Support for the creative economy

Written evidence submitted by the Design Council [SCE 070]

About this paper

This paper is a written evidence contribution to the Select Committee’s inquiry on support for the creative economy. The Design Council is pleased to have been invited to give oral evidence to the Committee and can expand on the points covered below at that time.

In this paper we set out:

· The role of the UK’s design industry as a key engine in our creative industries;

· The value that the design industry adds to the national economy; and

· Our response to your particular areas of interest for this inquiry

· Building on the Olympic legacy to showcase our creative industries to the world

· Barriers to growth in the creative industries and, in particular, the design industry

· The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth

· Establishing a strong skills base to support the creative economy

· The work of the Creative Industries Council and other public bodies responsible for the sector

About the Design Council

The Design Council is an enterprising charity that enables people to use design to stimulate innovation in business, tackle complex social issues, drive public service efficiency and improve the built environment. The Design Council has extensive experience of working in partnership with central and local government and running open innovation challenges and mentoring programmes for business, universities and service providers and offering design support for developers and infrastructure providers. These activities are market making for the design sector, creating opportunities where there are significant barriers to entry.

The Design Council is supported by the Department for Business, Innovation and Skills and the Department for Communities and Local Government and generates income through programmes, services and private funding partnerships.

What is design?

In his well-known Review of Creativity in Business [1] , Sir George Cox provided a definition of design, arguing:

‘Design is what links creativity and innovation. It shapes ideas to become practical and attractive propositions for users or customers. Design may be described as creativity deployed to a specific end.’

Design professions in the UK are diverse and deployed in far-reaching contexts; subsectors such as graphic and product design are important creative industry players and design skills underpin all other creative industry sectors. Design also includes skills and disciplines which are vital to the engineering and built environment sectors , covered by professions such as automotive design and architecture. Design skills and thinking have significant, although largely untapped, potential to drive innovation in the wider economy in manufacturing, healthcare and the commercialisation of science and technology research, for example.

The design process is a highly defined series of actions and staged gateways that guides and informs research, development and production in sectors such as manufacturing and service businesses. These approaches typically include both technical design (such as engineering for manufacture) and non-technical design (such as experience and identity).

The role of the UK’s design industry as a key engine in our creative industries

Shape and size of the UK design industry

· Design is a diverse sector encompassing a wide range of professions and activities, including interaction design, system design, automotive design, sustainable design, retail design, product design, service design, graphic design as well as architecture and urban design disciplines.

· Designers work independently in design agencies and consultancies which are typically small or micro businesses, as well as in-house in large firms.

· The UK’s design industry is the largest in Europe and one of the strongest globally.

· Most UK design consultancies sell services nationally but a high proportion of leading design firms export their services internationally. Some of the top industrial design and architecture practices report few or no UK clients.

· Latest estimates of the value design brings to the economy stand at approximately 2.2 per cent of GDP or £33.5 billion spending annually, (Imperial College London). [2]

· Our research [3] also shows that design is a resilient sector: the industry grew 29 per cent during a period of recession (2005-2010).

Employment

· The latest estimate of employment in the design industry is 350,000 (Imperial College London 2011) [4] .

· Self-employment within the design sector is high; it is as much as 48 per cent for product, clothing and related designs.

· Around four designers are employed outside the design sector for every one employee inside. Manufacturing, for example, employs around 120,000 design sector workers.

Impact of design on wider economy

· Design professions are central to the strength of the UK’s creative and engineering industries. They also support innovation in many other sectors.

· Beyond the creative industries in sectors such as manufacturing and science and technology, design approaches support new product and service development, open new markets, help to better understand users and investor needs and aid long-term planning.

· New Government research [5] on the design industry has found that design is highly export-facing. Around 35 per cent of UK exports come from industries that employ higher-than-average concentrations of designers, and the UK exports almost 50 per cent more design than it imports.

· The UK’s leading engineering/manufacturing sectors of high-tech, aerospace, energy, automotive, chemical and food production rely on engineering design, design skills and other design disciplines to develop ideas pre-production and to successfully take products to market.

· Particularly successful firms such as Jaguar Land Rover embed design throughout their product and service development, as well as marketing and selling strategies, and design thinking is integrated at the highest strategic level into boardrooms in some of the world’s most successful companies, as the well-cited example of Apple shows.

Our response to your particular areas of interest for this inquiry

Building on the Olympic legacy to showcase our creative industries to the world

· Design was a key part of the UK’s Olympic success. It was placed at the forefront of the LOCOG bid and embedded throughout delivery. The UK was the first country to have a clear design strategy for the Olympic and Paralympic Games and the design-led approach provided unprecedented showcasing for the UKs creative industries, demonstrating their wide-ranging application. For example:

· The Olympic Torch was designed by London-based studio BarberOsgerby through a competitive tender run by the Design Council and LOCOG.

· The Design Council Cabe’s Design Review process advised the ODA and LOCOG on the on the quality, sustainability and legacy of London 2012 proposals. This led to innovative life-changing architecture in the Olympic Park venues.

· Design support can ensure that infrastructure projects respond to context, address sustainability and make a positive contribution to the local community and environment. The design-led strategy of the Olympics provides an excellent model for other large UK infrastructure projects such as broadband rollout and High Speed 2 (HS2).

· More broadly, the success of the Olympics and integral role of the creative industries within this has created an opportunity to attract trade and inward investment, which should be built upon. For example, there is potential for UK creative sectors to supply other significant international events such as Brazil 2016.

· However, there were some limitations for design suppliers to the games around publicising their involvement and we support further recognition of the creative industry contribution to the event.

Recommendations

As part of the Games legacy, we firmly advocate continued showcasing for the contribution of UK design and creative industries to the event. There is a role for Government and Parliament to recognise and highlight the creative industry contribution, in a way that individual firms cannot.

The lesson of the Olympics should also be translated into other major complex projects, by embedding design at early stage. This can help to ensure success by enabling major infrastructure projects and events to respond to local communities and needs, address sustainability issues and create business opportunities for UK design and other creative industry sectors.

Barriers to growth in the creative industries-such as difficulties in accessing private finance-and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector

Growth of design businesses

· The UK is home to some of the world’s most successful design-led companies. The adage that if you are unable to compete on cost all you have is design has been exemplified through powerful case-studies over the last decade, including Burberry, Dyson and JCB.

· There is significant entrepreneurial energy in the design sector, which comprises a large number of start-ups, and the majority of design business in the UK are small or micro businesses. Challenges to growth for smaller design business often relate to a need for business skills as well as expanding reach and tapping into new markets rather than scaling up in size.

· Where creative business do aim to grow, they commonly face specific skills shortages. In addition to creative and technical skills, larger businesses have a greater need for accountancy, HR and management skills, which are currently lacking in the sector. The 2012 CIC Skills Group report [6] , for example, identified that much more needs to be done to provide the higher-level business skills necessary for growth. The report also found that creative entrepreneurs face particular challenges in securing finance for growth, which is also linked to a lack of business acumen in the sector.

Expanding into new markets

· Demand for design skills is also significantly under developed in the wider economy. In an increasingly design-savvy world, the UK’s world-leading design services are largely under-exploited by both UK business and by Government.

· This was identified in the Cox Review of Creativity in Business [7] (2005) which observed, for many SMEs design rarely reaches beyond the standard websites and logo. Whilst important, these represent only a fraction of the strategic potential of design, which can drive product development, facilitate user insights and increase revenues. There is still a need to build market demand in this area, the Innovation and Research Strategy for Growth [8] (2011) recognised that there are still parts of the economy where design awareness remains low, including amongst SMEs, scientists seeking to commercialise new ideas and the public sector.

· For business, design has significant potential. A recent independent evaluation [9] of the Design Council’s design Leadership programme for business demonstrates that for every £1 invested in design, businesses can expect a return of over £5 in increased exports. The evaluation also demonstrates that design increases turnover: for every £1 invested in design, businesses can expect over £20 in increased revenues. It also shows that design is linked to profit: for every £1 invested in design, businesses can expect over £4 increase in net operating profit.

· There is also significant untapped potential in Government to make greater use of design skills which can enable new approaches to civil service training and the development of more efficient, cost-effective and user-centred services.

· One example is the Design Council’s Public Services by Design programme, funded by BIS, where it is estimated that £26 of efficiency savings have been made for every £1 invested. The programme has supported over 30 public sector organisations on service delivery in the areas of homelessness, health and well-being and business services.

· The problem is two sided. Business and Government awareness of the potential of design remains low and the fragmented nature of the design sector as well as a lack of awareness of potential markets means that many design companies do not view business and Government as areas for growth.

· There is also evidence that business investment in ‘intangible assets’, which include design, marketing and R&D, is suffering during the recession. Worryingly, the latest NESTA Innovation Index, published in July 2012, shows that between 2007 and 2009 there was a decline in investment in innovation as a whole in the UK. The Index also shows a fall in design investment; the UK invested £15.5bn in design in 2009, down from £22.1bn in 2007.

Co-ordination between government departments

· Another potential but significant barrier to growth in the medium–long term is the disconnect emerging between Government growth policy and reforms to our education and schools system.

· We welcome recent initiatives to embed design in civil service training and coaching programmes such as the recent CLG policy summer school and UKTI annual conference where the Design Council delivered workshops and training modules. The recent Cabinet Office Design Summit also highlighted the role and potential of design at the strategy level in the civil service. There is more that can be done in this area to support a cross-Government approach to design at the strategic level.

Recommendation

Further support is needed for building business skills capacity in the creative sectors, through excellent initiatives such as the National Skills Academy for Design.

An active Government programme should be developed to support a culture shift in business perceptions of the value and potential of investment in design.

Government should turn isolated examples of design thinking and approaches into a practical programme for harnessing the power of design across a wide range of policy and delivery issues.

The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth

· Intellectual property laws provide vital protection to design industries, but as the Hargreaves Review of Intellectual Property and Growth (2011) recognised, the legal framework which has been used by businesses to protect their designs is fraught with complexities. The Design Council welcomes work undertaken by the Intellectual Property Office to streamline the current system and will continue to contribute to securing an effective approach.

· The vast majority of design businesses are small or micro businesses and reductions in unnecessary regulation can remove barriers to growth for these and other SMEs. Effective regulation can also provide certainty in securing markets.

Recommendation

Regulation for the creative industries must continue to be developed to involve and secure endorsement from the sectors affected and key industry intermediary bodies.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

Schools

· The teaching of design in schools underpins the supply to FE and HE and is a crucial pipeline into the professional design sector.

· The design skills base is threatened, however, by recent changes in school education. These include: the introduction of the English Baccalaureate, University Technical Colleges and Studio Schools; downgrading of vocational qualifications; and the potential removal of Design & Technology from the Secondary National Curriculum.

· Design teaching is vital in ensuring the next generation of design literate commissioners and consumers and in bringing the skills of creativity, enterprise and innovation to the private and public sectors.

FE/ HE

· The design sector in the UK is supported by an internationally regarded education and institutional infrastructure, including organisations such as the Royal College of Art, Glasgow School of Art, V&A and Design Museum.

· However, business skills are not sufficiently taught alongside artistic and technical skills at FE/HE level. These skills are best delivered by professionals from the relevant fields such as finance, law and business studies, which is the approach of initiatives such as the Own-it [10] scheme. These skills should also be embedded into teaching, through live projects/ internships/ work experience and understood in terms of creative practice-if provided in isolation they can seem irrelevant. Business skills as a component of design courses need to be backed up with sign-posting to additional or refresher information, again through online digital learning.

Continuing Professional Development

· Sector skills bodies play a vital role in enabling the 95 per cent of SMEs which comprise the creative sectors to access Government support for training through initiatives such as the Employer Ownership Pilots, enabling schemes which are typically directed at large employers to be accessed. In recent years there have been a number of changes in approach to skills and Sector Skills Councils have been instrumental in delivering a stable and coherent approach.

· Identifying relevant training opportunities would be greatly facilitated by access to coherent, comparable information on available training, including course frameworks, accreditation and content. There is a need for clear pathways to accreditation. Sector skills bodies, with specialist knowledge of the creative industries, play an important role in enabling this.

· We welcome Government support for a National Skills Academy for Design and are delighted to be involved in the delivery of this initiative which will galvanize the effective delivery of skills support for the design sector by strengthening links between the design industry and education training providers.

Recommendation

Government has a vital role to play in supporting the design skills base through the education system and we firmly advocate the inclusion of Design & Technology as a Foundation Subject in the National Curriculum to Key Stage 3. We also advocate the inclusion of a ‘sixth pillar’ in the Ebacc to include creative and cultural subjects, such as design and technology and art and design.

The work of the Creative Industries Council and other public bodies responsible for the sector

· We welcomed the establishment of the Creative Industries Council in 2011 to provide a stronger channel for communication between Government and the creative industries and to address specific growth barriers in the sector.

· We also firmly support the cross-departmental approach and Ministerial endorsement of the CIC, however it could be given far greater sway in Government with more regular meetings, more detailed considerations of specific issues facing different creative industry subsectors and greater profile for valuable inquiries such as the Skills Subgroup report.

· The remit of the CIC could also be expanded to include other departments such as the Treasury because of the significant economic contribution of the creative industries.

· At present the Design Council represents design at the CIC but given the size and significance of the design sector for all other creative industry subsectors we would also welcome wider design representation.

· Government also has a key role in continuing to support and enable other intermediary organisations such as the Technology Strategy Board, UK Trade and Investment, British Council and Design Council to collaborate and work coherently for economic and social benefit.

Recommendation s

Government should give greater weight and exposure to the work of the CIC.

Government should continue to facilitate collaboration between intermediary organisations.

November 2012


[1] http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/coxreview_index.htm

[2] www.ipo.gov.uk/ipresearch-designsreport1-201109.pdf

[3] www.designcouncil.org.uk/Documents/Documents/Publications/Research/DesignIndustryResearch2010/DesignIndustryInsights2010_Design_Council.pdf

[4] www.ipo.gov.uk/ipresearch-designsreport1-201109.pdf

[5] www.ipo.gov.uk/ipresearch-ukdesign-201207.pdf

[6] http://cicskills.creativeskillset.org/data/the_creative_industries_council_skillset_skills_group_report

[7] http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/media/A/7/Cox_review-foreword-definition-terms-exec-summary.pdf

[8] www.bis.gov.uk/assets/biscore/innovation/docs/i/11-1387-innovation-and-research-strategy-for-growth

[9] www.designcouncil.org.uk/our-work/Insight/Research/Designing-Demand-Executive-Summary/

[10] www.own-it.org/directory

Prepared 17th November 2012