It has helped to finance some of the great modern classics of Scottish cinema - including Jamie Bell in Hallam Foe, Ken Loach's Sweet Sixteen, and the critically acclaimed

Red Road - but now the country's most important film production fund has been closed to applications because it has run out of money.

Scottish Screen's £1.9 million content production fund will not accept applications from today, because its budget has already been shared out among a handful of films that are at planning stage. A notice on the publicly funded organisation's website will reveal that any application received until August 25 “will be returned ... without being reviewed”.

“We have made five commitments - and when a couple of these are for £500,000, the entire fund doesn't go far,” said Carole Sheridan, head of talent and creativity at Scottish Screen.

The announcement that funding had dried up, nine months before the financial year-end, prompted outrage from film-makers and politicians. Many in the industry believe that the level of funding is already at unacceptably low levels, arguing that public investment in feature film-making generates three or four times as much investment again from other sources.

Chris Young, a Skye-based film-maker, said that he was surprised and disappointed by the announcement. His 2007 feature, Seachd: The Inaccessible Pinnacle, received a £150,000 grant from the fund, equivalent to a quarter of its total production costs.

Mr Young said: “As a producer in Scotland, Scottish Screen is a first port of call, an absolutely crucial element in any funding package. Financing feature films is a very difficult business - we will have to hold our breath now and see what happens.”

Jeremy Purvis, the Liberal Democrat culture spokesman, said the announcement would have a detrimental effect throughout the creative community. He contrasted the failure to provide adequate funding for the screen industries with the start-up costs of establishing the quango, Creative Scotland, which is to be formed by the amalgamation of Scottish Screen and the Scottish Arts Council.

“The Government is willing to spend over £1 million in the bureaucracy required in the establishment of Creative Scotland, and that is being drawn from the grant-making powers of Scottish Screen and the Scottish Arts Council.

“We know that in real terms the budgets are falling over the next three years. That is sending the wrong signals out, not only in Scotland, but to producers around the world. The hype from the SNP has really not been matched by action at all.”

Some critics compared the low level of Scottish investment with the incentives available elsewhere. Australia provides up to 40 per cent in tax relief to production companies, while the Republic of Ireland offers tax rebates as well as the support of the Irish Film Board, which has an annual £11.1 million production fund, more than ten times the sum available across the Irish Sea.

There have been recent successes in Scotland. An award of £500,000 brought the filming of Stone of Destiny to the country - though the main public funding of more than £2 million came from Telefilm Canada. Neil Marshall's new film, Doomsday, recently shot for 12 days in the country, while Rounding Up Donkeys, the successor to Red Road, was on set in Glasgow earlier this year.

Officials at Scottish Screen find themselves in a dilemma of promoting the country but being unable to offer funding to potential investors.

Ms Sheridan said: “More funding would be good. It would enable us to capitalise on many of the relationships we have forged over the past couple

of years.”

A spokesman for the Scottish government said it was committed to ensuring that films prospered. He added: “Over the next three years Creative Scotland and the bodies we propose it replaces, including Scottish Screen, have been allocated nearly £150 million to invest in Scotland's culture.”

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