Supporting the creative economy - Culture, Media and Sport Committee Contents

Conclusions and recommendations

Olympic and Paralympic legacy

1.  We welcome the efforts of UKTI to promote the UK creative industries overseas and believe international trade missions should contain wide cultural representation. The greatest effort should continue to be directed towards ensuring that UK creative talent and businesses are assiduously promoted not only by UKTI but in all work to promote British business overseas. (Paragraph 14)

2.  The excessive constraints imposed by the Olympic No Marketing Rights Protocol and the inadequacy of the Supplier Recognition Scheme mean that the benefits from the participation of UK businesses in the 2012 Olympic and Paralympic Games are not being properly realised. This deeply disappointing state of affairs endangers the economic legacy that British companies in the creative and allied sectors have a legitimate right to benefit from. It reflects badly on the wider Olympic movement that, in other contexts, is all too ready to celebrate individual and collective achievement. (Paragraph 17)

3.  We recommend that the Government review, as a matter of urgency, whether the supplier recognition scheme can be improved to meet the objective of allowing British firms to promote their contributions to the 2012 Olympics and Paralympics. This is all the more pressing as firms throughout the UK seek to gain contracts for the next games in Rio de Janeiro. (Paragraph 18)

Copyright protection

4.  The relationship between the strength of Britain's creative industries and robust copyright laws is acknowledged by the Open Rights Group which aims radically to liberalise the use and sharing of copyrighted content. While we share the Open Rights Group's attachment to freedom of expression via the internet, we firmly repudiate their laissez-faire attitudes towards copyright infringement. (Paragraph 19)

5.  We encourage businesses to use the current law to bring claims wherever it is feasible for them to do so. There nonetheless remains a systemic failure to enforce the existing laws effectively against rife online piracy. (Paragraph 28)

6.  We strongly condemn the failure of Google, notable among technology companies, to provide an adequate response to creative industry requests to prevent its search engine directing consumers to copyright-infringing websites. We are unimpressed by their evident reluctance to block infringing websites on the flimsy grounds that some operate under the cover of hosting some legal content. The continuing promotion by search engines of illegal content on the internet is unacceptable. So far, their attempts to remedy this have been derisorily ineffective. (Paragraph 31)

7.  We do not believe it to be beyond the wit of the engineers employed by Google and others to demote and, ideally, remove copyright infringing material from search engine results. Google co-operates with law enforcement agencies to block child pornographic content from search results and it has provided no coherent, responsible answer as to why it cannot do the same for sites which blatantly, and illegally, offer pirated content. (Paragraph 32)

8.  There should be within Government a powerful champion of IP with a duty to protect and promote the interests of UK IP, to co-ordinate enforcement of IP rights in the UK and overseas and to educate consumers on the value of IP and the importance of respecting IP rights. Logically the IPO should take on this role. Yet too often it is seen as wishing to dilute copyright rather than defend and enforce it. (Paragraph 34)

9.  We recommend that the Intellectual Property Office's annual reports include an assessment of the degree of online copyright infringement and the extent to which identified search engines and other internet services facilitate this. We further recommend that the Government consider how it might incentivise technology companies to hinder access via the internet to copyright infringing material. (Paragraph 35)

10.  We recommend that the maximum penalty for serious online copyright theft be extended to ten years' imprisonment. Criminal offences in the online world should attract the same penalties as those provided for the physical world by the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002. (Paragraph 37)

Discouraging piracy

11.  While the practical implementation of the Digital Economy Act continues to be delayed, millions of pounds are being lost by the creative industries with serious consequences for the wider economy. We urge the Government to resolve the current impasse on implementing the Online Copyright Infringement Code without further delay, and in response to this Report to set out a clear timetable for doing so. (Paragraph 41)

12.  We recommend that a copyright infringement notification system envisaged by the Digital Economy Act be implemented with far greater speed than the Government currently plans. By targeting information letters to the worst infringers, early implementation will, we believe, serve an important educative purpose which could percolate more widely. (Paragraph 46)

13.  We are encouraged by the progress that has been made towards instituting a voluntary system of warning letters following discussions involving internet service providers and rights owners. If this can be achieved by mutual cooperation rather than legislation, it will be a major step forward. However, should voluntary initiatives such as this prove unsuccessful then the Government should ensure that the equivalent measures in the Digital Economy Act are promptly put into effect. (Paragraph 47)

14.  Following all the evidence we have received, we think Hargreaves is wrong in the benefits his report claims for his recommended changes to UK copyright law. We regret that the Hargreaves report adopts a significantly low standard in relation to the need for objective evidence in determining copyright policy. We do not consider Professor Hargreaves has adequately assessed the dangers of putting the established system of copyright at risk for no obvious benefit. We are deeply concerned that there is an underlying agenda driven at least partly by technology companies (Google foremost among them) which, if pursued uncritically, could cause irreversible damage to the creative sector on which the United Kingdom's future prosperity will significantly depend. (Paragraph 55)

15.  The Copyright Hub is a welcome development which should prompt the Government to redouble its efforts at working with industry to develop overseas markets for British IP content. (Paragraph 58)

16.  We believe participation in a copyright exchange or membership of a collecting society should both be voluntary, though the former will offer rights holders the advantage of visibility and the latter can provide an administratively convenient way of obtaining royalties. (Paragraph 60)

Exemptions from copyright law

17.  We are not persuaded that the introduction of new copyright exceptions will bring the benefits claimed and believe that generally the existing law works well. We recommend that the introduction or amendment of copyright exceptions should be contemplated only following detailed impact assessments and after proper parliamentary scrutiny on an individual basis. (Paragraph 68)

18.  We are not convinced by Hargreaves' implication that a facility for private copying is factored into the purchase either of music or devices that store, play or copy it. (Paragraph 73)

19.  Legal subscription-based cloud services are already emerging from business-to-business deals in which rights holders are properly rewarded. We consider this to be a welcome development that should be encouraged and we would not want it compromised by a hastily drawn private copying exception that the Government might subsequently regret. (Paragraph 76)

20.  We believe that there needs to be far more detailed consideration before any private copying exception is introduced. In particular, we recommend that any changes to copyright law should take full account of the material differences between the audiovisual and music sectors and indeed current and likely future technological changes. We do not believe a case has been made for applying a private copying exception to audiovisual content and it should therefore be excluded. (Paragraph 82)

Funding and finance

21.  Increasing use is being made of personal data to target online advertising better. While concerns around this have prompted reviews of data protection legislation, we do not think the targeting of appropriate advertising—essential to so many business models —represents the greatest threat to privacy. (Paragraph 85)

22.  We are disappointed by the blinkered and unimaginative approach of lending institutions. Investors need to talk to and engage with the creative industries which represent no higher risk than many accepted by the banks and which may produce considerable rewards. (Paragraph 87)

23.  The Government should vigorously promote both the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme. Given their particular importance to creative industries it is essential that their availability, and legitimacy, be communicated to the widest possible range of potential investors. (Paragraph 91)

24.  We believe that crowd-funding has significant potential, not least in that it might allow small creative start-up companies to retain control of their IP. The Government needs to examine whether existing financial regulation is hampering the growth of crowd-funding and whether more guidance can be made available to potential investors. (Paragraph 93)

25.  We recommend that the Government open and promote a clear channel of advice to creative individuals interested in setting up business—a creative business 'hub'. We anticipate this will include a key supporting role for public libraries as long-established knowledge centres. (Paragraph 95)

Tax régime

26.  We strongly support the film tax credit. The benefits it has brought in terms of film production have spread across the country, from Glasgow to Chatham, from London to Liverpool. (Paragraph 100)

27.  Among the initiatives we heard about during our visit to Paramount Pictures is a proposal to include in the opening credits of films some information about the economic benefits and job opportunities a given picture created. This is likely to be an effective way of illustrating the economic value of film productions. We endorse this approach and encourage its wide adoption. Furthermore, we do not doubt that the more people see how many livelihoods depend on receiving a fair reward for intellectual property, the more copyright infringement will become socially unacceptable as well as being illegal. (Paragraph 101)

28.  We deeply regret the European Commission's decision to investigate the validity of the proposed tax relief for video games. Introduction of the credit is long overdue, following its postponement by the Government after the election in 2010. There is clear evidence that such a tax credit would be of great benefit and delays in introducing it are greatly harmful to the industry. We urge the Government to make this point forcefully in its efforts to ensure the video games tax relief gets the go-ahead from the European Commission. (Paragraph 104)

29.  We recommend that the Government closely monitor the operation of the new tax reliefs for animation, high-end television and video games. Consideration should be given to applying a lower core expenditure cost to documentaries if it becomes evident, as we believe likely, that they will fail to qualify for relief on a significant scale. (Paragraph 106)

30.  The income tax system needs to better recognise the freelance nature of employment in much of the creative sector, and the Government should demonstrate how it will effectively acknowledge and respond to this. (Paragraph 109)

Education, skills and training

31.  The broader arts curriculum has been seriously hit by the Government's approach to performance measurement which we deeply regret. The danger remains that schools will in practice see a continued diminution in the provision of dance, drama and other creative subjects. We therefore recommend that arts are added to the five subject areas currently on which the EBacc assessment is based. (Paragraph 114)

32.  We welcome a greater focus on computing in schools, not least because, in the digital age, a practical ability to program computers amounts to basic literacy. It is vital that enough teachers are trained to impart to their students a solid grounding in IT and programming skills. (Paragraph 115)

33.  Our inquiry has found clear evidence that the Government's focus on subjects like science, technology, engineering and mathematics (STEM) is already having a pronounced impact on the arts and other creative subjects. We believe that the crucial role of arts subjects in a modern education should be recognised and that art subjects should be added to the STEM subjects, changing STEM to STEAM. (Paragraph 117)

34.  As it continues to introduce further changes to the national curriculum, the Government must ensure that students up to key stage 3 receive a solid grounding in the arts and design. We believe that students aged 14-16 (key stage 4) must be able to access the widest possible programme of creative subjects to prepare them to play a full part in the knowledge economy. (Paragraph 118)

35.  We recommend that school children be introduced to the ideas of intellectual property and the nature of business to gain a better understanding of the importance of creativity both to the learning process and to wider society and the economy. (Paragraph 121)

36.  When it comes to strengthening and nurturing apprenticeships, the Government needs to do much more than exhort and encourage industry to participate. Government has to communicate clearly and widely about the opportunities that exist, giving examples of good practice. The case for tax reliefs for companies—particularly in the creative sector—should be examined more closely. (Paragraph 124)

37.  Overseas students make a vital contribution to the growth of the UK's creative economy and there are signs that visa and employment restrictions sometimes fail in practice to recognise this. We urge the Government to take more account of the special situation of the creative individuals, many of them uniquely talented, who wish to study and work in the United Kingdom. (Paragraph 126)

Creative hubs

38.  While allowing for local concerns, the planning system should adequately recognise the significance of creative industry infrastructure. A useful initial step would be to revisit the advice to local authorities given in the National Planning Policy Framework. (Paragraph 130)

Creative Industries Council

39.  We recommend that meetings of the Creative Industries Council should always be attended by a Minister with direct policy responsibility for intellectual property, given the central importance of this to the creative industries. In practice this will mean either the Minister for Intellectual Property or the Secretary of State for Business, Innovation and Skills. (Paragraph 136)

40.  We recommend that a Treasury Minister and a Minister from the Department for Education attend at least one meeting of the Creative Industries Council annually. Ministers and officials from other Departments should attend as determined by agenda items. (Paragraph 137)

41.  The Creative Industries Council should publish an annual report which includes an update on the implementation of recommendations made by itself and its sub-groups. Such an annual report should be laid before Parliament. (Paragraph 138)

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© Parliamentary copyright 2013
Prepared 26 September 2013