UPDATE: I’ve been told that the decision to get rid of UK Film Council was Ed Vaizey’s alone, and not, as has been posited, by his boss Jeremy Hunt having a gun pointed at his head. What the government ministers disagreed about was timing. Vaizey wanted to consult the industry as part of his summer film review. It was Hunt who forced through the scrapping.

Roger Michell, director of Notting Hill, has called British culture secretary Jeremy Hunt’s decision “astonishing” and “catastrophic” without the merest hint of consultation with either the wider film industry of the UKFC itself. “The decision flies in the face of economic sense,” says Michell. Armando Iannucci, director of hit British comedy In the Loop, tweeted: “Mad move by macho numbercrunchers. It made UK a gargantuan load of money. They’re wangpots.” Fellow director Mike Leigh said he’s “reeling” from the shock, while Mike Figgis said the government doesn’t strike him as being people who understand the film business, or even the culture business.

Among name filmmakers, only Alex Cox (Repo Man) has welcomed its closure, calling it “very good news for anyone involved in independent film.” What’s startling is how much hatred there is for the Film Council out there on the message boards, despite columnists and opinion-formers all calling this a black day for the British film industry. Of course, the UKFC rejects 95% of people who apply for money so there’s bound to be bitterness. Rebecca O’Brien, regular producer of Ken Loach and UKFC board member, tells me yesterday’s announcement has given a great opportunity for those whose work has been rejected to vent their spleen.

The crucial question is who will administer the annual £15 million of lottery money for film production and distribution? Kevin Loader, producer of Nowhere Boy, tells me: “The important thing for British film is that the tax credit and lottery support are maintained at the current levels.”

More worrying, is what will happen to development funding. Development is always the riskiest end of the film production equation — and not one which the private sector is going to replicate. Loader says: “Producers will worry most about how the UKFC’s development operation would survive in other hands. Without it the whole sector will be thrown back on an over-reliance on the two broadcasters’ film divisions who spend significant sums in this area. It won’t be enough to maintain the current level of activity nor its diversity.”

John Woodward, CEO of the UK Film Council, writing in this morning’s Guardian, has compared the government’s decision to shut it down to other British film industry derailments such as the demise of PolyGram and scrapping the Eady Levy. “It will take several years for the full effects of the Council’s absence to be felt in the film industry,” Woodward says.Woodward described what the government has done as “Blitzkrieg, but without any forward planning.”

One UKFC insider tells me the government hadn’t even thought of shutting down the agency until last week. “We were thrown into the mix without warning to make Jeremy Hunt’s credentials as a cost cutter look better. It was as crude and simple as that — he wanted to have a good press release to impress Chancellor George Osborne.”

But the government now appears to be having second thoughts about yesterday’s announcement. Questioned in the House of Commons yesterday, Hunt claimed nothing had been decided yet and the Culture Department wanted to hear people’s views. Noting that the UK Film Council spends £3 million a year on admin, Hunt said he wants to know if this money could be better spent.