Creative Industries

Lord Hollick Excerpts

Thursday 3rd November 2011 Lords Chamber

[Lord Hollick]

I congratulate the noble Viscount, Lord Colville, on his impressive maiden speech. He reminded us of the important democratic role that the media can play. He also shone important light on what is happening with internships.

I declare an interest as an investor in and director of companies involved in broadcasting, television and film production, music publishing and digital media, all of which are listed in the Register of Members’ Interests. All these companies, whether they operate here, in Europe or the United States, benefit hugely from the great pool of creative and entrepreneurial talent that we have in the UK. This pool is not part of a natural order of things. It must be replenished and nourished by extensive provision of education and training, and there are several areas, some of which have already been referenced, where that essential nourishment is under pressure.

To succeed in the digital economy, particularly in digital media and digital games, where I also have some interests, we need a strong supply of people who are skilled at writing computer code. As Eric Schmidt pointed out, that is not a part of the curriculum in this country any more. That is an absolutely essential change that must be made, because we desperately need to regain our position in the computer games industry.

Our art colleges, which are now universities, have a long track record of nurturing home-grown talent, be they James Dyson, Ridley Scott, Paul Smith or Keith Richards. Today’s students, many of whom come from disadvantaged backgrounds, have to take on very significant debts to fund their fees and may be reluctant to do so because of the high level of risk in the creative industries. In the past, the BBC, independent television, the regional and national newspapers and news organisations have provided training schemes for aspiring journalists and programme makers. Today, unfortunately, only the BBC continues to provide training of any significant nature, and the director-general made it clear yesterday that the training budget was not immune to cuts. He added that he was hopeful that the reduced level of funding could be stretched further. We shall see. Against this background, it is vital that the media industry, academia and the Government work together to ensure that there is adequate and affordable provision of training at universities, specialist institutions and in the workplace in order to maintain the flow of talent.

The development of great content and the ability to own and exploit its value over time is the cornerstone of many creative businesses, and that requires a steady supply of risk capital and investment. The TV programming business is coping with an uncertain advertising market and a declining spend by the BBC. Sky’s welcome decision to increase its spend on original UK content and the growing importance of BBC Worldwide as a funder, which was referenced by the noble Lord, Lord Fowler, has helped to sustain programming investment. BBC Worldwide is one of the few genuine international players that we have in the UK. It has unrivalled power in global distribution and a growing and impressive track record in investing in successful and original programmes. It has invested over £1 billion over the past five years, working with both the BBC itself and over 200 independent production companies. It needs to increase its investment firepower if it is to provide the required level of funding to support broadcasters and independent programming investment.

An increase in the flow of risk capital to the TV and film production industries, and to digital media development, is of critical importance to the health of our creative sector. Our tax system generally prioritises the use of debt financing, and we are living with the consequences of that today. The interest on debt financing is fully offsettable against taxable profits, and of course that makes it more attractive than equity. But it is risk capital that is required, and that needs to be equally encouraged by the tax system. The Government’s welcome increase in the level of enterprise investment scheme investment that can be offset against personal tax is a step in the right direction, but a much more significant and bolder increase is required if the creative industries are to raise the level of risk capital they need and can successfully deploy.