Publishing Industry
(11 years, 10 months ago)
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Lord Dubs
My Lords, I am grateful to all Members of the Committee who are going to speak in this debate. I also express my thanks to the ALCS, the Publishers Association and the Society of Authors for the help that they have given me and, I hope, colleagues in preparing for the debate.
People who are brought up with books in the home are lucky and privileged, and life must be very difficult for those who, in their childhood, never saw a book in the house. I am reminded of a book which I read many years ago by Brendan Behan, called Borstal Boy, about a teenager in a juvenile prison allocated, I believe, two books a fortnight. He loved books so much—or developed such a liking for books while he was in jail—that he rationed himself to only so many pages a day, to make sure that his two books lasted the fortnight before he got new ones. One day the prisoner allocating books gave him a seed catalogue as his non-fiction book. As Brendan Behan says, he was almost in tears, with nothing to read for part of that period. Let us also remember that in the last century, books were burned by people who saw books and publishers as the enemies of freedom and democracy.
Books and publishing are of enormous value to the UK economy. The publishing sector is estimated to be worth some £5 billion a year, of which book sales amount to £3.2 billion. The United Kingdom is one of four countries that produce 100,000 new and revised titles a year. The UK book market is the fifth largest in the world, and 41% of the sector’s sales come from exports; a larger proportion than that from any other country. Moreover, successful books often lead to film rights, another benefit to the UK creative industry. However, a large barrier to growth is the difficulty most authors have in finding a proper return for their professional work. The figures for what many authors earn show how little they get in return for their professional work. One or two authors scoop the pools and make a fortune, but for many it is a very hard job indeed to make a decent living.
I turn specifically to publishing and the publishing industry. Publishers are of course the guardians of an author’s copyright, without which authors would hardly be able to make progress; they invest in authors, and give advances and royalty payments; they identify good-quality writing and research; and they help in the distribution of books. Publishers and retailers work together to encourage reading, for example in bookshops with World Book Day and many other such schemes.
However, one of the key factors on the scene is the growth of electronic publishing. I understand that in 2011 electronic publishing increased by 366%—an enormous increase. There is no VAT on printed books but electronic books published in this country attract a VAT rate of 27%. In some of our competitors on the continent, such as France and Luxembourg, there is a much lower rate of VAT. Britain is at an economic disadvantage with our e-books, and may well suffer even more as other countries impose lower rates of tax. If books are more expensive, Britain will fall behind. We only have to look at the music industry and the recent decline of HMV to see how bits of our economy can fall behind very rapidly if they are not able to compete in a world market.
On the positive side, digital books help in self-publishing, so they open the door for some authors. But nobody can predict the way in which e-books will go. All we can say is that the digital market has grown dramatically of late and I believe that it now poses a threat. I do not want to be a Luddite or act like King Canute and say we do not want e-books because of course they are here. What is important is that printed books will not fall behind too much and can live in this new digital age.
I think it was Jamie Byng, the managing director of Canongate, who said that one of the things that bookshops do is encourage discovery. The same applies to libraries. There can be few things more exciting than for a young person to be let loose in a bookshop or library and see the wealth of books available there for his or her reading. That applies entirely to libraries. Yet we have seen recently a dramatic decline in the number of bookshops. The growth of e-books will encourage that decline. I really feel that bookshops are one of the values in our society. If we lose bookshops, something valuable will be gone.
I love going to book festivals. I have been to the one in Edinburgh frequently. In the Lake District, there is a superb book festival at Keswick that I go to most years. Yet, if we all had only digital books, how could there be book festivals? They would not mean very much if the output of a book festival was just a pile of Kindles and no books themselves. Yet the public lending right should be extended to e-books and audiobooks. That is important to get balance, but we have to be careful. We have seen the problem with Amazon, which scoops the pool in terms of electronic books at the moment but is based abroad and pays very little tax in this country. The whole thing is unbalanced and makes it very hard for British electronic publishers and above all for books to compete.
On the national curriculum, changes to that are being phased in very quickly and it is important that the publishing industry is given a chance to provide the necessary and appropriate books so that the national curriculum can work. That is one of those areas where more co-operation between government and the publishing industry would be appropriate.
Open access has been an important point. There was a report by Professor Finch about open access for future academic publishing. I am not certain that the Government have responded to that but it would be useful were they to say where they stand on this.
We have in books and publishing one of the most important creative industries in the country. We are renowned for having good creative industries. We are a world leader, as I showed earlier. It is important that, in their general approach to publishing and books, the Government should be aware that our leadership cannot be sustained automatically. They need to make sure that they support publishing.
It is important in terms of detail that we have a reasonably successful copyright regime, which should not be weakened in any way. If we do that, we weaken the economic success of our publishing industry and our books. There has been some talk about developing educational exceptions. However, we have to be careful. If an educational establishment can photocopy something that is appropriate for teaching purposes for 50 or 100 students, that of course will severely impact on the income of authors, which would be a retrograde step. Of course, one wants educational institutions to be able to work freely and easily but we also have to protect copyright in that respect.
I have already mentioned the difficulties of VAT and electronic books. I am in two minds about this. It would be fair that VAT on electronic books should be on a level playing field with printed books. I am also concerned about the impact of e-books. I should like to repeat what I have said earlier. I must admit that I have a Kindle, although that was before I discovered how little tax Amazon is paying. I now feel a little guilty every time I use my Kindle and it is useful for travelling. However, we should be careful. Anything we can do to sustain hardback books, bookshops and the publishing industry can be only for the good. We have a vital creative industry in this country, which the Government must support as fully as they can.
Lord Black of Brentwood
I declare an interest as a director of the Telegraph Media Group. The noble Lord, Lord Dubs, is to be congratulated on securing this important debate. Publishing is the lifeblood of a free society. It forms the basis of democracy, our education system and our creative industries; yet its future is uncertain because of the massive impact of digital. Every publisher is faced with the central challenge: adapt your business model or die.
However, in order to find time to adapt, traditional publishers need two things; namely, as little regulation as possible and as much protection for the absolute right to copyright as possible. Both are under attack. I want to flag up three ways in which the Government can help. I agree with everything that the noble Lord, Lord Dubs, said about VAT. As printed material in the UK rightly attracts a zero rate, it is wrong that the electronic equivalent attracts the full 20% rate, which leaves UK publishers at a real commercial disadvantage. Given the rapid development of this market, there is now an urgent need to remove or reduce VAT on electronic publications. I would ask my noble friend if he would talk to his very kindly friends at the Treasury on this point.
As regards music publishers, I should declare an interest as a member of the Royal College of Music Council. Music publishing is an incredibly important business because it is at the core of our creative industries and certainty about copyright is crucial for it to flourish. Of specific concern therefore is the Government’s plan to water down copyright protection—again, the noble Lord mentioned it—which is of fundamental importance to its existence through extending the exceptions for educational use by introducing a so-called “fair dealing exception” which will be available to “all organisations and individuals”. This will increase exemptions in this area to include one-to-one music lessons, Saturday music services and music clubs, and could lead to a proliferation of photocopying of sheet music, which would be a real loss for the UK music publishing industry at a time when it is trying to make life easier for schools which want to copy musical work. I ask my noble friend to ensure that any scheme is sufficiently carefully drafted to protect small, specialist providers of educational material. Perhaps he could write to me to explain how the fair dealing exception will work.
Finally, I come to newspaper and magazine publishing, where the internet has been fiercest. Here we need to ensure that the press in the UK is not subject to any form of statutory content controls which would hugely disadvantage it with global competition. But proposals from the EC High-Level Group on Media Freedom and Pluralism would usher in a draconian European system of controls, including proposals to force media councils to ensure that newspapers comply with European values. These proposals would push the EU into an information dark age and the Government must do everything that they can to stop it. I ask my noble friend for his support on my three points.
Lord Howarth of Newport
My Lords, the impact of digitisation on the book industry has been seismic, and one might say, with Gramsci,
“in this interregnum a great variety of morbid symptoms appear”.
Swirling in the maelstrom, the publishing industry is, however, resilient and adaptable. So, too, are books. The codex was invented by the Romans. It has been refined in every century since, and it remains a technology that will be hard to beat.
What, then, is the role of the Government in supporting this important industry and the place of books in our national life?
The Government should create a fair tax regime. There should be zero-rating for e-books. Google and Amazon should pay their fair share. Meanwhile, Amazon might care to consider presenting a Kindle to every child, of whom 4 million in Britain do not own a book.
The Government should support publishing exports and deal firmly with trade barriers, piracy and infringement of copyright. They should ensure that their regime for intellectual property is coherent, fit for purpose and appropriately balanced as between the rights of creators and users. They should enable Parliament to consider, closely and carefully, any proposed changes to the legislation.
The Government should nurture reading within the national curriculum, working with the Publishers Association, allowing time in the school day for reading and putting libraries back at the heart of schools. They should support the charities which support books and reading. I single out the Reader Organisation, a charity which organises groups to read nothing but high-quality literature: groups of patients in mental health trusts, prisoners, substance abusers and looked-after children. It works in every case. The market for serious literature outside classrooms and middle-class homes can be developed.
The Government should enable local authorities to give decent support to libraries and literary festivals, and to help independent bookshops compete on price. The Arts Council should provide sustained security for serious non-commercial literary publishing, particularly poetry. They should implement the extension of PLR to e-books and audiobooks.
In a letter in the Times on 1 January 1942, TS Eliot, EM Forster, JB Priestley, Bernard Shaw, Rebecca West and others wrote:
“Unless authority suffers a change of mind, the condition of letters in this country will be quickly past prayer … Books and the book trade are not merely another industry. They are the daily food of our mental and spiritual life”.
They went on to quote the Prime Minister, Winston Churchill, who had said:
“Books in all their variety offer the means whereby civilization may be carried … forward”.
The Minister is a civilised man, and he will endorse all that we have said. May we hope that our Prime Minister, too, will affirm the high importance of books and the publishing industry in our culture and economy?
Lord Wills
My Lords, I, too, congratulate my noble friend Lord Dubs on securing this debate. I draw your Lordships’ attention to my declaration of interests.
This is a timely debate. As we have heard, digital technologies are disrupting the business models that have sustained the industry for so long. They are redistributing power within publishing, between publishers and retailers and between different sorts of retailers. However, as my noble friend Lord Dubs so eloquently set out, there is no existential threat to publishing in the way that canals, for example, were replaced by railways. Millions will continue to derive huge pleasure from reading and, as long as they do so, there will be a publishing industry.
However, these new technologies are potentially disruptive for what is available to read. For all the growth of self-publishing which has been enabled by these new technologies, and it is welcome, publishing is for the most part still a fragile ecology, where a wide range of talents and skills remain critically interdependent. Creative artists, whether writing fiction or non-fiction, rarely, if ever, create on their own in a garret. They are supported by agents and publishers, all striving together for that elusive creative and commercial success which underpins not just publishing but all the creative industries which do so much for this country. Those support systems depend, above all else, on effective intellectual property rights.
This is a complex area of public policy, as the Government have recognised. Rightly, they are trying to balance the interests of rights holders, creators, consumers and users, and this has always been a difficult balance to strike. However, it has been made all the more difficult by the extraordinary developments in digital technology over recent years. In the light of this rapid change and the inherent difficulty of the task, no one can be certain that the Government have got the balance right. If they have not, there could be serious consequences for publishing and all the creative industries.
I was therefore dismayed to see the Government reject amendments to the Enterprise and Regulatory Reform Bill in Committee, which unfortunately I was unable to attend, which sought to provide mechanisms to protect against such uncertainty—particularly the proposal for a new office to keep the interests of intellectual property rights holders in the forefront of public policy which, in such a rapidly changing world, and in which their importance has been overlooked in the past, seems simply prudent. To rely, as the Government seem to wish to do, on the existence of, in Sir Robin Day’s immortal phrase, here-today and gone-tomorrow Ministers seems to defy all the experience of recent years when the development of public policy in this area has painfully failed to keep pace with the implications of rapid technological change. I hope the noble Lords who proposed these amendments—I am glad to see that the noble Lord, Lord Clement-Jones, is down to speak in this debate—will submit them again on Report and that the Government will then reconsider their approach.
More generally, it is likely that the publishing industry will change even more in the next 10 years than it has done in the previous 10 years. Its customers—readers—will determine those changes, but public policy cannot stand aside. I look forward to the Minister setting out what the Government are going to do to support this vital industry.
Lord Dobbs
My Lords, I must declare my interest as set out in the register, which reflects 25 years of earning my living as a writer. I add to the thanks expressed to the noble Lord, Lord Dubs, not only for introducing this debate but for doing it so splendidly. He gave us a fantastic tour d’horizon.
The publishing industry faces grave difficulties, but I want here to concentrate on the plight of authors—academic, literary and others. Without them, there would be no industry. Incomes are falling; the future is filled with uncertainties; the essential nurturing of creative talent that allows authorship to reach its peak is disappearing; and the internet age believes that it has inalienable right to read everything online and for free. There is an urban myth that anyone who has ever written a book that anyone else has ever heard about must be a multimillionaire. The chilling truth is that the average annual income for a full-time author is around £12,000 a year.
I want to make two specific points. The first echoes the point made by the noble Lord, Lord Dubs, about the public lending right. It is a scheme whereby authors get a token payment when their works are lent out by public libraries. The PLR supports 23,000 authors every year. Those payments are limited and typically very small, but they are vital. It is not a subsidy; it is a payment in return for authors and publishers agreeing to allow their works to be loaned out through the library system. Yet the Treasury has cut PLR. It amounts to less than £7 million a year, but it has been cut. Still worse, it is refusing to extend PLR to audiobooks and e-books. It is a little like the Government commandeering a taxi and then refusing the fare.
My second point, about intellectual property rights, has also been referred to by the noble Lord, Lord Dubs, as it was by the noble Lord, Lord Wills. The Government are preparing to move us into the digital age by making it easier to access and copy authors’ works, particularly in schools. Cut through the language and what that means is that schools will be able to copy an increasing amount of work without paying the authors. It is of course vital that we support education, but I do not see the Government asking dinner ladies or the suppliers of desks and dusters to come to their rescue. But authors are, sadly, easy targets.
I trust, and I am sure, that the Minister will go away and think about all these matters. I do not need to bore him any more than I bore him in the Bishops’ Bar about some of these issues and I know that he is well aware of them. I hope that he will take on board, if not always necessarily agree with, the advice of the Society of Authors, the Publishers Association and other relevant bodies. It would take very little to correct some of the problems that have arisen—a little more care, a little more understanding and a little more vigour in protecting authors’ intellectual property rights. If that is not done, I fear that there is a real possibility that we will turn around in 20 years’ time to discover that those who should have been the cream of our literary talent, the lifeblood of British creativity, have cast their pens aside and found themselves other jobs.
Shakespeare did not write for posterity—
Lord Dobbs
I beg your pardon. Let me then sum up very quickly by saying that it would be a terrible pity if the book industry were to be left with little but celebrity memoirs, chick lit, TV spin-offs and books of such pale shades of grey that they were all but invisible. That would surely be the saddest tale that we could have written.
Baroness Rendell of Babergh
My Lords, I thank my noble friend Lord Dubs for introducing this much needed debate on the future of the publishing industry. I declare an interest as someone who next year will have been a published author for the past 50 years. The publishing industry is a vital component of the creative economy and employs 33,000 people across 2,500 companies. In addition, there are a large number of professional writers working full or part-time who create works on which the industry relies. The quality and range of British writers is recognised around the world, and 40% of publishing industry revenues are derived from exports—a bigger proportion than in any other country. The UK book market is the fifth largest in the world and the largest e-book market in Europe. Despite this, the Society of Authors is concerned that several of the Government’s current policies are creating barriers to growth and hindering the development of the publishing industry.
The largest obstacle to growth for most authors is financial. In a 2006 survey, the Authors’ Licensing and Collecting Society concluded that writing was a very risky profession, with median earnings of around £4,000 for all authors. Most authors earn very little and cannot live by their profession alone. In principle, the public lending right increases their income. The Digital Economy Act 2010 extends PLR to audiobooks and e-books, but these payments have never been implemented. This is patently unjust. That provision should be brought into force and extra funds should be made available to cover PLR payments for such lending.
Print books attract a zero rate of VAT, but their electronic equivalents are subject to a rate of 20% in the UK. Some other EU countries have reduced the VAT rate on e-books, so that the UK is now at a competitive disadvantage, as my noble friend Lord Dubs pointed out, as e-books sold in the UK are more costly than those sold elsewhere, making it doubtful that they have ousted printed books as reading matter. The Spectator recently carried a cartoon in which two women and a child are sitting on a park bench. One of the women is reading. The mother says to her little girl, “Look, darling, she’s holding something called a book”. I hope we have not got to that point yet. I have a Kindle but do not much like it. There is an urgent need for removing VAT on e-books to avoid the UK falling behind European competitors.
Authors would benefit enormously from an educational and general environment from primary level upwards that emphasises the value of culture and the importance of copyright. Intellectual property rights are lucrative to the UK economy. Knowing that they own copyright in what they have written and what that means can be a cause of excitement and pride in students and generate an understanding of the harm done by piracy.
School libraries should be compulsory, and reading and writing for pleasure encouraged; but in general, they are not. How many times have I been told, “I do not have time for reading”? How many homes have I been in, often beautifully furnished and decorated, but where there are no books? High street bookshops, local theatres and libraries all underline the importance of books, culture and learning and should be supported. The habit of culture should be as much a fundamental aspect of the environment as, for example, the country’s architectural and historical heritage.
I will finish on an optimistic note for the publishing industry. When I was first published, there were only two or three literary festivals a year in this country. Now, every county, city and town holds one. The large number of books sold at these events and the enthusiasm shown for reading by those who attend them must be a sight for sore eyes for publishers. The Edinburgh Festival is a large bookstore in itself, and the village of Hay-on-Wye has more bookstores in its streets than anywhere else in the world.
Lord Smith of Clifton
My Lords, I, too, thank the noble Lord, Lord Dubs, for this timely debate. Over the years, I have had a range of experiences in the world of publishing. I was on the board of the weekly magazines New Society and, later, the New Statesman, and was also a director of Gerald Duckworth & Co book publishers. I must declare an interest in that I am currently on the editorial boards of two learned journals—Government and Opposition and Public Policy and Administration, both of which posts are unpaid. The introduction of open access, as recommended by the Finch report and aggressively promoted by the advocates of STEM subjects, raises serious concerns in academia among specialists in the arts, humanities and social sciences. Both the Royal Historical Society, of which I am a fellow, and the Political Studies Association, of which I am vice-president, have made representations to BIS and its Universities Minister, David Willetts, and to the House of Commons Science and Technology Select Committee.
As proposed, open access will require authors to pay fees of up to $1,000 to the publishers of learned journals to cover the costs of expert reviews as to worthiness and of editing, which will have to come from already squeezed research budgets. This will have a deleterious effect on young, aspiring academics. In the arts and social sciences, articles are usually single-authored. By contrast, STEM articles are almost always multiauthored and half the average length of those in the humanities and social sciences. Up front publishers’ fees will be cheaper and more widely spread for STEM authors. The effect of this differential costing may well influence university departmental heads to allocate publishers’ fees disproportionately to senior, already tried and tested, academic authors rather than to risk the possibility of greater rejection of younger ones.
Secondly, there is the whole question of copyright, to which other noble Lords have alluded, and ownership of intellectual property. Open access will accord free use of UK research that has been funded by the UK taxpayer to all and sundry all over the world. Thirdly, it adds to the operating profits of publishers of learned journals, who make no financial contribution to sustaining scholarship and research; they simply enjoy harvesting it.
Those who undertake research in the humanities and social sciences are not opposed to some form of open access. However, they are concerned that the proposed scheme is being adopted without full consultation, is too STEM-compliant and will enable scholarly intellectual property to be plundered. Her Majesty’s Government and, particularly, Mr David Willetts need to think again. It seems that Mr Willetts and Dame Janet Finch, a distinguished social scientist, have been too easily seduced by the blandishments of STEM interests and forgotten those of their original university training. In winding up, will the Minister say whether Her Majesty’s Government are open to further consideration?
Lord Lucas
My Lords, I am a publisher but take a very bleak view of the future of publishing if Amazon goes unchecked—not that it will harm me, but it will kill most of the rest of the industry.
Amazon is an amoral monopsony in its growth phase. It is using extremely low margins to drive market share. It is using aggressive tax avoidance to afford those low margins. It is not just us that it does not pay tax to; it does not pay tax to anybody. It is being allowed by Governments to do this because it is seen as a nice, friendly company to consumers. Indeed, in the days when I shopped with Amazon, I found it a comfortable place to shop but it is coming to dominate the book industry. It is clear that it will soon have over half of all the book trade, physical and virtual. It is causing taxpaying businesses to die. One has just to look at what happened to HMV, which has died largely because of tax competition. A lot of that came from the likes of TheHut out of the Channel Islands but a good deal of it was mediated by Amazon. We now have nowhere to shop on a large scale. The internet retailers have control and the internet retailer that will have control above all is Amazon.
Suppliers will then become dependent on the one retailer. It is clear where Amazon intends to go after that: it intends to take out the publishers. It is already doing that in the States, forming its own relationships with authors and publishing its own exclusive-to-Amazon books. At the end of the day, what need has a company with three-quarters of the book trade of independent publishers? It can do everything itself.
It will continue to use a wide range of predatory tactics to do that. Amazon trawls the web to make sure that it always offers the lowest price on anything. It compels suppliers to charge it less than they do anybody else, on pain of being dropped—either individual projects or entirely. It runs this thing called Amazon Marketplace, where little traders can go, but it knows everything that happens in that marketplace: all communications between a business and its customers, what is being sold and at what price. When it sees a good opportunity, it goes to the supplier and undercuts the trader.
If you use Amazon fulfilment, it will clean up your complaints file so that bad notices will not remain for others to see. If you do not use Amazon fulfilment, it will not. It provides a home for people who are breaching copyright by importing books from outside the appropriate area. It provides a home for people who are running VAT scams. In one way or another, if we do not do something as a Government to remove the tax bias that benefits it, to enforce our existing laws and to put it through the Competition Commission, we will find that we have been steamrollered by Amazon.
Lord Giddens
My Lords, I, too, congratulate my noble friend Lord Dubs on his excellent introduction. I declare an interest as founder and director of Polity press.
Publishing is an industry in absolute turmoil. I am not sure that even the contributions to the debate thus far have brought this up strongly enough. This is true not just in the UK but in the US and other countries, too. One can say that absolutely no one knows where these trends will lead. Many people have their best guesses, but nobody actually knows.
There are three intertwining factors in the transformation of the publishing industry. First, as has been said by other noble Lords, e-books have arrived with a bang after several years in which they made little or no headway. It is important to recognise how massively popular they are in some sectors. In the United States, for example, among more popular titles, more than 60% are now produced as e-books. Will the traditional book survive? Will the e-book survive? One should not think that the e-book is the cutting edge here. E-books themselves are being transformed by all sorts of multilayered devices; you can hold conversations with authors and so forth. The e-book is certainly not the end of the story.
Secondly, the publishing industry here and in many countries is becoming hollowed out, with ever fewer large conglomerates at the top and an array of small publishers at the bottom—all of them, in a way, following a precarious existence. The rise and rise of Amazon, as has been mentioned by the noble Lord, Lord Lucas, is one main factor in this. Publishing is not really about the production of books but about marketing and distribution. Because of its massive size, and its mainly automated warehouse and delivery system, Amazon absolutely cuts prices to the bone.
Thirdly, a trend which overlaps with these is the emergence of self-publishing on the internet, where an orthodox publisher might not be needed at all. There is lots of experimentation going on here. For example, one publisher invites prospective authors to pitch their book proposals on its website. If sufficient people pledge to buy it, the author can then go ahead and write it, reversing the traditional relationship. It is not clear that this will succeed. These are overlapping trends, but they are creating something fundamentally new after centuries of domination by traditional book publishers.
I have three brief questions for the Minister. Often, technological innovation is followed by a “back to the future” reaction; for example, when nylon was invented, people went back to wool and cotton. The same thing might happen to traditional books. For this reason, I hope that the Government will not take too big a scythe to public libraries.
Secondly, as other noble Lords have asked, what is the latest position on open-access publishing? Many publishers, as well as academics, are quite worried about that and the Government’s endorsement of the Finch report. What will it do to traditional journal publishers?
Thirdly, apart from the issue of taxation—following on from what the noble Lord, Lord Lucas, so eloquently said—are the Government happy with the dominant position that Amazon has taken in the book trade? In conclusion, I hope that no noble Lords will be caught reading a Kindle in a Starbucks.
Lord Stevenson of Balmacara
I thank my noble friend Lord Dubs for initiating this debate and all noble Lords for their contributions, which have been of a very high standard indeed. As my noble friend Lady Rendell said, this is a very timely debate, and we appreciate that. My noble friend Lord Giddens warned us that this is an industry in which conditions are worse than we think. They may get much worse before they get better, if indeed they do. We need to bear in mind also that this is a complex industry, like all creative industries. With some notable exceptions, we have focused today mainly on the creative side—the agents and publishers—but we also have to think about the retailing end: the designers, the marketers, the logistics and, of course, the concept of electronic publishing, which is an underlying thread here.
This debate has really been about whether the current leadership that this country’s publishing industry deservedly has can be sustained and whether there will be growth. There have been a very large number of questions for the Minister and I do not intend to cover them all. I hope that he will be able to give a particular mention to them all but, if not, that he will write to us about them. I think that there will be too many, even for the time that he has been allocated. However, from the questions that were raised, the first was on this vexing question of the public lending right, which is so important to authors and publishers. Of course, it does a much wider job by raising people’s interest in books and writing and, more generally, in education. Will and can that be extended to e-books?
On VAT, the differential between the printed and electronic versions is obviously a major issue. What approach are the Government taking on this? I know that the Minister will say the usual thing when he comes to reply: that taxation is a matter for the Chancellor of the Exchequer. Of course it is but, six weeks out from the Budget, surely budget submissions will have been made. Can the Minister confirm that DCMS has raised this issue with the Chancellor and is making the right sort of noises, along the lines that he has heard today?
On copyright, the issue that comes up time and again is whether the Government have got their approach right, along with the question of who is actually in the lead on this issue. In debate on the Enterprise and Regulatory Reform Bill, the noble Viscount, Lord Younger, confirmed that he was the Minister for Intellectual Property and therefore has, within BIS,
“a role to champion the IP system as a whole”.
Indeed, he was proud of the fact,
“that no other country has such a post”.—[Official Report, 28/1/13; cols. GC414-16.]
He felt that that solved the problem. However, what then is the role of DCMS in relation to copyright? Perhaps the Minister could say a few things about the approach that he is taking in this matter and how the department gets its point of view, which we note to be significantly different in terms of discourse from that which is currently being led by the IPO. There is much more sympathy with some of the points that have been made today. It would be a pity if that was being boxed out by government structures.
On the key issue of education and the circularity of the approach that has to be taken across libraries and supportive reading, and about the role of English more generally—but particularly on reading and writing and on creative work in the EBacc—it would again be useful if the Minister could explain what DCMS’s role in that has been, whether meetings have been taken and whether it is making progress.
Finally, can the Minister say a bit more about the general role of the DCMS in this industry? Many of the issues that we have discussed today are, as I have said, largely in the gift of BIS and not that of DCMS. Can he therefore explain a bit more what its role is?
Lord Gardiner of Kimble
My Lords, I, too, thank the noble Lord, Lord Dubs, for securing this debate. It is certainly true to say that I have learnt a great deal today from the expertise of all your Lordships. I have listened and it is indeed a privilege to reply. Perhaps I might say that there were quite a number of questions and I hope that noble Lords will be tolerant if I write a general reply wherever I have not dealt adequately, as I would believe, with their questions.
Without doubt, the UK’s creative industries make a vital contribution to national life but they also have a key role to fulfil in helping our economy to grow and helping the people of the UK to compete globally. Employment in the creative industries has grown at double the rate of the economy as a whole, and 1.5 million people are currently involved in creative employment. They are, in many respects, British culture and I was very much taken by what the noble Lord, Lord Howarth of Newport, said about culture. I am sure that the Prime Minister is very keen and that he champions British culture too.
The entire publishing sector is the largest of our creative industries. It contributes £11.6 billion a year to the UK economy and employs some 244,000 people across 9,700 companies, which cover books, e-books, academic journals, national and local newspapers, magazines and print music, to name a few. Our publishers are the largest exporters of all the creative industries. With 40% of the sector’s revenues coming from export—the noble Lords, Lord Dubs and Lord Howarth of Newport, referred to this—that is a bigger proportion than in any other country.
However, as noble Lords have mentioned, it is not limited to print alone. UK consumer e-book sales grew by some 366% in 2011, as the noble Lords, Lord Dubs and Lord Giddens, referred to, making the UK the largest e-book market in Europe. The UK is a market of early adopters. Consumers in this country are quick to take up new products, services and channels, particularly in entertainment. In publishing, this appetite on the part of consumers has been matched by the willingness of publishers to explore new opportunities, in spite of the challenges that new technologies undoubtedly present, as the noble Lords, Lord Wills and Lord Giddens, referred to. I reaffirm my personal support for bookshops and the many happy hours I continue to spend in them. I have to admit that I have never bought a book from Amazon.
The Government are committed to fostering an environment that will stimulate world-class content creation. We want the current level of success and investment not just to continue but to increase. I am very conscious of course that the noble Baroness, Lady Rendell, and my noble friend Lord Dobbs, whose work is so widely admired at home and abroad, are in their places. Indeed, I very much hope that there will be many more generations of their like in British culture.
The issue of VAT was raised by my noble friend Lord Black, the noble Lords, Lord Dubs and Lord Stevenson, and the noble Baroness, Lady Rendell. As has been pointed out, Luxembourg and France at present operate a reduced rate of VAT on e-books. Under existing law, e-books are electronically supplied services and therefore should be taxed at the standard rate. The European Commission has launched infraction proceedings at the European Court of Justice against Luxembourg and France on this matter, the outcome of which is awaited.
My noble friend Lord Black of Brentwood raised a point about the recent EC report on pan-European press regulation. The Government have noted the contents of the report on media freedom and pluralism and await with interest any resulting debate and the response from the European Union. However, the Government have no intention of allowing European institutions to regulate the British press. The Government believe that this is a matter for individual member states and will resist any European legislation in this area.
Many noble Lords referred to copyright, including my noble friend Lord Lucas, the noble Baroness, Lady Rendell, and the noble Lords, Lord Dubs and Lord Howarth. It is vital that the publishing industry is supported in addressing copyright issues. I am mindful of the difficulties the music industry has suffered in its own digital transition, which my noble friend Lord Lucas specifically referred to. The Government are acting in a number of areas to ensure that the UK copyright framework meets the demands of the digital environment while continuing to maintain the success of sectors such as publishing. An appropriate regime is vital for copyright in the UK. The Government are very well aware of the range and strength of views and interests, which is why the Hargreaves review of intellectual property and the development of government policy since then have included broad and deep consultation.
Last December, the Government outlined a number of ways to support efforts by creative industries to protect copyright, in particular: action to educate consumers about the importance of respecting copyright and paying creators; launching a superfast patent processing service; a campaign for smaller businesses; and looking at enforcement. The Government are exploring with the City of London Police and the content industries what more can be done to bring to book the criminals who make a living from counterfeiting and piracy, particularly online. Protections for the interests of property rights owners and creators must be built into the revised framework. The noble Lord, Lord Dubs, mentioned that in particular.
The Government have sought to increase the number of options available to rights holders looking to protect their intellectual property online—the noble Lord, Lord Wills, referred to that—in particular, by ensuring proportionate responses are available at every level, from court action to a voluntary response. The Government have supported collaboration between industry and law enforcement and a regular round table for those involved is now held at the Department for Culture, Media and Sport under the chairmanship of my honourable friend the Minister for Culture, Communications and Creative Industries. The noble Lord, Lord Stevenson, in particular raised that. The round table has seen several successes, including an agreement with internet advertisers to cut off payments and advertising to illegal sites.
On exceptions, noble Lords raised in that connection the potential impact of changes to copyright law on business, for example the impact on exceptions to copyright rules on music publishing for educational use. The noble Lord, Lord Dubs, and my noble friends Lord Black of Brentwood and Lord Dobbs mentioned that. I will write to my noble friend Lord Black about the particular matter he raised. The Government want teachers to be able to use creative materials in the classroom without copyright being an obstacle but—I emphasise “but”—this should not be done at the expense of our educational publishing sector, on which our schools depend. We will give teachers more flexibility to use copyright works in new and creative ways but they will not be given a free pass. It is important that we strike the right balance. Copyright is the means to reward creativity; it generates investment, stimulates wider dissemination and delivers balance.
The noble Lord, Lord Dubs, mentioned the national curriculum. The Secretary of State for Education is due to announce the statutory consultation on the new national curriculum shortly. Publishers will therefore be able to consider the proposals for all national curriculum subjects. Again, the matter of young people was raised by the noble Lord, Lord Howarth of Newport. I entirely agree that reading and libraries are a great source of inspiration for young people—and adults. Next week, I am due to answer a Question in the Chamber on libraries. Libraries come under the budgets of local authorities and I am sure that we will have a full discussion in the seven minutes permissible on that next week. Again, I am personally a staunch supporter of open access to libraries. There are many exciting opportunities. New libraries are being opened and communities are coming together to ensure that reading and the opportunities that it provides to young children are well understood and recognised.
The Government also recognise that there are significant potential threats and opportunities with regard to how, for instance, text and data mining may be affected and how these technologies are used. I think we would all agree that the priority must be to develop the best environment for scientific and medical research. That has to include a successful research publishing sector. I am very mindful of what my noble friend Lord Smith of Clifton and the noble Lord, Lord Giddens, said. I will write to all noble Lords on the Finch review because I would like to consider the matter and then write in full detail. It is fair to say that the Government will proceed carefully in this sector.
The Government are supporting the industry through the expanding intellectual property attaché network abroad, which is already in China, Brazil and India. There is a new one now in south-east Asia. Progress on the EU patent front is a major step forward.
I appreciate that the sector faces many challenges. Noble Lords today have raised them in full and I am mindful of them.
Lord Giddens
Would the noble Lord care to say one or two words about Amazon and its industry dominance?
Lord Gardiner of Kimble
I should like to finish my few words. My commentary on Amazon is already on the record. However, many opportunities can be seen by the way in which the sector is embracing the digital revolution. The Government recognise the sector’s importance for cultural and economic reasons, and are working closely with the publishing industry to create an intellectual property environment which sustains success and rewards creativity.