Creative Industries: Research and Development

Baroness Bull Excerpts

Wednesday 8th January 2020 Lords Chamber

Asked by

[Baroness Bull]

To ask Her Majesty’s Government what consideration they have given to adopting a broader definition of research and development that includes, and incentivises, research and development investment in the creative industries.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, the Government’s definition of research and development builds on the internationally recognised OECD definition. Following that definition, the UK offers relief to boost research and development through direct grants, support for universities and R&D tax credits. There are eight additional tax reliefs specific to the creative industries, which delivered over £1.1 billion of support in 2018-19 alone.

[Baroness Bull (CB)]

I thank the Minister for his engagement with this Question. However, I urge him to consider, in reviewing R&D definitions, the Government addressing current HMRC requirements that R&D relates specifically to scientific or technological discovery. The exclusion of work in the arts, humanities and social sciences means that much of the R&D taking place in the creative industries is ineligible for targeted tax relief, despite creative businesses undertaking almost as much R&D as manufacturing. Does the Minister agree that applying tax incentives equally to a sector that already represents the fastest-growing part of the UK economy would be an effective way to boost innovation and productivity?

[Lord Duncan of Springbank]

The noble Baroness is absolutely right that creative industries are at the heart of the improvements that we have seen across the UK’s global reach. We put a significant amount of money into research and development in the creative industries. Some £58 million has gone to research and development through the creative clusters, £39 million directly from government and £25 million from industry. But that does not answer the noble Baroness’s question, which regards the definition. I read with interest the paper by Hasan Bakhshi and Elizabeth Lomas, Defining R&D for the Creative Industries. If the noble Baroness is willing and amenable, I would like to sit with her and discuss this matter further.