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Taken as a whole, the creative industries make a huge contribution to our economy as well as to our social and cultural life. They employ around 2 million people. They produce a higher proportion of GDP in the UK than they do in any other country, and they contribute considerably more to our balance of trade than does construction, insurance or pensions, and twice the amount of the pharmaceutical sector.



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Our creative industries are therefore not some lightweight or marginal sector contributing on the periphery of our economy. They are serious business. Our music industry alone—a recognised world leader—supports 125,000 jobs and contributes nearly £5 billion to the UK economy, of which one-third derives from exports. The UK film and video industries employ more than 50,000 people, with British television’s overseas earnings bringing in around half a billion pounds. Pinewood Studios has recently announced plans to double its size as it challenges Hollywood for the next generation of blockbuster films. Importantly, those plans include working with the National Film and Television School to set up an onsite academy to train set designers and costume makers, and Pinewood is projecting its plans as an opportunity to form a creative cluster, adding to a media park that houses companies such as Technicolor.

We have the largest market in Europe for computer and video games, as people in Britain now buy more computer games than record singles. In 2008, the UK video and computer games industry generated £2.5 billion and more than 20,000 people were employed in games development, publishing and retail. Most multinational games companies choose to locate their European HQ in the UK, and we have by far the largest concentration of games development studios in Europe, with clusters around Cambridge, Coventry, Dundee, Leeds and Liverpool, to name but a few. Our design industry is now worth over £5 billion a year, employing 70,000 people, and our designer fashion industry—as the noble Baroness, Lady Young, said—has grown tenfold in the past decade. Collectively, that is big business indeed.

In the Government’s first two terms they championed the creative industries, driven largely, as many noble Lords have said, by my noble friend Lord Smith of Finsbury in a previous life. The challenge now is to promote creativity and innovation in every part of our economy, because creativity is as important in the retail industry and in education, health and business as it is in the creative industries. The cultural sector in its widest sense should become the dynamo of the creative impulse that can serve all of those areas. My noble friend Lord Bragg quoted the key employment statistics for the creative industries, but he was referring to direct jobs. A great many creative jobs are within the many businesses supporting these industries.

The Government understand and have recognised the value of the creative industries. They have lain out in clear and decisive terms what needs to be done to nurture the sector and ensure that the economy gains maximum value from their products. It was an excellent example of joined-up thinking and cross-cutting government that produced the creative economy strategy entitled Creative Britain: New Talents for the New Economy. DCMS, in partnership with BERR and the Department for Innovation, Universities and Skills, set out a wide range of commitments outlining how the Government will take action to support the creative industries. Most measures are self-explanatory, such as giving all children a creative education, supporting research and innovation, or helping creative businesses to grow and access finance, and all contain a raft of measures that will help develop and sustain the sector.



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Perhaps the most important measure is the one known as supporting creative clusters, because the spin-off effects of such developments can be of real benefit to more than the creative industries themselves. These companies can prove to be the drivers of wider growth, sometimes leading the regeneration of cities experiencing post-industrial economic slump.

My home city of Dundee provides a prime example of that. Left reeling from a sharp reduction in heavy engineering and an end to shipbuilding, the city suffered from relatively low innovation and export levels. The response over the past 15 years has seen a ground-breaking collaboration between Dundee City Council, Scottish Enterprise Tayside, the city’s universities and its businesses to rebalance the local economy as a city region. Driven by Dundee University’s College of Life Sciences and the University of Abertay’s School of Computing and Creative Technologies—both recognised as world leaders—a creative media district was developed. The area already housed the renowned Rep Theatre and the Duncan of Jordanstone College of Art and Design, which is now part of Dundee University, and its cultural credentials were further enhanced with the arrival of the Scottish Dance Theatre and a visual arts centre, Dundee Contemporary Arts. Dundee’s Digital Media Park, now known as Seabraes Yards, was established, and the multiplier effect on employment, inner-city regeneration and the city’s reputation far and wide has been remarkable. More than 2,000 people are employed in the thriving creative media sector in Dundee, and this will drive further growth.

Other major UK cities have gone down a similar route: Glasgow’s flagship creative industries project, the Digital Media Quarter, is taking shape at Pacific Quay, a £500 million public and private sector redevelopment project that is anticipated to deliver 3,600 jobs by 2013. It is one of the flagship undertakings in the regeneration of the River Clyde waterfront, with neighbours including BBC Scotland, Scottish Television, Film City Glasgow and the city’s Science Centre.

The Cultural Industries Quarter in Sheffield is an example in another post-industrial city, and there are further instances in Birmingham, Liverpool and Newcastle as the regional development agencies increasingly identify the creative industries as one of the foundations for building a strong and dynamic regional economy. The London Development Agency has established Creative London to champion and support the capital’s creative industries. In Scotland, public agencies are supporting the country’s creative talent, formally joining forces to support the creative industries, a key sector for Scotland's economy which makes an important contribution to prosperity and growth. In 2007, these industries generated a turnover of more than £5 billion and supported more than 60,000 jobs. It is vital to build on that. In February this year, the Scottish Government published a framework document outlining the roles and responsibilities of key support organisations, including Creative Scotland, the enterprise agencies and local authorities.

The UK’s universities play a vital role in developing and sustaining the creative economy. The universities grouping Million+ has helpfully provided noble Lords

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with a briefing for today’s debate outlining the recommendations of its Creative Futures report. One of its group, the University of Abertay Dundee, is a partner in Scotland’s centre for research and teaching in the creative industries, the Institute for Capitalising on Creativity. Last year, the ICC was awarded a £1.5 million grant from the UK’s Economic and Social Research Council to conduct research in the creative industries in Scotland. The institute combines the expertise of four Scottish universities and is dedicated to a novel postgraduate programme of research, knowledge transfer, continuing professional development and networking/hub activities, including seminars, think tanks and conferences. The grant was one of only four to be awarded in the UK under the ESRC’s Capacity Building Clusters in Business Research and Engagement scheme, and was the sole grant to focus on the creative industries. Its award is a testament to the strength of those industries in Scotland.

This debate is indeed timely. As much attention as possible should be drawn to the cultural sector and the creative industries, and I trust that my noble friend the Minister will confirm that the Government will ensure that those industries continue to receive the necessary support to enable them to maintain their essential contribution to our economy.

1.19 pm

Lord Corbett of Castle Vale: My Lords, I thank my noble friend Lord Bragg and congratulate him on the masterly way in which he introduced the debate. However, I gently chide him for overlooking the astonishing contribution of the members of the Lunar Society in Birmingham—among them James Watt, Matthew Boulton, and Michael Faraday, to name but a few—who saw the problems facing people at the end of the 1700s and into the 1800s. They met on the night of the full moon because there was no street lighting, and they set about solving those problems. Although it is a small matter, it is the West Midlands and not quite the north.

That apart—and it might be something for the next debate rather than this one—there is expanding success in our creative industries. That success, as has already been said, is built on a very wide and deep base of talent—in schools, colleges and universities, amateur dramatic groups, choirs, orchestras and musical groups—and among all those people inspired to put the book which we all have inside us on to paper or on the screen. Musicians, film makers, script writers, authors, TV producers and designers are world renowned alongside a wide range of other talents, and the artists and programme makers do not all have to live within the M25 belt.

In Birmingham and the West Midlands, we have the Royal Shakespeare Company, the City of Birmingham Symphony Orchestra, the Birmingham Royal Ballet and the Birmingham Museum and Art Gallery among many other companies, both professional and amateur, which enrich our cultural lives and take their talents into schools and community groups to encourage others to enjoy what is on offer and perhaps to participate themselves. Advantage West Midlands, the development agency, has a £1.3 million fund to support festivals

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and events to underpin the region’s leisure tourism. These include the Shakespeare birthday celebrations, an international dance festival and a film premiere with Screen West Midlands. As has already been said, Britain truly has got talent.

Making a massive contribution to Britain’s creative energy, as well as to the enjoyment of its viewers and listeners, is of course the BBC. There is no other public broadcaster in the world, publicly funded, which is able to offer such a wide variety of programmes in sound and vision and digitally, and, in the process, to discover and nurture the talent and skills which this range of output needs and depends on, all paid for out of the licence fee. Only the BBC can sustain investment in a huge swathe of musical events, ranging from the joyousness of the Proms at one end to the big band concerts at the other. I very much agree with what Sir Michael Lyons, the chairman of the BBC Trust, said last week:

“The licence fee is key here ... And when people come up with ideas about ‘top-slicing’ the licence fee for other causes or commercial players, they would do well to remember that licence fee-payers give us their money in good faith, believing it will be spent on BBC services and content. To suddenly tell them midway through the settlement that their money is being siphoned off, as some have suggested it should be, would be more than an act of bad faith, it would be tantamount to breaking a contract”.

The BBC also makes increasing use of the independent production sector, which stimulates and encourages talent outside London as well, to bid for programme commissions. Channel 4 does the same, investing around £400 million a year in core independent production companies and also supporting digital content production. Similarly, ITV, the largest of the commercial broadcasters, invests around £800 million a year in original content, encouraging and using the talents of writers, actors, musicians, designers, directors and editors. It also gets overseas revenue of around £300 million, up last year by 25 per cent compared with the previous year.

All these activities in the audiovisual sector face serious theft issues—the theft of intellectual property. Copyright theft alone costs the sector an estimated £0.5 billion a year, meaning a loss to the economy of £1.2 billion a year and cheating the Exchequer out of £85 million a year in VAT. Organised criminals pocket this cash instead of it going where it should through physical and digital distribution. A report last week by the Strategic Advisory Board for Intellectual Property revealed that,

The UK Film Council told the authors of the report that there were,

through this theft. Respect for Film, which campaigns on behalf of the moving image, commissioned Oxford Economics to look at how legislative changes might help. It concluded that tightening laws to tackle physical and digital copyright theft would increase UK economic output from this sector by £614 million. That should interest any Chancellor of the Exchequer in these straitened times.



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What changes could be made? One example is to make camcording illegal in cinemas. This is the source of 90 per cent of seized first-release films and DVDs. It is already a criminal offence in France, Italy and Spain, and, in my view, there is no reason why it should not be made a criminal offence here. Next, there needs to be better regulation by local authorities’ trading standards departments of car boot sales and other markets. It is said that the Digital Britain White Paper, which we are expecting later this month, will commit the Government to the aim of reducing the file-sharing of illegal content by 70 to 80 per cent within two to three years as one step towards reducing online copyright theft. If that is the case, I much welcome it. I well understand that it is a complex issue but ways can and must be found to protect intellectual property rights for the future of our creative industries.

This debate is right to celebrate the value of our creative industries socially, culturally and economically, and the depth and range of the talent that underpin them. I do so with enthusiasm.

1.26 pm

Baroness Warwick of Undercliffe: My Lords, I appreciate being allowed to make this brief contribution in support of the education and research which underpin what other noble Lords have shown to be the huge success of the creative industries.

I argue—I declare an interest as chief executive of Universities UK—that this success has been built on the foundations of forward-looking education and research in higher education institutions, yet I am concerned that, in the laudable effort to promote study and research in traditional science subjects, we risk losing sight of the importance of the arts, humanities and social sciences, all of which play a role in underpinning our efforts in the creative fields. Research and education in fields such as design, interactive media and digital content, as well as more conventional creative subjects such as art, drama and music, are the lifeblood of our creative industries.

Therefore, I ask the Minister to comment on just one issue. Is it correct that the current definitions of R&D inadvertently position research for the creative industries and other arts and humanities outside the current R&D and innovation agenda? As I understand it, the guidelines for R&D tax credits state:

“Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines”,

thus excluding knowledge transfer activity relating to the creative industries, as well as R&D within the creative industries themselves, from tax relief of this kind. Therefore, a sector of industry which is often characterised by SMEs and which thrives on cutting-edge research does not receive the incentive to invest in that research.

So I urge Ministers, in considering how to achieve the best value for public funds, not to forget the lesson of the creative industries. We need education and research in the arts, humanities and social sciences. They are an integral part of the intellectual ecosystem of the UK—a part that, yes, provides powerful economic benefits but so much more as well.



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1.28 pm

Baroness Bonham-Carter of Yarnbury: My Lords, I join in thanking the noble Lord, Lord Bragg, for securing this debate. The number and variety of speeches today are an indication of how central the contribution of the creative industries is to the UK economy and also, I argue, to the well-being of the UK. As Sting pointed out at the Hay festival, while the country does not produce much any more,

He is so right. As I have said before, in an era which has seen manufacturing jobs halved since 1997, the creative sector is the new economy. As I think the noble Lord, Lord Watson, mentioned, it has been estimated that music alone contributes £5 billion to the UK economy.

Many noble Lords have mentioned festivals today—we have heard about Wales and Edinburgh—and I feel that I have to speak up for the south. I went from Hay to the Wylye Valley art trail, a nine-day celebration of the visual arts in and around the Wylye Valley where I live. It was an opportunity to visit artists’ studios, see the range of artwork being carried out in the area and to meet and talk to artists and craftspeople. Up the road, the Salisbury festival has for the past two weeks been host to music, dance, theatre, workshops and even, I believe, the noble Lord, Lord Bragg.

It not just about art, music and theatre; the range and diversity of the creative industries, as the noble Baroness, Lady Young, pointed out, stretches from fashion to film, advertising, architecture, television and video games. The cultural and creative industries make up 7.3 per cent of the national economy, contributing £60 billion a year and collectively employing 2 million people. We believe that that should be a key route to getting us out of the recession. But we must keep ahead of the game. The UK is lagging behind in the deployment of super-fast broadband. The Government’s commitment in the interim Digital Britain report to a rollout of two megabytes per second, when the average is already 3.6 megabytes per second, is not nearly ambitious enough and will not provide the catalyst for recovery that is required.

One of the greatest threats to the growth of this sector, as mentioned by the noble Lords, Lord Corbett and Lord Macdonald, is the knotty problem of the protection of intellectual property rights in our digital age and the ease with which copyright can be and is, flouted via online piracy and peer-to-peer file sharing. The report, to which the noble Lord, Lord Corbett, referred, Strategic Advisory Board for Intellectual Property stated that around 7 million people in the UK are involved in illegal downloads, costing the economy tens of billions of pounds. Of course, this behaviour spans from those involved in intentional online piracy to many who are uncertain about what is illegal. The fact that so much on the internet is free confuses people.

A new settlement is needed between artists, consumers, rights-holders and intermediaries, with copyright at its core. Good copyright protection is vital for the encouragement of creativity and the health of the creative sector. The Government’s interim Digital Britain

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report acknowledges the importance of creative capital. However, its suggestion of a digital rights agency without statutory powers seems to offer little hope of ending the problem. A collective approach from internet service providers, rights-holders and government is needed to make it more likely for court cases such as that brought against the founders of Pirate Bay to succeed. Moves by the ISPs to send warning letters to repeat offenders are welcome and evidence suggests that they would have a good chance of making a difference. However, we do not think that the “three strikes and you are out” policy being considered in France is a desirable solution. ISPs cannot be both judge and jury.

It is to be welcomed that part of the remit of the proposed rights agency is, according to the noble Lord, Lord Young, in a recent debate on online piracy,

I think that we would all agree about the need for education alongside regulation. We must not forget that we are talking about the creative world—a fast-moving, dynamic world that the explosion of digital content has nurtured. Alongside the need to find a solution to online piracy, we need to exercise proportion—cultivate without crushing, as the noble Lord, Lord Bragg, said. But the new world brings with it problems for the old.

Broadcasting has historically made a hugely important contribution to the British creative economy. I declare an interest as an associate of an independent production company. The inspired creation of the BBC—followed by ITV, BBC2 and then Channel 4—has played a crucial role in sustaining and fuelling British creativity. More recently, changes in TV terms of trade have seen remarkable growth in the independent production sector. As well as nurturing British talent and British content, radio and television channels have provided virtually free access to all across the creative spectrum. But as the noble Lord, Lord Macdonald and the noble Baroness, Lady McIntosh, said, British broadcasting has reached a critical point. A transition is under way. Competition from digital channels and the internet has led to a decline in advertising revenue for the commercial public service broadcasters, which is exacerbated by our being in recession. The funding model, which has seen an annual investment of £3 billion in UK-originated content is under severe threat.

However, the statistic that is most relevant is this: the five terrestrial channels—those that are universally available and free—are responsible for about 90 per cent of the investment in UK-originated content; whereas the new players—the digital channels and the internet—contribute less than 10 per cent. That is despite the fact that together they receive two-thirds of the income coming into UK TV.

The British creative industries need our public service broadcasters and we must protect the BBC licence fee from topslicing and suggestions of arbitrary freezing, as made recently by the Conservative Party. According to an independent report commissioned by the BBC Trust last year, the BBC’s activities put £5 billion per

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annum into the creative industries. We must not return to the days when the BBC was a monopoly. We welcome the Government’s commitment in the interim report of the noble Lord, Lord Carter, Digital Britain, to maintaining a plurality of public service broadcasters. Can the Minister confirm that the Government support the idea of a partnership between Channel 4 and the BBC’s commercial arm Worldwide?

As a publisher-broadcaster, Channel 4 makes an enormous contribution to the creative economy. It stimulates competition in the UK’s creative economy and it is vital that it survives. A snapshot of the creative industries can be seen in the new manufacturing industries and the phenomenon of Harry Potter. The films are made at a place called Leavesden aerodrome, where Rolls-Royce used to manufacture helicopter engines. Now instead of that kind of industry, it employs vast numbers of people from across the creative spectrum from the most advanced new media to practitioners of crafts in the shape of carpenters, painters, actors, and so on. But for this, there needs to be a skills base, and that starts with education.


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