Warner Bros buys Harry Potter studios in £100m boost for UK films

Warner Brothers will this week become the first Hollywood studio since the 1940s to have a permanent base in the UK, when it completes the purchase of Leavesden Studios outside Watford, in Hertfordshire, which it used to film the Harry Potter series.

The company said it would invest £100m in the site at a time when the film business is booming in Britain, despite the recession and government plans to scrap the UK Film Council, which organises funding for British films.

Warner is arguably the most Anglophile studio in Hollywood. It has filmed every part of the Harry Potter saga at Leavesden. The first part of the Deathly Hallows, the penultimate in the eight-part series, is due for its world premiere in Leicester Square on Thursday. Warner also plans to create a permanent Harry Potter exhibition on the 170-acre site, creating 300 jobs.

Warner believes that Britain is one of the best sources of technical talent outside the US. It is able to take advantage of the film tax credit regime introduced by Gordon Brown, which allows Hollywood films shot in the UK to qualify as British.

Barry Meyer, Warner's chief executive, met Jeremy Hunt, the culture secretary, in Los Angeles. Reassured that Britain was committed to maintaining the tax credits, Meyer went ahead with an investment he described as demonstrating "our commitment to, and confidence in, the skills and creativity of the UK film industry".

It also helps that Warner will be able to create a Harry Potter film museum, to open in the spring of 2012. It will feature film sets, costumes, puppets and make-up – but Warner was careful to stress this was "not a theme park". JK Rowling, the author of the series, has been reluctant to license amusement rides.

The investment caps a rapid revival of the film industry in the UK, which was in crisis when Sony and MGM decided to move the filming of the James Bond film Casino Royale to the Czech Republic. However, the tax relief has prompted a rebound in investment, and, so far, 2010 has been the best year on record. A total of £936m has been spent in the first nine months of the year, with studios such as Elstree saying that it has been forced to turn away business. Warner's move will also be a relief for ministers led by Hunt, who have been under fire for announcing the abolition of the UK Film Council, which has prompted criticism from a string of famous names, led by Dirty Harry star Clint Eastwood. However, the UK Film Council only had a limited role in encouraging inward investment, with most of its efforts concentrating on funding small British films that would not otherwise be funded.

The purchase of Leavesden, due to be completed tomorrow, will safeguard 1,500 jobs. Warner Bros has used the studios since 2000; with parts of The Dark Knight and Charlie and the Chocolate Factory filmed there.