Creative Industries (Communications and Digital Committee Report)

Lord Foster of Bath Excerpts

Friday 7th July 2023 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I, too, serve on the Select Committee and pay tribute to the noble Baroness, Lady Stowell, for her chairmanship and her excellent speech. I will avoid making any comment on the allegations of her frugality. I join her in thanking our excellent staff and in paying tribute to my noble friend Lady Featherstone, because it was her debate in November 2021 on government policy, funding and attitudes towards the creative sector that was a catalyst for the committee’s inquiry. Many of us in that debate—and the noble Lords, Lord Lipsey and Lord Berkeley, and others today—concluded that while both past and present Governments talked up the importance of the creative industries, they failed to understand them and their specific needs.

The noble Lord, Lord Vaizey, rightly pointed to some important lifelines given to the sector during Covid. I have praised the Government for that on several occasions. However, even while trying to help, the Government’s limited understanding of the sector resulted in, for example, a furlough scheme that failed to address the needs of the high number of part-time and self-employed people in the sector. As a result, as we heard in a recent debate, 38,000 such people left the sector in 2020.

A similar lack of understanding has led to the ill-suited apprenticeship scheme we have heard about and a Brexit deal that has damaged touring musicians and many organisations which previously benefited from talent from other European countries coming here, as the noble Lord, Lord Berkeley, reminded us. Since the noble Earl, Lord Clancarty, referred to architecture, it is worth reminding ourselves of a very recent survey which showed that 90% of architectural firms believe that Brexit has harmed their practice.

The committee’s report also argues that the Government are overly complacent about the contribution that the creative industries make to our economy. It was, indeed, a wake-up call. As others have indicated, judging by the response, the Government have, at least in part, listened. Certainly, there is much to welcome in the sector vision. Like the noble Baroness, Lady Stowell, and others, I particularly welcome the decision to ensure the continuation, with further funding, of the creative industries clusters.

An important part of the report which many noble Lords have picked up on addressed the acute skills shortage in the sector, which, frankly, is the biggest inhibitor to growth. The sector vision does at least recognise the problem, and it contains some welcome proposals, including—as we recommended—improved careers advice and improvements to the apprenticeship scheme.

However, we know that evaluation of the flexi scheme concluded that it was not flexible enough and that employer costs were unsustainable. The sector vision promises to “improve creative apprenticeships” but, frankly, gives no detail. Like others, I ask the Minister to say more about this welcome commitment without throwing out the baby with the bathwater, as was raised in the debate.

There are other issues that need to be addressed. As I have mentioned, we have debated the sector’s reliance on part-timers and freelancers. Given that so many left during the pandemic, it makes sense to look at ways to resolve the issues that caused them to leave and so help future retention. In that debate, I raised two issues but got no response at the time, so I hope the Minister can respond when he winds up.

The first was the current benefit scheme, which, as many of us know, was not designed for the tax and employment status of freelancers. What are the plans to address this and ensure their entitlement to protections, such as parental leave and sick pay, that full-time employees already have? Secondly, on tax, following the decision to drop plans to reform IR35, what will be done to develop a tax system that can unlock the agility of freelance work?

The key solution to meeting the skills shortage lies in our schools, colleges and universities. Here I address what the noble Baroness, Lady Bull, called the Government’s “blind spot”. The sector vision promises:

“We will build a pipeline of talent into our creative industries, from primary school to post-16 education”.


It specifically, and critically, acknowledges:

“The sector increasingly relies on a fusion of creative and STEM … skills”.


Many of us have been saying that for years, not least my noble friend Lady Bonham-Carter, who, like many others, repeated that again today. The noble Baroness, Lady Rebuck, and the noble Lords, Lord Vaizey, Lord Berkeley and Lord Watson, my noble friend Lord Clement-Jones and the noble Earl, Lord Clancarty, all said that we need STEAM not STEM.

However, our report says that

“there are too few incentives for students to study a combination of creative and STEM subjects”.

As noble Lords have said, the main culprit is the failure of the schools’ EBacc to include art or design components, sending a message that creative knowledge and skills are not a route to jobs.

Numerous figures have been cited. The Select Committee, for example, notes that, since the introduction of the EBacc in 2010, there has been a 70% decline in GCSE entries in design and technology and a 40% decline in other creative subjects. This means that A-level entries have also declined, which hardly helps to meet the acknowledged need for a fusion of creative and STEM skills. However, as again we have heard, the Education Minister told the committee that there are no plans to change the EBacc. Surely the Minister acknowledges that the Government need to rethink this.

There is some hope with the advent of T-levels, but the situation in higher education is equally worrying. Echoing what was said by the noble Lord, Lord Watson, and the noble Earl, Lord Clancarty, one witness told us that there is

“worrying rhetoric about creative degrees being low value”.

It is hardly surprising, therefore, that courses have closed and that student numbers decline.

Our Select Committee believes, as my noble friend Lady Bonham-Carter mentioned, that the basis on which the Office for Students developed the measurement of low-value courses was badly flawed. Despite our recommendation that the measure be revisited, the Government’s response was a stonewall defence of the current arrangements. I hope the Minister will acknowledge that the skills gap is not helped if fewer and fewer students pursue creative courses at university. Frankly, I am at a loss to understand why this Government, as they acknowledge the need for a fusion of creative and STEM skills, seem determined to prevent it happening.

I agree with the noble Lord, Lord Berkeley, the noble Earl, Lord Clancarty, and other noble Lords who have argued that, if we are to have successful arts courses in our educational system, we need the arts themselves to flourish, yet many provider organisations are facing cuts and uncertainty, as we have heard. Frankly, it is likely to get worse. I will give just one example of why. Local councils are the biggest funders of arts and culture in England, yet just this week—two days ago—the LGA announced that councils are struggling to fill a £3 billion black hole caused by inflationary costs and soaring demands for their services. In such circumstances, councils will have less to spend on discretionary functions such as funding the arts. I hope the Minister’s department is making representations to secure a better funding deal for our councils.

Finally, I turn to another key issue in the report: the crucial importance of a robust intellectual property framework to underpin the creative industries, ensuring financial recompense for those working in them. As others have said, we have a world-renowned IP framework, but, as the report points out, there are many new challenges to it, and my noble friend Lord Clement-Jones described a number of them.

I pick up just one: the development of AI, which of course offers huge opportunities but also challenges. He referred to the IPO abandoning plans for the damaging exception to copyright for text and data mining purposes—again, something recommended in our report. I hope the Minister will agree that there should be no new copyright exceptions in relation to AI. The development of AI models means that a great deal of content has to be ingested. In many cases, the developers are seeking permission from the creators to use this content and pay for licences, and that is of course welcome. However, I understand that some of the larger AI developers, often household names, believe that they do not have to seek permission or licences, claiming exceptions to avoid paying for content. This is a very live issue, as illustrated by the recent application by Getty Images for a High Court injunction to prevent Stability AI selling Stable Diffusion in the UK, claiming copyright infringement in the training process of Stable Diffusion.

I hope the Minister, on behalf of the Government, will be prepared to agree that, on a point of principle, those large developers, which are likely to make many billions of pounds from their services in the next few years, should license the content that they are ingesting. Will he make sure that those businesses are told so in no uncertain terms, and at the same time ensure that they understand that they are going to be required to keep accurate, detailed and transparent records of all the data they ingest?

It has been a fascinating debate, with many important contributions. It is the time of year for the school report, and on the creative industries my report for the Government would read something like, “Gaining a better understanding, about which we are pleased. Making good progress but with many outstanding issues”—such as reforming the Ebacc, expanding eligibility for R&D tax credits, and increasing support for freelancers. There is still no room for complacency.