"While we have a fantastic infrastructure, we have to protect that as much as we can and in order to do that we have to compete against industries in other countries," said Smith. "There's no doubt we need to tighten purse strings but we need to be careful we don't asphyxiate the film industry in general."
But in an article written for Blighty's Observer newspaper on Sunday, culture secretary Jeremy Hunt hit back at critics.
"If we are going to face budget cuts I have a duty to ensure that taxpayers' money is spent where it gets the most bang for its buck," he said. "It is simply not acceptable in these times to fund an organization like the U.K. Film council where no fewer than eight of the top executives are paid more than £100,000 ($160,000)."
Hunt added: "Stopping money being spent on a film quango is not the same as stopping money being spent on film."