1 Introduction
Creative industries
1. Creativity is the key to both cultural and economic
progress in an increasingly competitive world. In the United
Kingdom, we rightly celebrate the successes and achievements of
our artists and designers, our musicians and engineers, our writers
and creative entrepreneurs. Our creative industries define us
as a nation and provide a visible celebration of our diversity
and ingenuity. If we are to sustain this success, and build on
it, the Government must do all it reasonably can to help. Necessarily,
this involves examining a wide range of policies in areas such
as intellectual property, education and taxation. Such is the
importance of the creative industries to the UK economy, and the
scale of the challenges they now face from technological change,
that we believed the time was ripe to mount this enquiry, to listen
to a wide range of key players and to make recommendations to
Government for future action.
2. The Department for Culture, Media and Sport (DCMS)
adopts a definition of the creative industries given in the 2001
Creative Industries Mapping Document: "those industries which
have their origin in individual creativity, skill and talent and
which have a potential for wealth and job creation through the
generation and exploitation of intellectual property". The
following specific sectors are identified: advertising, architecture,
art and antiques markets, crafts, design, designer fashion, film
& video, interactive leisure software, music, performing arts,
publishing, software & computer services, television and radio.
3. The Creative Industries Economic Estimates (DCMS,
December 2011) contain statistics on gross value added (GVA),
employment and numbers of businesses within the creative industries.
These represent the most recent statistics, cited also in written
evidence to us by the DCMS.[1]
Some headline figures are as follows:
- creative industries contributed
2.9% of the UK's Gross Value Added in 2009, equivalent to £36.3
billion (GVA + taxes on products - subsidies on products = Gross
Domestic Product)
- 1.5 million people are employed in the creative
industries or in creative roles in other industries,[2]
5.1% of the UK's employment
- exports of services by the creative industries
accounted for 10.6% of the UK's exports of services, equivalent
to £8.9 billion (2009 figures)
- there were an estimated 106,700 businesses in
the creative industries on the Inter-Departmental Business Register
(IDBR) in 2011, representing 5.1% of all companies on the IDBR.
4. The DCMS plans to update its figures in Autumn
2013 following a recent consultation on the classification of
creative industries.[3]
This should provide much needed data with which to inform the
Government policies necessary to promote these key sectors of
the economy which, we have no doubt, will assume even greater
significance in the years ahead.
5. Examples of unique British successes can be found
in a wide variety of areas including film, television, music,
video games and fashion. The core UK film industry supports 117,400
full time equivalent jobs, contributes over £4.6 billion
to UK Gross Domestic Product (GDP) and over £1.3 billion
to the exchequer.[4] Between
2010 and 2012, 42 blockbuster films (over $100 million budget)
were produced globally and Pinewood and Shepperton Studios alone
were used either entirely or in part to film 24 of them.[5]
BBC Worldwide is the largest television programme distributor
in the world outside the US major studios, selling programmes
and formats produced by the BBC and by over 200 UK independent
producers.[6] Independent
television sector revenues alone have grown from £1.3 billion
in 2005 to nearly £2.4 billion in 2011.[7]
The British music industry is the second biggest exporter of recorded
music in the world, after the USA, with a 12% global share.
Adele's 21 was the biggest selling album in the
world in 2011— the fourth time in five years that a UK artist
has held this position.[8]
The boxed and digital UK video game retail market was worth almost
£3 billion in 2011.[9]
UK global successes have included 'Batman: Arkham City' and 'Football
Manager 2013'. This is not to mention web-based successes like
'Moshi Monsters' and the online role-playing game 'Runescape',
with over 100 million registered users between them.[10]
In 2009, the UK fashion industry contributed £20.9 billion
(1.7% of total UK GDP) and supported approximately 816,000 jobs—more
than telecommunications, car manufacturing and publishing combined.[11]
Even though these figures are based on a broad definition of
fashion, which includes retail distribution, they nonetheless
illustrate the wider impact of creativity in the national economy.[12]
The Committee's inquiry
6. We published a call for evidence on 10 October
2012 with an emphasis on the following issues:
- How best to develop the legacy
from the Olympics and Paralympics of the display of UK talent
in the creative industries in both Opening and Closing ceremonies
and more generally in the design of the Games;
- 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;
- The impact on the creative industries of the
independent Hargreaves Review of Intellectual Property and Growth,
and the Government's Response to it. The impact of the failure,
as yet, to implement the Digital Economy Act, which was intended
to strengthen copyright enforcement. The impact of proposals to
change copyright law without recourse to primary legislation [under
the Enterprise and Regulatory Reform Bill then before Parliament];
- The extent to which taxation supports the growth
of the creative economy, including whether it would be desirable
to extend the tax reliefs targeted at certain sectors in the 2012
Budget;
- Ways to establish a strong skills base to support
the creative economy, including the role of further and higher
education in this;
- The importance of 'clusters' and 'hubs' in facilitating
innovation and growth in the creative sector. Whether there is
too much focus on hubs at the expense of encouraging a greater
geographical spread of companies through effective universal communication;
and
- The work of the Creative Industries Council and
other public bodies responsible for supporting the sector.
7. The call for evidence stated that we wished to
focus on particular sectors as examples of the creative industries,
especially the film, music, television, design and games sectors.
However, we were pleased to receive written evidence from a range
of interests well beyond those of our initial focus in recognition
of common concerns within the creative industries. We received
120 written submissions from a wide range of organisations, a
reflection of the scale and diversity of the sector and the breadth
of the inquiry's terms of reference. Oral evidence was taken from
51 witnesses and we consulted with a large number of individuals
and organisations during visits in both the UK and the USA. In
addition, we received particularly useful assistance and advice
from our specialist adviser, Sara John.[13]
We are grateful to all those who have provided evidence, whether
written or oral, and to our hosts during our visits.
Visits
8. During the course of the inquiry we visited several
organisations and companies. Members of the Committee went to
Discovery Communications in Chiswick, west London, to the British
Library and Soho. The Soho visit, hosted by the Advertising Association,
enabled us to hold discussions at Fallon, Ridley Scott Associates,
Smoke & Mirrors and Spotify. Taken together, these three
visits provided some useful insights into the future potential
of creative sector tax reliefs (including those for television
documentaries), the significance of advertising both as a source
of income and a creative industry in its own right, the huge range
of skills needed to support film production and special effects
and online music businesses. The visit to the British Library's
Business and IP Centre underlined the importance of accessible
advice for creative enterprises and the centrality of intellectual
property to their business models.
9. We visited two studios: at Warner Bros. Studios,
Leavesden, we saw at first hand the physical infrastructure and
craft skills involved in supporting the film industry, and in
Middlesex we toured the Sky Skills Studios which provide an innovative
educational resource for schools. A visit to Silicon Roundabout
began with Modern Jago in Shoreditch, east London, followed by
the nearby Google Campus. Both provided examples of how technology
companies are providing opportunities and advice as well as platforms
for creative entrepreneurs. We were also briefed at the BPI's[14]
offices in central London as guests of the Creative Coalition
Campaign.
10. During the course of the inquiry we visited California.
As well as observing a British creative industries trade delegation's
visit ('Creative London comes to Silicon Valley') organised by
the Advertising Producers Association, we held meetings at SNR
Denton to discuss tax and other incentives for film production
and at Facebook and Google to cover the interaction of technology
companies with content providers and to discuss online piracy.
We met Viacom at Paramount Pictures, the UCLA School of Theater,
Film and Television, Exclusive Media and Warner Brothers. We
saw how the audiovisual sector is developing new business models
in the digital space, how business skills are being integrated
into university education and how film productions can be financed.
We held informal discussions with BAFTA LA members and were briefed
on film production incentives by Joseph Chianese of Entertainment
Partners before going on to meetings at Walt Disney Studios and
Technicolor; the latter two visits included discussions on shortages
of engineering talent in both film production and post-production.
We held further meetings with the music, film and computer games
industries. At Universal Music Group we were briefed on how the
industry's response to the internet has evolved to embrace a wide
variety of business models. Like the other film studios, Twentieth
Century Fox gave us a wide-ranging briefing, but with a strong—and
compelling—focus on how the introduction of a private copying
exception could jeopardise the emergence of legitimate digital
products. Finally, at Activision we saw how important the interplay
between art, design and engineering is in the production of computer
games.
1 Ev 202 Back
2
Creative roles in other industries means creative occupations
in businesses which are classed as being outside these industries,
e.g. graphic designers working in a manufacturing firm. Back
3
DCMS, Classifying and Measuring the Creative Industries: Consultation
on Proposed Changes, April 2013 Back
4
Ev 299 (British Film Institute) Back
5
Ev 204 (Pinewood Shepperton plc) Back
6
Ev 320 (BBC) Back
7
Ev 225 (Pact) Back
8
Ev 232 (BPI) Back
9
Ev 309 (Association for UK Interactive Entertainment) Back
10
Ev 310 (Association for UK Interactive Entertainment) Back
11
Ev w173 (British Fashion Council) Back
12
The Value of the UK Fashion Industry, British Fashion Council
and Oxford Economics, 2010 Back
13
Sara John is an independent consultant. She is a trustee/director
of the Young Persons Concert Foundation, a charity providing music
educational workshops and concerts to schools. Back
14
BPI represents the British Recorded Music Industry Back
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