Economy: Growth

Lord Clement-Jones Excerpts

Thursday 21st June 2012 Lords Chamber

[Lord Clement-Jones]

My Lords, I am not going to be provoked. I thank my noble friend Lady Kramer for so expertly setting the scene for this debate. A question on so many people’s minds is, “Where is the growth going to come from?”. I want to focus on the sectors with great potential for growth for which the DCMS has prime responsibility—the creative industries and tourism—both of which, I am glad to say, received some attention in the Treasury’s plan for growth last year and in the update this March. On the way, I also want to touch on higher education.

First, however, I shall say a word about the Olympics. There is no doubt that this has been an extraordinary achievement for the ODA, LOCOG and all the others involved in the preparations for the London Olympics. We were, however, promised a business legacy for the Olympics and I wonder whether the Minister can explain why it appears that, through the IOC rules, some 75,000 businesses will be banned by their contracts for 12 years from declaring that they have acted as a supplier to the Olympics.

Although official breakdowns of statistics are not helpful in this area, the digital and creative industries combined seem to contribute at least 7% of UK GDP, and those employed in the creative and digital fields now number perhaps 2 million. We are pre-eminent in so many areas but there is very strong competition internationally in a number of areas in the sector. I therefore welcome the new tax relief for video games, animation and some TV production that was introduced in the last Budget. Perhaps we will see an improved tax relief for co-productions in next year’s Budget. It is also noticeable how much investment is being made in film and television production—and at this point I should say “of the legitimate variety”. I very much welcome the formation of Creative England to support film and television productions and the activities of Film London to attract film and TV production to London. The UK Film Council estimates inward investment in the film industry at nearly £1 billion per annum, but there is a great deal to be done to secure optimum growth in this sector.

Skills issues in the creative industries need to be properly tackled in each part of the sector to ensure a talent pipeline. Shortages of skilled workers are a particular problem for the creative industries. I welcome the co-ordinated approach adopted by the report of the Creative Industries Council Skillset Skills Group to the Creative Industries Council earlier this year. The report made many extremely useful recommendations, many of which essentially involve action by the industry itself. However, as the Creative Industries Council and government Ministers have strongly endorsed the report, what are the Government, in particular, doing to improve and mitigate further regulatory measures, particularly the regulatory framework for freelance training as part of the Red Tape Challenge? What are they doing to make sure that sector skills council roles are clarified and communicated?

I welcome the strategic partnership between Creative Skillset, the skills council for the creative industries, and Creative and Cultural Skills, which covers a different group of creative industries, but surely there is a strong case for merging the work of the two and ensuring that skills issues across the sector are tackled in a fully joined-up way. The Creative Industries Council report urges greater “synergy and exchange” between STEM subjects and the creative industries. What action are the Government taking to respond to the recommended changes in the curriculum? Does this tie in with their response to the Livingstone-Hope Next Gen review of skills in video games and visual effects?

We also need to recognise that our creativity, ideas and intellectual capital will increasingly drive our future prosperity. The place of intellectual property has never been more important to society or our economy. The report in 2010 by TERA Consultants estimated that 250,000 jobs are at risk if we fail to do anything further about copyright infringement by 2015. The film policy review carried out by the noble Lord, Lord Smith of Finsbury, contained important recommendations about copyright issues, including sanctions for the recording of films shown in cinemas and the important question of implementation of the Digital Economy Act. What is the Government’s response to that? If they are serious about the health of the creative sector, it seems extraordinary that we can only expect introduction of the initial obligations code under the Act in 2014.

Although the Hargreaves report commissioned by the Government has some good aspects it relies on very dubious figures for its economic impact assessment. It seems to assert that current copyright laws in this country are inhibiting innovation, that copyright reform will somehow deliver a massive increase in our creative industries’ output and that copyright exceptions will make Britain more attractive for overseas investors, and so creators’ rights in the UK should be weakened. By contrast, in the first report of the digital copyright exchange feasibility study, Richard Hooper has put his finger on the real issue: there are barriers to the exploitation and licensing of intellectual property rights where there is complexity of process in the organisations involved in establishing ownership of rights, and in some cases insufficient availability of repertoire under licence. It certainly appears that the majority of responses to Hargreaves, published last week, are more minded to take the Hooper approach. There are exciting prospects for a Britain with a digital copyright exchange in place becoming an international hub for rights clearance, if we can get HMRC to negotiate suitable double-taxation provisions.

Turning to higher education, as the UUK report Creating Prosperity at the end of last year made clear, our higher and further education sector makes a major contribution to the development of talent and skill for the creative economy. Some 16% of our students are engaged in courses relevant to the creative economy. Rather than trying to restrict access for foreign students through our visa system, we need to create more internships for overseas students in the creative industries and the arts. As so many have said, not least London First and the vice-chancellors of our universities, we need to exclude non-EU students from our permanent net migration figures, as so many other countries, such as the USA and Australia, are increasingly doing. I look forward to hearing what the noble Baroness, Lady Valentine, has to say on this subject. Perception about UK visa policy is hurting our message that we are open for business and welcome international students and visitors.

How good are we at promoting the quality and potential of these industries overseas? Do we have the right architecture? I welcome the activities carried out by UKTI, in particular the appointment of the new IP attachés. I also welcome the signs of increased co-ordination between Visit Britain, the Arts Council, UKTI and the British Council, but how does that fit in with the Creative Industries Marketing Strategy Board or the Creative Industries Council? Is the Intellectual Property Office involved? If not, surely it should be. I certainly welcome the creation in 2011 of London and Partners as a single promotional organisation for London.

There is also the important question of investment in our digital and creative industries, particularly for start-ups and SMEs, and I particularly welcome the commissioning of work by the Creative Industries Council on access to finance. Can the Minister indicate any conclusions from its report, which I believe was presented to the council on 12 June, and when it will be published? Much depends on how attractive we are as a location for investment. The stories that could be told in our regional cities—for example, Liverpool, Manchester and Birmingham—are good ones. I applaud the Tech City initiative and UKTI’s involvement in that.

I shall not talk about broadband, but that is absolutely crucial to the further development of our creative industries. Tourism, however, is the world's fastest growing activity and the UK has enormous advantages and attractions. Although tourism is acknowledged as the third largest industry sector, employing directly and indirectly some 3.6 million people, there is still a lack of adequate government appreciation of its potential. Symptomatic is the recent letter from the British ambassador to China addressed to the Home Secretary about his frustration over the lack of promotion of Britain as a tourist destination to the Chinese and the cost and complexity of visas for tourists.

We should be much more joined-up. Should there not be a Cabinet committee which joined together the strands of government policy? There are many other deregulation issues—I hope that I have made a contribution to that agenda with my Live Music Act—but we need to make sure that our tourism industry is unshackled by many of the regulations that afflict it.