Creative Industries (Communications and Digital Committee Report)

Baroness Stowell of Beeston Excerpts

Friday 7th July 2023 Lords Chamber

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[Baroness Stowell of Beeston]

That this House takes note of the Report from the Communications and Digital Committee At risk: our creative future (2nd Report, HL Paper 125).

[Baroness Stowell of Beeston (Con)]

My Lords, it is a privilege and a pleasure to chair the Communications and Digital Committee and to introduce this debate. I am delighted that many of my fellow committee members, both current and former colleagues, will contribute to this debate on our creative industries report, published in January. I make special mention of the noble Baroness, Lady Featherstone, who is not here today as she is still recovering from an injury—I know that she would be here if she could. She was a strong advocate for our inquiry.

Before I go any further, I pay tribute to the excellent team that advises and supports us; indeed, it deserves a huge amount of credit not just for its hard work but for the quality of our work. It is led by our exceptional committee clerk Dan Schlappa, and we are also ably and professionally supported by our policy analyst Emily Bailey Page, Owen Williams from the Press Office, Rita Cohen—one of the best and most reliable administrators I have ever come across—and Soham Karwa, a second year PhD student temporarily on attachment to the committee from Imperial College. On the committee itself, we are lucky to have such a diverse array of knowledge and expertise from across the media, digital and creative sectors. I thank all members for their dedication and contribution to our collective effort.

Some noble Lords may remember that, as part of our inquiry, we took evidence from Ai-Da, the robot artist. The House will be pleased to know that she is not here today to accompany proceedings, but the release of ChatGPT in the time since we had to reboot her during her evidence shows just how fast technology is moving and why we need a coherent strategy to ensure that the creative sector keeps pace and can thrive in the modern world.

This debate is timely, coming shortly after the publication by the Government of the Creative Industries Sector Vision, which my committee has been calling for. I was pleased to see that it recognised and directly addressed many of the key concerns we raised in our report, which I will come to later.

First, let me clarify what we are talking about and why it matters. The creative industries are an economic powerhouse, generating £108 billion a year and employing over 2.3 million people. Between 2011 and 2019, job growth in the creative industries was three times that in the UK overall. This job market offers a range of rewarding roles, with many vocational entry routes. Clusters of creative businesses are located across the country, which supports levelling up. Creative sector businesses are addressing net-zero challenges by driving innovation in concept design and material sciences.

Much of the growth potential lies in areas that combine technology with creativity, and the UK has particular strengths here. Our gaming market is worth £7 billion alone, and our animation market is world-renowned. A record £5.6 billion was spent on film and high-end television production in the UK in 2021. The number of UK firms working on immersive technologies rose by over 80% between 2016 and 2021.

The UK has long been regarded as a global leader in both the privately funded and the publicly funded creative sectors, and rightly so. But international competition is hotting up. In the last 10 years, the global value of exports of creative services has more than doubled to reach $1.1 trillion. Countries across the world are seeking a greater slice of this lucrative industry. Let me explain how. Many of the things that made the UK successful—like fiscal incentives, public arts programmes, centres of excellence and high-end production centres—are being copied and improved on by Governments abroad. At the same time, small UK businesses are selling up and, with them, valuable intellectual property is moving overseas.

UK experts are being left out of leading international research collaborations, which leaves us less influential and less engaged at the cutting edge of innovation. Huge American tech giants are dominating the emerging market in virtual and augmented reality, and they are reaping huge dividends from all of the consumer data that this generates. Also, technological advances and disruption risk shifting people out of the creative workforce and, in the process, reducing the vibrancy and creative spark on which so much of our economic success depends. In short, we face mounting challenges and cannot take the continued success of our creative industries for granted.

When we published our report, we had major concerns about how seriously the Government were taking this sector and the challenges it faces. Political attention had waned in recent years, I regret to say. The sector scarcely featured in the Chancellor’s 2022 Autumn Statement and was not among his key growth industries. International summits were being skipped by Ministers, and industry experts had started to speak openly about the UK’s decline in a fast-moving and highly competitive global market.

We also had concerns about what seemed to be an incoherent policy landscape holding the sector back. UKRI, the national funding agency for investing in research and innovation, was proposing to cut the creative industries clusters programme, which had delivered unprecedented success and return on investment. The Intellectual Property Office was proposing a new text and data mining regime that would undercut creative sector business models. To be blunt, Whitehall was blindly favouring new technology at the expense of creative IP. Efforts to tackle skills were not aligned with industry needs, and support for organisations receiving public funding placed too little emphasis on the innovation, cross-sector collaboration and sustainability that are key to ensuring the arts sector’s long-term success.

It is vital to stress that 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.

Perhaps I may at this point direct a comment to the creative sector itself. The emphasis from some who work within it on how it is “special” and should not be dirtied by talk of money, efficiencies and the value it adds to the economy has not always helped its cause and I would argue to those who maintain that position that it does need to change.

Given the importance of the sector, I was very pleased to see the new sector vision, which is a collaboration between government and the creative industries and sets out plans and commitments to help the creative sector fulfil its potential. While, of course, it is not perfect, it addresses some of the core issues we raised.

First, the new level of political attention is notable. The Chancellor has now included the creative industries in the UK’s priority economic growth areas. The sector vision has a foreword from the Prime Minister. These changes matter, and industry will be paying attention. I believe this recognition at the very top of government has not happened by accident.

Second is the new £50 million of funding being provided to continue the creative clusters programme. This will build on the hugely successful previous round of clusters, which exceeded expectations and provided a proven model for stimulating innovation and generating significant returns on investment. I must emphasise, however, that while this investment is welcome, UKRI and the Government must ensure that the value generated by previous clusters is not lost; they must be supported to transition to a long-term, sustainable footing. One practice that we saw quite commonly across the policy areas relevant to the creative industries was what I might describe as a bit of “initiative-itis”: instead of sticking with what is proven to have worked, trying to reinvent things and start again from scratch.

The additional £75 million investment in the CoSTAR programme to boost R&D is also welcome, and speaks to the fact that the nexus between technology and creativity is a core UK strength that we should double down on.

Thirdly, the Government’s commitment to dropping the proposed text and data mining regime is crucial. I understand that the Intellectual Property Office is now working on a new voluntary code. My committee will keep a close eye on how that develops, because creative businesses, whether they are in the music industry, publishers, artists—all of them—remain very concerned about getting this right. As we emphasised in our report, developing AI is important—indeed, we have announced today that our next inquiry is on AI—but it should not be pursued at all costs. Otherwise, we will find that things we value and make us distinctive as a country gradually disappear in the name of efficiency and technological progress.

The previous proposals, which have now been scratched, threw creative sector businesses under the bus, and needlessly so. The trade-off does not need to happen in this way: many sectors marry technology and creativity very well, and generate huge profits in the process, without undermining IP and business models. A fair deal that promotes innovation and supports the creative sector is possible, and we look forward to seeing the IPO’s plans in due course.

Fourthly, the Government have committed to using a data-driven approach to mapping skills requirements in the sector, which will make use of the new Unit for Future Skills. This too is vital. There are thousands of training courses and initiatives, yet far too many employers say that skills shortages are getting worse and that the Government do not have a good enough plan to address this. The first step is to set out exactly where the most acute shortages are. The Government must ensure that this then informs policy decisions around the development of apprenticeships and T-levels, and the provision, funding and advertisement of lifelong learning courses.

On the subject of skills, I will reiterate the committee’s recommendation that innovative ideas, such as the flexi-job apprenticeship, should be scaled up to address a pressing problem: namely, that apprenticeships should be an excellent route into the sector, but many of them are poorly suited to the industry’s work practices and SME-dominated set-up. The Government have committed to ministerial round tables to discuss creative apprenticeships and say that they will “improve” the flexi-job model. I would be grateful for further clarification from my noble friend about what specific changes and improvements are planned, and the timeline for delivering them.

Fifthly, we called for better support for SMEs to boost growth. I was pleased to see that the Create Growth Programme is receiving a funding uplift. It will be important to review the most successful outcomes of this programme and help scale learnings more widely across the country. There are other welcome commitments around delivering national plans for cultural and music education, joining up the creative sector with public health, and awareness of how the sector relates to environmental targets.

I cannot claim that the sector vision addresses all the committee’s concerns. The UK’s definition of R&D for tax relief, for example, is an outlier compared with other OECD countries. It remains overly restrictive and excludes a large proportion of work in the creative sector. As one business owner told us, it can mean that technical staff are able to claim R&D relief but the key creative contributors working on the same project cannot. As a result, the whole team’s ability to innovate is limited by the number of creatives the company can afford to employ.

I appreciate of course that we cannot distribute endless tax cuts, but we can double down on our strengths and at least explore further options for stimulating more innovation. I reiterate the committee’s call for the Government to look at this issue more seriously by expanding the definition of R&D. A limited pilot could be a good start.

I would also welcome more clarity on what is happening with careers guidance. The committee’s inquiry heard evidence that guidance is patchy and needed significant improvements. This is vital to getting young people into the right courses and jobs, and filling extensive skills gaps. The sector vision refers to “inspiring creative careers guidance”, but does not say much about what that actually means. Perhaps it will be addressed in the forthcoming education plans; I would certainly welcome clarification from my noble friend if he can give that today.

Finally, we also need a solid plan for dealing with technological disruption. Technologies are moving at breakneck speed—to state the obvious. We cannot simply wish them away or pretend that they will not have significant disruption, particularly for people who have roles with insecure contracts and work in areas of the creative industries that are more exposed. The Government are not there to back up everyone’s business models, but they can create the conditions and planning to help UK businesses prepare and adapt. Supporting businesses and freelancers to be more resilient, dynamic and flexible will stand them in good stead to manage the looming changes facing the sector.

Other countries will doubtless be looking at this, and the UK must not be left behind. I look forward to seeing the Government’s response to the Creative Industries Policy and Evidence Centre’s report on working practices and hope that it will address, in further detail, concerns about helping businesses and freelancers understand and manage the impacts of technological disruption.

This sector vision is very much the start, not the end, of a process. We must not be lulled into a false sense of security: publishing a plan does not mean that it will automatically be successful, or indeed that other countries will not similarly publish ambitious plans which see the UK fall behind. Continued high-level political commitment will remain crucial. As I said at the beginning, our creative industries are critically important to our national life and economy. They help us to unite and generate our collective pride in being British and to promote the best of British around the world. They do not deserve special treatment or exceptions from the basic demands placed on all businesses and organisations which are necessary for their survival, but we need to make sure that the right policy frameworks are in place and that we take them seriously. In the end, their continued success will be down to the creative industries themselves and the very many talented people who work within them.

There is much more ground that I could cover, but I am sure that it will be picked up by other noble Lords in the debate, which I look forward to hearing. I beg to move.

--- Later in debate ---

[Baroness Stowell of Beeston (Con)]

My Lords, I am very grateful to the Minister for that very comprehensive response to this debate, which has covered a huge amount of ground. I join my noble friend Lord Vaizey in paying great compliments to him as a tremendous Arts Minister. I do not know whether he is as good or better than the last Arts Minister—who is also with us in the Chamber today—but we are very grateful to have him in that post. I am also very grateful to all noble Lords who have spoken in this debate today, for the very generous comments that have been made in my direction, to the committee as a whole and to those who support us in our work.

I will offer some concluding comments. It is probably worth me saying something which I did not say at the beginning, which is that the underlying premise of our inquiry was about identifying the risks and opportunities of technology as it impacted on the creative industries. Even with that framework, there was clearly a huge amount of ground to cover.

The noble Lord, Lord Berkeley, expressed an interest in my comments about how some of the creative industry leaders or high-profile figures might change if they are to be taken more seriously. One of the things I would say in response to that is that through doing this inquiry, I now really believe and understand the economic value of the creative sector. I have always known it was important, but I did not see it in those terms before. That has shifted my whole perspective on it. It might be worth sharing that when I was a teenager and had just moved to London, I went back home and told my dad I had met somebody who described themselves as “a creative” when I asked them what they did for a living. My dad’s response was, “Well, that sounds like a good excuse for doing nothing”. Now he was a brilliant painter and decorator—the best in the area—but he was also somebody who was good at art and is quite creative. The reason why I think this is important is that there has always been something of a separation in the way people perceive creativity: as something which is important but not necessarily a powerful driving force of our economy.

Technology has now given the creative industries the opportunity to show that they are part of the economic powerhouse, as has already been said. Our report calls for the creative industries to grasp that opportunity, and to make sure that they are not overpowered by technology or deprioritised because of it. We have seen and discussed this threat today, in particular in the context of IP. They should not be afraid to use it and grasp it. Those parts of the creative industries whose underlying purpose may not be commercial should use the overall commercial opportunity of the sector that they are a part of as a way of capitalising on their importance and contributing to something that is bigger than themselves.

One of the main areas of policy that was raised in the course of everybody’s contributions was skills and education. I again urge the Government and the creative industries, when they look at and consider this topic, to work even harder at gaining some mutual understanding in this area. As has been commented on, our report refers to what we described as:

“Lazy rhetoric about ‘low value’ arts courses”,


which risks deterring people from pursuing an education and career in the creative sector. The point we were trying to make is that, although we share the Government’s concern about some degree courses not representing value for money or value to anybody specifically, they should not, in highlighting them, group everything in that category.

It is important for the creative industries to be grown-up and realistic in the way they talk about that too. It was compelling to hear one of our witnesses during our inquiry, Seetha Kumar from ScreenSkills, make the point that a lot of people go to university to study skills and get degrees when that was not the best way for them to get into the creative industries. There were much better routes to do that, and that organisation wanted to create and support more of those opportunities. It was refreshing to hear somebody from the creative industries say that honestly in the course of our evidence.

As has been said, it is important that the sector vision identifies the fusion of creative and STEM skills as an important part of the future. There has to be a lot more collaboration and understanding by the Government as to what is needed from the creative sector. I also urge the creative sector to get better at being specific about what it needs and wants to see changed. If it can be specific, the Government will have a much better opportunity to respond to those needs.

Overall, the debate has shown the importance that all of us collectively attach to our creative industries. Long may they continue. We want to see them thrive and for everybody to have a good opportunity to be a part of them.

Motion agreed.