Covid-19: Economy

Baroness Penn Excerpts

Thursday 4th June 2020 Lords Chamber

[Baroness Bull (CB)]

My Lords, the UK’s creative industries are a major economic asset: before Covid hit, they were generating more than £111 billion in GVA, growing at five times the rate of the UK economy, employing more than 2 million people and adding jobs at over three times the rate of the national average.

As other noble Lords have highlighted, this pandemic has demonstrated the sector’s value beyond the economic, with arts, culture and creativity sustaining and connecting us, giving us reasons to hope and supporting mental health and well-being. This is despite the sector being among those most affected by the pandemic. An ONS survey found that just 17% of arts and entertainment businesses were still operating, 42% of creative organisations say that income has dried up completely and 63% predict annual turnover will be cut by half by the end of the year. In line with the broader UK economy, 95% of creative enterprises are SMEs with fewer than nine employees. Studies have found that these microbusinesses are particularly vulnerable to the negative effects of this crisis.

The creative economy faces a specific challenge, in that a third of its workforce is self-employed, compared to 15% of the economy overall. Many operate as limited companies, taking taxable dividends alongside a small salary. This renders them ineligible for both the SEISS and the job retention scheme, despite losing 100% of their contracts overnight.

Creative, cultural and entertainment businesses face significant challenges to economic recovery, with the workforce decimated and income streams closed down. The sector will be among the last to come out of lockdown, given the impossibility of operating fully while social distancing is in place. Brexit and the loss of EU funding pots present additional challenges on the looming horizon. Can the Minister say when and how the UK shared prosperity fund will be allocated, given its role in replacing EU structural funds, which have been so vital to the infrastructure and local growth of the creative industries? Can he also say what the Government are doing to provide urgent support, tailored to the needs of the creative industries, so that they can be swiftly restored as a major driver of the UK’s cultural, social and economic success?

[Baroness Penn (Con)]

My Lords, I remind noble Lords of the time-limited nature of this debate and the limit for Back-Bench contributions at two minutes to allow the Minister to give the fullest possible response.