Supporting the Creative Economy

John Whittingdale Excerpts

Thursday 13th February 2014 Westminster Hall

[Mr John Whittingdale (Maldon) (Con)]

Thank you, Mr Benton, for this opportunity to debate the Select Committee on Culture, Media and Sport report, “Supporting the Creative Economy”. It was the result of a major inquiry, in which we took a great deal of evidence and came up with a wide range of conclusions. There has been a lot of interest in some of our proposals across the industry and the House. I thank Elizabeth Flood, the Committee’s principal Clerk, and all the staff for their hard work on this inquiry and others.

We are debating a great success story. There is no question but that in this country we are very good at creative industries. Since the report was published, the Department for Culture, Media and Sport has published the latest figures, which show that the creative industries are worth £71.5 billion to the UK economy and generate around 1.68 million jobs. They are a substantial part of our economic activity and are growing steadily. We are achieving ever greater success.

Those bare figures conceal remarkable achievements. In almost every sector of the creative industries that we have examined, there have been fantastic successes. The British film industry continued to produce some great films, and we have some of the greatest talent in the world, but we have also been remarkably successful in attracting highly mobile international investment to the UK to make films.

[Mr Jim Cunningham (Coventry South) (Lab)]

I welcome the Committee’s report. Did the hon. Gentleman look at the arts and the financial contribution that they make to this country? He mentioned the film industry, but could he say something about the broader remit of the arts?

[Mr Whittingdale]

I am happy to, because I agree that the arts make a substantial contribution, not just to this country’s cultural life, but to our economic life, and provide an important economic stimulus. We are well aware of that, which is why, in a few weeks, the Committee will conduct an inquiry into arts funding in the UK, and will discuss with the Arts Council its priorities and how to ensure that the benefits are felt throughout the UK. Some hon. Members feel strongly about that, and it is very much a component of the creative economy’s success.

I have spoken a little about film, but the music industry is another enormous success for this country. The biggest selling artist last year was British: the band, One Direction. I may not have added to their album sales, but that is a huge success, which comes on top of another remarkable achievement: in five of the last six years, the best-selling album in the world has been by a British artist. This country continues to produce enormously successful artists, and it is worth noting that the music industry does that without any financial subsidy from the public.

The electronic games industry is another hugely important contributor to our economy. Some of the best-known games, including “Tomb Raider”, “Grand Theft Auto” and “Football Manager”, are British products. It is important that we continue to be a centre for the electronic games industry; that is another issue that I want to talk about.

I went to the MIPTV annual market in Cannes, where international buyers go to purchase TV programmes. There is no question but that the UK dominates that market. BBC Worldwide has a substantial presence at MIPTV, but independent production companies such as Shed Productions, Shine TV and All3Media, are also hugely successful at selling British products across the world. Then there are the fashion and design industries. Britain is in the lead in all those industries.

We started our inquiry on the basis that this country is remarkably good at the creative industries. Is there more that the Government could do to support those industries? Are there risks attached to that success? In each case we came up with recommendations. We started our inquiry on the back of the most extraordinary showcase for British talent—the 2012 Olympic and Paralympic games in London, where British talent, not only sporting but creative, was on display. That creative talent was on display not only in the Cultural Olympiad but in the games themselves, in the extraordinary opening ceremony by Danny Boyle, which gave us an opportunity to exhibit British creative talent to the world.

However, we were concerned to hear, when we received evidence, that some of the companies that played a key role in those events have not been able to take advantage by using that fact in their marketing campaigns. I am sure that the Minister will refer to the supplier recognition scheme, which is a huge step forward that gives companies an opportunity to market themselves on the back of their contribution to the Olympics, but we received evidence from the Professional Lighting and Sound Association, the trade body that represents the professional entertainment technology industry, which remains disappointed that it has not been able to publicise its involvement in the London 2012 games. PLASA gave as an example the fact that some of its members were responsible for the appearance of those rings out of the fire, for the 70,500 LED tablets that were placed on every single seat in the stadium ahead of the opening ceremony, and for the industrial chimneys that rose out of the ground. All of those were iconic moments in the opening ceremony, and the companies should have had an opportunity to make it clear that they were responsible. We still hope that the Government will reconsider the supplier recognition scheme and find a way to allow companies in such fields as audio, video and audiovisual equipment to promote their success in contributing to the games.

A key contributor to the success of the British creative industries is the tax credits offered by the Treasury, for which we give full credit both to this Government and the previous one. The film tax credit has been hugely successful. I understand that last year it generated almost £900 million in international investment in this country through just 37 feature films. I will always remember visiting Paramount Pictures to see the trailer for “World War Z”. There was astonishment on the faces of Committee members, particularly Scottish members, when we discovered that, although the film ostensibly showed Philadelphia being overcome by waves of zombies, it was not Philadelphia but Glasgow. Since then, several members of the Committee have been to a screening of “Jack Ryan: Shadow Recruit”, which is currently on at cinemas. That film is set in America and Moscow, but it was filmed in this country, mainly in London but also in a number of other places; locations included Barnet, Battersea, Islington, Tower Hamlets, Birkenhead, Liverpool, Hatfield, and a power station in Nottinghamshire.

[Tracey Crouch (Chatham and Aylesford) (Con)]

My hon. Friend has missed out the important role of Chatham, which has become a film set, having recently produced “Les Misérables” and various other vast-selling products. Is that not the tax regime at its best, bringing real benefit to local communities?

[Mr Whittingdale]

My hon. Friend is completely right. I apologise for not mentioning Chatham, and I am sure that the fact that it was chosen for “Les Misérables” is not a reflection on her constituents. There is no question but that every part of the country benefits from that kind of international investment. We have more to look forward to: “Mission: Impossible 5” will start filming in Britain soon, as will part of the next episode of “Star Wars”.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

On “Les Misérables”, I hope that my hon. Friend has noted that the stage production has brought in something north of £1 billion in revenue. At some point, he should acknowledge the important role of British theatre in our creative industries.

[Mr Whittingdale]

The Minister is entirely right. I am pleased that the Government are talking about extending the tax credit not only, as already proposed, to high-end television drama, animation and electronic games, but potentially to regional theatre, because theatre is the breeding ground for many of our greatest talents.

Still on film success, we talked to the film companies and asked why they came to make films in this country. A lot was to do with the extraordinary talent that we have here—the skills—but they also said that, without question, had the tax credit not been in place, they would not have been able to come here.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Might one of the other reasons film companies come here be our heritage? For instance, “Harry Potter” was filmed up in Northumberland at beautiful Alnwick castle. Looking around the world, or trying to build a set such as Alnwick, would have cost a fortune. Does he agree that that also can be a reason for people coming to this country to film?

[Mr Whittingdale]

Of course it is. In particular, historical dramas make use of some of our great heritage assets. There are a large number of reasons why people want to come to Britain to make films, but without the tax credit, they probably would not. We pay tribute to the previous Government for introducing it, and to this Government for continuing it.

I would be interested to hear from the Minister an update on the progress of discussions with the European Union on the introduction of the electronic games tax credit, because that, too, is welcome. The games industry is under pressure, and we have lost some companies already, so it is important for that tax credit to be achieved soon.

In examining the creative industries, we received a lot of evidence about an issue that lies at the absolute heart of their success: intellectual property rights. For a long time, Governments have sought to address some of the problems created by online distribution. In the previous Parliament, the Government passed the Digital Economy Act 2010, which was a valiant attempt to put in place measures to deter online piracy. Unfortunately, it has not come into force.

I will not recap the whole history of what has happened since the Act was passed—the judicial reviews, the arguments and so on. However, the principle behind it is that people who illegally download copyrighted material, and so jeopardise the success of the music, film, television, and, I suspect, in due course, games industries, need to be told that what they are doing is not only illegal, but poses a real threat to the economic viability and success of those industries. It was suggested that that should be done through the dispatch of warning letters. Once people were identified as serial downloaders, their internet protocol addresses should be identified and the internet service providers asked to send letters.

[Andrew Bingham (High Peak) (Con)]

Does my hon. Friend agree that some people download unwittingly—excuse the pun—because the websites all look plausible and completely legal? On the internet, there is no way to distinguish what is legal and illegal on occasions.

[Mr Whittingdale]

My hon. Friend is right. Some of the websites deliberately set out to appear legitimate. They might even make a small charge, although often they are distributing the content for free. Perhaps that would be another advantage of sending letters: it would increase awareness and oblige people to ensure that when they did download, they did so from a legal site, so that the artists and producers concerned received the remuneration due.

Despite the difficulties in enacting the DEA, the recent development of a voluntary agreement is in many ways preferable, if it can be made to work. In America, that is already working well. A voluntary copyright alert programme would involve an agreement between the rights owners and the ISPs that there would be a system through which letters were issued to those identified as illegally downloading. If that can be done voluntarily, that is preferable, and we should get on with that as quickly as possible. The Committee’s report is clear: we prefer a voluntary system, but if agreement cannot be reached, the Government need to stand by to bring into force the provisions of the Digital Economy Act 2010, and to use legislation.

Unfortunately, we were perhaps less optimistic on copyright law. The proposals on the modernisation of copyright law have given rise to huge controversy. The Minister will be only too aware of the concerns expressed right across the creative industries about the dangers of tampering. Copyright law supports the success story that I have described. The enormous economic contribution made to our GDP by the creative industries is possible because copyright law ensures that they receive the reward that they are due. Extending the exemptions on the basis that it might produce extra economic activity and income is dangerous if we do not take account of the risk of widened loopholes jeopardising existing success.

We viewed the Hargreaves report with some concern. When we tried to find out how Professor Hargreaves came up with the figures quoted in his report on the substantial potential benefits of some exceptions, we were concerned at the lack of hard evidence to support those figures, and no account was taken of the risk that widening exceptions poses to the industry’s success. That debate continues, and we await the statutory instruments implementing some of the exceptions. Great concern is still being expressed across the industry about the lack of clarity on some of the proposed exceptions, and on the loopholes that might be created. We are particularly concerned to ensure that Parliament has an opportunity to examine each exception in detail. There should be proper scrutiny.

The private copying exception has caused most concern, because it has the widest effect. No one would argue that transferring a piece of music that one has legally purchased from one device to another should not be permissible. Millions of people do that, and it is nonsense that putting a song on an iPod, for example, technically puts them in breach of copyright law. Legalising private copying, however, has to be done carefully. The Committee took evidence on that, and listened in particular to the concerns expressed by the film industry. Most of the rest of Europe has not applied a private copying exception to audiovisual material. The film industry said that the exception was unnecessary and that, in any case, legal means were already being developed through which consumers who purchased audiovisual material could store it in the cloud, or access it through different devices. The Minister will know that the film industry remains very concerned about the private copying exception. Perhaps he will say a few words on that in his speech.

We also talked to Google, which is responsible for some great successes and huge benefits; it is important to recognise that. The Committee visited the Google campus in east London, which is providing opportunities for start-up firms and app manufacturers to develop. It is at the forefront of the development of technology and making it available to entrepreneurs and small start-up firms. YouTube has been a great success in generating revenues for people who post material on it. More than £1 billion has already been generated in income.

The Committee was concerned about the issue of searching and the direction of people towards illegal download sites. Google has supplied us and, I am sure, other hon. Members present with statistics on how, if someone searches for an artist, most of the results that come up will be legal. Part of the argument is about the fact that Google is citing results of searches in which people simply put in the artist’s name, whereas the music industry points out that if, as well as naming the artist, people use the word “download” or “MP3”, that produces very different results. The latest figures that I have been given show that the proportion of links to infringing sites appearing in the top 10 search results remains roughly the same as before. The latest figure that I was given was 252 out of a possible 400, so 63% of results in the top 10 were illegal download sites.

Google will tell us about the huge number of pages that it takes down when it is notified that they contain copyrighted content being distributed illegally, but the notice refers to a single page, with the result that the music industry has sent more than 50 million notices to Google. Google does take the pages down when notified, but no sooner do they come down than they go up again. A much more sensible recommendation, which the music industry, among others, promotes, is that when a website is the subject of, say, more than 10,000 notices, it should be removed from the front page of search results, and when the figure of 100,000 notices is reached, it should be removed from the first 10 pages. Eventually, if that goes on, it should be blocked in its entirety, on the basis that it plainly consistently makes available copyrighted material illegally.

The Committee was persuaded that there was a very strong case for increasing the penalties for online copyright infringement from two years to 10 years, so that they were of the same severity as those for physical piracy. I know that the Government are looking at that. We were very impressed when we visited the new City of London police’s IP crime unit. That is an encouraging innovation. It is doing impressive work. However, there is a question about its long-term funding. I hope that the Minister can give some indication of whether the Government see it as a permanent part of our policing, with appropriate funding.

I now come to the final area that I want to discuss. I am sorry that the right hon. Member for Exeter (Mr Bradshaw) is not present, because he felt very strongly about it. I understand that the severe flooding in the west country prevents him from being with us. I am referring to education. It is obviously right that the Government focus on the promotion of the so-called STEM subjects—science, technology, engineering and maths—but, as the Minister knows, the debate is about whether STEM should in fact be STEAM. In other words, arts should be part of the core curriculum. I believe that the success of our creative industries is an ample demonstration of why it is so much in our interests to make arts a core part of the curriculum—so that this country can continue to produce the extraordinary talent that lies behind the success of all the industries that I have talked about.

I shall not go on talking any longer. I thank the Minister for the response that he has already given, but there are areas where we feel that he could go further, and I hope that he might be willing to do so later this afternoon.

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[Mr Vaizey]

I shall certainly copy in the hon. Lady.

[Mr Whittingdale]

And, indeed, everyone.

[Mr Vaizey]

I will certainly copy the hon. Lady and the Chairman of the Select Committee into my reply.

Danish law allows sharing within a household; Polish law apparently allows sharing within social circles—so there are much wider exceptions in Europe, and we have been careful to draw ours as narrowly as possible.

My hon. Friend the Select Committee Chairman asked about the future funding of the Police Intellectual Property Crime Unit. The Intellectual Property Office funded the set-up costs and the initial period of operation, but I understand that the baton will pass to industry, and that has always been made clear. If the work is worth doing, the industry should support it. I am interested in the PRS proposal on traffic lights. We reached out to some of the relevant intermediaries but without success, but if PRS still believes that we could pursue that system, it is worth revisiting.

As to increasing the sentences for online copyright infringement, I understand that the Minister with responsibility for intellectual property said that it was worth looking into that, and we also said so in our response. Further, the Science Minister, who responded on Second Reading in the Commons, said that we would report our findings by the end of the year. We support industry initiatives to educate people about the complexities of copyright, and are in active discussions with the industry about how the Government can support more education initiatives.

Perhaps that is the appropriate moment for me to pick up the point that the Select Committee Chairman made about the VCAP proposals. It has been difficult to implement the details of the Digital Economy Act 2010. The Government have not resiled from it, but there are significant technical obstacles, including the fact that we were being sued by BT and TalkTalk for at least two years from the time when it was passed. Other technical obstacles have presented themselves, and we are actively seeking to overcome them, but nevertheless we welcome the industry initiative, not only because we hope it may be up and running before the end of the year, but because it requires a partnership between both sides of the debate, and because it brings important flexibility to make it possible to adapt. I suspect that it will be easier to adapt the system as technology changes.

The Select Committee’s position and that of many hon. Members who rightly act as strong advocates for the creative industries and rights holders is well known. The Government’s position is also well established, and there has been an extensive dialogue. I hear what has been said about the need for separate statutory instruments when the exceptions are debated, and I am sure that the Department responsible will listen carefully to that recommendation.

Another all-pervasive issue is the position of the arts in education. Hon. Members will know that I sought out the job as culture spokesman in opposition and was lucky enough to be appointed Minister when we came into office. I passionately support the arts and would be concerned if I thought that some of what people allege about the state of the arts in schools was genuine. The Secretary of State for Education is a fantastic supporter of the arts. I have no doubt about that, and I work closely with him, as I have done for several years. One of the first things that we did was jointly to commission Darren Henley to look at music education, to secure the ring-fenced funding of music education services at a time when most funding was being devolved to schools, and when schools were becoming academies, as they still are. I felt that it was important to take that strong position.

We want music services to change, which is why we re-christened them music hubs. Obviously, more has to be done than simply change the name. We want music organisations—orchestras, and so on—to be genuine partners with local authority music services and for music services to be able to call on the talents of a wide range of people who deliver music in different ways in any local area. That is why we introduced the qualified music educator status, to allow people who teach music but are not formally teachers to be recognised for their talents and skills. And that is why we extended the In Harmony programme, increased its funding and integrated it into a wider national music plan.

We are at the beginning of this journey. Nobody is expecting music hubs to spring fully formed from this policy change. We have achieved two important things: we have ring-fenced the money and established the principle that music organisations and music services should be partners. A third important principle is that the money is contestable; no one local music service or local authority should be complacent—a word that has been used in this debate in other contexts—and simply expect to receive that money every three years.

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[Mr Whittingdale]

I had not anticipated commenting further, but this has been a very good debate. I am grateful to the members of my Committee who have come along to speak and to other hon. Members. That has demonstrated the degree of support and interest on both sides of the House and, indeed, in all parts of the country. As the Minister said, the debate has ranged into areas that perhaps go beyond his Department’s responsibilities, but I hope that he will consider carefully what has been said.

I echo everything the Minister said about the success of our creative industries. The Government are doing many good things, but the area that I remain concerned about and that several hon. Members raised is copyright. If there are to be modernisation changes, they should be made carefully, and we hope that there will be opportunities to look carefully at every proposed change. That will mean debates on the statutory instruments, if possible, as they appear.

I thank the Minister for his reply. His official response did not go as far as we might have hoped in some areas, but he has endeavoured in some way to make up for that this afternoon.

Question put and agreed to.