by Bernard Hay, Head of Policy
The Creative Industries Sector Plan, published earlier this week, marks a significant milestone in government support for the country’s creative industries.
Part of the UK Government’s Industrial Strategy, the plan provides a ten-year framework with the significant ambition to double business investment in the sector from £17bn to £31bn by 2035, and “to ensure that the UK becomes the number one destination worldwide for investment in creativity and innovation”. Alongside targeted support for four ‘frontier’ creative sub-sectors – ‘Advertising and Marketing’, ‘Film and TV’, ‘Video Games’, and ‘Music, Performing and Visual Arts’ – it includes multiple sector-wide commitments.
The growing body of creative industries data and evidence can also be seen reflected in the Sector Plan, including research from the AHRC-funded Creative PEC and our Research Partners. In this blog, we summarise some of the key sector-wide announcements and situate them in relation to the evidence base.
R&D and Innovation
Over the last decade or more, the Creative PEC, British Academy and others have highlighted the need for policymakers to consider the distinctive ways R&D and innovation works in the creative industries. Human-capital intensive, reliant on a dynamic freelance workforce, and often utilising a full breadth of disciplines including Arts, Humanities and Social Sciences, the sector makes an outsized contribution to R&D in the economy.
It is therefore welcome that the plan includes multiple interventions to increase creative industries R&D and innovation. In addition to confirming that UKRI’s creative industries strategy will be published later this year, it includes £25 million from the Department of Culture, Media and Sport to support creative technology innovation through the AHRC’s CoSTAR initiative; £100 million for a second round of the Creative Industries Clusters programme (with the launch of the next competition expected early 2026); and measures to boost technology adoption.
HMRC have also committed to updating their guidance on which activities are eligible for R&D tax relief, thereby improving its effectiveness in stimulating private R&D investment in the creative industries. By the end of the year, new guidance will be published to clarify that for R&D projects in the creative sector, arts activities that directly contribute to resolving scientific and technological uncertainties will be eligible for tax relief purposes. Whilst this is not a revision of the definition of R&D used for tax relief purposes, it marks a significant shift in clarifying how the relief can support interdisciplinary innovation in the creative sector. Together with the other announcements in the plan, this suite of interventions could have a catalytic effect.
Access to Finance
Although creative firms have a higher growth appetite than the general population of firms, our recent research on access to finance with Creative UK highlighted that they also face significant obstacles in accessing the right kind of finance to facilitate this. For instance, our research has shown how Venture Capital funding for the sector is concentrated in London and the South-East, and that market failures exist when it comes to creative firms being able to access private investment. A recent blog by Professor Nick Wilson for the Creative PEC estimates that the equity finance gap for the sector alone may be as high as £1.4bn.
The new £4bn Industrial Strategy Group Capital initiative from the British Business Bank, announced earlier in the Spending Review, offers an important source of scale-up finance for small and medium sized creative businesses across the country. The forthcoming change in the National Wealth Fund’s mandate to support Industrial Strategy growth sectors including the creative industries, could with the right implementation play a significant role in augmenting the UK’s growing national infrastructure for creative technologies and R&D – whether it be supporting new production labs, creative studios, or immersive exhibition spaces.
Given the IP-rich nature of the sector, a further initiative to watch is the forthcoming review by the British Business Bank and Intellectual Property Office to explore alternative models of finance – including IP-backed finance – for the sector, with the results due later this year.
Trade and Exports
The last decade has witnessed a rapid acceleration in the growth of the UK’s creative exports, largely driven by creative services exports which in 2021 accounted for 14% of all UK service exports. In addition, the creative industries are central to our booming trade in digital services, which have been a focus of the Department and Trade’s new trade strategy also published this week. Last year, our State of the Nations report on UK creative industries trade estimated that the sector could account for 67% of the UK’s exports in digital services.
The Sector Plan strikes an important balance in prioritising established and emerging markets for the sector. Whilst Europe and North America remain our primary creative services exports destinations for instance (accounting for 45% and 39% of creative services exports in 2021 respectively), Asia remains an important destination for creative exports.
Additional export support, including through an increase in funding available via the Export Finance scheme, and further trade missions and funds available for firms to participate in, will also help to encourage exporting with creative microbusinesses and SMEs. Targeting support at regions where there are relatively low shares of exporting creative firms, and firms that have recently stopped exporting post-Covid and EU-exit, could play a key role in boosting regional creative economies.
Skills and Job Quality
Skills challenges are a persistent and entrenched issue facing the creative industries. Our recent report on Skills Mismatches in the Creative Industries found that 65% of hard-to-fill vacancies in the sector are due to skills shortages, compared to 41% in all sectors. Creative employers are also more likely to report that skills deficiencies are holding back innovation. In short, ensuring the skills system works better for the creative industries will be vital to driving sector growth and increasing the number of high-skilled, quality jobs.
Two notable interventions announced are the Government’s intention to appoint a freelance champion, who will represent the interests of the 28% of creative industries workers who are self-employed, and the parallel development of new industry-recognised training and a new Skills Passport, which will help workers make visible to employers their skills and competencies.
Underpinning effective skills policy is robust, relevant and timely labour market information on current and future skills needs. As a part of this, the Creative PEC and Work Advance are undertaking a comprehensive creative industries skills audit, funded by DCMS and the CIC, and supported by industry and Skills England.
Creative Places
Following the government’s announcement of priority city-regions for the UK’s creative industries, the Sector Plan announces a £150 million Creative Places fund which will be made available to six Mayoral Combined Authorities in England. Alongside UKRI’s Creative Industries Clusters Programme investment, these will enable places that are prioritising the creative industries in their local growth plans to develop tailored interventions that respond to local needs and strengths. This will be supported by a new Creative Places Forum, to ensure best practice is shared across the country.
There is now an established evidence base highlighting the existence and benefits of supporting creative clusters at a range of scales. These are places where creative businesses and workers co-local, collaborate and compete, and through this produce a range of economic benefits for themselves and the places of which they are a part. Given the scale of regional disparities in the UK’s creative industries, such interventions are crucial to shifting the dial on local growth in the creative industries across the whole country.
One approach the Government has also committed to supporting is strengthened collaboration between creative clusters over larger geographic areas – what are known as ‘creative corridors’. Such corridors can already be seen at various stages in development in places like the North of England with One Creative North, the Thames Estuary, and in the West of England-South Wales. Together, these place-based initiatives offer huge opportunities for locally-led policy innovation, underpinned by robust evaluation to share and scale ‘what works’ in boosting regional creative economies.
Data and Evaluation
As the Sector Plan itself notes, the UK has been world-leading in developing definitions, statistics and evidence on the creative industries. The commitment to improve access to official statistics on the creative industries, including by harnessing existing ONS data sources where regular sector-specific data is not currently published, will be foundational to ensuring the implementation of the Industrial Strategy remains responsive to new evidence. Equally important will be the review of Standard Industrial Classification codes to look at how creative sub-sectors like Video Games and Music are captured in the data.
The rapidly evolving nature of the creative industries, coupled with global transitions spanning the rise of Generative AI, the climate crisis, and changing international relations and trade-flows, make it hard to predict what the next ten years might have in store. They will also require new evidence and insight. The Sector Plan provides an important and welcome frame to deliver against over the next decade. The Creative PEC looks forward to playing its part, working with government and the creative industries eco-system, to ensure the sector continues to thrive.
