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The AHRC has established itself as the leading authority on research-based knowledge transfer and innovation in the creative economy. It has established itself as a trusted broker for the creative industries, working with them to identify significant barriers to innovation in the sector. It has challenged the narrow definition of research and development that precludes non-technological innovation, which is central to the creative industries. It has engendered an appetite for research-based innovation in companies that lack the capacity or, normally, the requirement to engage in research and development. It has done this through its knowledge catalyst scheme, which targets the micro-enterprises that typify the creative industries by placing in a company a graduate, with a university-based mentor, to address a particular issue and come up with ways forward. This has been a highly innovative approach, successful in attracting applications from organisations that were previously hard to reach.

For big firms, the AHRC has developed innovative models of knowledge transfer through its knowledge exchange programme, based on 50:50 funding. The purpose is to use previously untapped research knowledge in the arts and humanities to deliver new applications in convergent media. One such is with BBC Future Media and Technology. This programme, in its pilot phase, has already attracted 60 applications involving researchers and staff of the BBC.

It makes very good sense to foster the work done by the AHRC and for it to be recognised in the forthcoming funding round. I know that the Minister was in on the creation of the AHRC and I am sure that he is as keen as I am that it should be able to integrate fully with the creative industries.

7.55 pm

Lord Howarth of Newport: My Lords, the creative industries are indeed precious, and we must nurture them. A balance-of-payments deficit on manufactures of £60 billion a year takes a lot of offsetting. Even after exporting Tracey Emin to Venice, we shall still not be paying our way.

Creative industries are a mixed bag in terms of economic performance. While the growth in gross value-added of software, computer games and electronic publishing over a sustained period has been 11 per cent a year, the growth in GVA of designer fashion has been zero. If a skull, even a diamond-encrusted skull with a £50 million price tag, is to be emblematic of our economy as well as of our culture, then whispers of immortality may be deceptive. At all events, we need to be very good indeed at the creative industries, not least because they are growing fast in this country and in others—faster, even, in some other countries than they are here.

What should the Government do? They should improve education for creativity. This is not easy; our educational tradition has been good at developing the rational and analytic faculties but much less effective in developing the imaginative and synthetic abilities. But if we can improve, through education for creativity, the self-confidence of young people, their motivation and their capacity to communicate along with their self-discipline and capacity for self-criticism, the benefits across the whole range of learning and the development of young people will be immense.

The Government should energetically implement all the very sensible recommendations of the Roberts report. In addition, they should continue to help link the universities and the creative industries, as the noble Lord, Lord Dearing, has just said, and continue to back the very important work of knowledge transfer that the AHRC is doing.

Otherwise, the Government should fund generously our museums, galleries, libraries, archives, theatres and orchestras—all our cultural organisations—so that they flourish. You get what you pay for. They should regulate sensibly; intellectual property rights should be flexible to adapt to the new situations that technological change creates and enforceable globally so that creativity is rewarded instead of sapped by the depredations of piracy and counterfeiting. They should tax sensibly: if the research and development tax credit excludes knowledge transfer in the creative industries from tax relief, then that should be changed. They should support creativity locally and regionally. There should be a duty on local authorities to support their own cultural institutions, with the resources to do so. They should enable access to finance for people who present themselves to the banks, as Oscar Wilde presented himself to the customs officer in the USA, saying:

There must be affordable premises. The Government should promote clusters and critical mass. The lessons from London and Liverpool are that the preconditions of creative success are liberal migration policies and liberal attitudes to lifestyle.

I hope that we shall see the Green Paper soon. After all, by the end of this month, the DCMS and the DTI may not even exist. I certainly hope we shall have a statement in July of a new, coherent vision. Above all, the Government must demonstrate that they value creativity. The irony is that if you support culture as a good in itself, it will repay you economically.

7.58 pm

Lord Birt: My Lords, after speed dating comes speed debating. I should like to speak in celebration. The UK is blessed with astonishing creative vitality, whether in the performing and visual arts, the media and writing, music of every kind or architecture, fashion and food. The range, diversity and quality are extraordinary.

As a country, we appear to have been doing something right for quite a long time. It is a mix of things. Our schools appear to be successfully nurturing individual creativity. Our arts educational institutions are simply world-class. Our regulation of, and investment in, public service broadcasting has fostered widespread innovation. Our national performing companies attain dizzy heights. We appear, too, to have the balance right, for success in the public sphere is matched by a corresponding vitality in the commercially funded sectors. There are plainly now powerful synergies at work in the UK between the public and the private spheres, with much crossover traffic going both ways.

Creativity is spread wide across the land as well, but it is worth while, in this context, considering London, for it is the powerhouse of the UK economy. As a city, it achieves world standards of productivity, matching the United States. It makes a huge contribution through taxation to the rest of the UK. It is noteworthy that the creative industries, including fashion, publishing, advertising, architecture, design and many other arts-related activities, are now second only to business services as the largest contributor to London's vibrant economy.

The final factor is that the UK is increasingly a magnet for the most talented, able and capable business people from all over Europe and beyond. Surveys tell us that those who come to work here are attracted not only by the sheer economic vitality of the UK, where the capital markets work especially well, but specifically by the liveliness, cultural diversity and sheer zest and creativity of life in the capital and beyond. Our national creativity increasingly underpins our economic development. The DCMS has powerful arguments to place before the Treasury.

8 pm

Lord Giddens: My Lords, asking an academic to speak for two minutes is like some form of exquisite torture, since we normally talk for 50 minutes—and there is some of my two minutes gone already.

I have three main points, which I shall make briefly. To reaffirm what other noble Lords have said about the crucial importance of the creative industries in the modern economy, one has to see that against the backdrop of the amazing changes that have affected the economy more generally. A generation ago, more than 40 per cent of the population worked in manufacturing and agriculture; now only 14 per cent of the population do so. There has been a tremendous change, and the creative industries are in a kind of vanguard in that new economy.

Secondly, however, we should not make a ghetto for the so-called creative industries, a notion that anyone can see is suspect, as you need creativity in every industry. Alongside the reports mentioned, we should add the Cox Review of Creativity in Business, which was much more sobering than the picture that the noble Lord, Lord Birt, painted of arts industries. It showed that more than 50 per cent of firms had not introduced any new services or goods within the previous three years, indicating that there is a long way to go in that regard.

Thirdly, on a note of caution, economists are saying that we are in a new phase of offshoring. The old phase of offshoring manufacture has probably gone about as far as it can, but IT offshoring is completely different; it could be vastly more radical. The Princeton economist Alan Blinder argues that no less than 40 per cent of jobs in the United States economy could in principle be outsourced, including many creative economy jobs in design, computers, film and television. As I go around the world speaking in universities, I am impressed by the degree to which other countries have many universities teaching completely in English. One can see that the whole level of competition is being ratcheted up. If the Minister would like to say something about the perils and opportunities of offshoring in the IT industries, I should be very happy.

8.03 pm

Baroness Warwick of Undercliffe: My Lords, it is a pleasure to speak about the contribution of the creative industries to the UK, because those industries, as other noble Lords have said, are the dazzling jewel in the UK treasure chest. I am sure that noble Lords will say that that jewel should be displayed regularly and with considerable ostentation. Higher education institutions have an essential role in keeping that jewel sparkling. I declare my interest as chief executive of Universities UK.

Higher education institutions provide the skilled workforce that enables the creative industries to succeed. Our smaller, specialist institutions, such as the Royal College of Art, the Royal Academy of Music and the Guildhall School of Music and Drama, are never undersubscribed and never short of successful, even world-famous graduates. Our larger, more mainstream universities equally play a role, as was shown in Universities UK's recent publication Higher Level Learning.

I shall give just two examples—and there are many that I could choose. Abertay Dundee, with support from the industry, became the first university in the world to develop degrees in computer games technology. The London College of Fashion, part of the University of the Arts, London, has its own fashion business resource studio. Competition is intense; having a degree is not always enough. That is why universities offer placements, work experience and tailored vocational teaching. But to maintain this success—and I echo here everything that the noble Lord, Lord Patel, said—investment is needed.

Government commitment to research and development, particularly in science, has been widely welcomed. I hope that the Minister will reassure me that this does not mean that the arts and humanities will be forgotten, since they are vital to the creative sector. Could he also comment on how the Government intend to support collaboration between higher education and small and medium enterprises, which are so prevalent in the creative sector? With proper support for applied research and incentives for university collaboration, our creative industries will continue to dazzle, both nationally and internationally.

8.05 pm

Baroness McIntosh of Hudnall: My Lords, this is the text message version of a longer speech. The first message is that I agree with pretty much everything that has been said so far, by every speaker—remarkably, within the time limit set.

The second message is that the creative industries include the performing arts—it says so on the DCMS website, so it must be true. The performing arts have led to very significant urban regeneration, and I give as an example the South Bank. Noble Lords can walk along the South Bank, see what has happened there and the economic activity that has followed. It is important that we recognise how significant the impact of large-scale cultural projects can be on producing regeneration.

Thirdly, theatre, which is part of the performing arts, is big business. It is worth approximately £2.6 billion per annum in the UK, £1.5 billion of that in London alone. It attracts visitors and is a tremendous export success. An example of that is “The History Boys” from the National Theatre. Will my noble friend confirm that the Government understand the powerful contribution that theatre makes, both culturally and economically, and does he agree that we must be careful not to undermine that contribution? Can he also say what progress is being made to ensure that theatres are not adversely affected by the sell-off of analogue frequencies ahead of digital switchover in 2012? That is a bit of an anorak point, but I am sure that the Minister will have a very good answer.

Finally, I shall say a very quick word about the Roundhouse in north London, of which I am proud to be a trustee. The Roundhouse has just completed a refurbishment, which cost about £30 million, of which 60 per cent has come from private donation and 40 per cent from public sources, both national and local. At the heart of the Roundhouse project is an inspirational new facility for young people, the Roundhouse Studios, which is equipped with performance spaces, recording studios, practice rooms, camera and editing facilities, musical instruments and much more. Some 4,000 young people have been through its programme since the building reopened. Most of them are from hard-to-reach communities, and many are linked to pupil referral units and youth services. They come to the Roundhouse to work with professional artists, technicians, marketing people and administration staff, to explore their own creativity but also to learn skills and develop attitudes that will help them into employment. This is another kind of cultural regeneration, regenerating minds and hearts, encouraging aspiration and supporting ambition, and we need much more of it.

8.08 pm

Lord Haskel: My Lords, like all of us here, the Government are aware that the creative industries are important to our economic future. I congratulate them on that. But what needs to be done?

I shall make two quick points. First, technology is rewriting the rules of the game. One result is that the arrangements for collecting royalties are now obsolete. The so-called summit on copyright in Brussels last week was inconclusive. So what is happening? The stakeholders—I hesitate to call them the players—are either pursuing their own individual solutions or heading for the courts. The Government are really going to have to get to grips with copyright because the uncertain economics will hold back the industry.

Secondly, perhaps the main reason why the creative industries do so well here is that we are seeing art and culture in all their forms—high and low, sound and vision—breaking out of their traditional locations, forms and media and infiltrating every part of our lives. I hope that the Government will treat the creative industries as part of our total economy, not a subsection, because creativity, which touches a chord with people everywhere, needs to be in the mainstream of our economy, not somewhere out in the fringes.

8.09 pm

Lord Clement-Jones: My Lords, what a distilled debate—we could probably sell bottles of it. I want very briefly to raise issues raised by the Select Committee, and referred to by the noble Lord, Lord Smith, in its excellent New Media and the Creative Industries report. The committee expressed strong concern about the lack of progress by the Government on copyright development, which in itself makes the argument for establishing a strategic advisory board on IP policy, as the Gowers review recommended. What plans do the Government have to include that in their Green Paper? I hope that they will take it forward.

The committee urges the Government to press the European Commission to bring forward proposals to extend the term of copyright for sound recordings to 70 years. We on these Benches have always thought that that extension should be combined with archive protection and compulsory licensing. However, the industry itself is now moving voluntarily down that track. We strongly support the committee’s recommendation. What are the Government doing in this respect? I asked an oral Question on this subject in December last. What consultations are taking place on the Government’s recommendations to the European Union? The European Union is clearly in pole position on this, but the Government’s attitude—since the UK has such an important position on music and recorded music copyright—will be vital.

Then there is the question of piracy. The Government are simply not doing enough, the committee concludes. Exemplary damages need to be considered. The committee says that the deterrent effect of the current enforcement regime is zero. Action needs to be taken on unauthorised copying of films by camcorders in the cinema. There is also the question of the so-called file sharing of music.

Finally, there is the question of fostering the investment climate in new media business development. In many ways we have gone backwards in this respect. I hope that the Green Paper will address all those issues. I hope that it does not consist only of a new task force—the previous one seems to have disappeared without trace. Even the Creative Economy Programme set up in 2005 is likewise not very visible. I look forward to hearing what the Minister has to say.

8.12 pm

Lord Howard of Rising: My Lords, rather than “What assessment?”, I suggest that it might in many ways be better if there was no assessment. Governments, when they look at things, have a nasty habit of interfering. The industries that most contribute to the economy, such as the advertising industry referred to by my noble friend Lady Buscombe, did not achieve their prosperity with the help of government. Indeed, one of the reasons for the recent decline, even if modest, in some of the creative industries can be directly attributed to government. The terrifying deluge of ill thought-out legislation and regulation is the exact opposite of the freedom from interference that makes the creative mind tick.

As my honourable friend the shadow Chancellor of the Exchequer has commented, it is not possible for Governments to create creativity. The greatest assistance that government can give to creativity is not to interfere but to leave it to take its own unpredictable path. When Handel, Mozart and Haydn came to London, it was because of freedom from government, not because of interference or subsidy. If my noble friend Lord Saatchi were here, he would no doubt tell us that his brother—however ill advised some might think it—has been a far more conspicuous and successful patron of Brit art than have government. Historically, theatres and music have prospered on their own. Their successors in the entertainment industry still do. Video games, iPods, televisions and so on developed without taxpayers’ help. Government interference hinders their evolution.

Perhaps, if the Government have to interfere, they could reverse the imposition by the European Union of the droit de suite and other actions of the European Union that have done so much to harm the fine art industry in the United Kingdom as well as addressing the problem of copyright piracy referred to today.

8.15 pm

Lord Evans of Temple Guiting: My Lords, I start by thanking the noble Baroness, Lady Bonham-Carter, for securing this debate. Like everyone else, I think that it is a great shame that we have had to do it so quickly. There are some very important matters to be discussed but we will not have time to do so.

Last week I spent a great deal of time at the literary festival at Hay-on-Wye. Although it is called a literary festival, it is much more than that. It is a week when many major players in the creative economy converge on Hay, turning this small town into a hub of creativity—a live testament to the importance of the creative economy. People from film, music, literature and theatre come together and talk; and if you listen, no one would doubt the existence and growing importance of this part of our economy—growing, as we have heard, at twice the rate of the economy as a whole, with exports for this sector of around £13.6 billion. My noble friend Lord Haskel argues that it must be seen as central to our economy and not as a sideshow. He is absolutely right, as is the noble Baroness, Lady Bonham-Carter, who made the same point.

Let me give a few examples of what I heard at Hay. Tim Bevan, of Working Title, told me that “Mr Bean”, yet to open in the US, has already grossed $181 million around the world. Andy Harries, of Left Bank Pictures, which made “The Queen”, directed by Stephen Frears, told me that it cost $15 million to make, was shot and edited entirely in the UK and has taken to date—and it is just at the beginning of its run—$120,000,000 worldwide. But the British film industry, as we have heard, is flourishing not only in London. John Newbigin told me that last year two international hit films were made in the West Midlands—I did not know that. “Confetti” sold to the US market for four times production cost and the acclaimed “The Road to Guantanamo” has been sold in 23 countries around the world. Neither of these films would have been made without the support of Screen West Midlands, a regional support agency for the West Midlands film industry.

A record 12.3 million people attended the London theatre, and we heard from my noble friend Lady McIntosh the value of theatre both inside and outside London. I had hoped that the noble Lord, Lord Lloyd-Webber, would be in his place this evening, but he is abroad preparing the sequel to the fabulously successful “The Phantom of the Opera”. The total value of UK film exports in 2006 was just under £600 million. As we know, the UK is second only to the US in the global art market.

The other evening, my noble friend Lord Rogers won the prestigious Pritzker Prize, the Nobel Prize for architecture, reminding us that UK firms account for eight of the top 10 architectural firms in western Europe. Our music industry is the third largest in the world, worth £6 billion. As an example, in March, Amy Winehouse’s album “Back to Black” entered the Billboard chart in the US at No. 7, with 57,000 sales in the first week. By the end of May, it had sold more than 400,000. Closer to home, British music artists are the dominant force in Europe. Nineteen of the 36 IFPI platinum awards made to artists selling more than 1 million copies of an album across Europe went to British acts.

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