Supporting the Creative Economy

Paul Farrelly Excerpts

Thursday 13th February 2014 Westminster Hall

[Nigel Adams]

Yes, he is a jolly good chap.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

Is he here?

[Nigel Adams]

I cannot spot him in the Chamber today, but I understand that he has a meeting with representatives of the music industry, so I am sure that he is doing great work on our behalf.

There is much important work going on to improve awareness of the importance of IP. I welcome the recent launch of a joint IPO and UK Music game, which educates young people about copyright in a fun and interesting way. I understand that the IPO’s karaoke shower is continuing its live tour of the UK and promoting the importance of IP, and that is very welcome. Through the Alliance for Intellectual Property, the industry has developed a content map, which allows users to check which services are licensed. Signposting and nudging consumers in the right direction is sensible, but we need further action to ensure that our creators are properly rewarded.

Those are all positive steps forward, but education will not tackle illegal content if it is not accompanied by mechanisms to ensure that consumers are able to make the right choices about where to get their content. Earlier this week, I and other colleagues here today were presented with a proposal from PRS for Music for an IP traffic light system for online content. That system would provide consumers with clear and visible indicators that would allow them to determine easily whether a website provided illegal or legal content before they entered the site. The merits of such a system are clear, and importantly, it would tackle the root of the problem, which is consumer confusion, while cutting off the traffic to illegal sites, and the revenues collected from advertising on them. In fact, in a survey by Harris, 91% of online downloaders said that they would welcome the introduction of a traffic light system to aid understanding of which sites were legal.

I encourage technology companies to work more closely with the creative industries to find a way of delivering such a system. The company whiteBULLET, which received a grant from the Intellectual Property Office, has being doing good work in that space, but more support should be encouraged. A signal today from our excellent Minister that he backs the principle behind the traffic light system, along with a commitment to support it going forward, would be welcome.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

We are well used to Governments of all colours responding to Select Committee reports by saying that they take issue only with 10 out of 100 of the Committee’s recommendations and agree with the remaining 90. Usually, of course, those are the 90 places in which the report has agreed with the Government in the first place. The Government’s response to this report is firmly in that mould, and there is a general feeling on the Committee that it is perhaps the most disappointing response we have yet had from the Government to a major report. I do not blame the Minister for that; we have love and respect for him.

On all fronts, the response shows a determination to plough on regardless. All too often, such a determination is justified loosely by a wry reference to a previous Administration, either because the recommendation has cropped up before but was not, for whatever reason, pursued by the previous Government—that is the case with the sensible proposal to equalise penalties for copyright theft in the online and physical worlds—or because, as in the case of the private copying exception, the recommendation follows a course that was endorsed before 2010, but the then Government did not get round to implementing the proposal.

The impression from the response is that it is the first time in the history of the coalition Government that the previous Labour Government have been accorded the accolade of omniscience. It appears, for the first time, that we could do no policy wrong. But of course what is right or wrong is what suits the present, not the past, not least when digital technology and services are moving so quickly that they can often render a policy redundant, harmful or both.

In my short contribution I want to focus on two areas that are central to our inquiry: intellectual property and copyright, and education, which is so important to the strength of the industries. That strength is recognised worldwide. Just a fortnight ago I attended a discussion with the CBI and its German counterpart, the Federation of German Industries, which was held at the instigation of the German embassy. The federation’s director-general, Dr Markus Kerber, made the point that although Britain might be envious of Germany’s car makers, its household electricals manufacturing and its engineering prowess in general, we should realise that there is the same envy and appreciation in Germany of our creative industries—music, film, video games, and general digital and online UK consumer and business services. Our report cites a legion of statistics about how important the creative industries are to the economy, and ahead of this debate such statistics have been coming in thick and fast. I will not repeat them all, for lack of time.

Central to the submissions from the creative industries, during the inquiry and since, is the importance of copyright and of having a strong framework of intellectual property law and enforcement. That is the bedrock on which those industries’ success stands, and if we tinker with the framework rashly, we will weaken those foundations. Having heard the evidence, our Committee, in the report, takes issue with the direction of travel of the Hargreaves review in general—quite frankly, its quantification of the so-called benefits of relaxing copyright law simply vanishes under the slightest scrutiny—and questions the effect of the proposed copyright exceptions in particular.

In our conclusions, we agree with the creative industries that too often the changes seem to be driven by the commercial interests of digital technology giants. They were invariably American, and chief among them was Google. That company, as we have heard from the Chairman of the Committee, clearly does some good works. It has opened up the worldwide web, through YouTube in particular, an outlet that is much used by new talent. However, we must remember that like all those American digital giants, it goes to extraordinary lengths to avoid UK taxes, and indeed those of its own country and every other.

In their response, the Government highlighted the role of the Under-Secretary of State for Intellectual Property, Lord Younger, as the UK’s IP champion and guardian of our creative interests. The hon. Member for Selby and Ainsty (Nigel Adams) referred to the Prime Minister’s new IP tsar—that is my description—the hon. Member for Hove (Mike Weatherley). There is still no Liberal Democrat even on the fringes of the Department for Culture, Media and Sport.

It is worth repeating what the Minister, Viscount Younger, told us in his evidence. As stated in paragraph 52 of our report, he said:

“Google is one of several search engines, and I am very aware of their power, put it that way. I am also very aware, I think, that they have access, for whatever reason, to higher levels than me in No. 10”.

The industry’s concern about that influence does not stop at our shores. I will quote from a recent submission to us from the BPI, which represents the music industry. It is worried not only about the Government pressing ahead with their copyright exceptions in the UK, but Europe doing so under the EU’s copyright directive. It said:

“The UK has, for reasons the BPI doesn’t fully understand, achieved for itself a reputation in Europe as being hostile to copyright. This is despite the UK being one of the European economies that gains most from the creation of copyright content and has most to lose from hostile attacks on the copyright regime.”

It is time for the UK Government to act to dispel that reputation, and I hope the Minister will give us some comfort when he responds.

I will conclude with a few words about education, skills and training. On the education front, since 2010, there has been a history of repeated corrective actions. Whenever a light bulb goes off in the Secretary of State for Education’s head when he is in the bath, humming “Jerusalem” and mentally chiselling his epitaph for when he is in the Elysian fields, we have to take action to try to correct what he is doing. I will give a recent example. It has not had much coverage here, but it was important to those involved. It involves Japanese, the language of manga comics and of “My Neighbor Totoro”, which is perhaps the finest and most enchanting children’s animation of recent times.

You may be surprised, Mr Benton, to learn that quite a number of primary schools around the country teach Japanese. They tend to be clustered around factories, such as Toyota in Derby, where there is a lot of Japanese-related employment. Those schools do not have to teach Japanese. It is not statutory, but voluntary, and they should be commended for teaching any language. However, that was not good enough for our Secretary of State for Education, who is always on manoeuvres. Last year, he published a list of recommended languages for those primary schools. It included, of course, the ancients, German and French, but it did not include Japanese, so at a stroke, those schools felt that they were being discouraged from teaching Japanese. There was also the small matter of including Mandarin, and the resulting diplomatic incident. After concerted pressure, the Secretary of State was forced to change his mind. He may zig and occasionally zag, but he often returns to his same true course; it is veritably an exercise in constant vigilance.

The creative industries’ concern starts with the Secretary of State’s focus on the STEM subjects; he gives little place to the arts. After much concerted campaigning, the Government changed some of the plans for the curriculum. There have been changes to the EBacc, but the continuing concern is that schools will still encourage pupils to opt for what they believe they are being measured on most strongly, and that de facto choice is being driven out of the curriculum, leading to an ongoing downgrading, as we have heard, of the arts, design and technology of computing in the state curriculum, but not the private sector. The industry fears that that will lead to further narrowing of the social background of those in our creative industries, making it more dominant in the products of some of our excellent private schools.

I urge the Minister and the Secretary of State for Culture, Media and Sport to join us in our eternal vigil, and to give us comfort on the arguments that have been forcefully made on the importance of maintaining a robust, strong copyright framework, and of enforcement, which have been the bedrock of the success of our creative industries.

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[Damian Collins]

The Minister gives an excellent example of the sort of investment that the film industry and production industry are bringing to this country. Of course, as he will be aware, we anticipate success in the film awards this year for “12 Years A Slave”, which of course is a film that Britain can be proud of. It is based on a book published many years ago by Penguin. Writers involved in the film industry are an important part of the talent mix. Whether the writers of original scripts or writers who adapt books that have previously been published, they are all part of the same ecosystem.

When I worked in the adverting industry, I was always impressed that Soho could draw on the talents of such a broad base of people, which is why people from around the world come to be here. A film company seeking to make a big feature film can come to the UK and know that we have the facilities to make it and the talents to complete the job at every level. That is what makes working in the creative industry in the UK so exciting.

The development of creative centres of excellence, not only in London but around the country, is an important part of the ecology of the creative economy and its future success. We do not want our creative industries purely to be centred and located in the traditional centres of excellence in London and the south-east; we want to have a strong network of them right across the country. We can see that happening now. Particularly with the investment in Media City at Salford Quays and projects such as the Sharp Project, Manchester city council has come together with members of the business community to create a hub for creativity in that city. Such developments are helping to make Manchester the fastest growing media city, or creative city, in Europe. In Birmingham, there is an important and growing creative hub and community in Digbeth, and in Belfast, around the Titanic centre and the Titanic quarter, near the old Harland and Wolff shipyards, there is another important centre of the creative economy.

Yesterday, I attended an event focused on the creative industries in my constituency and the rest of east Kent, where we looked at the development of creative and digital clusters around the east Kent coast, particularly in Folkestone, Ramsgate and Canterbury. In my constituency of Folkestone and Hythe, we now have more than 200 businesses that can be considered as part of the creative technology economy, according to the Department for Culture, Media and Sport’s definition of that economy. It is a rapidly growing sector employing a large number of people, and that growth is only accelerating in the scope and range of the tasks that the sector is undertaking, as well as in the number of opportunities for work that exist within the sector.

One of the challenges is how we link together these different centres of excellence—these different hubs and clusters—and how we ensure that we have good links, both through broadband infrastructure and transport infrastructure, that connect the hubs in places such as east Kent to the centres of excellence in Tech City in London and elsewhere.

Sleeping Giant Media is a search engine optimisation and social media marketing campaign company based in Folkestone. A few years ago, it was started from nothing and it now employs more than 20 people. There are many reasons why such a company chooses to locate in Folkestone. The quality of life in Folkestone and the low cost of doing business there will be among them, but Folkestone is less than an hour by high-speed rail from one of the world centres of excellence in the creative economy—Tech City in London—and that is a key reason why those businesses are in Folkestone.

Businesses in Digbeth in Birmingham, working in places such as the Fazeley Studios and the Custard Factory, have a great place to do business and a great community of people to work alongside, but it is their proximity to a major global centre of excellence in London that makes it so attractive to be there.

We can have the physical infrastructure and facilities to support an expanding creative economy. The Select Committee underlines the importance of these hubs and clusters. It was right that the Committee visited silicon valley as part of its study tour, because that is a great example of a successful cluster that has given birth to a number of great companies.

It is interesting that companies such as Facebook and Google have been born out of research laboratories and facilities, not only of universities such as Stanford, but out of precursor companies in that industry, such as Hewlett-Packard and Xerox, the success of which spawned further companies. We hope that in London new businesses will come out of our creative and digital economy as it develops, in turn spawning the creation of further businesses down the line and employing yet more people.

The Chancellor of the Exchequer set out his ambition that London should be the tech hub and creative hub for Europe. We are well on the way to achieving that, if it has not already been achieved. One key aspect of making that possible is attracting businesses, investment and talent. We want to see as many people as possible born in Britain taking advantage of the opportunities to work in such a centre of excellence. We also need to ensure that we can bring in the best talent from around the world. At the moment, the industry is growing apace, but we do not currently have enough people to satisfy all the demand. Therefore, having the right policy on visas that allows the most talented people to work in the UK is a crucial issue facing development.

Another element of that development is ensuring that young people have the skills that they need and the understanding to take part in this growing sector of the economy. The importance of young people’s having the opportunity to develop their creative talents at a young age, when at school, through music and the arts has been discussed in this debate. I do not believe that the Secretary of State for Education’s focus on some core academic subjects in any way undermines that. People need good skills and qualifications in those core subjects to do almost anything that they would seek to do; that is an important part of a good education. There is no reason why creativity and artistic talent and flair cannot form part of the curriculum. Schools can do that. A longer school day will give schools many more options in pursuing that.

There are also uses for such talents in other sectors in the creative industry, particularly for young people who might want to work in the video game sector. We want a nation of young people who not only play video games, which are increasingly made in this country and exported around the world, but know how to build them. That is why bringing computer science into the science curriculum, as an equal science alongside chemistry, physics and biology, is an important step. We need more young people learning computer coding at school, so they know the building blocks of computer programming and the creativity needed to build websites, computer games and animation programmes. That should be an important part of the curriculum.

[Paul Farrelly]

I recently went through GCSE choices with my son and saw first hand how the school is being measured and how it felt that it would be measured in future. Once the subjects of that measurement are prescribed, there is a great limit on choice that drives subjects such as computing out of being an effective choice.

[Damian Collins]

I note the hon. Gentleman’s point, but that is why I said that it is important that computer science is given equal standing and equal weight, alongside other areas of the science curriculum, as part of the core science subjects that young people can study. However, we must also consider what people do a long time before they get to GCSE choices. That is why code clubs in primary schools are important.

I saw Google run one of its code club projects at the Folkestone primary academy school in my constituency, getting primary schoolchildren to learn basic programming techniques, which is something that those of us who are old enough to remember did on BBC Microcomputers and Spectrum computers back in the 1980s, although advances in software render that sort of programming redundant. Teaching coding is being brought back to young children of primary school age. Code clubs can be part of extra-curricular activities, as part of a longer school day, as well as being something that young people can do in evenings out of school.

[Sandra Osborne in the Chair]

In Hackney, with the support of Tech City and businesses in that area, a concerted effort is being made to take coding in particular into the schools that surround the Tech City area, so that young people do not grow up just seeing the new glass buildings and office blocks and understanding that people are working there but never acquiring the skills to take advantage of the jobs that are being created. It is very important that we focus on the educational element of developing talent to work not only on the artistic and creative side of the creative industries, but on the technical side, through coding and programme writing and making.

Another important development that the Government are supporting through the Department for Education is studio schools. In Folkestone, we are about to embark on a project to create a new studio school with a focus on the creative industries, where young people will not only learn subjects linked to the examinations that they will take and the qualifications that they will gain, but do so in conjunction with direct work experience as part of the ordinary school day. Studio schools linked to creative businesses in the towns and cities that they serve are an excellent way to provide that and are an important innovation, alongside having more of an emphasis on creativity and creative skills as part of the school curriculum.

The final point that I want to add to the debate about IP is this. I followed very closely the argument made by the hon. Member for Bristol East (Kerry McCarthy) in the speech before mine. With regard to private copying, we can look at Nick Hornby’s book “High Fidelity” and the film made of it. In some ways, that book and that film celebrate private copying. That is an important part of the story in the book. It is something that everyone has done or certainly people who grew up with records and cassettes have done. Probably everyone in this room has breached copyright law by copying a record on to a cassette or by loading a CD into a computer and copying the contents on to the hard drive. Each time, they are infringing copyright. Some people may consider that once they have purchased an item of music—once they have paid the fee for it—it is theirs to enjoy personally. A change in the law that reflects something that is already commonplace—that people already do—is not necessarily something that we should be frightened of.

I agree with the hon. Lady, though, that when we get to a position where people can share music, in particular, or film or another form of content through the cloud and potentially with a wider audience, they are getting into a remit where they are no longer privately copying but, either intentionally or unintentionally, distributing content. That is a very different matter and something that we must be very careful of. The hon. Lady is right to raise that important point.

--- Later in debate ---

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

I am pleased to have the chance to reply to this stimulating debate. It has been extremely wide-ranging, covering copyright, education, Scottish independence and the future of HS2—all four of which I am not formally responsible for, but I will try to address the points that were raised.

I particularly enjoyed the speech of the hon. Member for Washington and Sunderland West (Mrs Hodgson). It included extensive plugs for her son—I would have done the same thing—and his future career in the video games industry. Short of reading his CV into the record, I do not think she could have done more to bring the industry’s attention to the budding talents of Hodgson Junior, as I assume he is called.

The hon. Lady was followed by my hon. Friend the Member for Selby and Ainsty (Nigel Adams)—[Interruption.] He is over here now—he is the acting parliamentary private secretary; he was promoted in the middle of this debate. He refrained from mentioning the success and talents of his son, Ben Adams, in the soon-to-be-world-famous British band Summer City. I regretted that he did not mention it, because then we could have had a contest to decide in the course of this debate whether the offspring of Labour MPs are more creative than the offspring of Conservative MPs. I was particularly pleased to open a copy of my local newspaper to find that the son of my hon. Friend the Member for Henley (John Howell)—Conservative—has won the first scholarship from Sky Arts and been picked out by Quincy Jones as one of the most talented drummers he had ever seen. Let it not be said that MPs from all parties are not making their own direct contributions to the success of the creative industries.

It is a good thing that all of us who have spoken in this debate can point to the success of the creative industries. In the spirit of ecumenicalism that often surrounds such debates, I point out that the creative industries were identified by the former Secretary of State for Culture, Media and Sport, Lord Smith of Finsbury, who has managed to make an impact on other areas of public policy since then. That was the process by which the UK’s creative industries were put on the map. The process of identifying a rather disparate sector as a coherent whole has been followed by many other countries. Because of it, we can identify the success of the creative industries: more than 1.5 million jobs, over 5% of UK jobs; growth of 8.6% since 2011; a contribution of £70 billion to the UK economy.

This Government have built on the achievements of previous Governments in supporting the creative industries. I was particularly pleased that we have built on the success of the film tax credit, which now brings in roughly £1 billion annually of inward investment in the UK, with the introduction of a television tax credit for high-end drama and a tax credit for animation, which was responsible, incidentally, for more than £200 million in inward investment in its first year. To answer the first question posed, we are expecting an announcement shortly from the European Commission on the video games tax credit. I have been in discussions with the Commission for a time. It has a job to do, and the Government, particularly the Conservatives, recognise the importance of policing state aid and unfair and anti-competitive Government subsidies to industries. It is important that the Commission is convinced that a tax credit is the right thing to do, but we have made great progress and we expect an announcement shortly.

As well as the tax credit support—I was delighted when the Chancellor extended the film tax credit; it is particularly important to support the visual effects industry, in which the UK is among the leaders in the sector—there are other forms of support. I hear what the hon. Member for Bishop Auckland (Helen Goodman) asked about whether the Department for Business, Innovation and Skills has designated the creative industries as a priority sector. We are certainly the first Government to set up a sector council for the creative industries; we now have a Creative Industries Council, which is co-chaired by the Secretaries of State for Business, Innovation and Skills and for Culture, Media and Sport alongside Nicola Mendelsohn, the chief executive of Facebook in Europe.

Alongside that council, which considers a range of issues including access to finance, skills and exports, we have set up Creative England, which is designed to support the creative industries outside London. We take that support seriously. To respond to what my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said, it has received significant support from the Department for Business, Innovation and Skills in terms of money from the regional growth fund.

There is also Tech City, which acts as a beacon to show this country’s support for the technology industry. It is important to recognise that Joanna Shields, the chairman of Tech City, has made it an imperative to reach out to all the other clusters across the UK, to bring them together as a coherent whole and to ensure that other parts of the UK also benefit from that extraordinary growth. I have written to the chairmen and chief executives of local enterprise partnerships—many of them already recognise this—to remind them of the importance of the creative industries when setting out their strategies. Some of the city deals, particularly the one in Brighton, have put the creative industries centre stage. With Tim Davie from BBC Worldwide, I co-chair UK Trade & Investment’s sector advisory group, which works to help the export of our successful creative industries and to attract inward investment. There is a hugely successful story to tell about Government support for the creative industries and about the ongoing activity to support the industries.

It is also important to stress that we should include the Arts Council in the mix. The hon. Member for Bishop Auckland talked earlier about the need to support people in employment. The Arts Council has set up a £15 million fund to fund apprenticeships in the creative industries, in addition to the £37 million creative people and places fund to help fund the arts in areas where they have previously been under-represented. The agenda is wide, but there is a huge range of activity to support that agenda.

I pay tribute to the fantastic Chairman of the Select Committee. He rules the Committee with an iron fist and directs it towards all the pertinent issues of the day. He has, as usual, produced a perspicacious and incisive report that focuses in particular on concerns about the changes to the copyright regime. As the Minister with responsibility for the creative industries, I understand the concern of many in the creative industries about copyright enforcement. I have tried to bring together the different sides of the debate—the rights holders, the internet service providers and the search engines. We take a wide range of action. Let us not forget that existing law has been used effectively by rights holders to seek and obtain injunctions against some of the biggest sites that exist for the sole purpose of distributing infringing material. We also work with City of London police and credit card companies to take down payment sites, and we have one of the most advanced systems, if not the most advanced system, working with the advertising industry to ensure that advertising is not present on many of those websites.

We take a wide range of action, but my response to the Select Committee, which seems to have got a resounding B+ from hon. Members here today—[Interruption.] I might be being optimistic. We want Google to do more, and we will continue to press it to do so.

[Paul Farrelly]

It is a Select Committee, so the B+ is cross-party.

[Mr Vaizey]

I am grateful for that clarification. My excellent officials have provided me with answers to most of the questions that have been posed in this debate. I feel like I should recreate the famous Bob Dylan video when I read them out, but I will address some of the excellent points that have been raised.

Copyright reform began with the Hargreaves review, which has been extensively consulted upon. Many views have been taken into account, and it is important to get the balance right. The hon. Member for Bristol East (Kerry McCarthy) knows that I am going to say that we believe that the private copying exception is the narrowest exception in Europe, so we do not think a levy is appropriate. I shall write to her as she invited me to, setting out in great detail why I think that.

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[Mr Vaizey]

I hesitate to commit my Secretary of State or the Government to such a report, but given today’s important speech by the Chancellor about the future of currency in Scotland and the Prime Minister’s important speech about Scottish independence just under a week ago, I am sure that an opportunity will present itself between now and the vote for the Department for Culture, Media and Sport to highlight the effect that independence could have on the creative industries.

[Paul Farrelly]

rose—

[Mr Vaizey]

I now give way to the hon. Gentleman not from Stoke.

[Paul Farrelly]

It is almost a Stoke point. Before the Minister concludes, I want to take him back to the beginning and point out an anomaly that was discovered in the definitions and statistics—although I am not going to argue for the inclusion of ceramics in the statistics, which is a Stoke argument. When examining the statistics, we found that, of the £36 billion, £20 billion was attributed to the so-called fashion industry, so I asked the Chairman of the Committee why we were discussing music and film, but not clothes. It seems that the £20 billion attributed to the fashion industries includes pretty much everything that goes by the name of clothing on the high street, so the Minister may want to consider the statistics and how they are gathered and measured.

[Mr Vaizey]

I do not know why the Chairman of the Select Committee would not want to talk about fashion. I would have thought that it was his top subject. As my hon. Friend the Member for Folkestone and Hythe said, London fashion week begins tomorrow, and I know for a fact that the British Fashion Council would welcome the Chairman of the Committee at any of its events over the next five days.