Rising East Online

Creative Policy

What should the government do about creative industries?

—John Newbigin

The fact that government ‘discovered’ the creative industries a mere 10 years ago does not mean they are a recent phenomenon. Just as America was ‘discovered’ by Columbus, but had been there all along, so the creative industries are as old as human society itself; there’s plenty of evidence that our Neolithic ancestors took art, design and decoration at least as seriously as we sophisticated 21st century urbanites like to think that we do.

What is surprising is that the discovery of their economic significance took so long. In 1988 a brave man by the name of John Myerscough wrote a Policy Studies Institute pamphlet entitled The Economic Importance of the Arts in Britain in which he calculated that what he called ‘cultural goods and services’ accounted for five per cent of consumer spending and generated £10 billion of turnover in the UK’s domestic economy. For his pains he was systematically rubbished by a succession of Treasury economists and it was not until the New Labour government came to office in 1997 that Whitehall was finally persuaded to think seriously about industries that everybody recognised but nobody quite knew how to define. A Task Force was appointed to do the job and came up with a tentative, somewhat clunky, definition of “those activities 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.”

Orthodox economists and tidy bureaucrats complained that this definition was so woolly that it covered huge and unintended swathes of the economy, including all scientific research and development, the pharmaceuticals industry, and plenty more besides; but the Task Force was emphatic that, perfect or not, at least the definition provided a benchmark for debate and policy development, and it went on to list 14 identifiable activities as the core of the creative industries – advertising, architecture, the art and antiques market, crafts, design, designer fashion, film, interactive leisure software, music, the performing arts, publishing, software, and TV and radio. After a reasonably rigorous research effort, and to general surprise, this list turned out to cover £60 billion worth of economic activity and provide jobs for about one a half million people. There were other surprises, too. It seemed that ‘interactive leisure software’ (aka video games, not something which had ever attracted the attention of the Department of Trade and Industry) employed more than 25,000 people and was earning almost half a billion pounds a year in exports alone, making Britain something of a world leader.

But the Task Force was doing more than measuring up the new sector. It was given the job of recommending “steps to maximise the economic impact of the UK creative industries at home and abroad.”

Ten years on, it’s worth asking if that goal is being achieved. Has the discovery of the creative industries by public policy-makers and the attempt to give them a coherent definition as a sector been of any real benefit to the industries themselves? Two years ago, as a junior minister with responsibility for the creative industries at the Department for Culture, Media and Sport, James Purnell, now Secretary of State and therefore boss of the whole department, initiated a review to ask that question and think about where public policy should go next.

Predictably, no obvious or easy answers have emerged. The creative industries may have become an accepted part of the public discourse; the term is used in business, the media and local government; politicians of all parties hold them up as a defining element of Britain’s economy in a fast-moving, deregulated global market place. But what distinguishes the creative industries and, more importantly, what, if anything, government should be doing to make them more successful, seem to be as elusive as ever.

To start with, it is not clear whether all the public attention lavished on them has made much material difference, but it may just be too early to tell. Detailed evidence has not been collected for long enough and, although much better than it was, remains woefully inadequate compared with many traditional economic sectors or the exhaustive data-collecting of the US movie and IT industries.

It is no accident that US creative industries – movies, music, software – have far more vigorous and comprehensive policies in place to protect their intellectual property than do their European counterparts; they have a much fuller understanding of its long term value. It may be that, in time, the greater public awareness of and interest in intellectual property issues triggered in Britain by initiatives such as the Gowers Review, combined with better data sets, will lead to a similarly sophisticated approach to intellectual property here (which does not mean that we necessarily pursue such crudely protectionist policies as the US; public ownership of – and public access to - intellectual property is far more deeply ingrained in the European psyche than in the American).

Where there is good research that tracks the development of creative industries over the last 10 years, the story is somewhat inconclusive. A report commissioned recently by NESTA (the National Endowment for Science, Technology and the Arts) from the Burns Owens Partnership suggested that in some key areas the UK has lost market share since 1997, experienced little real growth or seen a fall in R+D. However, it may simply be that Britain has a slightly smaller share of what is a much bigger and rapidly growing global cake. One of the attractions of the creative industries for government ministers is that they are still growing at about twice the rate of the economy as a whole, and are generating new jobs faster still. That’s got to be good, especially as, on the whole, they are not intensive users of energy or materials and, on the whole, they contribute to social and cultural well-being rather than detracting from it. And it is abundantly clear that, however fuzzy the definitions may be, this is a sector in which a huge – some argue an unsustainable – proportion of school-leavers want to try their luck with jobs and careers. That may be a headache for politicians and academics, and it certainly seems to wind up plenty of newspaper editors who love to rail against the folly and vacuity of what are always described as ‘media studies courses’, but, in a democracy, that emphatic public statement from young people should not be lightly dismissed. Nations, like individuals, tend to do best when they like what they are doing.

The demand for skills in the creative industries, and the remarkable success of British higher education in providing courses that feed it, produce some incidental problems of their own. John Sorrell, chairman of CABE (the Council for Architecture and the Built Environment) and ex-chair of the Design Council, has often commented on the irony that one of Britain’s major contributions to the global growth of the creative industries is to offer world class education and training to all our competitors – an approach which has obvious short-term attractions but which may turn out not to be in the best long-term interests of the UK’s own prosperity!

And that, in turn, goes straight to the heart of a brace of difficult questions for government: in a globalised economy what does it mean to support ‘national success’ in a particular industry or sector? London is the undisputed global leader in most areas of financial services but only a tiny proportion of the businesses in the City are ‘British’. The difficulty is compounded when ‘national success’ appears to depend on something as amorphous as ‘creativity’.

Creativity is always going to be a messy process: it grows out of scepticism, cussedness, lateral thinking, rejecting established orthodoxies – exactly the things that kick against strategic policy development and give Whitehall mandarins internal bruising. Every attempt to address creativity in the school curriculum seems to end in tears and tantrums and, as the lifers in the old Department of Trade and Industry were fond of joking, governments are much better at propping up uncreative failing industries than at stimulating creative and successful ones. Ekow Eshun, director of the Institute of Contemporary Arts, said recently “creativity is the antithesis of process”. Unfortunately, process is what governments like doing best.

If government has difficulty getting to grips with the ‘creativity’ bit of the story, should it be focusing on the ‘industry’ bit? There is some truth in the view that Britain has a much better track record at inventing things than it has at turning inventions into viable long-term businesses. That’s been especially true in areas such as engineering and electronics and is epitomised by the story of the car industry. The British volume car industry (that is the British-owned car industry, not the well-managed and highly successful plants run in the UK by Nissan and Honda) became an international joke before it finally disappeared with the death of Rover. Yet Britain remains a world centre of car design (including a large number of Japanese, Korean and German cars) and the only truly ‘British’ car industry left is Formula 1 racing cars where British engineering dominance is overwhelming – whatever the badge on the front of the car; but this in a field where ‘creativity’ is all and ‘industry’ almost an irrelevance.

The games industry provides a different but comparable story. An astonishingly high proportion of the world’s top selling video games – from Lara Croft and Tomb Raider to Grand Theft Auto – were created in the UK; but their creators were unable to break into the international distribution market in any significant way and were eventually swallowed up, along with all the rights they owned, by Japanese, American or French distribution companies. The Burns Owens Partnership report highlighted the fact that investment in R+D in the British games industry is now falling as the big multi-national distribution companies realise they do not need to invest in the UK, but can simply hire UK creative talent as offshore contract labour while the big investment – and the big returns – go elsewhere.

So, should pubic policy acknowledge that creative talent seems able to look after itself, and what is really needed is more imaginative business managers, savvy investors and smart intellectual property lawyers who can help talented creative people retain and build on the value of their creativity (it’s an old joke that most inventors only understand the real value of intellectual property when they realise they have given all theirs away)? If it’s the development of business skills that need government attention, at what point in the value chain does it make most sense to intervene? One of the peculiarities shared by many of the creative industries is that at the creative end they are typically tiny micro-businesses (a 2002 survey of ‘Creative Skills’ in London calculated that 28% of the 400,000 jobs in the sector in London were people working on their own) while at the distribution, revenue-generating end they are dominated by trans-national entertainment and consumer corporations.

Perhaps public policy could start by looking at initiatives which address that asymmetry? That’s not such a radical idea. Channel 4 was created in the early 1980s to provide a platform for an energetic but fragmented and marginal group of independent TV producers. As a ‘publishing house’ with no programme making capacity of its own Channel 4 commissioned its entire output from those independents which, 25 years later, have grown in size and number to become the most powerful creative force in UK television. They are also internationally competitive, selling hundreds of millions of pounds worth of programmes and programme ideas around the world. A handful of them are now as big as, or even bigger than, the channel that helped create them!

Of course a 1980s model of public intervention in the market is not easily replicable today, although it is worth noting that Ofcom with its proposal for a ‘Public Service Publisher’ is adopting the same basic approach as a potential means of stimulating public service content for the online world.

Perhaps a more relevant example of how industry asymmetries can be addressed is provided by the story of ‘Sohonet’. A dozen years ago, having been lobbied by a consortium of small special effects businesses in Soho, serving the film, TV and games industries, BT built Sohonet – a dedicated high-speed broadband network covering a tiny area of central London which allowed those small businesses to work collaboratively on larger projects; which in turn enabled them to pitch for major contracts for computer-generated special effects on Hollywood blockbuster films; which led in time to the evolution of CFC Framestore, one of the biggest, most powerful and most creative special effects houses in the world, employing hundreds of highly talented creative people – and still based in Soho.

An unusual aspect of the Sohonet story is that it started and ended with a community – defined both geographically and occupationally. Traditional industry policy has rarely been put together on this basis, except when industries are collapsing and the impact on particular communities has to be mitigated – coal-mining being the most obvious example. For all the slippery issues surrounding the development of a public strategy for the sector, one of the strong and consistent features of the creative industries seems to be that so many of them are place-specific. Unlike a clothing factory or a car factory, you cannot lift creative industries out of one country or one community and dump them down in another. Put another way, cultural industries grow from cultural roots. It’s a fact that has been explored at some length by a number of authors and researchers, notably Richard Florida in his book The Creative Class. The evidence is that diversity of population and culture, a rich cultural environment – not just formal arts provision but also cafes, bars and public spaces – are as important in sustaining creative industries as good communications are to the financial sector in the City or as Sohonet was to a special effects industry trying to make its way in tough international markets. That may be the most useful and practical starting point in any long-term public strategy of support.

There is one further crucial ingredient to the necessary community mix for the creative industries: a university. It is undoubtedly true that in the UK, wherever there is a strong and sustainable hub of linked creative businesses, for example, digital media in Brighton, or interactive games in Dundee, there is nearly always a local university that helped plant the seed and continues to nurture individual businesses and the specialist local labour markets on which they depend. Such fine-tuned support grows out of detailed knowledge, good data, comprehensive networks.

Those particularities of place and skill come together with a special force in London. Whatever is going on in Brighton, Dundee or anywhere else, the fact is that London is the powerhouse of the UK’s creative industries and, if London is the powerhouse, East London is where most of the turbines are located.

As the already massive regeneration and growth of East London is intensified by the impact of the Olympics, nurturing an environment which continues to be receptive to the creative industries, and, equally important, trying to understanding what are the day-to-day drivers of success and failure in those industries, will both be hugely significant. It is pure serendipity that all this should be happening at the same moment as a new Secretary of State is appointed to the Department for Culture, Media and Sport who happens to be one of the few senior politicians in Britain who not only ‘gets’ the creative industries but is determined to find an answer to the question asked by the Task Force 10 years ago: how can we ‘maximise the economic impact of the UK creative industries at home and abroad?’

Even if the ultimate answer is that the best policy for government is to do nothing, universities will have a unique role in getting to that answer, and doing nothing will certainly not be the best answer or the most appropriate role for any of them. That should be good news for UEL.

John Newbigin is one of Britain’s leading cultural consultants, and a visiting professor at the London East Research Institute, UEL.

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