Creative Industries: Creating Jobs and Productivity Growth

Lord Freyberg Excerpts

Thursday 6th February 2025 Lords Chamber

[Lord Freyberg (CB)]

My Lords, I too thank the noble Baroness, Lady Thornton, for initiating this timely debate. I congratulate the noble Lords, Lord Brennan and Lord Lemos, and the noble Baroness, Lady Griffin, on their inspiring speeches. I declare my interest as an artist member of DACS, the Design and Artists Copyright Society; here I echo the noble Lord, Lord Berkeley, and others on copyright and how we should protect our creatives.

I will focus on the impact of cross-border trade and regulation on our creative industries. Our creative sector is a pillar of economic growth and cultural influence, yet increasing trade barriers and excessive regulation are eroding our competitive edge. The UK art market exemplifies these challenges. London has been a leading hub for art transactions, supporting over 45,000 jobs directly and nearly 38,000 through ancillary services such as logistics, conservation and marketing. However, our market share has declined from 34% in 2008 to just 17% today, while art imports have plummeted from 24% to just 7% in the past decade.

While large institutions struggle, small craft businesses and independent artisans are particularly vulnerable. These enterprises, from ceramicists to jewellers, form the backbone of our local creative economies. A local potter shipping to European galleries now faces paperwork costs exceeding £100 per shipment, which is prohibitive for items selling for just a few hundred pounds.

The post-Brexit trading environment has significant obstacles. The combination of import VAT and customs checks has turned what was once a smooth process into a bureaucratic nightmare. Compared with major art markets such as New York and Hong Kong, our import procedures are more expensive and administratively cumbersome. This creates a significant disadvantage in attracting international business and investment.

A severe lack of specialist customs infrastructure for inspecting artworks and collecting import VAT has created significant barriers to art movement between the UK and the EU. Although comprehensive data is limited, the evidence from dealers, auction house and shipping companies reveals widespread disruption. Art handlers report major delays at inspection points that are ill-equipped for handling sensitive artworks, while the complex VAT system of collections has created costly administrative burdens for galleries and dealers.

A telling example is the relocation of a major art shipper from Wiltshire to Brussels, due to unsustainable delays at Dover and Folkestone. Where previously multiple weekly shipments entered UK warehouses for international distribution, they are now consolidated into a single weekly UK delivery from Brussels. These barriers have contributed to the closure of London art fairs, such as Masterpiece and London Art Week, and significantly impacted the ability of auction houses to source works of art for UK sales, with major houses such as Sotheby’s and Christie’s reporting substantial difficulties in importing art for London auctions. The ripple effect extends beyond the art auction houses; it impacts restorers, transporters, framers and other related businesses. The very ecosystem that sustains our creative industries is under threat.

Adding to this burden is overregulation. Although anti-money laundering laws serve an important purpose, they disproportionately impact smaller businesses. Many independent craftspeople now find themselves drowning in compliance paperwork. A small ceramics studio must complete the same complex documentation as a major gallery shipping million-pound artworks. Courier companies compound these challenges by adding their own layers of bureaucracy: charging additional handling fees, requiring duplicate paperwork and often holding shipments in customs clearance for longer than is necessary.

If we are serious about maintaining our status as a global cultural hub, we must act decisively. First, we must simplify import procedures. The reintroduction of zero rating for art imports would bring the UK in line with New York and Hong Kong. If this is not possible, extending temporary admission arrangements would significantly reduce burdens. Secondly, we must ensure proportionate regulations. Raising the AML compliance threshold from £10,000 to £30,000 would provide much-needed relief. Thirdly, we must create a simplified trade framework for small-scale creative businesses. A streamlined craft export scheme for shipments of under £5,000 would help thousands of independent artisans to maintain vital international connections. I hope that the Minister will look favourably on these things.