Support for the creative economy

Supplementary written evidence submitted by the Department for Culture, Media and Sport
[SCE 024a]

Thank you for giving me the opportunity to give evidence last month as part of your inquiry into support for the creative industries. You will recall at the session that I promised to come back to the Committee on a number of issues raised. I know that Viscount Younger has written to you in a similar vein on the issues addressed to him at the session.

Firstly, I promised to clarify the figures for the creative industries' contribution to the UK economy. The latest statistics available (from 2009) identify the creative industries as being worth £36.3bn GVA to the UK economy, representing 2.9% of the total UK GVA. More recent employment statistics (from 2010) show that 1.5 million people were in creative employment (either in the creative industries or in a creative role in another industry), representing 5.14% of overall UK employment, and in 2011 the creative industries accounted for £8.9bn in exports.

I also offered to write to you with details of lessons learned from the contracting process for last year's Olympic & Paralympic Games. It is worth highlighting the CompeteFor network set up for the Games to ensure the transparency and availability of London 2012 business opportunities, maximise the number and diversity of businesses contributing to the London 2012 programme, and create a legacy of increased capacity and expertise. Over 160,000 businesses have now registered on the website, and more than 12,000 business opportunities have been made available. Approximately 75% of contracts awarded to CompeteFor suppliers have gone to SMEs with contracts awarded right across the UK (around two thirds of contracts were awarded to CompeteFor suppliers located outside of London).

Following its successful use by the London 2012 authorities and their supply chains as part of the London 2012 Games, CompeteFor continues to be used in the supply chain to transform the Queen Elizabeth Olympic Park, and by other public sector buying organisations, such as Crossrail, as part of their procurement process. In turn, smaller sub-contractors of these larger organisations use CompeteFor to make their business opportunities widely available. It is also worth mentioning here the report produced in July 2012 by Sir John Armitt identifying the benefits to UK companies of hosting the Games, and how these opportunities could be maximised in the future. [1]

At the evidence session I promised to get the Cabinet Office to outline ways in which they were encouraging Government procurement from SMEs. The Government has an aspiration that by 2015 25% of government procurement by value should go to SMEs. Over the past two years the Cabinet Office has been implementing a wide range of measures to open up the way Government does business to make sure that small companies, charities and voluntary organisations are in the best possible position to compete for contracts. As a result, direct spend with SMEs across Government has steadily increased since 2010. All departments have been challenged by the PM to develop action plans with stretching targets to deliver an increase in their spend with SMEs and deliver their contribution to the 25% aspiration. These plans have been scrutinised by Cabinet Office ministers and results of this scrutiny have been reported to the PM. In addition to the appointment of SME Champions at official level, all departments have confirmed the appointment of a ministerial SME Champion to drive this important agenda forward. The use of Pre Qualification Questionnaires (PQQ) has been eliminated in 15 departments for procurements below the EU threshold of approximately £100k. Public procurement has been made more transparent and accessible by publishing tenders and contracts through the 'Contracts Finder' website; by introducing a new eSourcing solution, the Dynamic Marketplace, on which SMEs are able to provide quick quotes for low value contracts (below £1 OOk), and by piloting a new online service for procurers to invite the SME market to respond, in advance of a formal procurement, to emerging opportunities to deliver government business more efficiently. Finally the Cabinet Office has produced a series of videos to help SMEs and voluntary organisations pitch for and win government.

At the evidence session, concern was expressed that funding from the Technology Strategy Board (TSB) was primarily going to large US technological companies at the expense of SMEs in the creative industries. Figures provided by the TSB, however, demonstrate that this is not the case. From 2007 up to December 2012, TSB granted over £30m in funding for over 300 creative industries related projects. TSB estimate the of these 300 projects, only around 25 of these have included large companies, equating to approximately £2.3m in funding to these companies out of the total £30m. In the field of the creative industries, the TSB makes grants predominantly to SMEs, who, by their nature tend to be UK owned and developed businesses. Larger companies who may have non-UK ownership may also be recipients of grants, provided that they are UK employers and that they run fully-fledged R&D facilities in the UK. Companies who only have sales offices here are not, however, regarded as eligible for funding from Technology Strategy Board, since all of the funding is targeted at research, development and innovation.

....

Finally, I can confirm that Viscount Younger did attend the meeting of the Creative Industries Council on 5th June for a discussion on IP issues.

June 2013


[1] www.gov.uk/government/uploads/system/uploads/attachment_data/file/77430/John_Armitt_Report.pdf

Prepared 18th June 2013