Culture, Media and Sport CommitteeWritten evidence submitted by Teledwyr Annibynnol Cymru/Welsh Independent Producers

About TAC

Formed in 1984, Teledwyr Annibynnol Cymru/Welsh Independent Producers (TAC), represents nearly 50 active independent TV production companies. These companies are primarily involved in the production of programmes and content for Welsh based and other broadcasters and other providers of audio visual services, either as production companies, or in a support capacity. Their combined turnover is in excess of £100 million. Our members diversify into making radio and multiplatform content.

As well as being part of the overall UK TV production industry, Welsh TV producers also have specific issues and concerns which they communicate to UK Government and Parliament, and of course the Welsh Assembly and Government.

The Committee Inquiry

TAC greatly welcomes the Committee’s decision to hold this inquiry, as it is a crucial time to look at how the UK’s creative industries can further to contribute to growth.

We hope the views expressed below are of interest, and would be happy to submit further supplementary information to expand on any aspect of them if it would be of help to the Committee.

Specific Issues Raised by the Select Committee

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

Significantly, the ceremonies for both Games highlighted the different cultural contributions to the UK’s overall creative excellence of the individual nations within it.

One of the UK’s great strengths is its diverse peoples, cultures and perspectives. The cultural value of the Welsh language is recognised by the establishing of S4C in the early 1980s, a public service broadcasting institution which, despite fresh challenges, continues to play a key part in both preserving and growing the culture of Wales and providing a valuable engine for economic growth.

So the Government should ensure that it is ensuring that sectors based in the nations and regions are in a position to thrive and, specifically the Welsh language broadcaster S4C is in a position to act as a lynchpin for maintaining and strengthening the Welsh language and culture in Wales and beyond.

S4C

Whilst TAC members make content for a range of UK and international broadcasters and corporate clients, a key engine of growth in Wales is Welsh-language broadcaster S4C.

As a publisher-broadcaster S4C commissions its content wholly from the independent sector.

Continued funding of S4C should be seen as part of a wider cultural remit to safeguard the Welsh language but also as an investment in the indie sector that drives further growth. So it is crucial that the assurances Government has so far given in relation to the future of S4C are backed up in legislation, in terms of stipulating a guaranteed level of funding that ensures S4C is sustainable.

In the 2010 Comprehensive Spending Review, S4C had its funding reduced by a net total of, it is estimated, 42%.1

The organisation has made significant efficiencies, and its previously-established partnership with BBC has contributed to this.

The CSR fundamentally altered S4C’s funding arrangements—whereas it had received just over £100 million in a direct grant from DCMS it now receives, though only guaranteed until 2015, £7 million from DCMS. But most of its funding comes from the TV Licence Fee.

This development means that the BBC Trust, as the organisation which oversees the spending of the TV Licence Fee, has s role in ensuring that S4C is achieving good value for money.

The way that this new relationship works is absolutely crucial to the future of S4C—over-heavy “regulation” could result in its no longer being able to function properly as a separate entity, something which was guaranteed by the Government at the time of the funding settlement.

In order to establish this working relationship BBC Trust and S4C recently published a draft operating agreement. TAC has registered its concern that this agreement, whilst containing some positive aspects, fails to adequately set out the clear lines needed between S4C and the Trust and indeed the BBC Executive. Specifically:

Its failure to consistently make clear that it is the BBC Trust, rather than the Executive, that is overseeing the manner in which S4C would spend the part of the Television Licence fee apportioned to it.

Its insistence upon S4C making further significant cuts to expenditure despite S4C already having had a large cut in its funding and implementing significant efficiency savings.

The provision allowing the BBC Trust to “in extremis” withdraw S4C’s funding without having to refer the matter to the Secretary of State for Culture, Media & Sport.

A lack of consistent commitment to S4C’s relationship with the independent production sector.

TAC is seeking changes to the draft Agreement to correct these failings, and would welcome the Committee’s support for the changes.

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 2011 report “Risky Business”2 highlighted the fact that the creative industries have an unjustified reputation for being unreliable investment opportunities, whereas in fact compared to some other sectors they are a relatively “good bet”. The Government has a role here in educating the investment sector of the potential understanding that creative industries can be a sound investment. Specifically steps could be taken to establish ways of creative sectors and investors coming together to discuss these matters and create new networks.

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 currently before Parliament)

Intellectual property (IP) is the lifeblood of all content creators. TAC supports Hargreaves and the Measures in the Digital Economy Act to protect copyright. It is vital that the Committee does what it can to ensure that the Government sees the Act through and also works to better educate the public as to the illegality of many free downloads, and the detrimental effects of the practice on the creative industries.

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

TAC has responded to the consultation on the tax credits. We broadly support them, but argue that as there are specific unique circumstances pertaining to production in Wales, there is an argument for a specific provision with the high-end TV drama concerning S4C commissions.

The case made to the Treasury is as follows:

TAC represents the interests of television production companies who alongside content produced for a range of other networks and services, produce programming for the Welsh language channel, S4C. S4C’s remit is to provide a range of programming in different genres which has over the past 21 years included high-end drama and television films.

S4C has, as a result of the Government’s Comprehensive Spending Review been required to make a reduction in funding of 30% in real terms.

TAC’s producers are concerned that sustaining the production of high-end drama will be very difficult as a result of the reduction in S4C’s core funding and endeavour to attract co-production funding in order to maintain high quality production in the Welsh language. We have seen the success of Scandinavian dramas such as “Wallander”, “The Killing”, “Borgen” and “The Bridge” and aspire to replicate such success. The £1 million per hour threshold however provides no support to achieving this aim; production budgets in the Welsh language are significantly lower.

We wish therefore to propose an amendment in the proposed legislation which provides for a model similar to the film tax relief model to apply in relation to UK minority language production of high-end drama with a cost per hour of £500,000. At this level, drama productions solely funded by S4C would not qualify for relief as the funding available would always be below £500,000 per hour. These productions can only be realised with co-production funding from the international markets and tax incentives. Otherwise they are unlikely to be produced.

The definition of eligible productions, qualifying “core expenditure” would be consistent with that applicable for English language high-end television dramas with budgets in excess of £1 million.

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

TAC has welcomed the work of the Creative Industries Council Skills workstream, and is in dialogue with Creative Skillset to ensure that Welsh production sector is fully engaged with working develop practical skills and training to keep the flow of highly0-skilled production professionals coming to met current and future demand as our industry hopefully continues to grow.

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

“Clusters” and “hubs” are important for cross-fertilisation of ideas and expertise, as well as sharing of resources. The BBC’s investment in Cardiff obviously helps maintain and build production skills and capacity in South Wales. However this must always be balanced against the benefit of produces being based round the UK, and indeed around all parts of Wales, in order to give the viewer and TV Licence Fee Payer the opportunities to experience the different perspective, stories and talent originating from those different and distinct geographical areas.

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

As stated above, we recognise the work of the CIC and in particular the skills work stream. We would argue that the Creative Industries Council should continue to operate but in a manner that ensures it is allowing all sections of the creative industries to contribute and make sure that not only the biggest voices are heard on a regular basis.

November 2012