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FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.
The author is co-chair of the Creative Industries Council, a board member of Creative UK and chair of the RCA Council.
Britain has a Rip van Winkle economy. While we are offered a rich array of political promises during this election, we know that the only way to deliver at least half of them is to deliver more growth. The creative industries will be part of the solution. The last government made us a priority sector for growth and we returned the favour by recovering dramatically from Covid-19.
The creative sector now accounts for around 6 per cent of UK goods and services and employs 2.3 million people. And, as it sits at the heart of the digital economy, there is much more we can offer if we put the right policies in place: revolutionary gaming software, immersive display production, artificial intelligence in advertising, 3D printing in fashion, “creative tech” start-ups in universities. But here comes the “but”.
Britain has yet to catch up with a sector we defined just 26 years ago. Compare that share of goods and services with the percentage of public investment going into the creative industries: barely 1%, far less than other growth sectors. And yet the evidence is that that 1% more than pays for itself.
In 2018, UK Research and Innovation invested £56m in nine creative clusters across Britain, spanning the screen, gaming, fashion and artificial intelligence sectors. Over five years, the contribution from industry and other sources amounted to a phenomenal £252m. Universities connected applied research with more than 2,500 small and medium-sized businesses, creating jobs and new products.
You might think that a second “creative industries cluster programme” would be a no-brainer. In fact, we had to fight terribly to get funding. Eventually, with support from the Department for Digital, Culture, Media and Sport and the Treasury, we got it done – provided everyone keeps their promises in the next spending review. However, the next government needs a more fundamental reordering of public investment to reflect and take advantage of the new economy.
It’s one thing to argue with statistics, but are there really investment opportunities? The Prime Minister’s Science and Technology Council answered that question last year. It spent six months examining different creative subsectors, visiting some of our 55 organic clusters and studying university spin-offs. It concluded that “public investment (should) reflect the size, economic contribution and future growth potential of the sector.”
This authoritative research also recommended a broader definition of R&D for tax credits, because – wake up, back there – we are behind Germany, France and South Korea, which have adopted a definition that works for creative businesses. Ours does not. And we cannot get proper data from HM Revenue and Customs on our current use of credits.
What about private investment in the creative industries? I’m afraid it’s a similar story. The Council’s report noted that the British Business Bank, whose job it is to attract private investment to SMEs, was failing to meet the sector’s expectations. Its criteria “do not match the needs or business models of creative businesses.” The bank also fails to share the data that would allow us to analyse this properly.
To address this problem, Creative UK, a long-standing and successful investor in small creative businesses, has a novel idea: it is proposing a Creativity Bank that could work in the footsteps of Better Society Capital, an organisation that has cleverly managed to mobilise £3bn in social enterprises to match its own £925m. This dynamic idea deserves to be developed by the next government.
When the creative sector grows, the benefits are also reflected in the wider economy: advertising and music enhance a country’s brands, fashion drives retail, design is central to manufacturing, and gaming software now helps power self-driving cars. Not to mention annual exports of more than £50bn a year and the soft power benefits that come with them.
But the sector’s contribution goes beyond the economic, to culture and society. Our production expresses our values and enriches our national conversation: the emotional intelligence of Adele and Ed Sheeran, the Runescape and Little Big Planet (both successful British-invented games), the RIBA Stirling Prize-winning retirement home John Morden, and the ITV television show Mr. Bates vs. the Post Officewhich provoked outrage in the country. This is the pulse of the nation.
If Britain truly realises the potential of the creative sector, the benefits will be extraordinary.