The creative industries are huge contributors to the UK economy, and the rise of digital media will make them more important still. Winnie Agbonlahor looks at how government can promote growth in this crucial sector
Starting a band is easy. Keeping one going is less so. Everyone plays a different instrument, according to their individual preference, talent and skill, so making sure everyone is pulling together can prove difficult when it comes to logistics as well as attitudes and opinions. The bigger the band, the more diverse and difficult to coordinate are its views. And the more important the gigs, the bigger the pressure – which can make it more challenging for everyone to play in concert.
In the government’s efforts to support the creative industries it, similarly, is trying to align a wide range of interests, needs – and artistic temperaments. The UK’s creative economy provides jobs for 2.5 million people, or 9% of the workforce: more than financial services, advanced manufacturing or construction, according to figures collated by innovation agency Nesta.
Representatives from across the creative sector agree that the UK is a global leader in the field. Jo Twist, chief executive at UK Interactive Entertainment (UKIE) – the trade body for the UK’s computer games industry – says “we are the most creative nation in the world”. Hasan Bakshi, director of creative economy at Nesta, tells CSW that the creative sector is “the only area of the UK economy where we are still perceived as a leading nation”; he adds that countries such as South Korea want to learn from the UK how to promote their own creative sectors. And Henry Vann, public affairs and policy officer at the Incorporated Society of Musicians (ISM), which represents more than 6,500 professionals, notes that British music education has a strong reputation worldwide.
So what is government doing to support the creative industries. Well, a fair bit, it seems. The coalition has, for example, passed the Live Music Act to reduce the red tape around hosting gigs – a move welcomed across the music industry and described as “spot on” by Jo Dipple, chief executive of UK Music. And the Creative Industries Council, a forum bringing together industry and government bodies – and co-chaired by culture secretary Maria Miller, business secretary Vince Cable and Facebook’s vice-president for Europe, the Middle East and Africa Nicola Mendelsohn – has also been well received in the industry.
Definitions
These people also share the view, however, that some significant building blocks aren’t quite in the right place yet. The first challenge lies in defining the creative sector: which professions should be classed as part of the creative industries? Twist believes the government’s current classification is flawed and doesn’t accurately reflect the sector’s contribution to the country’s economy. The Department for Culture, Media and Sport (DCMS) removed some software and publishing professions from the creative industries in 2011, which meant that on paper, the creative industry’s output fell considerably compared to 2010. Nesta’s Bakshi describes this move as “perverse” due to the “increasing convergence between creativity and technology”.
Getting these definitions right is important. As Matthew Fell, director for competitive markets at the CBI, explains, it is the basis on which government decides what to “throw its weight behind”. DCMS responds that it consulted recently on the industry (SIC) and occupation (SOC) codes used in its creative industries classification, and is considering responses.
Money, money, money
Twist is confident the classifications issue will be resolved in due course. The “biggest frustration” for her sector. she says, is the migration of promising companies to other countries in pursuit of more attractive tax breaks: “The games industry is faster-growing than films or music, and we used to be fourth in the world in terms of our industrial standing: we’ve now slipped to sixth,” she warns. “We’ve suffered a lot from brain drain: people closing down businesses here and deciding to open up instead in countries like Canada, where some areas have 37% tax relief.” These tax breaks, Twist adds, are an important tool when selling the UK to the rest of the world as an attractive place to work and invest. The Treasury says it is committed to introducing tax reliefs for the games industry as soon as possible, but is awaiting approval from the European Commission.
Another difficulty for creative businesses lies in accessing finance: banks see them as particularly risky, according to Twist. The vast majority of businesses in the creative sector are small start-ups of five employees or less, Fell says. Obtaining loans is always tricky for such companies, and it’s particularly difficult when their assets mostly comprise ideas. “Securing a loan against intangible assets – ideas rather than buildings, plants or machinery – is difficult,” he explains. Twist’s suggestion is for businesses in the games industry to sell data they own about product users, following in the footsteps of businesses such as Facebook and Twitter.
But how can government help with access to finance? It should act as a mediator between businesses and banks, Fell says, encouraging banks to “lend to young firms where intangible assets are predominant”. The Department for Business, Innovation and Skills (BIS) says it is already doing some facilitating work: it launched a campaign in 2011 to make businesses aware of an appeals process they can initiate if they feel they have unfairly been refused finance. A BIS spokesman told CSW that as of June, 40% of appeals had been successful.
Fell also thinks government could do more to adapt its own funding programmes to the needs of creative businesses. The government’s £3.2bn Regional Growth Fund (RGF), which is open to bids by private businesses until 2017, is not well-suited to creative industries, Fell says. Under the scheme, companies are required to provide a sustainable jobs guarantee for three years or more. “But we know the creative industry is very much a project-based industry that comes together, collaborates on an idea, makes a plan, goes away, reforms and makes the next project. So this is an oddity the government would do well to iron out.”
In response, a BIS spokesman says that creative businesses are welcome to apply for the RGF, but adds that they’re “often more inclined to seek equity finance than debt finance, and the government is boosting the availability of equity finance through enterprise capital funds. Government is also investing in non-bank lending channels such as peer-to-peer lending companies.” All these schemes are being transferred to the new British Business Bank, which aims to support SMEs by bringing together public and private sector funds. The bank was promised an extra £1bn in this year’s autumn statement.
The next generation of creative programmers
Equally important to producing world-class creative businesses is our ability to equip our next generation with the right digital skills, says Twist. Here, there was progress last month, when the government announced the introduction of computing to the national curriculum from September 2014, replacing ICT. This, Twist explains, means that rather than learning to use existing software, pupils will now be taught to create their own programmes.
This announcement by education secretary Michael Gove was counted as a major win by the Next Gen Skills campaign, which has urged government to improve the programming skills needed for future growth. The campaign was backed by UKIE, as well as the likes of Facebook, Google and Nintendo. Twist welcomes the change, but adds that efforts must not stop here: “Our games industry was born 30 or 40 years ago out of kids with BBC microcomputers being able to tinker and code and make their own games. We lost that a bit over the last 20 years. So this is a win. But it’s only the first step.”
To deliver on its ambition, Twist says, the government should ensure its teachers have the necessary skills, equipment, capacity and confidence to teach those subjects effectively. Teachers “need continuous professional development and have to understand what resource materials there are,” she says. Twist also believes there should be a greater emphasis on fusing technology with art in the national curriculum. “Our ideal A-levels graduate would have computer programming, but also art skills within their toolkit,” she says. “We don’t just need people who can code: we need people who can draw; people who are artistic and creative programmers. Programming is not just a dumb science, it needs kids who are naturally using technology to create art.”
The musicians of the future
The use of technology is also crucial to our music industry, says ISM’s Vann. While the music element of the national curriculum initially made no mention of technology, this omission has been addressed in the final version: this is important, Vann explains, because “a lot of people now use different forms of technology to write music – most pupils engage with music on all sorts of gadgets.”
Equally important is the value that government attaches to the teaching of music itself, Vann adds. Music was not included in the EBacc, which ranks schools by pupils’ achievements in maths, English, sciences and languages. And while EBaccs are no longer compulsory, the absence of music from this league table has nevertheless led to fewer children taking music GCSE, according to ISM’s research.
Intellectual property
A third area to which government should attach more weight in children’s education is intellectual property (IP), says Vann: “In order to reduce copyright infringement we need a combination of two things: enforcement and education.”
Including copyright in the national curriculum would not only teach kids to respect other people’s intellectual property, he says, but also teach them about the value of a good idea. Independent artist Neville Farmer agrees. He tells CSW that a “complete change in attitudes” is necessary in order to embed a culture in which it is not acceptable to steal other people’s works of art. “People love their films, music and TV,” he argues, “but no one wants to pay for it. Eventually, if people continue not paying for it, there will be no films, music or TV.”
IP is largely managed by copyright law, which, as Nesta’s Bakshi explains, “has always tried to strike a balance between incentivising creativity whilst not being so restrictive that it prevents creatives from borrowing some of the ideas of other creatives”. But as the Intellectual Property Office (IPO) – the executive agency of BIS responsible for IP rights in the UK – acknowledges, current copyright law “was designed for the analogue age” and is therefore under review.
While CBI’s Fell agrees there needs to be a robust intellectual framework, he also warns that copyright regulations have regularly been reviewed by successive governments, creating uncertainty within the industry over many years. “I don’t think the creative industries are any different to any other business in that the single biggest thing they need for investment is certainty, and if one of the things fundamental to your business model is continually up in the air, that makes it pretty tricky to plan ahead and invest with any degree of certainty or confidence,” he says. The current review process, an IPO spokeswoman says, is “nearly complete and will reduce the current legal uncertainty when implemented and ensure the evolving market is not held back by out-of-date legislation”. However, she’s unable to give a timeframe or deadline.
Another uncertainty has been created by the delayed implementation of the Digital Economy Act, which includes measures to combat copyright piracy. The act’s provisions, which include sending letters to suspected illegal downloaders and disconnecting the worst offenders, have been delayed by a judicial review. While Fell and Vann both call on the government to speed up the implementation, Farmer raises concerns over its feasibility. The act, he says, “operates on the assumption that you can throw someone out of the internet. But in an age of wifi and at a time where internet access has almost become a civil right, this is simply not going to work.” A spokeswoman for DCMS has said implemention of the mass notification system required by the act will require secondary legislation, which the government is “currently drawing up”.
A wider strategy
While Bakshi is happy to see a healthy debate about copyright, he believes that government and the creative industry should see it as just “one plank of many by which the government supports the creative economy.” There’s a need for a national strategy, he says, but that’s “slipped to the sidelines over time”; he’d like to see the centre of government – Number 10 and the Treasury – taking the lead in developing a strategic plan for our creative industries, as set out in Nesta’s April 2013 Manifesto for the Creative Economy.
The absence of a strategic approach, he adds, has led to a lack of support for research and development (R&D) in the creative sector. “There has been nowhere near enough debate on how innovation policy and R&D policy can support the creative industries,” he says. “Instead, there has been too much focus on areas like copyright and arts funding; it’s too simplistic to think that this is the only way government can support the creative economy.” When it comes to R&D investment, he says, there has been a long-standing bias towards engineering: “When the R&D definitions were set the economy was much more dominated by manufacturing, but for 2013 we think that’s just not good enough.”
DCMS has said it welcomes Nesta’s manifesto, and works “closely with Nesta to discuss the organisation’s contribution to the creative industries work programme”. And Cable, addressing a fringe event about the creative industries at the Liberal Democrats’ conference in Glasgow earlier this year, said that government “does recognise the industry is enormously important; it’s probably undervalued”. He added that this isn’t just an issue for DCMS: “My own department now regards the creative industries as one of its key objectives. We’ve had a team in BIS – we’ve never had this before – working on creative industry, trying to address the kind of problems my department can help with, like business finance, training, innovation and IP reform. So you’ve got friends in government.”
The government is, then, moving to support creative industries in various ways. But Twist argues that it’s now crucial to understand the impact of recent interventions in order to build on any success or root out mistakes. For the UK boasts talented programmers and “world class TV, film and video games”, Twist says. It has a highly reputable music education sector, according to Vann. And the country must now sell itself to overseas companies, says Twist, so that it keeps its edge in the creative industries. For this we will need – like any aspiring music band – a high degree of patience, an ability to coordinate a large number of forces, and some great tunes with broad appeal. Then we can ensure that everyone is working in harmony to put on a truly world-class show.