On 4 November 2021, the House of Lords is due to consider the following:

Baroness Featherstone (Liberal Democrat) to move that this House takes note of the impact of Her Majesty’s Government’s policy and spending on the creative sector in the United Kingdom.

The creative sector encompasses a wide variety of industry sub-sectors, ranging from film and television to information technology (IT), software and computer services. The Department for Digital, Culture, Media and Sport (DCMS) defines creative industries as “those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”.

How much does the creative sector contribute to the UK economy?

Economic output

DCMS uses gross value added (GVA) to measure the contribution of different sectors, such as creative industries, the cultural sector and digital sector, to the UK economy. In 2019, DCMS estimated that the creative industries contributed £115.9 billion to the UK, accounting for 5.9% of the UK economy. The department noted that the GVA of creative industries had increased by 5.6% between 2018 and 2019 and by 43.6% between 2010 and 2019 in real terms. Since 2011, the GVA of creative industries has been growing faster than the UK economy. GVA of creative industries has been growing faster than the UK economy.

Of the differing sub-sectors which form the creative industries, the DCMS reported that ‘IT, software and computer services’ contributed the most towards creative industries’ GVA in 2019 at £47 billion (40.6%). This subsector also accounted for 53% of growth in creative industries’ GVA between both 2018 and 2019, and 2010 and 2019. The next biggest contributor to growth in the sector was ‘film, television, video, radio and photography’, which accounted for 39% of growth in creative industries’ GVA between 2018 and 2019.

Additionally, the cultural sector—which includes retail of music and video recordings, in addition to some sub-sectors found in the creative industries, for example, the arts and museum activities—contributed £34.6 billion in 2019, accounting for 1.8% of UK GVA. The GVA of this sector had increased by 9.5% since 2018 and by 27.0% since 2010 in real terms. Within the cultural sector, the ‘film, tv and music’ subsector contributed the most towards the sector in 2019 at £21.7 billion (62.9%). The ‘arts’ subsector was the next biggest contributor to growth in the sector, accounting for 6% of growth between 2018 and 2019 and 25% of growth between 2010 and 2019.

DCMS noted that there was an overlap between some of its sectors. For example, 27.7% of DCMS sector GVA is from within both the creative industries and digital sectors.

Employment

In 2019, there were over 2.1 million people employed in the creative industries sector, which was an increase of 3% from 2018. Since 2011, the number of jobs in the sector had increased by 34.5%, which is more than three times the growth rate of employment in the UK overall (11.4%). In the cultural sector, there were 676,000 people employed in 2019, representing an increase of 2.6% from 2018. Since 2011, the number of jobs in the sector had grown by 24%.

What impact has Covid-19 had on the sector?

Several stakeholders have argued that the pandemic has significantly impacted the creative sector. In a report, published in July 2020, discussing the impact of the pandemic on DCMS sectors, the House of Commons Digital, Culture, Media and Sport Committee argued that the pandemic presented the “biggest threat to the UK’s cultural infrastructure, institutions and workforce in a generation”.

As part of this, the pandemic has impacted output in the creative, arts and entertainment activities sector. This sector encompasses: performing arts; support activities to performing arts; artistic creation; and the operation of arts facilities. Between Q4 2019 (before the pandemic in the UK) and Q2 2021 (the most recent data to date), output declined by 37% in real terms in the sector in the UK. Additionally, output in libraries, archives, museums and other cultural activities declined over the same period by 30% in real terms.

In response to the pandemic, the Government introduced several schemes to support businesses and those who are self-employed. The schemes included the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS). On 23 March 2020, approximately 325,300 people employed in the arts, entertainment and recreation sector were on furlough under the CJRS. The largest number of people employed in the arts, entertainment and recreation sector—which includes sports and visitor attractions—and on furlough under the CJRS was 455,100 in May 2020. The latest available data for claims made under the CJRS reveals that the arts, entertainment and recreation sector provisionally had the joint-highest take-up rates of furlough of all the sectors (12%) as of 31 August 2021. Under the SEISS, a total of 35,000 claims for those in the arts, entertainment and recreation sector had been made under the fifth tranche of grants, up to 15 September 2021. This represented a take-up rate of 36% of the eligible population in the sector.

Within the creative sector, the pandemic has affected many separate industries, including the theatre and music industries. The representative bodies for professional theatre have previously estimated the total loss of income for theatres as a result of the pandemic to be £630 million. They attributed this to the theatre funding model which is “heavily reliant” on income from ticket sales. In addition, they noted that theatres and theatre companies have suffered a loss of income from associated or secondary income, including: bar, restaurant and café sales; event hire fees; and theatre rental income. Turning to the music industry, the trade body UK Music reported that the impact of the pandemic had been “catastrophic” on the music industry, with a “46% fall in GVA contribution; a 23% hit to exports, and a 35% drop in employment”. According to the chief executive of UK Music, Jamie Njoku-Goodwin, “statistics alone cannot convey the devastation of the pandemic—many in the industry have lost earnings, lost jobs, even lost their lives”.

What action has the Government taken to support the sector?

Prior to the pandemic, in October 2019, the Government launched the ‘culture investment fund’ which would allocate £250 million to the culture and creative sectors. Of this funding, over £125 million would be invested in regional museums and libraries and more than £90 million would be provided to extend the cultural development fund, which “uses investment in heritage, culture and creativity to drive regeneration and growth”. Announcing the fund, the then Secretary of State for Digital, Culture, Media and Sport, Nicky Morgan (now Baroness Morgan of Cotes), said it was the “Government’s biggest ever single investment in cultural infrastructure, local museums and neighbourhood libraries”. She also contended that the fund would “benefit communities across the country”.

In response to the pandemic, and the “unprecedented challenges it brought to culture and creativity across the UK”, the Government announced several measures to “help save these sectors, maintaining jobs and keeping businesses afloat”. These included:

In July 2020, the Government announced the creation of the ‘culture recovery fund’, worth £1.57 billion, which it described as a “rescue package” for arts, culture and heritage industries. The fund allocated:

  • £1.15 billion for cultural organisations in England delivered through a mix of grants and loans. This would comprise of £270 million of repayable finance and £880 million grants.
  • £120 million of capital investment to restart construction on cultural infrastructure and for heritage construction projects in England which was paused due to the pandemic.
  • £100 million of targeted support for the national cultural institutions in England and the English heritage trust; and
  • An extra £188 million for the devolved administrations in Northern Ireland (£33 million), Scotland (£97 million) and Wales (£59 million).

Announcing the package, the then Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden, said that the “massive investment” by the Government showed its “level of commitment” to protecting the arts, culture and heritage industries. However, Mr Dowden also acknowledged that although he believed that the funding would protect the majority of jobs in the culture sector, “not every job is going to be protected and […] we will see further redundancies”. In the March 2021 budget, the Government announced that it would provide an additional £300 million to the fund to “continue to support key national and local cultural organisations in England as the sector recovers”.

The Government notes that over 5,000 organisations and sites have been awarded funding, as at June 2021.

The fund was widely welcomed by many organisations within the arts and creative industries, including from Arts Council England, Historic England, the British Film Institute, the Music Venue Trust and the National Lottery Heritage Fund. However, there has also been some criticism of it, in particular concerns over its model and usability.

Following an inquiry into the culture recovery fund in 2021, the House of Commons Public Accounts Committee stated that it “acknowledge[d] the Department’s efforts to aid the [creative] sector’s survival through Covid-19 and get funds to over 5,000 organisations”. However, the committee reported that it had “uncovered issues” with the fund which had left some organisations in “perilous financial situations”. These included some organisations having difficulties accessing the fund and others receiving no feedback following unsuccessful applications.

Looking at the impact of the pandemic on DCMS sectors more widely, the House of Commons Digital, Culture, Media and Sport Committee had argued that the funding arrived “too late for many in the sector” and “on its own, will not be enough to stop mass redundancies and the permanent closure of our cultural infrastructure”. Consequently, the committee called for a “sector-specific deal” that included:

  • an extension to the furlough scheme for affected businesses until mass gatherings are permitted under the Government’s and devolved administrations’ Covid-19 guidelines;
  • continued workforce support measures, including enhanced measures for freelancers and small companies;
  • clear, if conditional, timelines for when they will be able to reopen, and technological solutions to enable audiences to return without social distancing; and
  • long-term structural support to rebuild audience figures and investment in an uncertain economic climate. They noted that this “should involve new, sector-specific tax reliefs as well as an extended VAT cut for the sector”.

In the October 2021 budget, the Chancellor of the Exchequer, Rishi Sunak, also announced further support for the UK’s cultural sectors. In the budget documents, HM Treasury stated that these sectors would “benefit” from receiving temporary rate uplifts to three corporation tax reliefs: the Theatre Tax Relief; the Orchestra Tax Relief; and the Museums and Galleries Exhibition Tax Relief.

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Cover image by Giusi Borrasi on Unsplash.