Creative Industries: Creating Jobs and Productivity Growth

Baroness Penn Excerpts

Thursday 6th February 2025 Lords Chamber

[Baroness Penn (Con)]

My Lords, I join the noble Baroness, Lady Thornton, in looking forward to the trio of maiden speeches we have coming up in this debate. As recognised by the last Government and by this one, our creative industries are an absolute economic powerhouse, and I am sure we will hear many facts and figures and personal stories in this debate to pay tribute to that. The noble Baroness, Lady Thornton, managed to namecheck so many of the great institutions that we have in our creative industries that I shall try not to repeat that in the four minutes I have. Instead, I want to focus my remarks on the support the Government provide to the creative industries and how we can learn from the success of one aspect of that support.

In the UK, we benefit from a mixed model of funding for our arts sector: we have some state subsidy, particularly to ensure that everyone gets access across the country; we have tax reliefs, which stimulate new activity; and we have private philanthropy, which rewards and supports excellence and is something that could be extended with the right incentives in place. But, in the time available, I am going to focus on the second in that list—the success of the tax reliefs and credits that we have put in place to support growth in our creative industries.

By their very nature, our creative industries are innovative and inventive sectors and so respond well to tax reliefs which stimulate new creative work. This was recognised by the previous Government, which extended and built on the existing film tax credits to a wide range of sectors, including high-end TV, children’s TV, video games, theatrical productions, orchestral productions and exhibitions in museums and galleries. I am glad that this Government have committed to retaining them.

Each of those has a cost to the Exchequer in terms of forgone revenue—£12.5 billion cumulatively, which is not to be sniffed at. But research from industry and HMRC itself has shown that they have been successful at attracting investment to the UK that would have otherwise gone elsewhere. Crucially, the reliefs are globally competitive not just because of their headline rate but because of their perceived simplicity, consistency and speed of payment.

I think that point cannot be emphasised enough. Industry and government get the greatest benefit out of such schemes when they are simple and predictable. Too many forms of government support, whether it is through tax reliefs or credits or grant funding, are subject to too many different rules, criteria, application processes and timescales. We have endless—many of them put in place by the previous Government—pots and funds attempting to support sectors where we see high potential for growth, not just in the creative industries but beyond. Through a perfectly sensible desire to ensure value for money, we sometimes end up failing to see the wood for the trees and make it too difficult to access the support.

In the context of a difficult spending review coming up, I make a plea to the Department for Culture, Media and Sport to make the case to the Treasury and learn the lessons of what can be and has been effective in these sectors. I am not arguing for new tax reliefs for every different sector that is as effective at lobbying as the creative industries—which the volume of emails in my inbox, as mentioned by the noble Baroness, Lady Thornton, can attest to. But to those who either tend to see public subsidy to the arts as a nice to have rather than making good economic sense or who see tax cuts for business as revenue forgone that could have been spent on public services, I say that smart, well-designed, internationally competitive tax reliefs can make an important difference to industries for the UK that create a wider ecosystem of talent and growth.

I hope that the enthusiastic support we might hear for some of these measures in this debate today can be a lesson for the Government to take away and think of in the future.