Funding of the arts and heritage

Written evidence submitted by South West Screen (arts 174)

I am writing in response to the recent call for evide nce regarding the enquiry into ‘F unding of the A rts and H eritage . My submission makes particular reference to ‘the impact of recent changes to DCMS arm’s-length bodies - in particular the abolition of the UK Film Council’.

1. It is clear that the landscape of public funding for the creative industries is changing. The announcement of the proposed abolition of the UK Film Council (UKFC) comes alongside the replacement of Regional Development Agencies (RDAs) with Local Enterprise Partnerships (LEPs) , t he details of which are yet to be determined . Together these changes will have direct impact on the structure of support for the creative industries across the UK.

2. The importance of these creative industries cannot be underestimated. Widely recognised as a significant growth area for the UK economy moving into the digital age, together they contribute £60 billion a year, and represent 7.3% of the UK economy, comparable to the Financial Services sector. Here in the South West the creative industries sector is strong and growing fast, with around 8,000 businesses and practitioners, and direct employment of approx 36,000 people. The South West is home to major businesses such as award-winning animation company Aardman and Twofour, one of the UK’s largest and most successful independent communications companies, as well as a host of small and medium size firms - many of whom have the potential also grow to national and international success.

3. Recognised as a creative industries national exemplar, the creative economy in the South West employs 144,000 people and contributes £5.4bn GVA1. Globally renowned for strength in animation and natural history television production, substantial revenue is also generated from incoming film and television production which in 2009/10 brought £62 million to the region – much of it in rural and coastal areas of the South West2. CC Skills reports a 19% rise in South West employment since 2006 in the subsectors which make up its footprint (including design and advertising). Whilst the broader Television and Publishing sectors represent the major economic drivers, the Digital Communications and Design sectors are also growing in scale and profile. The media sector in the region employs over 36,000 people and research by the relevant sector skills councils identifies high levels of micro-enterprises and freelancers in the region’s creative industries3. However, spread across a large geographical area and operating on varying levels of scale, many creative companies here in the South West find it hard to access the guidance, skills and support that help them to grow, innovate and compete, thereby hampering their true potential.

4. The UK Film Council set up the nine independent S creen A gencies in 2002 under the network of Screen England, to help it distribute its funds and nurture talent across the country. Since then these agencies have grown and diversified to work across the full range of creative industries, encompassing talent development, production, audience development, skills and supporting businesses across film, television, games and new media. As the DCMS has noted, the network of agencies have, for a relatively small investment, encouraged investment of over £50m in the audio-visual creative industries across all regions.

5. South West Screen (SWS), the screen agency for the development of creative industries in the South West, now promotes and supports businesses working across not only film and television, but also non-screen areas such as games, design, new media and digital remits. The agency plays a key role in developing the sector, providing cohesion, delivering key initiatives, boosting talent, training and skills and keeping companies connected across a wide geographical area. Its work is consistent and effective, and its benefits have been felt across the South West. It actively sources investment from other sources to benefit the sector, such as the recently secured £3.2m Creative Industries Innovation Network (iNet) funding programme which will unlock opportunities to leverage further support for innovation, export and knowledge-sharing within the creative industries over the next three years.

6. SWS has historically been reliant on the UK Film Council and South West RDA to resource its programmes of training and business, audience and talent development. As the footprint of creative media has broadened to include digital and pervasive media technologies, so SWS has diversified its funding streams and now has programmes and partnerships with Skillset, UK Trade & Investment, the European Regional Development Fund, BBC Films and NESTA, amongst other partners, whilst simultaneously developing its own income-generating projects. Its services respond to constant change in the needs of the local area’s businesses, the pace and complexity of which is especially great in the newer areas of the creative digital economy.

7. Under the Screen England network, the Screen Agencies are currently re-structuring around a more cost effective model of developing businesses and commercialising projects, and it is important to ensure that the financial support is not halted altogether for this sort of valuable activity. There is a danger that the loss of the leadership and funding that was provided by the UKFC will create a real vacuum out of which it will be difficult to ensure a proper strategic model for creative industry development and growth outside London.

8. Since they were set up, the Screen Agencies have used the RIFE Lottery funds allocated to them from the UKFC to leverage another £50m of investment into creative industry development for England. The loss of UKFC funding altogether would create a very big hole in the creative industries. Research by BIS and DCMS illustrates that creative SMEs face numerous problems acquiring finance. Resource from UKFC and RDAs has often been used by the Screen Agencies as seed corn funding, which enables creative businesses to go on to leverage further revenue and move to the next level. Removing access to this seed corn funding would be damaging to the growth of the creative business on a local level, impacting on the creative industries as a whole.

9. With the UKFC no longer in existence, and the structure of LEPs not yet determined, it is imperative that any future restructuring of funding should incorporate a strong recognition of the creative industries, so that this vital sector can continue to grow, to protect jobs and revenue, and to play its part in helping the UK out of recession. In my particular area of the South West, I believe that South West Screen, with its roots in the creative media industries and its contacts across the sector, is best placed to continue to deliver this support as we move into an increasingly digital future.

10. However, this is also a time to grasp the opportunity to re-balance the relationship between production and culture in Lottery funding, an area which SWS has argued the case to the UKFC about for a number of years. Yes, there needs to be an emphasis on the use of film subsidy to achieve economic benefits, but there also needs to be a focus on using funds to achieve broader cultural benefits, and this is something that we feel has not been maximised.

11. South West Screen absorbed much of the latest reduction in its annual grant from the UKFC through cuts to staffing and overheads. However, there was an unavoidable impact on our activity to support Festivals and Exhibition Venues. As local authority budgets continue to be pressured, this area of cultural investment – arguably the area most deserving of public support towards film – will struggle to find additional resources. The UKFC had the wrong balance between exhibition and industrial film. We would argue that public money needs to be for public benefit, and there needs to be an infrastructure for cultural impact that can generates commercial benefits whilst also providing social or community value. For example South West Screen is delivering a Lottery funded Rural Cinema Pilot Scheme in Wiltshire and the Test Valley over the next three years, which will take digital projection equipment out to hard to reach areas to enhance access to culture, whilst strengthening social interaction and reinvigorating community participation at the same time. Also, talent development needs to have a higher priority, and we need to be able to invest in the next generation of talent at a grass roots level across the country, outside of London. This is a new opportunity expand on talent development and address the fragility of local film festivals, screening venues and mixed arts venues.

12. Faced with the abolition of the UKFC, we recognise the need for a cultural change. Operating at a local level allows us to be more flexible and responsive/reactive to the needs of all sectors of both media and film communities, as the following letters of support illustrate. It is vital, therefore, that the change in funding does not lead to a loss of locally nuanced decision making and delivery.

13. In discussing these points with key businesses and partners in the South West, a number of concerns have been raised about the impact of the abolition of the UKFC, and in particular the threat it poses to the activities of SWS. The following examples have been included to provide a cross section of opinion across growing businesses of a range of sizes across a range of creative industry sectors.4 I would urge Government to read these points and ensure that they are considered.

September 2010

[1] SWRDA, June 2007

[2] SWS figures

[3] CC Skills, the Sector Skills Council for the C reative and Cultural Industries , identifies 88% of companies within its footprint as having fewer than 5 employees and 47% in self employment. Skillset, the sector skills council for the creative media industries , identifies 33% of those working within the media industries in the region as freelancers.

[4] Ev. not printed.