Don’t let complacency jeopardise the creative industries – Lords Communications Committee

The House of Lords Communications Committee has warned that Government complacency risks undermining the UK’s creative industries in the face of increased international competition and rapid technological change.

In a report published today, the Committee says that the UK’s creative industries should sit at the heart of the UK’s economic growth plans. But the Committee sounds the alarm over missed opportunities and a failure among senior Government figures to recognise the sector’s commercial potential.

The UK’s creative industries were worth more than £115bn to the UK economy before the pandemic, and make up as many as one in eight businesses across the country. Their contribution to the economy in 2019 was more than the aerospace, life sciences and automotive industries combined. The sector also delivers higher levels of innovation than many other areas of the economy. Countries across the world are competing for a slice of the lucrative opportunities in the sector: global exports of creative services alone exceeded $1 trillion in 2020 – more than double what it was in 2010. 

The Committee draws attention to the implications of technology-related disruption, and warns that the UK risks losing its leading position in this fast-growing industry. The Committee concludes the Government has a major opportunity to put the creative sector at the heart of its future growth agenda but is failing to do so.

The report calls on the Government to unlock the sector’s potential by fixing policies “characterised by incoherence and barriers to success”. The report acknowledges the Government’s ongoing work but says urgent action is needed to ensure the UK does not fall behind fast-moving international competitors. Issues of concern include: allowing other countries to overtake the UK on providing more competitive tax incentives; blind spots in education and skills policy; proposals to relax intellectual property law which threaten creative sector business models; the ending of the Creative Industries Clusters Programme; and a failure to take seriously the creative industries illustrated by the perception across government that DCMS remains the “ministry of fun” rather than a key driver of economic growth.

Commenting Baroness Stowell, Chair of the Committee, said:

“The UK’s creative industries are an economic powerhouse and have been a huge success story. But the fundamentals that underpin our success are changing, and rivals are catching up. The Government’s failure to grasp both the opportunities and risks is baffling.

“International competitors are championing their creative industries and seizing the opportunities of new technology. But in the UK we’re seeing muddled policies, barriers to success, and indifference to the sector’s potential. We acknowledge the Government has introduced important programmes in recent years, but we are concerned past success has bred complacency.

“Our report sets out some immediate challenges that the Government can address now. These include improving R&D tax policy to stop excluding innovation in the creative sector; abandoning plans to relax intellectual property rules which would undercut our creative businesses; making the Department for Education wake up to the reality that the future lies in blending creative and digital skills rather than perpetuating silos; and urging senior figures across Government to take the creative sector’s economic potential more seriously.”

The Committee set out a range of recommendations including:

• Improve tax policy to boost innovation: The Government’s definition of R&D for tax relief is narrow and restrictive. It should be changed to include more of the creative sector. The Government should also benchmark other creative sector tax reliefs against international competitors to address the UK’s declining competitiveness.

• The Intellectual Property Office’s proposals to change the text and data mining regime are misguided and should be paused immediately. The proposals were intended to support the development of AI, and could enable international businesses to scrape content created by others and use this for commercial gain without payment to the original creator. This would threaten business models and income streams in the UK creative industries.

• Protect the UK's intellectual property framework, which is respected across the world. These protections underpin the success of the UK's creative industry exports. The Government must not water them down when striking new trade deals.

• There should be a cross-Government focus on skills shortages in the creative industries. The Department for Education should encourage students to learn a blend of creative and digital skills; improve careers guidance; reverse the decline in children studying design and technology; change lazy rhetoric about ‘low value’ arts courses; and make apprenticeships work better for SMEs in the creative industries.

• UK Research and Innovation should identify options to continue the most successful parts of the Creative Clusters Programme after March 2023. Discontinuing support would be a needless waste of a programme that is exceeding co-investment expectations by 600 per cent.