The potential impact of Brexit on the creative industries, tourism and the digital single market Contents

2Workforce issues

7.Much of the evidence we received focused its attention on the impact that Brexit may have on the workforce within the industries under examination, their future ability to recruit, and their capacity to deploy staff flexibly.

8.Across all sectors, witnesses highlighted the importance of retaining their EU staff and maintaining access to talent and future workers. The Museums Association said in their written evidence that “uncertainty faced by EU nationals who work in museums is substantial” and

possible new immigration rules and the tone of debate on immigration are damaging museums’ ability to attract and retain staff from across the world at all levels of employment.9

The Publishers Association said “EU workers are highly valued, with almost a third of publishing houses saying that retaining freedom of movement is their top priority post-Brexit.”10 The British Fashion Council warned that “it is an essential aspect of UK based designer businesses to be able to source from the EU for both students to train and skilled workers to employ.”11

9.Nicola Mendelsohn CBE, Vice President, Europe, Middle East and Africa, Facebook and Co-Chair, Creative Industries Council told us:

Access to talent is a key issue for us and that is where we share the same challenges that the Creative Industries Council and all the 280,000 businesses that are looking to access talent from across the waters face as well. We would seek reassurances both for the people who are already here, but also for the people we might want to hire in the future, that they will be able to live here and so will their [ … ] families.12

John Kampfner, Chief Executive of Creative Industries Federation (CIF), described a meeting convened between a broad range of CIF members, and members of the Exiting the European Union Select Committee. Mr Kampfner said that the aspect of the discussion which “was interesting was that everybody had their opportunity to speak, about 30 over a couple of hours. About three-quarters of the conversation was on access to talent.”13

10.Discussing the impact of the outcome of the referendum on the tourism and hospitality industry, Ufi Ibrahim, Chief Executive of the British Hospitality Association, also made the point that businesses and workers were already experiencing a negative impact in terms of recruitment as a result of Brexit-related uncertainty and a feeling that EU workers were not welcome.14

Role of EU staff

‘Locals selling to locals’

11.Sir Peter Bazalgette, then Chair of the Arts Council England, said that it was important to access a diverse international workforce to enhance the commercial success of British businesses:

There is a phrase people like to use, “Locals selling to locals”. It does not matter whether it is the box office or the Royal Opera House or whether it is the distribution department of a television company selling finished programmes or formats, you need multilingual, multicultural teams to sell great British content around the world or to sell great British culture to tourists who come.15

12.This point was reflected in evidence which discussed the needs of tourism in the UK. Deirdre Wells, Chief Executive of UKinbound, the trade association for businesses focussed on inbound tourism, described the circumstances of a UK business called JacTravel which, she noted, employed:

70% EU nationals in their London office so they can communicate with the outbound operators in Germany, France and Italy and create those sorts of business deals in their own languages—that is still primarily how business is done. They need those language skills with skilled operations staff who can work with their clients overseas to be able to put these packages together.16

13.The importance of international knowledge and skills to harness commercial success within the UK was not confined to the tourism and hospitality industry. The Royal Institute of British Architects said in its written evidence that the “ability to recruit and retain staff with experience of working in foreign markets helps make the UK more competitive.”17

Language skills

14.The need to employ staff with sufficient language skills was emphasised in the oral evidence heard by our predecessor committee. Sally Balcombe, CEO of VisitBritain, said:

I can give a clear example where I have had cruise companies pulling off ports in the UK because they cannot find language speaking guides. I am not talking about Mandarin or whatever else but about German. There is an absolute lack of German guides for us at the moment.18

15.Hilton, the hotel chain, described the risk that losing easy access to EU staff poses to the standing of the UK’s tourist industry:

They bring valuable language skills and international experience, helping us to welcome European guests who make up 63% of inbound holidaymakers to Britain. [ … ] Our role as ambassadors for the UK is now of strategic importance as we deliver the GREAT welcome to leisure and business travellers.19

Whilst the UK remains a very popular tourist destination, surveys of visitors show that we are regarded as “less welcoming than our competitors” and visitors from key EU nations tend to score the British welcome poorly.20

Number of EU workers

16.The Government told our predecessor committee that:

The creative industries employed 1.9 million people in 2015. Of these, 115,000 were from other EU countries (6.2%), and 103,000 (5.5%) were from outside of the EU.21

Their evidence noted that “EU nationals form about 9% of the workforce and those from the Rest of the World account for 6%.”22

17.Evidence taken prior to the general election outlined the large numbers of EU staff working in tourism and the concern within the industry about the negative consequences of Brexit. UKinbound told us that:

30% of our members’ employees are EU migrants and many business owners have said that the loss of this highly valued workforce would be a body blow to the industry.23

18.Since we took evidence, the Department for Exiting the European Union’s (DExEU) report on the Creative Industries puts its EU workforce at 131,000—6.7% of the total, against a UK average of 7%. Within the sector, the employment rate of EU nationals is highest in publishing (9.8%) and architecture (9.2%) and at its lowest in the music industry (4.1%).

19.Similarly, DExEU says that of 1.5m people in the UK’s digital sector in 2016, some 98,000 (6.7%) were EU nationals and a further 95,000 (6.5%) came from outside the EU.

20.Citing latest data from the Office for National Statistics, the Department’s Tourism report estimated that EU nationals made up around 10% of the overall workforce in 2016—higher than the UK average, but significantly less than the figures for UKinbound’s members.

Accuracy of Government estimates

21.The official figures illustrating reliance on EU workers were thought to be an underestimate by witnesses from range of sectors. Ufi Ibrahim said of the tourist industry:

If we look at the estimates, for example of the Migration Observatory at Oxford University, which put the volume of EU migrant workers in our industry at 15%, and extrapolate that back to the 4.5 million people employed in hospitality and tourism, that gives you a figure of around 700,000 people. We think that is very conservative as a number, particularly in areas such as London and the south-east, where the percentage jumps to in excess of 40% as an average.24

22.Discussing estimates for the creative industries, John Kampfner said:

I am not casting aspersions on DCMS figures—6% of EU workers in the creative industries. We think that is a huge underestimate. Our absolutely incomplete evidence-gathering from our members puts the figure at somewhere between 10% and 40%, more usually hovering around the 25% to 30%. The highest we have heard is an architect’s practice at 60%, one fashion house at 50%, quite a lot in the 40%.25

Furthermore, Nicola Mendelsohn cited the example of one agency in the advertising industry which had “on average 20% of the company’s workforce [ … ] made up of non-British EU [citizens].”26

23.The Museums Association said that collection of data in relation to the nationality of workers is incomplete, observing in its evidence that there is “little data” because “current employment law does not require organisations to document the nationality of EU employees.”27 Despite this limitation, the National Museum Director’s Council provided evidence that “for some museums—particularly larger nationals—up to 15% of the workforce are EU nationals.”28

24.Fifteen percent of museum and galleries staff being of EU origin stands in clear contrast to figures quoted by NESTA, a charity dedicated to driving creative innovation, which suggested an average of only four percent.29 These figures are by no means incompatible, but this one sector illustrates the wider point that there is little certainty as to the extent to which creative organisations rely on EU workers.

25.Responding to these concerns, the then Secretary of State, Rt Hon Karen Bradley MP, said that the Department for Digital, Culture, Media and Sport (DCMS) and the Home Office would measure reliance on EU workers within each sector in order understand the needs of the labour market:

The Migration Advisory Council [Committee] are looking at the overall UK labour market and how many of those jobs are currently filled by EU nationals, how many are filled by non-EU nationals that are not UK nationals.30

The Secretary of State added that the focus of this effort would be to ensure that “we have the right numbers of people and that we have the right skills.”31

Regional concentration

26.Evidence gathered during the inquiry showed that EU workers in the creative industries and tourism are largely concentrated in London and the South East. Ufi Ibrahim said:

In London and the South East the truth is that we are very close to full employment. There just are not the British workers available and easily accessible to be able to employ in the United Kingdom and we have learned this over the past three years.32

27.Ms Ibrahim added that she was aware of some London-based businesses where 90% of workers were drawn from the EU.33 Although the greatest concentration was London and the South East, it was noted that there are other parts of the UK where EU migrants compensate for the dearth of domestic workers:

It is not only London and the South East because you have anomalies. For example, in Llandudno in north Wales in one of our member businesses 67% of their workforce are EU nationals. It is not just London; Guildford, and many other areas across the country I can name, are heavily reliant on the EU workforce.34

Shortage of domestic workers

28.A commonly reported complaint among many organisations that submitted written evidence was that recruitment of foreign workers, both from the EU and farther afield, was a consequence of a shortage of skills within the domestic workforce. An example of this was provided by the British Fashion Council:

There is a real shortage of skilled workers in Britain, forcing companies to recruit from the EU in order to source the highest quality candidates.

Many businesses look first to the UK, however the skills at the level required aren’t currently available.35

29.Organisations from a range of sectors including the performing arts, tourism and tech made similar cases. The Royal Opera House said, in cases where an artist is required at very short notice, they are “rarely able to secure cover from the UK and are therefore dependent on the ability of EU nationals to immediately board a plane.”36 Without this instant source of talent, the Royal Opera House warned of a detrimental impact on the quality of performances and the possible “cancellation of a performance.”37

30.UKIE, which represents the UK digital games sector, underlined the critical relationship between attracting the requisite skills and commercial success. They described a “war for talent” and reported that 70% of games firms believe that “access to talent is “critically” important to the industry.”38 This, UKIE said, is because there is a “critical skills shortage in the UK.” Dell EMC, the American IT firm, echoed concerns about skills in the wider tech sector arguing that businesses “already face an acute challenge in hiring digital talent.”39 It is telling that the Government has already responded to such fierce competition for talent by doubling to 2,000 per year the “number of visas available to the brightest and best talent from around the world” under the tier 1 exceptional talent route.40

31.Visit Britain emphasised the dearth of language skills available to tourism and hospitality businesses and compared the lack of skills affecting tourism with the IT skills required by the wider business community:

In a 2013 survey of businesses by the Confederation of British Industry only 36% were satisfied with their employees’ language skills, compared with 93% who were satisfied or very satisfied with school and college leavers’ skills in the use of IT.41


32.The UK creative, tech and tourism industries need sufficient access to talent to continue as world leaders. That is self evidently in the nature of being a global centre of excellence in these areas. The then Secretary of State, Rt Hon Karen Bradley MP, said that Brexit is an opportunity to think about “how we can upskill our native workforce”, but this alone will not address the challenges that businesses face today particularly in an increasingly globalised and international sector. Brexit will place a greater urgency on developing the skills of the domestic workforce, but we cannot allow a skills gap to occur which could create shortages of essential workers for businesses in the UK as a result of our departure from the EU.

33.The then Secretary of State’s assertion that analysis of the workforce must be completed on a sector–by–sector basis is a sensible approach. However, the lack of detail regarding precise numbers is problematic. There is a lack of clarity about reliance on EU workers. For instance, figures cited to us for the number of people working in tourism ranged from 3 million to 4.5 million.

34.It is imperative that any analysis examines regional demand for staff and the operational requirements of businesses and organisations, ranging from very small start-ups to international corporations. Effective policy cannot be developed if the Government underestimates the extent to which these thriving industries depend on staff drawn from the EU. It is essential, therefore, that the Government and its advisory bodies—including the Creative Industries Council, the Tourism Industry Council and the Migration Advisory Committee—take these considerations into account in their analysis of the impact of Brexit on the UK’s future labour market.

Future immigration arrangements


35.Discussing the operation of our future immigration arrangements with the EU, the Creative Industries Council’s Nicola Mendelsohn emphasised that many businesses in the creative industries would not have the capacity to manage a burdensome bureaucratic system:

With 90% of companies in the creative industries employing fewer than five people, the bureaucracy that we already see when people are trying to obtain visas from other parts of the world is a challenge and can stop business. [ … ]

When you think from a creative industries perspective about what it means for an orchestra from Leeds to go on a tour of Europe, you might have two or three people pulling that together and you do not want them to be bogged down in endless amounts of paperwork and bureaucracy that is going to stop that collaboration from happening.42

36.Festivals Edinburgh echoed this concern and said that a more restrictive system of allowing EU performers into the UK could diminish the diversity of Edinburgh’s festivals.43

37.John Kampfner, Chief Executive of the Creative Industries Federation, said that replicating the existing visa system for EU nationals would be damaging but observed that Brexit provides an opportunity to design a useable system that does not disadvantage SMEs:

The large arts organisations, your BBC, your Tate, your ITV or whatever, have large HR departments. They can do all the visa applications, as any large company or even large/medium-sized company can do. For particularly the small ones, if we introduce a visa regime that is similar to the one we have now for non-EU foreign nationals, it [ … ] will cause a lot of economic damage, both in terms of the medium-term and the short-term applications for jobs. That will obviously cause direct economic damage, so this is an opportunity to start from scratch.44

38.The timeliness of a new system which allows for the swift movement of performers was stressed by Nicola Mendelsohn:

One of the other differences about our industry is the fact that a lot of people have time-limited activities. They cannot wait months and months to get the visas.45

Salary as a proxy for the value of employees

39.The existing arrangements which use salary levels as the measure by which non–EU migrants are eligible for tier 2 visas were also thought to be inappropriate. John Kampfner noted that the arts and creative industries share many traits with parts of the tech and digital sector in that skilled posts are not necessarily well remunerated:

In other sectors—financial services, IT, whatever—there is a pretty strong read-across between earning potential and value. How much is a top oboist worth or a great poet or a great photographer or a start-up games developer? The tier 2 starting rate is £30,000 and that will be a stretch for quite a lot, particularly the not-for-profit arts sector, but also for start-up commercial creative industries companies. If we are, as it seems we are, going to introduce a visa system, I would recommend some sort of caveat in determining value that does not always have to use earning potential as the single criterion.46

40.Representatives of the fashion and tourism industry made similar points. Adam Mansell, Chief Executive Officer, UK Fashion and Textile Association, described significant reliance on EU seamstresses and cutters in the fashion industry. He argued that a visa system structured around salary requirements would not complement the way in which the sector operates.47 Ufi Ibrahim provided some context around the existing visa system as it related to tourism:

On the tier 1 and tier 2 structure, there was a tier 3 structure that was originally proposed but it was never really enacted because it was felt that the EU would provide the tier 3, which was a lower skilled volume of migrant workers.48

Ms Ibrahim also said that losing access to the relatively low-paid EU workforce would be damaging to SMEs. She noted that eight out of ten businesses in the sector “employ fewer than 10 people” and many could be “pushed over the edge” if EU labour is “cut off”.49

Future options

41.Designing a system based on seasonality in order to meet the demands of the tourist industry was not regarded as an entirely viable option by Ufi Ibrahim. She said that such a scheme:

might help in areas such as north Wales or coastal communities, but in areas such as London and the South East tourism is now 365 days a year, in many cases now almost around the clock, 24 hours a day. In those areas a seasonal solution would not help. It would help in other areas, as I said, such as coastal areas.50

These comments reinforced the written evidence submitted by the British Hospitality Association which noted that “90 per cent of tourism workers are permanently employed.”51

42.As noted above, the then Secretary of State emphasised in her evidence that determining the future arrangements will require sector-by-sector analysis. NESTA, however, noted in their evidence that the existing migration system does not support this approach:

The migration system as a whole is not set up to cater for specific industry sectors, and as such, high skill, high growth sectors like the creative industries will suffer disproportionately from changes to policy, and from migration rules as they currently stand.52

43.Witnesses from all sectors agreed that a simple replication of the existing system would not allow them to maintain their existing levels of growth. NESTA acknowledged that the Government has provided “positive reassurances” but warned that a change in the status of EU migrants “would disproportionately affect creative service activities like Advertising, Publishing and Design which all employ around 10 per cent of their workforce from Europe.”53

44.Examining options for how a new system could operate, the London Borough of Camden submitted written evidence welcoming the concept of regionalisation of visas which could create a “London Work Permit”.54 Hilton’s evidence suggested that there is potential for “targeted use of work permits for priority sectors.”55

45.A more restrictive immigration system for EU workers was described as “a non–tariff barrier” by PACT, the trade association for independent TV and film producers. Echoing Nicola Mendelsohn’s evidence, they concluded that the success of the industry could not have been realised “without the reciprocal ease of movement between the UK and EU for time-limited activities.”56 Furthermore, the Royal Opera House recommended that a new system for EU migration to the UK could be “an online process for same-day applications and/or an audited system that relies, in the first instance, on an organisation’s judgement.”57

UK workers in the EU

46.The reciprocal aspect of future arrangements is of fundamental importance to large swathes of the tourist and creative industries. The Motion Picture Association told us that the Government should prioritise as an outcome of the negotiations an agreement ensuring that “UK production crews can work in the EU and vice-versa.”58 Just as the Royal Opera House had highlighted concerns that they may not be able to bring in EU artists at late notice, the British Film Institute said that British workers in film production often take posts in the EU in short timeframes. They said “the introduction of a UK-EU visa regime might impact the ability of highly-skilled UK based operatives to take up opportunities in a timely fashion.”59

47.During the Committee’s visit to Belfast, witnesses from the film and television industries impressed on us the importance of this free-flow of people across borders, if the success of Northern Ireland is to be maintained in attracting big budget productions from overseas producers, including those from the United States. Scenes from the Game of Thrones, for instance—the set of which we visited in Belfast—are filmed in several European locations.

48.During our visit, a number of witnesses expressed concerns that Dublin—which is already attracting other industries, including financial services—might otherwise benefit at Belfast’s expense if the current workforce flexibility was not maintained after Brexit.

49.During the Committee’s visits to digital and creative business centres in Berlin and Barcelona, it was clear that these cities are already attractive to UK entrepreneurs and are actively developing strategies to woo more UK businesses after Brexit. At our meetings both at the Barcelona Tech City, and at G-TECH [the German Tech and Entrepreneurship Centre] in Berlin we were told that the main language for doing business in digital clusters such as these is English. The cost of doing business is lower than in London, and it has been made easy and attractive for people to relocate there. Paris, with its new ‘Station F’ centre in a converted rail freight depot, also has ambitions to attract new digital start-ups and Amsterdam—which has already secured the European Medicines Agency—is seeking to lure cross-border broadcasters from London, too. The opportunity to be able to move both people and businesses easily between different European cities is clearly greatly valued. Whilst there is a danger that some people could move their firms to other creative cities within the European Single Market post-Brexit, it was also clear that no other city in the EU can match the size of the creative and digital sectors in London. Again, this does not mean that other UK cities will have the resilience to withstand this. In addition to this, London provides unrivalled access to finance, and other legal and professional, services. Some entrepreneurs the Committee met both in Berlin and Barcelona stated that they will still want to access these services after Brexit, and that a tech business based in Europe looking to complete a significant funding round would be much more limited in its ability to do this, without access to the London financial markets.

50.A key aspect of The British Fashion Council’s evidence was the importance of reciprocal free movement in developing the talent of British workers at the highest levels of the fashion industry:

Free movement also allows British talent the opportunity to establish themselves within EU businesses. For example, the Creative Directors of Chloé, Louis Vuitton Menswear and Loewe are British designers. The global reach of British talent that encourages international investment in British talent will be further impacted by potential changes to free movement policies.60

51.Pronounced and immediate concerns also exist within the outbound tourist industry, which structures many products around the presence of British staff at holiday destinations. Alan Wardle, CEO of ABTA–The Travel Association,61 highlighted the importance to tour operators of British staff being able to continue to work in the EU.62 Stephen D’Alfonso, Group Head of Public Affairs at Thomas Cook, noted the importance of the future relationship with the EU allowing the easy movement of staff employed by a UK-based business:

Ultimately, we want to be able to move our people around. We have 22,000 employees across 16 source markets. We don’t want barriers to that and short-term visas, for example, is a very important element in that respect.63


52.Irrespective of Brexit, the Government should overhaul the existing visa system for non-EU nationals, who also make a valuable contribution to the UK economy, including our creative, technology and tourism industries. These industries rely on EU workers, and their commercial success is built on having a diverse workforce. The Government must heed warnings that SMEs across creative industries and tourism will not have the capacity to manage a new system that foists additional bureaucracy upon them.

53.Brexit provides an opportunity for the Government to overhaul the existing visa system. We believe that salary levels are a crude proxy for value and fail to recognise the central role that workers from the EU and beyond play in making British businesses successful. We recommend that the Government explores ways in which commercial value, and value to specific sectors of the economy, can be factored into the UK’s post-Brexit immigration system.

54.Simplicity should be a key feature of the future migration arrangements that the UK will agree with the EU. In particular, the creative industries and performing arts need a system which complements the spontaneity that defines live performance. We believe, therefore, that the Government should seek to retain free movement of people during any transitional period after the UK formally ceases to be a member of the EU in March 2019. If the visa system is to change subsequently, an intensive and detailed process of consultation with all those affected will need to begin as soon as possible.

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24 January 2018