The impact of government policy and spending on the creative sector - House of Lords, 4 November 2021

• Councils are committed to supporting the growth of the creative industries and have a key role to play in providing the local conditions for new creative clusters to flourish.
• Councils recognise the creative industries’ potential to boost sustainable economic growth as we move into recovery. The LGA has published a guide for councils, Creative Places, to support them to harness the creativity and innovation inherent in the sector to take on the challenges of a post-COVID world, and generate jobs and investment in local economies.
• Before the pandemic, the UK’s creative industries contributed more than £111 billion to the UK economy and supported over two million jobs. The success or failure of the creative industries is important to councils, not just from its economic contribution but it’s key role in creating local identity, vibrant places and wider opportunities.
• Councils and combined authorities are already working to strategically position the creative industries in local growth strategies and are using tools first developed in Business Improvement Districts and Enterprise Zones to support the growth of creative clusters. They have also successfully leveraged national funding, including through the Levelling Up Fund, to develop their local creative sectors and drive regeneration.
• Councils invest over £2 billion annually in culture, leisure and related services. Publicly funded culture is a vital part of the broader creative ecosystem, which directly supports the growth of the creative industries and the wider for-profit creative economy. It is crucial that councils are provided with adequate long-term funding so they can continue to invest in discretionary services that support the wider creative economy and drive local economic growth.
• The government’s provision of £14 million of funding for the creative industries is welcome. To maximise investment in the creative industries, councils should be empowered to work with local businesses and national leaders to deliver a place-place-based approach that delivers the right interventions for the creative sector in each area. We would like to see a pilot programme of place-based investment and incentives in the creative economy at a local level, match funding councils’ own investments and providing a package of incentives for areas designated a creative cluster area.
• The government should also expand existing initiatives that have proven to deliver for the creative industries. Councils and combined authorities should be supported by Arts Council England with additional revenue funding to develop more cultural compacts, and we would like to see capital funding made available to convert disused retail units on the high streets into creative studios that would help local creative businesses to develop and thrive.

Contribution of the creative sector

Parts of the creative industries have been hit harder by the impacts of the pandemic, than other parts of the economy and will need targeted support to recover. Parts of the sector that depend on attracting audiences or visitors were the last to resume operations. Likewise, many creative small and medium enterprises (SMEs) and freelancers had had their work dry up overnight, and for some it may take time to resume normal operations and rebuilt a pipeline of projects.  

Before the pandemic, Government statistics show that in 2018 the UK’s creative industries contributed more than £111 billion to the UK economy, equivalent to £306 million every day or £13 million every hour – more than the automotive, aerospace, life sciences and oil and gas industries combined. This was a 7.4 per cent increase on 2017, with growth in the creative industries more than five times larger than growth across the UK economy as a whole. More than two million people work in the UK’s creative industries and, before the COVID-19 crisis, the sector was projected to create another million jobs by 2030. Jobs in the creative economy tend to be higher value, better paid and be more skilled than the average in the wider economy and compared to other sectors, are less likely to be replaced by automation. The creative industries are also highly distributed across the UK in over 700 micro-clusters, therefore they will be crucial to delivering quality jobs in every area and levelling up.

The success or failure of the creative industries is important to councils, not just from an economic perspective but because of the way culture and creative spaces contribute to local identity and opportunity. We must harness the innovation inherent in the sector to take on the challenges of a post-COVID world, generating jobs and investment in local places. Councils also recognise that the creative and cultural sectors drive social innovation and help councils – and other parts of the community, voluntary, third and public sectors – improve community cohesion and co-create with communities a vision for the future of their local area as we build back better.

Place-based recovery

The creative sector in each place faces different conditions, has lost different elements of its local ecosystem and will be in a different starting point for development and recovery. As conveners of place, local leaders are best placed to work with their local businesses and national partners to coordinate recovery. Alongside this, ongoing investment national investment, including through Arts Council England, will have a critical enabling role in the development of local creative sectors.

Councils are committed to supporting the growth of the creative industries and providing the local conditions and support for new creative clusters to flourish. The LGA’s publication, Creative Places, provides a guide for councils to harness the creativity and innovation inherent in the sector to take on the challenges of a post-COVID world, and generate jobs and investment in local economies. Many councils and combined authorities have already strategically positioned the creative industries in local growth strategies and are using tools first developed in Business Improvement Districts and Enterprise Zones to support the growth of creative clusters.

For example, the Greater Manchester Combined Authority has worked in partnership with The Centre for Local Economic Strategies to develop Creative Improvement Districts, offering rate relief and start-up support to creative entrepreneurs. The North of Tyne Combined Authority and Creative England have launched a £2.625 million investment programme to stimulate culture and creativity in the region, including a combination of grants, loans, equity finance and business advice. 

Councils invest over £2 billion annually in culture, leisure and related services which are a vital part of the broader creative ecosystem that directly supports the growth of the creative industries and the wider for-profit creative economy. Publicly funded culture supports the development of skills that support the creative industries; provides cultural infrastructure in places and spaces that allows creative industry networks to develop, and operates as an attractor for the location of creative businesses.

For example, for many people publicly funded theatres act as a training ground for skills for the wider film and television industry. Business and Intellectual Property Centres (BIPCs) in public libraries have also delivered extraordinary results in supporting entrepreneurs and provide vital spaces for new creative start-ups to develop. Between 2016 and 2019, BIPCs have generated £6.95 for every £1 of public money spent and have supported the creation of 12,288 businesses - 47 percent of which were in the North - and helped businesses create an estimated total of 7843 new FTE jobs. BIPCs have also been particularly effective in supporting entrepreneurs from minority groups.

National support

At the recent Budget, we were pleased that the Chancellor announced £14 million of funding in each year of the spending review period to support our world-leading creative industries, including support for SMEs to scale up and bespoke support for the UK’s independent film and video game industries. The government also announced £800 million of funding for the Live Events Reinsurance Scheme and an extension to the £500 million Film & TV Production Restart Scheme, which will be vital to enable UK events and productions to thrive and plan with certainty.

We also welcomed the inclusion of the creative industries and culture in the Levelling Up Fund. In the first round of funding allocations, several councils and combined authorities have successfully secured funding for local creative regeneration projects. For example, Kent Country Council secured funding for Ashford International Studios, a TV and film studios, which will create 2000 jobs, triple the size of Kent’s TV and film industry, and create a new cluster which can be built upon.

Moving forward, we need a place-based approach to supporting and developing the creative sector, that delivers the targeted support that the sector in each area needs. Placed-based approaches, including the Creative Industries Clusters Programme, have been proven to deliver and will be crucial to achieve the right interventions for place. We would like to see a pilot programme of place-based investment and incentives in the creative economy at a local level, match funding councils’ own investments and providing a package of incentives for areas designated a creative cluster area. This should include consideration of how clusters can work outside of urban centres. We also recommend:

• Councils and combined authorities should be supported by Arts Council England with £400,000 in revenue funding to develop more cultural compacts. As shown by the pilot in Lancaster, cultural compacts are a proven approach which can deliver for the creative sector and these should be expanded.
• Making £100 million capital funding available to convert disused retail units on the high streets into creative studios would enable creative industries (worth £111 billion GDP) to thrive, drive footfall to high streets and increase pride in place, offering a chance to grow entrepreneurs and innovators for the future by delivering 3D printing, coding and display spaces for creative experimentation. This must be coupled with the planning powers needed to curate high streets, as was done by removing permitted development rights from theatres and performance venues, protecting them from inappropriate development and preserving them for the community.
• A £30 million capital funding investment in libraries should be made to develop a network of makerspaces and public access computers to help close the digital skills divide in many of our most deprived areas and grow creative entrepreneurs and innovators in every council area. The Leadership for Libraries Taskforce, convened by DCMS and the LGA, demonstrated that makerspaces are a swift, cheap, and popular way of bringing creativity and innovation into communities that have previously had few creative outputs. 

Creative skills

Councils and mayoral combined authorities play an important role in making the skills system working for their areas and developing a pipeline of creative talent. At present, 17.3 million people in the UK lack the essential digital skills for life or work. Addressing the skills gap will be crucial to support the creative sector and ensure residents in every area can benefit from creative opportunities.  

With the right funding, flexibilities and national support, councils could do more to create an integrated skills and employment system that delivers sustained outcomes for people and businesses. To achieve this, councils should be at the heart of the design, commissioning, delivery and oversight of skills and employability support for their local areas. With opportunity to work with government to co-design and re-shape national skills support with Government, councils could also enhance the national skills offer and target schemes- including Kickstart and Restart- to local needs. This would enable councils to better join up skills programmes with infrastructure spend- including through the Levelling Up, Community Renewal and UK Shared Prosperity Funds- and create an integrated support offer to help residents to upskill and retrain.

The Levelling Up White Paper provides an opportunity to empower councils to work innovatively with their communities, government and its agencies to design a locally determined skills and employment offer. Work Local is the LGA’s framework for making this happen, which could offer significant social and fiscal benefits. A commitment from Government to back and fund Work Local pilots would see those benefits to places, people and the economy being achieved more quickly. 

Megan Edwards, Public Affairs and Campaigns Advisor

[email protected]