Support for the creative economy
Written evidence submitted by the British Screen Advisory Council [SCE 008]
The British Screen Advisory Council (BSAC) welcomes the Culture, Media & Sport Select Committee inquiry into support for the creative economy. Considering how Government policy can best enhance the prosperity of the UK audiovisual sector is a key facet of our work and we have published a number of reports on this subject in recent years. We are therefore pleased to take this opportunity to submit evidence to the Committee.
As you know, BSAC is an independent advisory body to the government and policy makers at national and European level and to the audiovisual sector. It brings together the widest possible range of UK interests, experiences and contacts in the screen industries including television, games, film production, distribution, exhibition, post-production and the US studios with offices in the UK.
The UK audiovisual sector is one of the most competitive media markets in the world. Our expenditure on content is one of the highest globally with an estimated £13bn per year flowing through the audiovisual economy, with £4bn spent on UK originations. The UK's creative industries continue to significantly outperform competitors, contributing a higher proportion to the country's gross value-added than any other OECD nation. It is therefore extremely important that Government policy is correctly positioned to protect our global competitive advantage and to encourage industry to thrive.
The Government has identified the creative industries as a growth sector recognising their potential as an important contributor to wealth creation. In his announcement of the new tax reliefs for animation, high end TV and games in March 2012, the Chancellor asserted the 'industrial ambition' to 'turn Britain into Europe's technology centre' starting with digital content. The sector has been subject to major structural shifts as a result of technological developments. As well as audiovisual businesses taking advantage of the opportunities afforded by digital technology, there is an opportunity for Government in the long term to review the framework of public subsidy and regulation currently in place, and consider the policy levers available to it to ensure the best conditions for the sector.
Access to finance
In order to help to provide the best conditions for growth and innovation within the audiovisual sector, it is necessary for Government to recognise that although the UK is rich in creative talent and adept at producing creatively excellent content, various factors prevent creative businesses from achieving scale and effectively exploiting their IP. The vast majority of creative businesses in the UK are very small and lack the scale to finance their own projects and must therefore seek private investment. The high risk profiles of such businesses impact on their ability to attract sufficient investment from the market. It is essential that Government intervention in respect of easing access to finance for creative businesses is based on a sound understanding of the risk profile of such businesses.
BSAC has engaged with the HMRC on the revision of guidance for the operation of the Enterprise Investment Scheme over recent months. Concerns were raised in relation to the new guidance unintentionally penalising creative businesses. We have received assurance from HMRC officials that this will not be the case and look forward to the publication of the final guidance.
As we noted in our response to the DCMS Communications Review  , crowd-funding sites can offer a valuable source of finance for creative businesses, especially SMEs, in the UK, and could provide the opportunity to leverage further private investment. We support the recommendations of the Creative Industries Council report on Access to Finance that Government consult with the Financial Services Authority to introduce an enabling legal framework for crowd-funding.
BSAC has been actively engaging with Government in constructive debates on the IP framework over a number of years. We have previously welcomed Government action to facilitate the legal use of audiovisual material in which there is one or more orphan right as well as the conclusions of Richard Hooper's feasibility study to develop the Digital Copyright Exchange. BSAC is currently participating in the Working Group which is considering how to create a Copyright Hub. We have, however, expressed concern that the direction of travel, in relation to certain proposals, is towards amending copyright law as far as possible for the benefit of only certain types of stakeholders. We would caution that such a course needs to be pursued very carefully if it is to facilitate the Government's goal of delivering real value to the UK economy and to the creators and lawful users of IP. In our response to the DCMS Communications Review, we recommended that, in taking forward future developments of the copyright regime, it is essential for the IPO to continue to improve its economic analysis of the evidence, as well as to reaffirm what we believe is the essential requirement for IP policy development, namely delivery of a system that is fairly balanced between the interests of all stakeholders.
BSAC has for a long time identified copyright infringement as a priority issue needing Government action. The sending of messages to those identified by right owners as engaged in casual copyright infringement in the peer-to-peer environment is likely to lead to a significant reduction in illegal use of content and these provisions in the Digital Economy Act should now be brought into force. Industry must continue to play its part in developing new ways of making protected content available to the public and, for example, engaging in initiatives such as the Copyright Hub to make legal licensing of content easier. However, industry action alone is unlikely to be sufficient to enable the digital creative industries to build and protect their online revenues in the long term; and therefore to continue to invest in innovative new business models to meet consumer demand for high quality content across platforms and devices. Government oversight and, if necessary, regulatory intervention will continue to be required in order to ensure all relevant stakeholders effectively address copyright infringement. Educational initiatives led by the Government to increase understanding about the value of copyright are also important.
The proposals in the Enterprise and Regulatory Reform Bill that would permit changes to copyright law without recourse to primary legislation include a provision that would enable the issue of orphan works to be addressed, an issue that BSAC has recommended action on for some time. However, we are concerned that the current proposals may prevent a solution that balances fairness for missing right owners against not being unnecessarily bureaucratic for potential users of orphan works. The proposal that would permit provision about extended collective licensing may, on the other hand, not sufficiently constrain when that could apply. BSAC is pleased to be involved in discussions in the IPO working group about how these powers might be used, but it would have been preferable for these discussions to have preceded decisions about the provision in the Bill. This would have enabled provisions to be appropriately drawn up to permit secondary legislation on the issues in a fair and balanced way. We are pleased that the scope of the provision permitting changes to copyright exceptions has now been clarified by an amendment linking what can be done to provision within the scope ofEU Directives.
Skills for the creative economy
Over many years, BSAC has argued that an effective cross-sectoral skills strategy is a key component in the maintenance of the global competiveness of the UK's creative industries. In a 2009 report on the state of the sector, we called for the production of 'a generation of "creative technologists"'.  We are a supporter of the Next Gen Skills Campaign for the introduction of an industry relevant Computer Science course within the framework of the National Curriculum. Progress is being made on this issue, however, the UK risks losing its competitive advantage in the VFX and computer games sectors as it will take several years for appropriately qualified new entrants to emerge. With this in mind, we recommend that Government regularly evaluate whether the present curriculum is adequate to provide children with the literacy they need in the digital age.
In our response to the recent DCMS Communications Review, we highlighted some ways in which further and higher education institutions could further help in the establishment of a strong skills base for the creative economy. These include multi-disciplinary courses which bring together industry-relevant digital content creation with creative arts practice and business skills, and greater engagement and partnership between higher education and industry in line with the recommendations contained in Sir Tim Wilson's Review of Business-University Collaboration.
In order to effectively deliver a coherent policy for the support of the creative economy, BSAC believes that audiovisual policy must be properly resourced in order to strengthen economic knowledge and sector specific expertise within Government. Government should consider how to ensure that DCMS has the scale and capability to deal with the complex and rapidly evolving economic and technological issues facing industry going forward. We have previously recommended that, given the UK has the most developed and mature audiovisual sector in Europe, it is important to consider how to ensure the needs and concerns of UK industry are effectively represented in policy negotiations at European level.
 See BSAC response to DCMS Communications Review at www.bsac.uk.com/2012.html
 For the 'BSAC Creativity, Competitiveness & Enterprise report' see http://www.bsac.uk.com/policy-papers.html