television or film industry. In good times it did not need to. The British television industry is one of the most subsidised in the world through the licence fee for BBC and is hugely successful at exporting dramas around the world.

The British have always been world-class at producing film and television, but changes in 2003 meant that British production companies had to raise much of the funding themselves.

Competitive pressures from countries such as Ireland, Hungary and the Czech Republic, as well as dwindling budgets, have seen a mass exodus to make British productions elsewhere.

In 2010 the British government introduced tax breaks for film, allowing production companies to claw back 25 per cent of their British spend from the state.

Following extensive lobbying from the television industry, Osborne now intends to do the same for the television sector in relation to dramas up to a cost of £20 million (€22 million).

These changes, due to come into play in April 2013, could at a stroke wipe out the competitive advantage Ireland has had.

The Government is worried enough to commission a report from the Irish Film Board about how to deal with the potential threat to the Irish audio-visual industry.

Separately the Department of Finance is undertaking a review of section 481 reliefs in order to inform future policy making in relation to the scheme.

Irish Film Board chief executive James Hickey says they will look at every aspect of the product that Ireland offers to overseas production company.

“Obviously it does represent a significant change from the existing position and we are looking at various aspects of the competitiveness of Ireland,” Hickey adds. “The UK will do what the UK will do. Ireland has to be able to step up to the mark with all areas of competitiveness.”

These will include the critical tax breaks for productions in Ireland, the availability of services and the cost of production in terms of both labour and services.

Screen Producers of Ireland chief executive Barbara Galavan is less sanguine. She says the British tax incentives could be “very damaging” for the business here in Ireland.

“If a similar tax incentive were to be available in the UK that provided parity, potentially, you’d have to ask as a UK producer about the reasons for going to Ireland. If this extension happens, it is very hard to see where the advantage will be unless we can make ourselves more competitive.”

In order for British companies to qualify for tax breaks in Ireland, they have to have Irish co-producers.

Element Pictures, the producers behind the films The Guard and The Wind That Shakes the Barley, has also been involved in the co-productions of many high-end British dramas including Ripper Street.

Element Pictures co-director Ed Guiney says the potential problem is compounded by the strength of the euro against sterling. The euro is now trading at 83p sterling – a couple of years ago it was 68p.

“As the exchange rate moved against us, we still had section 481 so Ireland continued to be a valid place to come and do business, but with these changes it is going to be a challenge to attract the likes of Ripper Street,” Guiney adds.

“We are especially vulnerable about the UK set stuff driven out of the UK. We have more challenging work practices here than in the UK.”

If this [UK tax] extension happens, it is very hard to see where the [Irish] advantage will be unless we can make ourselves more competitive