Summary
The creative industries rank among the world’s fastest-growing sectors. They provide high-quality employment, drive innovation, and support civic and social wellbeing. According to the Government, in recent years they have generated more value to the UK economy than the life sciences, aerospace and automotive industries combined. Much of the growth potential lies in areas that combine technology with creativity.
The sector has benefited from some Government attention in recent years. Tax reliefs, investment programmes, skills initiatives and pandemic recovery funds have all been widely praised.
But the Government’s current approach is complacent and risks jeopardising the sector’s commercial potential. Indeed, the creative industries scarcely featured in the 2022 Autumn Statement and were not included in the Government’s five priorities for growth. This lack of focus risks affecting the UK’s future prosperity, especially at a time of rising international competition in the sector and domestic economic challenges.
Championing the creative industries is not a matter of special pleading. There is a serious and well evidenced business case for the sector to sit at the heart of the UK’s future growth plans.
To unlock the sector’s full potential, ministers must devote serious attention to fixing a policy landscape characterised by incoherence and barriers to success. The creative industries rank amongst the most innovative sectors in the country, but UK tax relief for research and development remains restrictive and does not reflect where innovation comes from in the sector. The UK business environment lacks sufficient incentives for small businesses to scale at home; too many sell up and valuable intellectual property (IP) moves overseas. New proposals to relax IP laws risk undermining creative sector business models, and do not even enjoy the support of the creative industries minister in the Department for Digital, Culture, Media and Sport (DCMS). Trade negotiations are putting the UK’s ‘gold standard’ copyright regime at risk.
Data collection in both Government and the sector is muddled and under exploited. Academic research funding does too little to encourage commercially orientated creative projects; it skews towards collaborations with large businesses rather than the small firms that characterise the creative sector. We remain perplexed as to why UK Research and Innovation is choosing not to continue one of its most successful interventions, the Creative Industries Clusters Programme, even as other new initiatives are being set up.
Successive governments’ efforts to address skills shortages have fallen far short of what is needed. The English education system equips pupils poorly for the realities of future work, in particular the freelance market. Technical skills shortages are widespread. Opportunities to encourage students to develop a valuable blend of creative and digital skills are being missed. Careers guidance about the sector remains patchy and poor. Skills policies have led to an over-abundance of courses (more than 100,000 are listed on the national careers website) but too few opportunities to develop the types of skills employers say they want. There have been 35 ministers responsible for skills in the past 25 years, which is hardly conducive to long-term stability.
Creative sector organisations receiving public funding also face a challenging future. Many are struggling to adapt to the rapid pace of technological change. Funding streams are disparate and complex; integrating good practice remains challenging; and the stop-start nature of grants makes it hard to support cross-disciplinary collaboration or help shift business models towards long-term financial sustainability. A greater focus on innovation, collaboration and sustainability will be key to their long-term success.
Ministerial engagement with international opportunities appears to be declining. The Government is reportedly absent at key global gatherings such as the World Conference on the Creative Economy, while cuts to the British Council hamper opportunities to build profitable overseas networks. Several witnesses told us the UK was a world leader when it defined the concept of the creative industries over two decades ago. Such leadership is now being left to others.
The Government’s new Sector Vision will therefore be very welcome. This should help ministers identify priorities and make difficult choices about the allocation of scarce resources. It should also help those across the creative sector realise the full commercial potential of their work.
But a plan on its own will be insufficient. Better cross-departmental collaboration will be key to its success. Unless senior figures across the Government start taking the creative industries more seriously, the fundamentals that underpin the sector’s success will deteriorate and the UK’s competitiveness will decline. In some areas this process has already begun.
We therefore recommend the following priority areas for attention:
- Recognise our strengths: The creative industries are an economic powerhouse. The Government should commit to making them a key feature of its future growth plan, and explain why they were omitted from its recent list of priority sectors with high growth potential.
- Protect IP: The Intellectual Property Office must change its proposed approach to text and data mining to avoid undercutting creative industries business models. The Government should also commit to maintaining and promoting the UK’s IP standards in trade deals.
- Fund what works: UKRI should work with DCMS and the Department for Business, Energy and Industrial Strategy to ensure the Creative Industries Clusters Programme can continue beyond March 2023. Discontinuing support would be a needless waste of a programme that is exceeding co-investment expectations by 600 per cent.
- Boost innovation: HM Treasury should change its approach to the R&D tax relief system to include innovation in the arts. It should undertake and publish a comprehensive review of the options. Relatedly, the Government’s review of audiovisual tax reliefs must benchmark the UK against international counterparts to address declining UK competitiveness.
- Address blind spots in education: over the next decade there will be a huge demand for workers with a blend of digital and creative skills. The Department for Education needs to wake up to this reality. It should start by addressing the major decline in Design and Technology GCSEs, and improving careers guidance. Lazy rhetoric about ‘low value’ arts courses risks deterring much needed talent from pursuing education and careers in the sector. The Department should further address barriers to apprenticeships in the creative sector and promote the new flexi-job apprenticeship scheme more widely.
- Follow the data: future priorities—from further education course content through to lifelong learning entitlements and careers guidance—need to be informed by up-to-date market data and long-term forecasts of skills shortages. The new Unit for Future Skills should play a central role in providing this information.
- Support adaptation: DCMS should publish a forward-looking plan to help the sector adapt to technological disruption and change, with a particular focus on those on low incomes working in the creative industries.
Terms and definitions
- The terms ‘creative industries’ and ‘creative sector’ refer to the DCMS definition of industries “which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”.1 Nine subsectors fall under this definition:
- music, performing and visual arts;
- museums, galleries and libraries;
- publishing;
- IT, software and computer services;
- film, TV, video, radio and photography;
- design and designer fashion;
- crafts;
- architecture; and
- advertising and marketing.
- Our inquiry engaged with a selection of the above: music, performing and visual arts; museums and galleries; publishing; gaming, film, TV, video, photography; and digital and design services.
- The term ‘creative occupations’ refers to jobs that are creative in nature according to the DCMS creative industries economic estimates methodology.2
- The term ‘creative economy’ includes both creative and non-creative occupations within the creative industries, as well as those working in creative occupations in other sectors (for example a marketing professional working in financial services).
1 DCMS, ‘Sector Estimates Methodology’ (2021): https://www.gov.uk/government/publications/dcms-sectors-economic-estimates-methodology/dcms-sector-economic-estimates-methodology [accessed 24 November 2022]
2 DCMS, Creative Industries Economic Estimates Methodology (2016), p 6: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/499683/CIEE_Methodology.pdf [accessed 24 November 2022]