Culture, Media and Sport CommitteeWritten evidence submitted by Directors UK

Introduction

1. Directors UK is the professional association for film, television and all moving image directors in the UK. The organisation is both a collecting society for the distribution of secondary rights payments to directors, and the professional association providing services and support to its members. It seeks to protect and enhance the creative, economic and contractual rights of directors in the UK and works closely with organisations in the UK, Europe and around the world to champion directors’ rights and concerns. With over 4,500 members it represents the overwhelming majority of working film and television directors in the UK.

2. Directors UK welcomes the opportunity to submit comments to the Culture, Media and Sport Committee inquiry into support for the creative economy. Our focus in responding is on the Creative element of the “Creative Economy” and in particular creative individuals, who are the engine of economic growth. Our key priorities are:

Support for copyright—fair rewards and incentives for British creators.

Tax and employment—recognition and support for the nature of freelance employment.

Skills and training—developing and inspiring talent.

Representation of individuals—a government champion for the individual creatives.

Creative Talent—Individuals and Businesses

3. Creative talent is the engine of a thriving UK industry. In our view government policy-making has tended to focus on developing and supporting business organisations within the creative sector. While it is clearly right to look at ways to support creative businesses, it is vital also to develop and support creative individuals. We believe more attention needs to be paid by government to the needs of creative individuals so that we capitalise on opportunities that would have a direct benefit on the creative economy.

4. What was so striking about Danny Boyle’s Opening Ceremony for the Olympic Games was not just a director’s creative concept, design and execution brought to life on the world stage, but his celebration of the work of other individual British creators from the fields of music, film, technology, engineering, fashion design, invention and more. The inspiration comes from the individuals—David Bowie, Alexander McQueen, J.K. Rowling—and not the businesses that published or produced their works.

5. The key attributes of a creative mind—innovation, inspiration, surprise, risk-taking, challenging norms, new perspectives—can be applied across many industries—fashion, art, film, television, music, design. Creative individuals generate new ideas, products and services that power the growth in the creative economy. These individuals, in our view, need a champion in Government.

6. In this paper we provide some examples of where greater support for creative individuals would benefit the creative economy as a whole. We also highlight some areas where there has been strong government support, as evidence of the potential that a joined up approach can realise.

Support for Copyright & Fair Rewards for Creators

7. The creative industries have been recognised as a key growth sector. However, without the ideas and inventions of individual creators, underpinned by the protection of those ideas through copyright, there would be no creative economy.

8. Much of the Government’s desired growth from the creative industries will derive from the ideas and creations of individual authors and creators. It is therefore crucial that, like businesses, individual creators are able to participate fairly in the rewards of success of their creations and are thereby incentivised to commit their careers to creating more great British works.

9. To ensure that creativity is contributing to the maximum economic growth in the UK, the Government needs to ensure that authors and creators are encouraged to remain in the UK commercial sector through incentive and reward.

10. We have seen in both our own and other industries how the UK’s brightest talents can become disillusioned and decide instead to forge their careers in other countries and/or industries where their talent is fairly rewarded (in the case of film directors—to the USA).

Fair compensation for surrendering rights

11. Directors UK members have an active interest in copyright and IP, as directors are recognised as authors of their work under UK and European law. Retaining IP rights is vital; it provides creators with the means to realise value for the uses of their creations. The extent to which independent TV producers have used the retention of rights granted in the 2003 Communications Act to distribute more UK content on secondary channels and in particular internationally, illustrates the extra economic success achieved when content creators have control over their own IP rights.

12. At Directors UK our main challenge has been asserting our members’ rights in the face of huge pressure to surrender their copyright for no fair reward or compensation—a challenge that remains to be resolved in the area of film. We are also concerned this will increasingly become an issue for on demand and other digital use of their works where it proves difficult for individual creators to tap into the various different revenue streams and to deal with some of the very large ISPs.

13. Without fair remuneration for authors there is no incentive to continue to create new and innovative commercial content, instead concentrating on projects where the incentives come from critical or artistic acclaim rather than commercial success, and this poses a very real risk to industry and growth.

14. We want to see an environment emerging in which consumers, creators and service providers can all access creative material at a fair price and with fair rewards and compensation to creators for the use of the copyright.

Hargreaves

15. Many of these issues are largely dealt with through the copyright system, and Directors UK has been involved in the work of Hargreaves, the IPO, Richard Hooper and BIS.

16. On the whole we felt that the Hargreaves review and the work that followed it was heading in the right direction, in particular its understanding of the need to sustain fair rewards for creators, and for the continuing fight against IP theft. We were particularly supportive of the recommendation for a Digital Copyright Exchange, which was further developed by Richard Hooper and has led to industry figures agreeing to support a “copyright hub” project. We believe this industry-led approach is the most effective way of ensuring that copyright licensing is as efficient and usable as possible in the digital age.

17. However, there are some areas arising from the Hargreaves review in which we do have concerns, in particular Private Copying Exceptions for personal use and issues concerning the regulation of Collective Management Organisations.

Private Copying Exceptions

18. Format shifting (or copying works across devices) whilst notionally illegal in the UK is not currently enforced and consumer awareness of the illegality of it is low, with consumers expecting to be able to use the content on whatever device they choose. While we agree with Hargreaves that this needs to be addressed, in our view it is important to have flexible and adaptable arrangements which allow people to access content via different platforms but which protect and fairly reward rights holders.

19. In our response to the IPO’s consultation on copyright we highlighted our concerns regarding the private copying exception. We argued that the consultation document seemed to pitch consumers, creators and platforms/businesses against each other. It appeared to have been framed very narrowly, limiting the extent to which legal private copying could take place and without any payment to copyright owners. Instead we proposed an alternative Statutory Licensing approach, which would permit more extensive private copying that could liberate new creative businesses whilst providing a fair reward to creators of the works which new businesses wish to use.

20. Statutory Licensing could take the form that equipment or platform providers, or the consumers themselves, would pay a licence fee at the point of purchase of content which would give them the right to all authorised uses. We believe this approach would be widely supported by creators, consumers and digital businesses: —consumers will be able to use their content in the ways in which they want without breaking any laws; businesses will be able to create and develop market opportunities for products using these works; and creators will be fairly rewarded for the use of their work. In our response we strongly urged the Government and the IPO to think again.

Regulation of Rights Owners

21. Following Hargreaves and work being conducted in the EU, policy is moving towards heavier regulation of rights owners such as Collective Management Organisations (CMO’s) in the UK and Europe. Whilst we support the need for better regulation of CMO’s we are concerned that an uneven playing field might be created if legislation excludes private rights collection organisations and public institutions such as public service broadcasters. Once again it risks unfairly penalising groups of individual creators compared to businesses.

Retransmission Fees

22. Outside of Hargreaves, a further anomalous situation in the UK which is being examined within the DCMS Communications Review is the fact that there is no standard requirement that payments are made by pay TV platforms for retransmission of free-to-air PSB broadcast channels, unlike most countries in the rest of Europe.

23. British Creators are alone in not currently benefitting from retransmission copyright fees in the way that authors in other countries do, as highlighted in research conducted by Oliver and Ohlbaum:1 “Across much of continental Europe and the USA re-transmission of leading free to air networks is protected by copyright (ie they need the channel’s permission to re-transmit) and is accompanied by an obligation on platforms to pay a copyright fee which is then shared between the broadcasters, producers and authors of TV works/programmes”.

24. We believe that the new Communications Act should require that pay TV broadcasters must pay to carry the PSB channels, this would provide additional funds to those channels and would represent a valuable incentive to all creator groups—writers, producers, directors, performers, music composers—through both remuneration for use of their works and as funds for investment in new content creation. Any changes to the retransmission fees structure should incorporate copyright payments for authors.

Tax & Employment

25. We welcome the government’s commitment to the film tax credit and the proposals for introducing creative sector tax incentives for high end TV, animation and video games. Directors UK had been increasingly concerned about the risks to the industry of such productions moving out of the UK and this move should help to reduce this risk.

26. However, whilst there has been government and treasury support for the business end of the industry we are concerned that on an individual level some aspects of the tax system bear down too severely on creative individuals and should be reviewed.

27. In recent years creative businesses have been removing creative individuals from full-time staff positions. As a result the vast majority of creators and authors are now freelance ie pursuing their careers outside a company/staff employment structure, with fewer employment rights and protection and with limited support.

28. Their careers are often characterised by long periods where they are not paid. This time can be used productively to develop and research new projects, at their own risk. We note the moves that the Government has already made to alter certain aspects of the corporate tax regime in the UK with a view to incentivising spend on R&D. We would like the government to explore the possibility of extending similar ideas to individual creators through the personal tax system so that authors are incentivised to invest their time between periods of “paid work” in the development of strong and innovative creative ideas.

29. We have also been concerned with the unintended consequences of the HMRC’s “9-month rule”. This rule, set out in the HMRC Film Industry Tax Guidelines whereby any freelance worker in the film and TV industries whose contract extends beyond nine months is deemed to have PAYE tax status, causes producers and broadcasters to limit contracts to nine months maximum, even if the project has a natural life of one year. As a result, a director who is quite clearly a freelance worker has to take an enforced and artificial three month period of unemployment, and is denied the opportunity to complete the natural cycle of employment on that project. It also has an impact on freelancers who are employed independently on different projects, headed up by different production teams, but for the same umbrella employer, eg the BBC, ITV or a large independent production company. In the case of continuing drama directors, who are limited to working on a small number of productions (EastEnders, Casualty, Holby, Doctors, Coronation Street, Emmerdale) produced by the BBC or ITV, they risk enforced unemployment as a result of the restrictions imposed by the rule.

30. This measure was originally introduced, we believe, to prevent the avoidance of PAYE by workers who claimed to be self-employed, but in practice now it is having the effect of an additional and unfair penalty on workers who are clearly freelance and have no claim to employed status. Directors UK is currently engaged in dialogue with HMRC regarding their recent update to these rules and while we acknowledge that the revisions do allow some flexibility, it is still confusing to both employers and freelancers alike. We would like to see the nine-month rule altered in the case of the Film and Television industry, to remove this unnecessary and harmful effect.

Skills and Career Development for Creative Individuals

31. The UK was able to showcase so many talented British individuals at the Olympic ceremonies, but they all had to start somewhere. When considering the legacy of the Olympics we need to ensure that we continue to create an environment that nurtures, develops and supports our creative individuals throughout their careers and which allows for entrepreneurial risk-taking.

32. The value of the creative economy, and in our case film, television and new media production activity in the UK from both indigenous production and inward investment, demonstrates the vital need to ensure that the UK’s talent base remains world class, not just in terms of facilities and resources but also for individual creative talent.

33. There is a clear analogy here with sporting excellence. The risk is that UK talent will not be available to deliver the full range of creative content required for the future, unless we tackle the issue of investment in skills and career development. We believe this requires a strategy for the development of the whole careers of creators, and not just discrete skills training.

34. Our concern is that training has recently tended to focus on what funding bodies or creative businesses want or think is wanted, as opposed to what the individual recipients actually need. This is exacerbated by the fact that the casualisation of the workforce has fragmented access to training opportunities for our largely freelance British talent base.

35. We believe the industry and the individual creative talent would be better served if training strategy and funding focused more on the delivery of career development through professional associations who are tuned in to the needs of their members.

36. Directors UK, as the professional association for screen directors, can and should play a key role in determining where key skills gaps exist and where training and further development needs must be met. In our members experience current practice by broadcasters and employers does not address this in a practical way.

37. Beyond the core craft skills learnt at college or on the job, directors need to acquire any new technical skills; they also require opportunities to practice the full range of skills and to be supported in their existing work place; and they need to gain inspiration and learning from their own work, that of their peers and of the great directors. Our concern is that with the increase in risk-averse investment and commissioning there is little scope for directors to develop their own vision, experiment or innovate with new ideas and techniques.

38. We are ready to work with Creative Skillset to identify these gaps and needs and to deliver the necessary training to ensure that there is no shortage of talented, world-class British directors creating innovative British content.

39. Directors UK is also keen to ensure that activity designed to identify and develop talent is applied across the country. This is important not only to ensure that all potential talent has the opportunity wherever it is based, but also that a range and diversity of UK voices is present both behind and in front of the camera.

Representation of Creative Individuals

40. Directors UK has become the recognised voice representing the concerns of our members. We are now an active participant in industry and government discussions and our opinions are being heard, but we are conscious that voices representing individual creators have been, and still are, too often missing in industry discussions and forums. We view this as a dangerous oversight.

41. We note that among the list of members on the Creative industries Council there are representatives of creative businesses across a variety of sectors but there appears to be no individual creators or representatives speaking on behalf of creative individuals. We believe it is important that creative individuals are part of the debate concerning development and growth in the creative economy.

42. An example of how well this can work can be seen in the recent Film Review conducted by Lord Chris Smith. His review brought together input from individual creators, film businesses, industry experts, skills experts, educationalists, government departments—with BIS, DCMS and the Treasury all playing their role. As a result it produced a list of recommendations that ensured a joined up approach to policy and to which all parties felt incentivised to work together to deliver in order to best develop their industry.

43. Policy work affecting the creative industries is currently being undertaken in departments across government eg by the DCMS in the Communications Review, by the IPO on copyright, BIS on growth, innovation and skills development and HM Treasury on creative sector tax reliefs, all of which have the aim of protecting and encouraging growth in the UK’s creative industries. Whilst Directors UK welcomes this cross-governmental support for the creative industries and feel there is a continuity in the policy objectives that links many of them together, there has to be sufficient support for Creative Individuals. Our proposal to achieve this is for the Government to designate a champion who would work across departments to ensure that the interests of individual creators are heard, supported and encouraged and to ensure a more joined up approach to policy making.

November 2012