On 8 December 2022, the House of Lords is due to consider the following:

Viscount Chandos (Labour) to move that this House takes note of the case for a strategy towards the arts and creative industries considering the UK’s world leading position and benefits to the economy and levelling up

1. Contribution of creative industries to the UK economy: facts and figures

1.1 Economic output

Recent data from the Department for Digital, Culture, Media and Sport (DCMS) shows that:

  • The creative industries sector contributed £109bn to the UK economy in 2021. This is equivalent to 5.6% of the UK economy that year. The largest subsector within the creative industries was IT, software and computer services, which accounted for 2.3% of the UK economy in 2021. (These figures are based on monthly estimates for gross value added (GVA).)
  • While the economic output of the creative industries fell during the Covid-19 pandemic, it was less adversely affected than the UK economy as a whole. Monthly GVA in the creative industries fell by 6.6% between January 2020 and January 2021, compared with the 11% decline for the UK economy as a whole. However, certain subsectors within the creative industries were more adversely affected. For example, over the same period, the monthly GVA for museums, galleries and libraries fell by 37%. Indeed, during the pandemic visitor numbers for DCMS-sponsored museums fell from 50 million visitors in 2019 to 11.5 million in 2020. Music, performing arts and the visual arts also saw a decline in economic output, with its GVA falling by 35%.
  • Growth in both the creative industries sector and the economy as a whole declined in September 2022 compared with the previous month.
  • However, overall, the creative industries sector grew by 6.9% in September 2022 compared with the same month in 2021. Growth across the UK economy as a whole was 1.2% over the same period. Indeed, as demonstrated by the graph below, growth in the creative industries has been higher than across the whole of the economy since the outbreak of the Covid-19 pandemic.
Graph showing gross value added of creative industries
Figure 1. Changes to UK economy and the creative industries sector, January 2020–September 2022

1.2 Employment in UK creative industries sector

DCMS figures for employment in the creative industries sector show:

  • The creative industries sector saw a faster recovery in employment after the pandemic when compared with the rest of the UK economy. In 2021, there were 3mn filled jobs in the creative industries.
  • Most of these jobs (0.96mn) were in the IT, software and computer services subsector. Jobs in the creative industries represented 7% of all filled jobs in the UK economy.
  • Over the course of 2021, jobs in this sector increased by 5.1% compared with the previous year. During the same period, overall employment in the UK fell by 0.6%.

1.3 UK cultural exports (goods and services)

Figures published by the UN Conference on Trade and Development show:

  • The UK was the fifth largest exporter of creative services in 2020, after the United States, Ireland, Germany and China. It said the UK’s creative services were worth $57bn (US dollars), equivalent to 5.4% of all creative services exports that year.
  • The UK was the seventh largest exporter of creative goods, after China, the United States, Italy, Germany, Hong Kong and France. The total value of UK creative goods exports that year was $15bn, 2.9% of all creative goods exports.

2. Government strategy for creative industries and the arts

The UK government provides funding to creative industries and the arts through direct funding. It also provides funding through arms-length bodies such as Arts Council England. The government provides other forms of support, such as through tax reliefs. Currently, tax reliefs are available for industries including film, certain forms of television and video games. The government also provides reliefs for museums, galleries, the performing arts and other art forms. The government is responsible for negotiating the BBC licence fee over the course of the BBC’s royal charter period. It also owns Channel 4, which is commercially funded. With the exception of broadcasting and the BBC, policy on culture and the arts is devolved in Scotland, Wales and Northern Ireland. This briefing focuses on UK government support for the cultural industries and the arts in England.

The government has said it intends to use economic support for the creative industries and the arts to grow the UK economy. In March 2021, the government, then led by Prime Minister Boris Johnson, published its growth strategy, Build back better: our plan for growth’. In this strategy, the government identified the creative industries as one of five sectors where the UK had a competitive advantage. The white paper included a commitment that the government would publish a series of ‘sector visions’ later that year. These sector visions would state the kinds of support that would be provided to each sector. The white paper said each sector vision would:

[…] set out a vision for high-growth sectors and technologies where we are well-placed to develop a globally competitive advantage.

2.1 Delays to the sector vision for creative industries

In July 2021, the Department for Business, Energy and Industrial Strategy (BEIS) published the UK Innovation Strategy. This restated the government’s commitment to publish a series of sector visions, including a sector vision for the creative industries. In February 2022, DCMS announced the sector vision for the creative industries would not be published until in the summer of 2022. The government also confirmed the sector vision was being developed in partnership with the Creative Industries Council. The Creative Industries Council is a joint forum including businesses working in the creative industries sector, the government and other creative organisations. In the same month, the minister of state at DCMS, Julia Lopez, said the sector vision would set out the government’s ambitions for the sector up to the 2030s.

Government ministers have subsequently confirmed the sector vision would address the following:

In July 2022, the House of Lords Communications and Digital Committee launched an inquiry into the future of the UK’s creative industries. The committee has yet to publish its report. During an oral evidence session on 22 November 2022 as part of this inquiry, Julia Lopez confirmed the sector vision for the creative industries would be further delayed. However, she told the committee her department hoped to launch the sector vision in January 2023.

2.2 Changes to government ministers in 2022: impact on creative industries strategy

During 2022, there have been changes to the ministerial team at DCMS, as well as the changes of prime minister and the chancellor of the exchequer. The changes at DCMS include the following:

  • Michelle Donelan was appointed secretary of state for DCMS on 6 September 2022 following the resignation of Nadine Dorries.
  • Julia Lopez resigned as minister of state on 6 July 2022 but was appointed to the same role on 7 September 2022.

During an oral evidence session with the House of Lords Communications and Digital Committee on 22 November 2022, the chair of the committee, Baroness Stowell of Beeston, asked Julia Lopez whether changes to senior members of the government had resulted in a shift in policy for the creative industries. Specifically, Baroness Stowell noted that, in his autumn statement on 17 November 2022, the new Chancellor of the Exchequer, Jeremy Hunt, had identified five areas for growth in the UK economy. He had not included the creative industries as one of these areas. Julia Lopez told the committee the creative industries remained a “priority area” for the government, even though it was not specifically mentioned in the autumn statement.

Although he did not include the creative industries sector as one of his five areas for growth, Jeremy Hunt announced as part of his autumn statement that the government planned to consult on proposals on reforms to tax reliefs. Specifically, he said the government would review the tax reliefs available for film, animation, high-end TV, children’s TV and video games. The government said the aim of these reforms would be to ensure reliefs “go further to incentivise the production of culturally British content and support the growth of the audio-visual sectors”. This consultation was launched on 17 November 2022.

One of the issues identified by the House of Lords Communications and Digital Committee as part of its inquiry into future of the UK’s creative industries is the fragmentation of the government’s strategy for supporting the creative industries. During the committee’s evidence session with ministers from DCMS, the Department for Education (DfE) and BEIS on 22 November 2022, Baroness Stowell of Beeston noted a recent announcement of funding made in November 2022 did not include a reference to the sector vision. She also noted witnesses had told the committee they had had difficulty engaging with DCMS in the development of its sector vision. Julia Lopez responded by acknowledging it had been difficult to align the government’s announcements. She also acknowledged there had been changes to ministers over recent months, including at the DfE and BEIS as well as at her department. However, she said she was working closely with her counterparts to develop the sector vision, in preparation for its publication in 2023.

2.3 Review of job quality and working practices in the creative industries

In addition to the publication of the sector vision, the government has confirmed it is working with the Creative Industries Policy and Evidence Centre (PEC) to conduct a review into job quality and working practices in the creative industries. PEC is a body led by a non-departmental public body, the Arts and Humanities Research Council, and the National Lottery funded independent innovation agency, Nesta. PEC launched a call for evidence as part of this review in March 2022. The director of PEC, Hasan Bakhshi, said the purpose of the review was to identify the “most pressing priorities for promoting quality work in the sector”.

3. Government’s levelling up agenda

The government has said it intends to use the economic support provided to the creative industries and the arts to deliver its ‘levelling up’ agenda. Specifically, it has said it intends to allocate funding to support cultural activity and grow businesses outside London.

BEIS’s July 2021 UK Innovation Strategy confirmed the government’s sector visions would support its strategic objectives, including levelling up. The government’s levelling up white paper, published on 2 February 2022, described the creative industries as having a “critical role to play in levelling up”. It described creative industries and the arts as a source of “local pride and improved quality of life” as well as “drivers of growth and productivity”.

The white paper also said the government intended to increase the support available for cultural institutions outside London, such as theatres, museums, galleries and libraries. It said all of the new funding allocated by Arts Council England during its next three-year spending review period would be used to support spending outside the capital.

On 23 February 2022, the then secretary of state for DCMS, Nadine Dorries, set out a series of measures she described as tackling cultural disparities in England. She confirmed funding to support levelling up would be announced as part of the Arts Council’s 2023–26 national portfolio funding round, setting out how the Arts Council would allocate government funding. She also said the Arts Council would provide support to London-based organisations applying for Arts Council funding to enable them to move, expand or establish new activity outside London. These plans were criticised by the mayor of London, Sadiq Khan, who said they would be a “devastating blow” to the city’s creative sector. The Arts Council’s 2023–26 national portfolio funding round is discussed in more detail later in this briefing.

3.1 House of Commons Digital, Culture, Media and Sport Committee report on cultural placemaking

In its report, ‘Reimagining where we live: cultural placemaking and the levelling up agenda’, published on 2 November 2022, the House of Commons Digital, Culture, Media and Sport Committee said the arts, culture and heritage can support levelling up by engaging local communities and supporting local industry. However, it identified several barriers to the development of the arts and culture in certain areas, including geographical disparities in funding. It recommended that the government and its arms-length bodies should consider how to address these funding disparities, including by better incentivising private sector investment. The government has yet to publish its response to this report.

4. Existing support for creative industries

While the government has yet to publish its sector vision for cultural industries, it has made several announcements concerning funding to support the creative industries and the arts. These include the following programmes:

4.1 Cultural investment fund

In October 2019, the then Culture Secretary Nicky Morgan (now Baroness Morgan of Cotes) launched the cultural investment fund. She said the fund would allocate £250mn to the culture and creative sectors. Of this funding, over £125mn would be invested in regional museums and libraries and more than £90mn would be provided to extend the cultural development fund. The cultural development fund’s aim was to use investment in heritage, culture and creativity to “drive regeneration and growth”. Arts Council England states £48mn of investment has been allocated so far through the cultural investment fund. It has said a further £128mn will be invested as part of future funding rounds over the course of the current spending review period (2022/23 to 2024/25). In March 2022, the government said the funding allocated so far had been for capital spending predominantly outside London, with nearly £10mn spent in the northeast of England.

4.2 Culture recovery fund

In July 2020, the government announced the creation of the ‘culture recovery fund’, worth £1.57bn. It described this fund as a “rescue package” for arts, culture and heritage industries following the outbreak of the Covid-19 pandemic and the closure of venues as part of the government’s public safety measures. Of this fund, £1.15bn was allocated to cultural organisations in England, delivered through a mix of grants and loans. The government said this would be comprised of £270mn of repayable finance and £880mn grants. Further information on the culture recovery fund is provided in the House of Lords Library briefing, ‘Impact of government policy on the creative sector’ (28 October 2021).

4.3 Create growth programme

In November 2022, the government launched the create growth programme. It said the purpose of this fund would be to ensure creative businesses in different regions outside London are able to access finance. The government announced £17.5mn would be allocated during the current spending review period as part of this programme, with each region receiving £1.275mn in grant funding. It has confirmed the regions benefiting from this fund would be: Greater Manchester; the west of England and Cornwall and the Isles of Scilly; Norfolk, Suffolk and Cambridgeshire; Leicestershire, Derbyshire and Lincolnshire; Kent, Essex and East and West Sussex; and the northeast of England. Julia Lopez confirmed during her oral evidence session with the House of Lords Communications and Digital Committee that the create growth programme would be included in the sector vision for the creative industries when it is published in 2023.

4.4 Creative clusters programme

In 2018, the Arts and Humanities Research Council launched the creative industries clusters programme. The aim of this programme is to support research and development by establishing links between universities and businesses in the creative industries in order to drive innovation in the sector. The establishment of this programme was originally recommended by Sir Peter Bazalgette in his 2017 independent review of the creative industries. The budget for this programme is £120mn, and it is set to end in 2023.

In his evidence to the House of Lords Communications and Digital Committee on 15 November 2022, the executive chair of the Arts and Humanities Research Council, Professor Christopher Smith, said the programme had yielded a higher return on investment than expected. He told the committee the programme had resulted in a “4:1 return” on investment. The committee has written to UK Research and Investment (UKRI), the body responsible for the allocation of funding for this programme, to ask why funding was not being extended. At the time of writing, the UKRI has not yet responded.

5. Recent developments: Arts Council England’s 2023–26 investment programme

On 4 November 2022, Arts Council England published its 2023–26 investment programme. Arts Council England said its intention for this new programme was to concentrate funding on those places in the country it said had been underserved in the past. For example, Arts Council England said it would invest £383mn of new funding for the north of England. However, the programme included cuts in funding to other organisations, including English National Opera (ENO). The ENO lost its status as a national portfolio organisation, meaning it would not have guaranteed funding over the course of the 2023–26 investment programme. Writing on 10 November 2022, director of music at Arts Council England, Dr Claire Mera-Nelson, acknowledged the removal of funding would be difficult for those organisations affected. However, she said Arts Council England would provide funding to the ENO, which is currently based in London, to develop a plan for it to move to Manchester if the ENO decided to do so.

The Arts Council England’s decision to remove ENO’s national portfolio organisation status has been criticised by organisations, including the union Equity, the Musicians’ Union, the Broadcasting, Entertainment, Communications and Theatre Union (Bectu) and the Independent Society of Musicians. These bodies have argued the reduction in funding would damage jobs in the industry. During a Westminster Hall debate on 22 November 2022 on supporting UK artists and culture, the decision was also criticised by several MPs. For example, Sir Robert Neill (Conservative MP for Bromley and Chislehurst), the chair of the all-party group on opera, described the decision as being fatal for the ENO as an organisation. He also criticised the decision on the basis that there had not been adequate consultation on the change’s impact. Barbara Keeley (Labour MP for Worsley and Eccles South) also criticised the decision as showing “poor planning [and] short sightedness”. Specifically, she criticised the government for imposing too much political direction on Arts Council England regarding its funding decisions.

Speaking at the end of this debate, parliamentary under secretary of state for DCMS, Stuart Andrew, stated his support for Arts Council England as part of its 2023–26 investment programme. He asserted investment in culture was “at the heart” of the government’s approach to levelling up. He said this was why the government had asked Arts Council England to invest more in areas outside London.

The House of Commons Digital, Culture, Media and Sport Committee has invited the chief executive of Arts Council England, Darren Henley, to give evidence on the funding decisions made as part of Arts Council England’s 2023–26 investment programme. This evidence session is scheduled to take place on 8 December 2022.

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Cover image by lynne from Pixabay