Creative Industries — Debate
11:37 am

Moved By Baroness Bonham-Carter of Yarnbury

To call attention to the importance of the creative industries in the United Kingdom; and to move for papers.

11:39 am
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Baroness Bonham-Carter of Yarnbury (Liberal Democrat)

My Lords, I am privileged and pleased to introduce this debate on the importance of the creative industries. The gratifyingly large number of people who are taking part in the debate demonstrates that there is consensus in this House, at least on the title. I also express my pleasure that my old friend and colleague from BBC "Newsnight", the noble Viscount, Lord Colville, has chosen this debate to make his maiden speech. I believe this brings the tally of "Newsnight" alumni in this House to four. Perhaps we should start our own party. I declare an interest as I sit on the boards of the National Campaign for the Arts and the Lowry.

As a country we have always been blessed with a wealth of creative talents, which have shaped and illuminated our history and national identity. Creativity is part of what makes our society vibrant, unique and modern. It helps us to understand the world around us and forms our individual and collective identities. The journalist Matthew Parris recently referred to the culture of a country as its heartbeat-a fitting image as from cultural activities flow into the body politic considerable economic benefits. The UK creative industries are the fastest growing sector of our economy and as such are a critical driver for our recovery. In particular, I argue that, properly encouraged and harnessed, they can be part of the solution to the problems our young people are facing in finding employment.

As Eric Schmidt, chairman of Google, pointed out in his MacTaggart lecture, the UK is the home of so many creative inventions: photography, television, computers-apparently in both concept and practice. According to him, the world's first office computer was built by the Lyons chain of corner shops. I thought that its only creative contribution was tea, cakes and a few Muriel Spark characters. However, Mr Schmidt went on to point out that today none of the world's leading exponents in these fields is from the UK. The message from UK business is clear: we are struggling to maintain our position as world leaders in creativity.

A report entitled Next Gen., commissioned by my honourable friend Ed Vaizey-Minister for the Creative Industries, among other things-to look into the needs of the video games and special effects industries, discovered that in the past two years the video games industry has fallen from third to sixth place in the global development ratings, UK companies are having to go abroad to find talent because of the skills shortage at home and are,

"turning away millions of pounds of work every year for one reason: they can't find the skilled people they need. This means job opportunities and potential tax revenues are being lost".

The findings are backed by Aardman Animations, which makes the Wallace and Gromit series, among other things. An executive told the Communications Committee, on which I used to sit last year,

"We probably take more graduates from ... France"

and from Germany,

"than we do from the UWE, which I could walk to from my office".

Moreover, this is happening at a time when employment prospects at home are so bad.

The essential need is for a skills base, and that starts with education. The creative industries need creative people, but creativity needs to be taught and nurtured. The new EBacc is to be welcomed in that it broadens the exam base. However, what it does not do is include those subjects that develop creative skills. It consists of maths, science, English, a humanity subject and a language. There is no art or design and no computer science. Because it will be possible to rank schools on their attainment in the EBacc subjects, schools are already starting to emphasise them at the expense of creative subjects. Does my noble friend the Minister not share my concern over a recent survey by the National Society for Education in Art and Design, in which 60 per cent of the schools that responded said that they will stop teaching art and design at GCSE level as a result of the introduction of the English baccalaureate as they feel that they have to concentrate on the subjects that it encompasses?

We should listen to such successful and highly respected individuals as Sir James Dyson and Sir John Sorrell, who argue that we should invest more in creative education and design. We should listen to Ian Livingstone and Alex Hope, authors of the Next Gen. report and leaders in their world of video games and visual effects, who recommend that art and computer science should be included in the EBacc. And we should look to the international baccalaureate, which does include art and has computer science as an elective part of its maths qualification, and follow its example.

Finally on this point, schools need to be encouraged to promote an arts-science crossover. The success of those in the creative industries lies in the fusion of technology and creative skills. Look at Steve Jobs. His genius lay in being able to bring together exactly such a fusion, connecting aesthetics with function. Jobs was obsessed with design, calling it,

"the fundamental soul of a man-made creation".

And guess what? The senior vice-president of industrial design at Apple, the leading designer behind the iMac, the iPhone and the iPad, is a Brit called Jonathan Ive.

Then there are the connections between educational institutions and business. The University of Abertay in Dundee is providing grants of up to £25,000 for small companies which develop video games and other forms of interactive digital content. It also provides digital space and equipment. This has resulted in a cluster of creative businesses in Dundee, providing employment and prosperity. The relationship between university and entrepreneur is clearly mutually beneficial. The former ensures it is equipping its students with the skills they will actually need when they enter the job market; the latter gets access to cutting-edge research and the brightest talent pool. We need more of this and we support the work being done by Skillset in this area.

A different snapshot of how creative industries foster productivity can be seen in the phenomenon of Harry Potter. It crosses my mind that the books were written in a tea shop so maybe what we need are more tea shops. The films were made at Leavesden aerodrome where Rolls-Royce used to manufacture helicopter engines. It now employs vast numbers of people from across the creative spectrum, from writers, actors and those adept at highly technical special effects to practitioners of crafts such as carpenters, model makers and painters. Happily, this is set to continue because, despite the end of the Harry Potter franchise, Warner Bros has bought the studios, although it seems sad that the profits will be going to the US rather than here.

The contribution our creative sector makes is not simply economic. Our cultural exports are a key source of soft power, strengthening Britain's influence and prestige around the world. At home the cultural and creative industries are central to the well-being of the country. As I mentioned at the start of this speech, I sit on the board of the Lowry in Salford. The idea behind it was to build a major arts complex as a trigger for the regeneration of the area. The result is a building of global architectural significance in which you can experience a wide-ranging programme of the performing and visual arts. Central to its ethos is interaction with the local population through a community and education programme. An example is its Walkabout project in which a member of the Lowry team and a range of artists spend 14 months with a specified community. A report commissioned following a recent Walkabout showed that, of the 2,340 people who took part, 34 per cent said it improved their quality of life, 71 per cent said it helped them develop skills which would be useful in future jobs, 76 per cent said they were more interested as a result in doing creative activities, 81 per cent said participation made them feel part of their local community and 93 per cent said it created better understanding between young and old. What more ringing endorsement could there be of the power of cultural activity?

Within our Department for Culture, Media and Sport I believe there is recognition of the importance of the creative industries. My honourable friend Ed Vaizey has commissioned two reviews from Darren Henley, managing director of Classic FM. The first is a review into music education, out of which I believe will emerge the first ever national plan for music education. The second is a cultural education review, which is due to be published before the end of 2011, and I hope that the Minister can confirm that out of this there will emerge a national plan for cultural education. This plan should cover formal but also informal education, and I hope my noble friend shares the enthusiasm felt on these Benches and by Mr Henley for the Sorrell Foundation's National Art&Design Saturday Club, which runs free Saturday morning art and design classes for school children at local colleges and universities. At present there are 14, but a further 100 FE colleges and universities have indicated that they would get involved if funding were available.

Another example is the Roundhouse. Last night I attended a fifth birthday celebration of its reopening. Every year it works with 3,000 11 to 25 year-olds offering them the opportunity to get involved in creative projects, from the performing arts through to new media. Part of its funding comes from Arts Council England and I am delighted that one of ACE's priorities over the period 2011-15 is that every child and young person will have the opportunity to experience the richness of the arts. Ten bridge organisations have been established that liberates young people's strategy but ACE must now ensure that these organisations receive a clear brief as to their function.

One threat to the growth of this sector, to which there has been a response, is the knotty problem of protecting intellectual property rights in our digital age, and the ease with which property rights can and are flouted by online piracy and peer-to-peer file-sharing. The coalition Government have accepted and are implementing the Hargreaves recommendation, which it is estimated could add £750 million a year to the UK economy.

Finally, and in my view most importantly, a Creative Industries Council has been established, chaired jointly by the Business Secretary, Vince Cable, and the Minister for Communication and Creative Industries, Ed Vaizey. Its remit is to engage with the industry in-this is crucial, and here I steal a new Labour term-a joined-up way. I am sure that my noble friend the Minister agrees that we must ensure that its recommendations are implemented. The creative industries make a significant contribution to the UK's economic growth. NESTA argues that this contribution could grow to £85 billion by 2013 creating 150,000 jobs. Let us prove it right. The creativity is here. Let us provide the skill and the will.

11:52 am
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Lord Fowler (Conservative)

My Lords, first I congratulate my noble friend on her speech and on securing this debate. In the glory days of the Communications Select Committee-that was when I was chairman and she was a member of it-we worked very closely together. Of course, we did carry out an inquiry into the creative industries as one of our last works. I also look forward very much to the maiden speech of the noble Viscount, Lord Colville. We all remember his father with enormous affection. His own career has been with the BBC, and he will find in this House that most of us regard that as being a very high recommendation indeed. In particular, in these years of phone hacking, the BBC has managed generally to preserve standards that are the envy of the world. Not all my later remarks will necessarily be as obliging to the BBC, but we very much look forward to his speech.

As my noble friend said, there is an enormous opportunity here. We already have a position where, in terms of jobs, the television, film and games industries are of vast importance. Of course, added to that is the revenue that is being earned, the taxes paid and the national reputation which has increased in areas such as theatre and music. We have truly important industries by any measure. The aim should now be to see where government policy can aid in future development. My noble friend highlighted education and training-and rightly so. She is absolutely right to stress the point that there are good careers for men and women with skills in these industries.

I should like to add one or two other essentials. On financial support from the Government, the great issue is consistency. The film production tax credit introduced in 2006 has been a great success and is absolutely essential. For those who argue that no government support is necessary, I would say that we need to recognise one central point about the film industry. There is intense competition in seeking to bring film-makers to individual countries from around the world: an array of financial incentives is offered. Germany offers them; Canada offers them; and even some individual states in the United States offer them. We all recognise the dominating importance of American studios and distributors and therefore compete for their investment. If Britain was not to do that, we would be removing ourselves from the market altogether.

There are a range of areas that the Government should examine to see what further practical help can be given: encouragement for independent British film-makers and animation companies, where we already do very well and could potentially do even better; an examination of the video games industry, which competes internationally with countries that give tax incentives; and in television I strongly support those who argue for exploring ways to help British children's programmes.

There is a temptation in these debates simply to set out a shopping list for government aid, which is not currently a hopeful area in any event. Not everything needs to be government money, and television is an example of how progress can be made by taking off restrictions, promoting change and creating more jobs and revenue. We are fortunate in this country in having a range of excellent television companies: BBC, ITV, Channel 4 and, to be fair, BSkyB, which now makes some excellent programmes. The choice was illustrated a couple of weeks ago when, on Sunday night, you had to choose between "Spooks" and "Downton Abbey". Programmes like these are sold around the world-that is the point.

BBC Worldwide is far and away the largest British distributor. It has built up sales of more than £1 billion a year, and a profit of more than £150 million a year. It has been an enormous success-there is no doubt about that-and the question is whether that success can be further improved. It is a company that is capable of being a truly global brand. It can expand further, increase revenue and create more jobs but it is held back because, basically, it is in the public sector. It has to fund its expansion from its own internal resources; it cannot borrow on the market. The BBC Trust is in the background, saying that it should not expand too much in any event. It is a typically British position. A company capable of being a world leader held back by a lack of ambition, not from within the organisation, but by the corporation that owns it. There is an overwhelming case for a public/private partnership. For those who think this is the view of some way out, right-wing think tank, the final report from Digital Britain, signed by two Secretaries of State from the last Government, said:

"BBC Worldwide has the potential to be a very significant global rights business for Britain and the Government believes it would be a missed opportunity to limit BBC Worldwide to a narrow supporting role to the BBC".

That is entirely my case.

However, what has happened is, like in the worst of nationalised industries, that the corporation has replied that BBC Worldwide is not for sale and has made other remarks of that kind. We should remember that the BBC is not a corporation owned by a set of directors or executives; it is owned by the licence fee payers, who have provided the finance whereby it has developed. The question is not whether it is just in the interest of the BBC; it is what is in the national interest, the British interest and the interest of the creative industries. The decision here is an acid test of our intention and policy and whether we are truly serious about improving our creative industries.

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Baroness Garden of Frognal (Liberal Democrat)

My Lords, I remind your Lordships that this is a timed debate and when the clock reaches six you have completed your six minutes.

11:59 am
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Baroness McIntosh of Hudnall (Labour)

My Lords, I shall endeavour to take that to heart. I start by thanking the noble Baroness, Lady Bonham-Carter, for securing the debate. She is extremely assiduous in keeping the importance of the creative industries before the House. I, too, look forward to the maiden speech of the noble Viscount, Lord Colville. I have no doubt that his experience will be of enormous value to the House as time goes on.

I should also like to mention the excellent note generated by the House of Lords Library for the debate. It is full of useful information and statistics that remind us of the economic and social importance of creative enterprise. It is a really good read. However, it tells us only what most of us already knew and have shared with each other and with successive Governments many times, contributing-I hope that the noble Baroness will forgive me for putting it this way-to a slight groundhog day feeling to the debate. But some things bear repeating-and I am sure that they will be repeated as the morning goes on.

I have knocked around the creative industries-mostly the performing arts-for a very long time, initially in executive roles but now exclusively in non-executive ones. I am currently a board member at the Royal Shakespeare Company, the Roundhouse, the National Opera Studio and the Southbank Sinfonia. I am also a director of Artis Education. I will explain what these organisations have in common; that is what I want to talk about. They are all committed, wholly or in part, to education through developing the most talented young performers and/or by helping to develop in children and young people, often using trained, professional performing artists, the confidence and skills-for example, communication and teamwork skills-that all employers, not just those in the creative industries, say that they need.

In my nearly 40 years in the performing arts there have been some tough times-but none as tough as now. First, I want to say how proud I am of the arts sector as a whole, and in particular the organisations that I work with-for which I take absolutely no credit-for the mature, imaginative and, I have to say, creative way in which they are facing up to the combined challenge of shrinking funding from all sources and audiences with significantly less money in their pockets. Although this week Arts Council England announced a new strand of strategic funding, which is of course very welcome, it had to take some very difficult decisions earlier this year. It did not shirk them, but their impact on the sector will be felt in earnest next year and beyond. ACE itself is being forced to make a 50 per cent cut in its own costs, which cannot fail to reduce its capacity to provide the leadership and support that, as the noble Baroness, Lady Bonham-Carter, pointed out, it exists to provide.

All in all, it is easy to be gloomy, but I have faith in the resilience of the arts. They will find a way to survive and thrive. I am not shroud-waving or special pleading. People in the cultural sector understand that in dire economic times everyone has to take a hit. I will talk not about what we spend on our creative industries but about how we value them. How often do we pat ourselves on the back about the worldwide reputation of our artists and arts organisations? We all feel entitled to glow when the peerless Mark Rylance in "Jerusalem" or the National Theatre's "War Horse" triumph on Broadway, or when Colin Firth or Helen Mirren wins an Oscar. However, we should remember that truly great artists, be they actors, puppeteers, musicians or fashion designers, do not spring fully formed from television competitions. They are rare and wonderful creatures whose skills take years to hone, and more often than not their talent and enthusiasm have been nurtured first in school and then through universities and specialist training institutions such as arts colleges, drama schools and music conservatoires.

That is why it is so profoundly depressing that the higher education teaching grant has been removed from arts, humanities and social science subjects; that the much vaunted EBacc, which the noble Baroness, Lady Bonham Carter, mentioned, and which many schools will feel they have to prioritise, does not include any mention of music, design or drama; and that an artificial divide has thereby been created between the so-called STEM subjects and everything else. The message from the Government appears to be: creative education, and by extension the industries that flow from it, is not important but is a luxury and an add-on that is not central to our lives.

As I know from reading the right honourable David Willetts's speech to the British Academy earlier this year, the Government will protest that such an inference should not be drawn from what they have done to higher education and funding in the school curriculum. I think it is hard to sustain that position. Mr Willetts is an honourable man and I have no doubt that he meant to give comfort when he suggested that taking away the teaching grant from those in the arts and humanities was going to improve the position of higher education courses in those subjects. However, that is not how it feels to all those who have worked so hard and for so long to build our creative industries into the vibrant, economic and social force that they are today. It feels like a slap in the face or, worse, indifference.

The world faces a huge array of challenges at the moment. Some we hope are short term, but most are long term, centring on issues such as climate change, population growth, migration and scarcity of natural resources. We will have to apply every ounce of creative energy that we can summon up to meet them. Solutions will not come, nor have they historically come, just from scientists, engineers and mathematicians, much as we need them and creative as they are. They will come from the boldness of those whose imaginations have been shaped and stimulated by a richly creative education.

I hope that the Government understand this, but it is not clear to me from their policies that they do.

12:06 pm
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Lord Clement-Jones (Liberal Democrat)

My Lords, I warmly congratulate my noble friend, not only on initiating this debate, but on her tremendous opening speech. We need to recognise that our creativity, ideas and intellectual capital are what will increasingly drive our future prosperity. Increasingly, technologies are converging, and technology and content are aligning, so it is possible to draw the description of creative industry extremely widely, even to include industrial design in areas such as aerospace, automotive and advanced engineering.

We are pre-eminent in so many areas: in computer games and new media, architecture, design, fashion, animation, music, film, radio, television and advertising. Just take music: in per capita terms, we are one of the top three recorded music markets in the world. UK artists' share of global sales is estimated to have been nearly 12 per cent in 2010, with one in 10 sales in the US being a UK act. However, the fact is that other countries are making substantial investment in their creative industries. So today I hope that we can celebrate some of the considerable achievements taking place to develop our creative industries, while at the same time combining this with further suggestions for action.

Like my noble friend, I welcome the formation of the Creative Industries Council, co-chaired by the Secretaries of State for Business, Innovation and Skills and for DCMS, which, I think, has met once so far. Last year the Liberal Democrat policy document The Power of Creativity emphasised the need for assistance with start-ups for many young creative industry companies by setting up a creative enterprise fund. Earlier this year, Dr Stuart Fraser, in his report Access to Finance for Creative Industry Businesses, commissioned by the DCMS, identified that finance was much slower coming forward for creative industry business than in other sectors. The Treasury Plan for Growth in March this year accepted this and the recent Demos report Risky Business confirmed it.

With this evidence, I hope that the Creative Industries Council will press for more assistance and will spur the Government to improve the enterprise finance guarantee scheme so that it can support new businesses in the creative industries and take other steps proposed by the CBI to ensure that other schemes, such as the R&D tax credit and the enterprise investment scheme, can be accessed. What plans are there to solve some of these financing issues for the creative industries?

Moving on to education and skills, we have some great higher and further education institutions. Indeed, overseas students beat a path to our door. As the UUK report Creating Prosperity at the end of last year makes clear, our higher and further education sector makes a major contribution to the development of skill and talent for the creative economy. It represents hubs for innovation and centres for research. Some 16 per cent of our students are engaged in courses relevant to the creative economy. However, as Fintan Donohue, the principal of North Hertfordshire College was recently describing, it needs to make sure that, as well as the formal academic aspect, it develops the enterprise and entrepreneurial skills of students in the creative arts sector.

I commend the work of Skillset, the sector skills council for some of the creative industries, such as advertising, animation, computer games, fashion, film and TV, and Creative & Cultural Skills, which represents design, literature, music and performing and visual arts. Both have identified that there is a significant shortage of skills in their sector, and both are tasked with ensuring that skills issues across the sector are properly tackled in a strategic way. However, there are still major issues, as the recent NESTA report on video games and visual effects, which was referred to by my noble friend, shows. We need to make sure that we have the right computer skills in particular. We have a positive story in some respects, but I am baffled why we have two skills councils for the creative industries. Should they not be doing more than simply working together? Should they not be a single body rolling out programmes right across the sector?

Then, of course, there is the vital question of intellectual property protection through copyright, a subject of increasing importance in the digital age. Combating piracy should not simply be a crime and punishment approach. We need to combat through education the idea that copyright infringement is socially acceptable, and we need to make sure that there are legal ways of accessing copyright works. I was nominated for an Internet Villain award last year for my efforts on the Digital Economy Act, but I am unrepentant about the need to protect intellectual property over the internet and to ensure that creative artists and the creative industries can enforce their copyright. It is all very well to talk about developing new models for exploitation of new work, but without the underpinning of copyright, creative artists cannot receive the proper reward for their efforts. There are some 50 different services giving legitimate access to recorded music, so there is no excuse for piracy.

The Hargreaves report, commissioned by this Government, has some good aspects, but it seems to think that some creators' rights should be weakened. However, as pointed out by UK Music, its economic impact assessment of the growth impact of its recommendations is laughable and certainly a great deal more speculative than the cost of piracy estimates that Hargreaves criticised. For instance, how can format shifting add up to £2 billion to the economy? In reality, format shifting has been rife for years. MP3 players have already been invented, and very few of them are made in the UK.

In that light, the Government's commitment to strengthen the IPO's economics team and the fact that it has begun an ambitious programme of economic research are very welcome. In the limited time available to me, I welcome the Technology Strategy Board and its research on metadata development, which may prove an extremely important development. I also mention the impressive story of how some of our major cities are becoming hubs. We have the East London Tech City, and Liverpool's city of culture year resulted in an addition of £800 million to the economy of that city.

Finally, I cannot forbear to mention live music. I very much hope that the Government will give a fair wind to my Private Member's Bill in the House of Commons.

12:13 pm
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Lord Bilimoria (Crossbench)

My Lords, if I were to list the areas in which we are the best of the best in the world, it is actually quite a long list for this tiny country of 60 million people compared with, say, the United States with 300 million. I could go for higher education, advanced engineering and the creative industries, where we are right up there among the best of the best in the world. I thank and congratulate the noble Baroness, Lady Bonham-Carter, on initiating this debate. It is crucial. Whichever area of the creative industries you look at, we are world class-whether it is film, theatre, art, design or advertising. The list goes on.

It struck me when I was taken on a private tour of the Reichstag in Berlin that it was redesigned by none other than our very own British architect, the noble Lord, Lord Foster. When in 2004, the Royal Society of Arts' 250th anniversary year, I was privileged to receive its Albert medal, which was presented by His Royal Highness the Duke of Edinburgh. The other medal winner was Jonathan Ive, the Apple designer, who won the Benjamin Franklin medal. The noble Baroness, Lady Bonham-Carter, spoke about him. He was Steve Jobs's right-hand person.

Why are we so brilliant in creative arenas and how can we continue to remain the best? The question I ask the Minister is: are the creative industries really a top priority for this Government? The creative industries make up 5.6 per cent of the gross value added to our economy, they contribute £17 billion of exports and services and almost 9 per cent of companies in this country in some way or another fall under the creative industries umbrella. They make such a substantial contribution. Are the Government doing enough to support them? On the other hand, the huge Department for Work and Pensions has £200 billion of spending. Surely the Government should prioritise creative industries to help them to grow and to receive even a fraction of that £200 billion of funding.

We all agree that the cuts the Government are making need to be made, but I just do not understand slashing higher education funding by 80 per cent when there is a shortage of skilled and trained people in the creative industries. Will the Government wake up to this? This is our core competence. We need the brightest and the best academics and students from around the world to come to our universities. Ten per cent of academics in our universities are foreign; at Oxford and Cambridge it is 30 per cent. Foreign students bring in £8 billion to the UK and yet we have this crude immigration cap dissuading the brightest and the best from coming to our country. I know that from India applications have plummeted. As we rely on brain power in the creative industries, we are being affected by these nonsensical policies. Will the Minister tell us whether the Government are going to wake up to this?

The creative industries are open; they are flexible. They are tiny microbusinesses on the one hand and giants like WPP on the other hand. With today's technology and communications, this industry is full of companies that are really mobile. Britain is one of the least competitive countries in the world when it comes to taxation, with our top rate of 50 per cent. In 1997, we were the fifth most competitive country in the world in terms of taxation; now we are 94th. Not only is this a disincentive for our home-grown creative talent, it is also a disincentive to the brightest from around the world to come and work in our creative industries.

I was taught at a very young age that I was not creative because I was useless at art and drawing. I still am, but I have realised that in building a business, being an entrepreneur, one of the greatest strengths you need is creativity. What are the Government doing to encourage creativity in our schools to give children the confidence that we all have the latent, untapped potential to be creative? Britain is so good in this area is because we are an open economy, we have open minds and we are always willing to question, to challenge, to push the boundaries. I was proud to write the foreword for Big Ideas for the Future, a report published by Universities UK and Research Councils UK, which has 200 world-changing ideas coming out of our universities. Many of those are in the creative industries. The noble Baroness, Lady Bonham-Carter, spoke about the link between universities and business.

In building a business you need the four Ps of marketing: promotion, price, place and product. I have three more Ps: people, passion and "phinance". Without the money you cannot do anything. What are the Government doing to help supply finance for the creative industries? Unlike manufacturing, where you can provide bricks and mortar as collateral, creative industries can only provide brain power as collateral. What are the Government doing to help finance things like the small firms loan guarantee scheme, which helped my company, Cobra Beer, in its early days? Two of those loans helped us get off the ground. Why are the Government not doing more to greatly enhance this scheme, which would be particularly useful for the creative industries?

I conclude by saying that today we are among the best in the world in the creative industries, but unless we address these issues of uncompetitive taxation, short-sighted cutting of funding for higher education, the introduction of a crude, self-destructing and self-defeating immigration cap and not doing enough to provide access to finance, how will our creative industries be able to add value and stay ahead, with the emerging giants of China and India galloping ahead? We need to be partners with these giants in the decades ahead with our creative brilliance but we can do this only if we have the support. For centuries we have provided many of the world's greatest, most innovative and most creative minds, and I am very proud of that.

12:18 pm
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Lord Razzall (Liberal Democrat)

My Lords, I think it is common ground among all of us that the creative industries now represent a significant part of our industrial effort. If you add together software development, film, music, theatre, broadcasting, architecture, industrial design, the creative arts and video games, it is quite likely that, in some statistics, the creative industries have passed manufacturing in their contribution to Britain's GDP and are fast pushing the declining financial services sector. This is an extremely important debate.

First, my noble friend Lady Bonham-Carter indicated some of the problems faced by some of these industries, but we ought to take a moment to reflect on some of the triumphs. Let us look, for example, at the acquisition of Autonomy by Hewlett Packard, one of the major worldwide computer companies. The sale was significant but, more significantly, Hewlett Packard will base the whole of its software development programme in Cambridge, based around the Autonomy structure. That is a huge triumph for Britain's software industry. Look also at what has happened at Pinewood. No doubt my noble friend Lord Grade of Yarmouth will share with us the secrets of how he did it. As the noble Baroness, Lady Bonham-Carter, indicated, Warner Bros' investment is a huge triumph for the British film industry. My noble friend Lord Clement-Jones spoke about the record industry, which now represents 12 per cent of global sales, notwithstanding the problems about copyright infringement, to which other people have referred. As my noble friend Lord Fowler indicated, we have a hugely successful television production industry, ranging from the BBC through to the independent sector, to Channel 4 and ITV, and even BSkyB is now making independent programmes. As this morning's Times editorial indicated, the television industry in the UK, contrary to fears, has,

"dumbed us up, not down".

The noble Lord, Lord Fowler indicated that, no doubt, a number of your Lordships would have a shopping list, which should be avoided. I have a shopping list of three things that I think the Government ought to be doing. First, on subsidies, I take the point put forward by the noble Lord, Lord Bilimoria, that the Government already provide significant subsidies for the creative industries. There is the grant, which no one has yet mentioned, for people involved in research and development through which companies can recover, from HMRC, the PAYE paid on such people's salaries That is a very significant contribution towards the development of small software companies and it hat must be retained. I was very pleased that the coalition Government, notwithstanding one or two blandishments from my side of the political parties, have retained that R&D grant.

Secondly, there is the film grant, the EADY money which was replaced by the current film grant: as long as a film contains sufficient UK content, there is a cash grant which comes back to the makers of the film from HMRC. That must be retained.

Thirdly, there is the Arts Council. As we know, the Arts Council suffered a cutback in the amount of money that it could make available to the arts this year. Presumably, next year, once the Olympics are over, there will be more money available from the National Lottery Fund and it is important that, when that happens, the Government do not use the opportunity to take back the contribution that has been made from the Treasury, so that the Arts Council funding can be maintained at least at the same level as it is today. There must be no change in that.

Another area where I think the Government need to take some action is on immigration. There is internecine warfare, as noble Lords will appreciate, between the Home Office and DBIS with regard to how we get clever, talented people, who are necessary for the creative industries, into this country, often on a temporary basis. A company like BlackBerry, for example, is thinking of moving its European headquarters away from the UK into continental Europe because the Home Office will not allow it to bring in the sufficiently talented people that it needs to maintain that important centre for British industry. In my view, DBIS must carry on that battle with the Home Office, which I hope it wins, so that that can continue.

The third area, as my noble friend indicated, is, of course, education. As Eric Schmidt said in his famous speech in Edinburgh earlier this year, it is slightly ludicrous that we are teaching our 15 year-olds to plug things into computers but not how to program them. As the noble Baroness, Lady Bonham-Carter, indicated, we really need to change the educational structure in this country to ensure that computer science is in every student's DNA.

In conclusion, as I indicated at the beginning, this is now a very serious industry. When the DCMS was started, it was termed "the Ministry for fun" and that was not only because David Mellor was the first Minister but because it was thought that that was all that it dealt with. That is not so. The DMCS is now responsible for a significant element of our industry.

12:24 pm
Photo of Viscount Colville of Culross

Viscount Colville of Culross (Crossbench)

My Lords, I thank noble Lords for their kind words and I look forward to the establishment of the "Newsnight" party. It sounds like fun. I of course declare an interest: I work for the BBC as a producer in the science and history departments. I am very grateful for the honour bestowed on me by the noble Lords who elected me to these Benches. My father loved this place and talked frequently of his many friends here, which included both staff and noble Lords. Since I arrived, I have been very touched by the many people who have spoken so warmly about him. I hope that I will be able to make my own small contribution to the life of this place. I should like to take this opportunity to thank everyone for making me feel so very welcome; in particular, as every noble Lord knows, we in this House are very well served by the tremendous team of staff who look after us so assiduously. I thank them for helping and advising me in their wonderful, courteous way.

In 1989, I went to the Soviet Union to work on the first live television programme to be broadcast from Moscow by the BBC. My translator and fixer was an amazing woman called Masha Slonim. She had been a dissident in Moscow in the 1960s and was taken to the West by Dr Henry Kissinger. From there, she broadcast on the English and Russian language services of the BBC World Service and, for two decades, she talked into the ether. The Cold War meant that that she never heard any reply from her audience and did not even know whether there was an audience.

Finally, in 1989, she returned to her home country for the first time with us. As part of the programme we filmed in the small city of Yaroslavl, a few hundred kilometres north of Moscow. We met a priest and Masha introduced herself. When he heard her name, he fell to his knees, kissed her hand and wept. When he had composed himself, he said, "Your broadcasts have kept my mind and heart alive for these many dark years. I can't imagine what my life would have been without the sound of your voice and the information you gave me. Thank you, Masha. Thank you Britain".

The noble Baroness, Lady Bonham-Carter, and the noble Lord, Lord Fowler, have spoken of the huge contribution that the British creative industries make to our economy, and they are right. But I know that the creative industries are so much more than just a business opportunity. They also have the power to shine a light into the darkness-not just for audiences and authoritarian regimes but into the darker places of our own minds. However, I am concerned that this extraordinary part of our economy is under threat. The creativity of these industries depends entirely on the talents of those they recruit, but I fear that these industries are increasingly restricting the range of new entrants.

So many of these companies depend on unpaid internships for their pool of new talent. For a week or even a month, they are a wonderful way to introduce new recruits to the incredible opportunities promised by a career in the creative industries. But in recent years there has been an explosion of long-term unpaid internships. I fear that these are not only replacing paid jobs but are driving many would-be recruits, who are not just from poorer backgrounds but from the middle classes, away from the industry. As Tanya de Grunwald, who runs Graduate Fog, one of the many websites campaigning on this issue, told me, people can manage for three months, six months is quite difficult, but nine months is not an option. They run out of money and many give up their dream.

In preparing for this speech, I spoke to many interns. One particularly struck me; she was a young graduate from Cambridge with a good 2:1 in English who wanted to work in journalism. She completed more than 18 months of unpaid internships at three companies in the creative industries. She was doing proper work, such as writing press releases and proof reading. Eventually, she decided that she could not go on working for nothing. She has given up her hope of being a journalist and has gone elsewhere. She told me that many of her friends who had also thought of going into the creative industries had decided that they could not work for so long without pay. They, too, have gone to other professions.

The concerns are not just among graduates themselves; at the very top of the industry, people are worried. Jo Taylor, who runs 4Talent, which sets up paid internships through Channel 4, told me that not paying people for work devalues the opportunities being offered and limits new recruits to a small homogenous pool.

In September, the Department for Business, Innovation and Skills brought out guidelines called Common Best Practice Code for High-Quality Internships. These specify that high-quality internships should last no longer than 12 months, although they say the internships last typically for three months. There are no recommendations about whether the interns should be paid or not.

The present economic climate is putting greater pressure on small creative companies. The temptation to take young people on as unpaid interns as part of the companies' business model has never been greater. However, the industry must take note. It is endangering its future vitality and the creativity of one our greatest exports by not recruiting as widely as possible from the very best talent from across our country and across society.

Will the Minister say what the Government propose to do to collect data on the number of internships, both paid and unpaid, and whether she is happy that the best practice guidelines seem to give little guidance on long-term unpaid internships?

12:31 pm
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Lord Black of Brentwood (Conservative)

My Lords, it is a privilege to be able to follow the noble Viscount, Lord Colville of Culross, and to congratulate him on such an elegant, graceful and moving maiden speech. We have seen in his contribution today a glimpse of the wisdom, expertise and passion that he will bring to our proceedings. It is a particular delight to me that in the noble Viscount we have another colleague, along with many speaking today, with great expertise in the media.

As I am going to speak in a few moments about local newspapers, it was splendid to discover that the noble Viscount was once a reporter in the local press on those great publications the Ludlow Advertiser and the Worcester Evening News. From there he joined the BBC on "Newsnight"-a programme that has no doubt caused many a vexed moment for Members of this House, as he said-at the time of the fall of the Soviet Union. He stayed on that flagship programme for many years before branching out to make his own science and history documentaries for the BBC. One of them was called "The Incredible Journey", a title that might reverberate with many noble Lords privileged enough to be here. The noble Viscount has an exceptional bank of learning and understanding on which we can draw, particularly in this vital area of the creative industries. We all look forward greatly to his part in our deliberations.

I want to speak about one of the jewels in the crown of the UK's creative industries-the local and regional press. I declare an interest as director of the Telegraph Media Group, accordingly. The local press, comprising some 1,200 newspapers, employs more than 30,000 people, including 10,000 local journalists-more reporters on the ground than any other medium. It delivers reliable local news to 33 million newspaper readers a week, and 42 million online readers each month who consume local news from 1,600 websites.

Despite the difficult commercial background, local newspapers are doing their utmost to invest in new platforms and converged multimedia newsrooms and to utilise digital technology to find new ways to open up public bodies to the scrutiny that is vital to local democracy. That remains the most vital role of the local press: holding local politicians and public services to account and ensuring that the justice system is transparent. They provide in a fiercely independent fashion a watchdog role no other medium matches.

However, the local press is under serious commercial pressure. New revenue streams are not growing as fast as old ones decline. A punishing, prolonged structural downturn in advertising, with once lucrative classified ads migrating to the web, and significant rises in newsprint prices have produced a perfect storm of commercial challenges that is threatening the viability of many local titles. To survive this storm the local press needs to make significant investments in services and content, product quality, training and digital. For an industry in real difficulty that is a tall order, especially because the local press has such remarkably diverse ownership structures.

There are in fact 87 separate publishing group owners, many of them family businesses that may never be able to make the significant investment in new media that is essential for their future. On their own they are unable to capture economies of scale in management, distribution, printing and sales that would allow them radically to overhaul their businesses. Local publishing businesses must therefore consolidate to survive. If we value the local press, we are going to have to ensure that such consolidation can happen.

However, it is now clear, following what can only be described a dinosaur decision from the Office of Fair Trading last month that torpedoed the sale of Northcliffe Media's Kent newspapers to the family-run KM Group, that local publishers are not being given such essential commercial freedom. KM Group is the sort of family business that needs to acquire other newspapers to ensure that it can invest in the future. To help it do so, it proposed to acquire just seven titles from Northcliffe. Ignoring the expert advice of Ofcom, which had rightly said that,

"a merger may provide ... a sounder commercial base from which to address long-term structural change",

the OFT decided, in a manner which the Independent rightly said made it,

"hard not to laugh out loud",

that the deal must go to the Competition Commission. It said that such consolidation risked,

"costlier advertising for businesses and higher cover prices for readers".

The OFT, which appears to be living in the last century, had failed to appreciate that digital media had fundamentally changed the way local business and advertising works and the way local people consume news. The result of this decision was that the proposal was withdrawn because the costs of a Competition Commission inquiry were too high to bear.

The same thing happened a few years ago when Trinity Mirror proposed to sell eight free weekly newspapers in Northampton and Peterborough to Johnson Press. A ruling from the competition authorities meant the sale had to be abandoned. The shocking fact is that seven of those eight titles have now closed. I very much fear that the same will happen to those seven Northcliffe titles in east Kent. The OFT is preventing the changes in the local newspaper industry that will allow it to survive, undermining local democracy in the process. Enough is enough.

I believe that the Government understand the issues here and are sympathetic. The relaxation of local cross-media controls has been an important step, but it means nothing without a more realistic approach to local media mergers and to the assessment of competition in local markets by the competition authorities. Swift reforms to the merger regime are needed if further deeply damaging decisions are to be avoided. They must ensure the OFT takes account of three factors: first, the changes that have taken place in the highly competitive local advertising markets as the result of the growth of digital media; secondly, the changes that have happened in the way people consume news, which means that it is now impossible to exercise a local news monopoly; and, thirdly, that the creation of publishing organisations with scale and the ability to invest is the only effective way to protect the viability of local titles and maintain plurality of voice.

We all want local papers to survive and flourish, for they are at the very heart of our creative industries at local level, but in order for that to happen it is no good just talking about it; we have to will the means, not just the ends. Change to the merger regime is essential. Let history not damn us with those dread words, "Too late". Let us act instead to show that we understand the importance of our local press in the creative economy and in local democracy and set publishers free to renew their businesses for a new age.

12:38 pm
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Lord Hollick (Labour)

I congratulate the noble Viscount, Lord Colville, on his impressive maiden speech. He reminded us of the important democratic role that the media can play. He also shone important light on what is happening with internships.

I declare an interest as an investor in and director of companies involved in broadcasting, television and film production, music publishing and digital media, all of which are listed in the Register of Members' Interests. All these companies, whether they operate here, in Europe or the United States, benefit hugely from the great pool of creative and entrepreneurial talent that we have in the UK. This pool is not part of a natural order of things. It must be replenished and nourished by extensive provision of education and training, and there are several areas, some of which have already been referenced, where that essential nourishment is under pressure.

To succeed in the digital economy, particularly in digital media and digital games, where I also have some interests, we need a strong supply of people who are skilled at writing computer code. As Eric Schmidt pointed out, that is not a part of the curriculum in this country any more. That is an absolutely essential change that must be made, because we desperately need to regain our position in the computer games industry.

Our art colleges, which are now universities, have a long track record of nurturing home-grown talent, be they James Dyson, Ridley Scott, Paul Smith or Keith Richards. Today's students, many of whom come from disadvantaged backgrounds, have to take on very significant debts to fund their fees and may be reluctant to do so because of the high level of risk in the creative industries. In the past, the BBC, independent television, the regional and national newspapers and news organisations have provided training schemes for aspiring journalists and programme makers. Today, unfortunately, only the BBC continues to provide training of any significant nature, and the director-general made it clear yesterday that the training budget was not immune to cuts. He added that he was hopeful that the reduced level of funding could be stretched further. We shall see. Against this background, it is vital that the media industry, academia and the Government work together to ensure that there is adequate and affordable provision of training at universities, specialist institutions and in the workplace in order to maintain the flow of talent.

The development of great content and the ability to own and exploit its value over time is the cornerstone of many creative businesses, and that requires a steady supply of risk capital and investment. The TV programming business is coping with an uncertain advertising market and a declining spend by the BBC. Sky's welcome decision to increase its spend on original UK content and the growing importance of BBC Worldwide as a funder, which was referenced by the noble Lord, Lord Fowler, has helped to sustain programming investment. BBC Worldwide is one of the few genuine international players that we have in the UK. It has unrivalled power in global distribution and a growing and impressive track record in investing in successful and original programmes. It has invested over £1 billion over the past five years, working with both the BBC itself and over 200 independent production companies. It needs to increase its investment firepower if it is to provide the required level of funding to support broadcasters and independent programming investment.

An increase in the flow of risk capital to the TV and film production industries, and to digital media development, is of critical importance to the health of our creative sector. Our tax system generally prioritises the use of debt financing, and we are living with the consequences of that today. The interest on debt financing is fully offsettable against taxable profits, and of course that makes it more attractive than equity. But it is risk capital that is required, and that needs to be equally encouraged by the tax system. The Government's welcome increase in the level of enterprise investment scheme investment that can be offset against personal tax is a step in the right direction, but a much more significant and bolder increase is required if the creative industries are to raise the level of risk capital they need and can successfully deploy.

12:43 pm
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Baroness Benjamin (Liberal Democrat)

My Lords, I cannot congratulate my noble friend Lady Bonham-Carter enough on securing this important debate. I also congratulate the noble Viscount on his excellent maiden speech, and I look forward to working with him as he has already volunteered to be a part of the All-Party Parliamentary Group for Children's Media and the Arts. I welcome him.

Creativity is one of the key attributes that defines humanity. Since Stone Age people painted visions of their world on the walls of their caves, sang laments to the moon and the stars to express wonder and fear, or danced joyfully in the flickering orange glow of their campfires, there has been creativity. Through the ages such acts have provided nourishment and hope for the souls of humans. Art, music, dance, literature as well as theatre have defined civilisation and human progress. Today, of course, we have television, which is probably the primary creative portal through which the vast majority of people see the world around them. So it is vital that television reflects Britain's culturally diverse society and communicates accurately the views and perceptions of all communities. This can only be achieved if the workforce that makes the products is drawn from all communities and not limited to just one sector of the population.

For example, there is a huge diversity problem in employment in the film and television industry, both in front of and behind the camera, and the ones who are lucky enough to get the opportunity of employment often get pigeonholed and have little job advancement prospects. The BBC and Channel 4 have made outstanding efforts to correct this and should be applauded, but the rest of broadcasting industry is lagging far behind. Often the adverts on commercial channels contain more diversity than the programmes themselves. In the past, the UK Film Council actively promoted equality and diversity within the film industry through its training and employment schemes, but I am still waiting to hear what plans the BFI has to make sure that people from culturally diverse backgrounds get a fair and equal chance to actively participate in all aspects of the film creative industries.

Transparency and accountability are essential, especially when companies are in receipt of public funding-and that includes art galleries, museums and theatres. So I would like to ask my noble friend the Minister this. What are the Government proposing to do to ensure that we have transparency and accountability when it comes to equality and diversity in employment in the creative industries, so that the public can see for themselves how well we are being served and how organisations are implementing diversity and inclusion?

As noble Lords know, I am passionate about the well-being of children and young people and I cannot help but draw attention to the need for children, especially those from poor backgrounds, to be included in all aspects of the creative landscape. We must provide them with every opportunity to take part in, be exposed to and develop a love for all things creative, so that they can achieve to their full potential. But the cuts in the arts are threatening this. Many of our young people feel disconnected from society, from the world of politics and finance. They are surrounded by war and conflict and overwhelming doom and gloom. No wonder they lash out at society. It is the role and duty of the creative industries to reflect the changes and moods of society and include everyone in that process. This is so important.

However, young people themselves are redefining creativity as modern technology changes the way they create. Graffiti and rap music have become art forms in their own right. Online sites such as YouTube allow them to participate in creative projects independently and reach millions across the globe. Computer games are now also part of the modern creative landscape, spawning an entirely new creative industry that young people are exploring and taking advantage of. However, more needs to be done.

Before I finish I must refer to the decline in children's UK television production. I believe that childhood lasts a lifetime and that exposure to television programmes, which stimulate creativity in young children, especially as early as possible, is critical. But, sadly, the percentage of home-produced children's programmes is shamefully low, at around 1 per cent according to Ofcom figures. This is simply not good enough. The BBC is virtually the sole provider of PSB children's programmes but there are only so many writers, performers and directors that the BBC can employ. If we do not sustain a vibrant children's television sector producing dramas and factual programming rather than importing cartoons, we will be squandering the talents of our creative people and denying our children high-quality, relevant programmes reflecting their world.

The whole of our creative landscape is linked together like a shimmering spider's web of interaction, each thread supporting and enhancing the other, giving us relief from tedium, acting as food for the soul and often bringing joy and happiness into our lives. So, in these days of austerity and economic fear, the creative industries and those who work in them are vital to the well-being and spiritual health of our nation. Can the Minister assure the House that the Government will be creative in their thinking in finding ways to ensure that we sustain and celebrate our creative industries?

12:49 pm
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Lord Rowe-Beddoe (Crossbench)

My Lords, I declare my non-pecuniary interests as president of the Royal Welsh College of Music & Drama, which has some 600 students, 15 per cent of them from overseas, and as president of the Wales Millennium Centre-a workplace of 1,000 people.

It is apparent from the interest displayed this afternoon that many of your Lordships fully appreciate the significance of the cultural industries in the UK, measured in terms of economics, employment, education, cultural impact and social well-being. It is also pleasing to note some of the supportive activities that have taken place since our last debate on the topic in your Lordships' House over two years ago. One example has already been mentioned-the Government's establishment of the Creative Industries Council in September. The economic impact of the creative industries has been clearly recognised in that council through the joint chairmanship of the Secretary of State for Business, Innovation and Skills and a Minister from the Department for Culture, Media and Sport.

DCMS figures relating to the third quarter of 2010 state that some 1.3 million jobs are to be found directly within the creative industries. We also know that the export of services in 2008 totalled £17.3 billion-some 4.1 per cent of all goods and services exported from the UK that year. In a 2009 UK Trade & Investment survey, business leaders cited the provision of arts and culture as a critical determinant in investment location decisions-even more important than a favourable tax regime.

I am pleased to refer to some recently published NESTA work which is the outcome of a two-year collaboration between the Universities of Birmingham and Cardiff. This work seeks to identify and understand the dynamic of regional hotspots in creative excellence and activity. NESTA reinforces the contribution that the creative industries make of more than £50 billion to the economy each year. NESTA identified a special case for media production in Cardiff and states:

"Cardiff should ... be seen as the locus of a Media Production cluster where production for broadcasting is tightly integrated with digital media services".

Such recommendations dovetail in a most helpful way with the review of the creative industries, The Heart of Digital Wales, led by Professor Ian Hargreaves for the Welsh Assembly Government in March last year.

HSBC's report, The Future of Business 2011, has independently identified Cardiff as a possible hub for Britain's creative industries. This report also claimed that the UK's creative industries now represent 6.2 per cent of the total economy, a sector which, it states, is proportionally the largest of any in the world, with 2 million people employed across a broad range of activities from video games to the performing arts. Britain's leading position is reflected in the fact that over two-thirds of international advertising and branding agencies have their European headquarters in London.

I am happy to join the commendations made earlier about the BBC. The BBC has taken an important step in Cardiff by completing construction in September of 175,000 square feet of HD-ready film studios, which will provide a permanent, purpose-built home for four of its flagship dramas-"Casualty", "Doctor Who", "Upstairs, Downstairs"and "Pobol y Cwm". Some 500 or more people will be working on site, of which some 20 per cent are new jobs.

Equally exciting in these times of very high youth unemployment is the BBC's commitment to start an apprenticeship scheme in the next month, in partnership with the independent sector and Skillset Cymru. The BBC will select 24 apprentices and provide on-the-job practical training and experience as well as classroom-based college learning leading to a level 3 certificate in creative and digital media. Twelve-month work placements will also be available with BBC Cymru Wales and with independent film companies.

Finally, perhaps I may say a brief word on Conservatoires UK, another vital factor for employment within the creative industries. The eight members across the United Kingdom provide world-class training in music, and two or three of them in drama and dance as well. I mention it because a key objective of these conservatoires is to produce performers and other professionals across the sector, which is vital to the continuing global recognition of the quality and reputation of the UK's creative skills. Their work is not only to be applauded but measured by their importance in terms of employability. Graduates from these special institutions are among the most successful in terms of their professional engagement. The continued level of funding by both central and devolved governments is vital to the ongoing extraordinary contribution made by this small sector.

12:55 pm
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Lord Grade of Yarmouth (Conservative)

My Lords, the noble Lord, Lord Rowe-Beddoe, is to be congratulated on cramming so much into two-and-a-half minutes. Because time is so limited and my interests both past and present so numerous and duly disclosed, I hope that noble Lords will allow me to proceed by taking them all as read. Thank you.

In a period of seemingly relentless bad news, my noble friend Lady Bonham-Carter is to be congratulated on securing time for the House to discuss, or celebrate, one precious good news story for our time: Britain's creative industries. If the Chancellor of the Exchequer is looking for the elusive G-word-growth-he need look no further. As we have heard this afternoon, Britain is enjoying a golden period of creativity and commerce both at home and abroad and in every single one of the creative disciplines.

British television is enjoying the most sustained success. Our programmes, programme makers and ideas and formats are in demand throughout the world as never before in my lifetime. This success is the direct result of the investment made by both the public and private sector public service broadcasters: BBC, ITV and Channel 4 and Five. The licence fee and the advertising revenues collected or earned by these channels are invested into British content to the tune of some £3.5 billion annually. I will restrict my remarks today to some areas of nonsense regulation that threaten and erode this investment.

First, a few facts: British television employs more than 130,000 people and has grown consistently by 4 to 5 per cent in each year of the past decade. A recent report concluded that Britain spends more per capita on original programming than any other country in the world. According to Ofcom, public service, free-to-air channels contribute 90 per cent of the whole industry's £4 billion total annual investment in UK production. This investment is declining, and that must in part be due to the depressed advertising market and BBC licence fee pressures. These factors are unlikely to reverse, so we must do whatever we can, short of further public intervention, to maximise this annual investment and maintain our world lead. This certainly calls for ever greater efficiency, particularly at the BBC, but also means plugging those leaks in the revenue stream caused directly by damaging regulation.

There are leaks in the investment bucket that are easily within government's power to plug. As we heard from my noble friend Lord Black, the first is the competition regime that regulates, in particular, my former employer ITV. When ITV recently sought to be released from the stranglehold of the airtime sales remedy imposed by the Competition Commission as the price for its consolidation in 2003, the CC found against it. In the course of the inquiry, I found it profoundly depressing that the commission felt unable to engage with the argument that there is any public interest in ITV being free to charge even a fair market price for its airtime in order to sustain and increase its investment in original British production. The commission refused to acknowledge that there is any public interest in programme investment.

So long as advertisers can continue to enjoy the cheapest airtime in Europe, through the artificial deflationary remedy imposed 10 years ago, all is well in the rarefied world of economic market theory inhabited by the people at the Competition Commission. By the way, they also chose to ignore the fact that the Google-dominated internet is now a fully grown, head-to-head competitor for advertiser-supported television. Nor did it occur to them that sustained investment in British content is also in the advertisers' long-term interests. Could the CC have got it more wrong? The Government must look at the CC's terms of reference in this market and require that they take account of the public interest in programming investment, and the new wider online market. Recalibrating the competition authority's outdated remit will pay handsome dividends in jobs and exports. Please spare us one of those ludicrously long three-year market review solutions beloved of economic regulators.

The other leak in the investment bucket comes with a health warning: it is not for those of a nervous disposition and may come as a shock to some listeners. All of the free-to-air public service broadcasters currently have to pay Sky to transmit their billions of pounds worth of British hit programmes each year. There is not time today to explain how this comes about, suffice it to say that a lethal cocktail of statute, competition law and regulation, both UK and European, and political and regulatory apathy is ensuring that an estimated £15 million a year currently flows out of UK production jobs and exports and into the coffers of Sky. In no remotely comparable television market anywhere in the world is this allowed to happen.

Since these arrangements were put in place, I estimate hundreds-yes, hundreds-of millions of pounds have been drained out of UK public service programming investment and across to Sky. Clearly there is an importance to Sky viewers in being able to watch "Coronation Street" and "EastEnders", and clearly there is an interest for the PSBs in reaching the Sky audience. So, the simple question for the Minister is: why does any money need to pass between two mutually dependent media sectors? I suspect the economists' answer would be that it that is all very well in practice, but it does not work in theory.

Fairness demands that this arrangement should be neutralised as a matter of urgency so more jobs can be created, more exports earned, more economic activity generated and more wonderful home-grown programmes enjoyed by everyone-everyone except, that is, the competition commissioners. Both of the issues to which I have drawn your Lordships' attention today, belong to that file of free market economic theory that I have labelled "Ongar" which, as your Lordships well know, is the station on the Central line just beyond Barking.

1:02 pm
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Baroness Jones of Whitchurch (Labour)

My Lords, I thank the noble Baroness, Lady Bonham-Carter, for initiating this debate. She has been a tireless and vocal agitator for greater prominence for the arts and has once again made a compelling case today. I would also like to add my welcome and congratulations to the noble Viscount, Lord Colville, who has demonstrated today that he is going to be a talented and effective new recruit to the growing band of us who care about the arts.

As I reflected on what I might say today, it occurred to me that I had not read or heard much from Jeremy Hunt on this issue for a while, so I thought that I ought to check. I looked on the DCMS website under the creative industry section and there was nothing. There were no speeches or press releases from the Secretary of State celebrating the arts, no messages of congratulation to our film-makers, our actors, our playwrights, our authors or our artists for their recent successes. There was nothing to welcome the blockbuster achievements of exhibitions at our great museums and galleries, no words of encouragement and nothing to thank the sector for the continuing contribution being made to the economy at this difficult time.

To be honest, I was not surprised because that is what it feels like on the ground to those of us that take an interest in, and support, the arts. The sector feels unappreciated and unloved. Regrettably, the Secretary of State has pursued a single-minded agenda of cuts at the expense of any other considerations. He was, of course, one of the first Cabinet Ministers to seek the favour of the Chancellor by offering up cuts in his own department of 20 per cent. This has been followed up by a rushed financial squeeze on the BBC, the axing of the much respected UK Film Council and the closure of hundreds of libraries around the country. As we know, he wants the sector to stand on its own feet, backed up by private giving where necessary, without fully understanding how central the arts are to the future growth of the economy.

The noble Baroness, in her opening speech, quoted some figures on the creative industries' economic contribution. There are a number of ways of calculating this, but even the DCMS website acknowledges that they contributed 5.6 per cent of the UK's gross value added in 2008 and exported over 4 per cent of the total goods and services. Under the previous Government these figures continued to rise. In addition, undoubtedly the main motivation for many overseas visitors coming to Britain is the theatres, concert halls, museums, country houses, festivals and historic buildings. These visitors bolster our economy and create jobs, not only for those employed directly in the sector, but for the hundreds of thousands working in hotels, restaurants, transport and retail outlets.

However, this is not just a debate about visitor numbers and export successes; it also raises issues about the sort of country we want to inhabit. We are all rightly proud of our cultural history, but a vibrant culture is more than just history-it is about the way we live now. Our lives are enriched by the artists, designers, writers and composers who are working today. As my noble friend Lady McIntosh highlighted, these are not born successes but need opportunities to build and develop from small-scale local theatres, galleries, studios and publishers. They often need grants or loans or funds to help them break into the sector, and they need encouragement from a young age to develop their imagination and creativity.

A number of noble Lords have referred to education in the debate. There is nothing I have read in the Government's education plans that leads me to believe they understand the need for creativity in education. Michael Gove prefers formal teaching and a concentration on learning facts and dates. As several noble Lords have said, the English baccalaureate does not include one creative subject: art, design and music studies are sidelined. It was reported in the press at the weekend that applications to do creative art and design courses are down 27 per cent, and universities report that many of their humanities courses are under threat of closure. We are in danger of squeezing out the creative forces that make Britain unique.

It is time that we took a cold hard look at what the UK economy will look like in 10 or 20 years' time. What will be our unique selling point? What will be our fields of excellence in the global economy? Many of our industries and services can no longer compete with the continuing expansion of the Asian economies. What will we have left to sell? We cannot assume that the UK will always maintain its reputation for creative excellence in the world. Other countries are waking up to the need to invest in the creative industries, particularly around design and innovation. It would be all too easy to lose our edge in the global market, and we will not be able to retrieve it.

Meanwhile, for example, we know that the Chinese look upon our culture with respect and admire our heritage and our artistic tradition. Over 100 million students are learning English in Chinese schools. A colleague who is a second-hand book dealer says there is now a vast demand for English textbooks in China. Meanwhile, India has the second-highest number of English speakers of any country in the world. We need to capitalise on these trends so that we have something of value to exchange in the global marketplace of the future. I hope the Government wake up to these needs and demands.

A number of noble Lords talked about needing to avoid shopping lists in the debate, so I have a simple request-a simple expectation-which is that I hope the Minister will agree to have a word with her boss about how he might signal to the arts in this country that, belatedly, they are loved and valued again.

1:08 pm
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The Earl of Glasgow (Liberal Democrat)

My Lords, I too congratulate my noble friend Lady Bonham-Carter on not only setting up the debate but also her important speech, which I hope will be followed up or taken very seriously by the Government. I also congratulate the noble Viscount, Lord Colville, who is not in his seat at the moment, on his maiden speech. It looks as if he is going to be a great credit to we rather sad number of beleaguered hereditary peers-there are not many of us.

I want to say a few words about the British film industry, particularly because I bring tidings of good news at a time when there seems to be a diet of bad news. The British film industry is bucking the trend. In fact, 2011 could be the British film industry's most successful year of all time. Already this year, $3.3 million of foreign sales have been achieved, and £311 million in domestic sales. This has been caused by a certain number of films that have come out this year. Practically everybody has seen "The King's Speech", which was very successful: it won 65 awards, including four Oscars and seven BAFTAs. It was only beaten by another British film three years ago, "Slumdog Millionaire", which got eight Oscars and 104 awards. Rather surprisingly to some of us, "Tinker Tailor Solider Spy" is becoming a very successful film. It is surprising to me because I thought that people under 40 would not understand or be interested in the Cold War, but apparently it is appealing to them.

The most successful British film in Britain this year is something that I doubt any of us here will have seen, called "The Inbetweeners Movie". It is about a whole lot of young people behaving very badly. It is what is sometimes called-oh dear, I have forgotten the name now, but there is a certain type of word for that particular type of film. It tends to be all about people behaving badly. What is the word for it? I cannot remember now.

Photo of The Earl of Glasgow

The Earl of Glasgow (Liberal Democrat)

No. There is a word for it. Damn it; I should have written it down on my bit of paper but I did not.

Anyway, "The Inbetweeners Movie" has made £45 million at the British box office, which is an extraordinary achievement. Another film, which got very bad reviews and has been running for two weeks-I doubt whether any of your Lordships have seen it-is called "Johnny English Reborn" and, of course, stars Rowan Atkinson, who is incredibly popular. That may be one of the reasons it has already got £17.5 million in two weeks. These are quite extraordinary amounts. It is rare that the British film industry does as well as this.

There is also what they call an art film, which is very depressing and gloomy but very good, called "We Need to Talk About Kevin", which came out two weeks ago. That has already taken £1.5 million in Britain. It is strange and surprising for an art film to achieve that.

The most extraordinary film this year is the documentary "Senna". I am told that it has made more money than any other feature documentary in British history. It has already made $3 million, which is amazing for a documentary.

Noble Lords have already heard, so I am not going to talk much about it, that British film studios have never been busier; they are doing very well indeed. Also, of course, a lot of foreign companies are coming over to Britain to make films in this country. An interesting one with Brad Pitt was happening up in Glasgow, which for one weekend suddenly was made into Detroit, which was very strange. Glasgow was completely closed down. In 2012, £935 million will be spent in Britain.

Film can be judged in three different ways. It can be judged as an art form, it can be judged as entertainment, and it can be judged as an industry. As an art form is how I judge it most, as the French have always done. As an entertainment is probably how most noble Lords will think of film. As an industry, of course, it is very important to our economy, which is one reason that we are talking about these things at the moment. It employs many people. British technicians are widely regarded as the best in the word. However, can this present success really be maintained? That is the important thing. There have been many false dawns. There was a time when Colin Welland announced that, "The British are coming!" after the success of "Gandhi" and one or two other very good films. But then it all went pear-shaped with Goldcrest Films, which was once thought of as the flagship of British cinema.

This time, the BFI believes that a successful British film industry is sustainable. After the Olympics, more lottery money will be invested in British films. Traditionally and historically, the film industry always does better in a time of recession. It is currently a success story. When there are so few other silver linings on the horizon, the Government should get behind the film industry, as the French Government have always done with theirs.

1:15 pm
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Lord Bichard (Crossbench)

My Lords, I, too, thank the noble Baroness, Lady Bonham-Carter, for allowing and enabling this debate, and congratulate the noble Viscount, Lord Colville, on his excellent maiden speech.

My early encounters with creativity were no more successful than those of the noble Lord, Lord Bilimoria. My art teacher said that I was the most boring pupil he had ever had; I thought that that was a bit excessive at the time. He went on to describe some of my work as "derivative"; I now realise that that is the biggest insult you can pay to any artist. So it took some recovery from that, but I went on to spend several wonderful years as vice-chancellor of the University of the Arts London, and as chairman of the Design Council. I learnt a lot from that experience. I learnt, of course, about the economic importance of our creative industries, not least in London, which is now vying with financial services as they most important economic sector.

I also came to understand the sheer excellence of our creative industries, which are quite simply world leaders. Since we rarely mention fashion in this House, let me mention it as an example. Fashion designers like Hussein Chalayan, Paul Smith, Vivienne Westwood, the late, lamented, Lee McQueen, Stella McCartney and Phoebe Philo dominate the world of fashion.

I also began to appreciate the way in which our creative industries define the UK in the eyes of the world. For many overseas, it is what we stand for. I came to understand the huge impact which our creative industries can have on individuals. I often say that the film which changes my professional life was Ken Loach's fantastic "Kes". I vowed, having watched "Kes" and the way in which Billy Casper was dealt with by public services, that I would never want to lead a public service that dealt with anyone like that. Of course, we all understand, and I learnt, the huge impact that the creative industries can have on the quality of people's lives, transporting them from the mundane to the magnificent. In every possible way, the UK would be poorer if it failed to sustain the success and the quality of its creative industries. Our competitors and those who admire our country and culture would be astonished if we allowed that to happen.

Yet that is exactly what is now in danger of happening. Art and design education, on which the success of our creative industries is in many respects built, faces a perfect storm of initiatives and policies which threaten its future and, therefore, the future of our creative industries. It is there that I want to focus my attention. I make no apologies for doing that; it has been mentioned by several other noble Lords today, but is so important that it bears repeating. If we are honest, in our schools, the development of creative skills and the appreciation of the creative arts have had a chequered history. Currently, the renewed emphasis on the traditional academic subjects and knowledge sometimes seems to be at the expense of the creative subjects. As others have mentioned, the introduction of EBacc has caused many schools to rethink their curriculum, and they no longer see the creative arts as having a pre-eminent place. Why is it that, in the recently introduced Scottish Curriculum for Excellence, the expressive arts are seen as one of its eight curriculum areas? In contrast, in England I have heard few Ministers for Education since the election even advocate the importance of creative art education. The review of the curriculum may well see design and technology lose its status as a compulsory subject.

The position is even more grievous in higher education, in which hitherto Britain has undoubtedly led the world. A series of policy initiatives, which individually might be justified, together pose very serious threats for the future of art and design in higher education. Higher fees for students may be unavoidable, but they hit art and design students particularly hard. Many who come from state schools and working-class backgrounds, in addition to the fees, have to bear the cost of making artefacts for assessment or funding their final shows. The loss of teaching grants means that all costs have to be met from tuition fees, which barely meet the cost of course delivery let alone provide investment for the expensive kit that is now needed, such as body scanners for fashion schools and foundries, and rapid prototyping equipment.

Finally, the fact that international postgraduate students are no longer able to work for two years after completing their Master's course means that Britain is now a much less attractive destination. Art and design colleges need those students not just for the money but because they bring the rich cultural mix that is so important to successful art and design education. Is it not ironic that all this is happening just at the time when our global competition has realised the critical importance of art and design education and is investing so heavily in those subjects?

The problem with success is that you can begin to think that it is inevitable; but it is not. Our creative industries matter, they depend on the quality of our creative education, and we are in danger of seriously damaging that.

1:21 pm
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Lord Shipley (Liberal Democrat)

My Lords, I, too, thank my noble friend Lady Bonham-Carter for initiating this debate, in part because it gives me an opportunity to speak about the impact of creative industries on north-East England; and here I declare my board membership of One North East, which pump-primed quite a bit of it.

Last Friday, Radio 4's "Any Questions?"was broadcast from Hoults Yard in the Ouseburn Valley, on a tributary of the River Tyne in the centre of Newcastle. It used to be the home of Maling pottery, it then housed the Hoults family removal business, and now it is the heart of a major renaissance in the creative industries, with 50 businesses generating some 400 jobs. The Ouseburn Valley and Hoults Yard are living testament to the potential of creative industries to regenerate old industrial areas. Hoults Yard, of course, is part of a more buoyant general growth in the north-east's creative industries which recorded a 37 per cent increase in gross value-added in the five years from 2005 to 2010 and now contribute £90 million to the north-east's economy. The core creative sector's growing importance is reflected in the fact that there are 25 per cent more companies and 15 per cent more people employed in the sector than there were in 2005. Overall, there are some 6,000 companies in the creative sector in the region, with 1,000 now in the core creative sector.

How can this be built on? A good example is based in the Ouseburn Valley: Northern Film & Media, a creative industry development agency with the vision to create a strong commercial creative economy in the north-east by commercialising talent and ideas. To date, it has generated £4 for every £1 of public money invested, and aims to provide the link between talent, experts and the market using seed investment, leverage, industry expertise and partnership working to make an impact in film, television, games, web, mobile and music. I hope that experience, and expertise and that of similar organisations elsewhere in the country, can be built on, given the establishment of the Creative Industries Council and the Creative Industries Network and their aim to boost growth.

The creative sector in the north-east is part of a much wider cultural renaissance. I pay tribute to the Vision of Gateshead, The Sage Gateshead and the Baltic art gallery, where recently many thousands of people queued on the first five days to see the Turner Prize exhibition. On the Newcastle side of the river, there has been major capital investment in theatres, dance, film, the centre for children's books, and museums, all of which have contributed enormously to changing the imagine of Tyneside and its industrial heritage and generate wealth both directly and indirectly.

What do we need to do now to increase the potential for our creative industries? First, to grow, some firms need more help and advice to overcome barriers to growth-how to win contracts, how to secure skilled workers and how to access finance, particularly bank loans and venture capital.

Secondly, there is the role of the BBC from Manchester as it moves increasing north. There is clear research evidence that the growth of creative and cultural industries in Bristol and Manchester has been supported by the extent of commissioning by the BBC. I hope we can ensure that the move to Salford Quays is genuinely accompanied by an increase in commissioning across the whole of the north of England, because it could make a very significant difference indeed.

Finally, I turn to the importance of the universities because they create a strong pool of potential talent. Joining the needs of companies, particularly those requiring high-level skills, with the courses that are being followed at those universities is extremely important, because working together they help to drive commercialisation and expansion. Of course, many northern cities have large numbers of incoming students. Indeed, one of the causes of successful regeneration of cities across the north of England has been the large number of students who come to undertake courses and then stay on. Getting them to stay in those cities on graduation, to set up businesses or to join other businesses makes an enormous difference to the speed and extent of growth in those cities.

Creative industries account for some 5 per cent of the UK's economy. The figure is broadly similar in parts of the north. It is a bit lower than 5 per cent across the north-east as a whole, but it is rising. However, it is clear to me that, with proper nurturing, our creative industries sector, both across the UK and in my region, can grow so much further.

1:27 pm
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Lord Colwyn (Conservative)

My Lords, I, too, thank my noble friend Lady Bonham-Carter for initiating this debate. I take this opportunity to remind your Lordships of the significant contribution of jazz to economic, educational and cultural life at all levels. I declare an interest as co-chairman of the All-Party Jazz Appreciation Group. We are hosting the start of the London Jazz Festival with some live music on the Terrace next Wednesday. I am also a very occasional player, a patron of the National Youth Jazz Orchestra and a member of the Musicians Union.

There is an active jazz scene in all major UK cities. Musicians with established reputations and young musicians, many with great flair and originality, seek a serious audience that can understand and enjoy their music. They perform in a variety of settings, from pubs, clubs, arts centres, hotels, ballrooms, village halls, restaurants and local arts festivals to high-profile events at the nation's most prestigious concert venues. Many UK jazz musicians have developed international reputations for live performance and have recordings that are seen and bought by a worldwide audience. Every year there are jazz festivals all over the country, many featuring some of the finest jazz musicians in the world. More than 3 million people patronise these events, with five times that number expressing a definable interest in jazz.

While jazz continues to attract these audiences, 80 per cent of jazz musicians earn less than £25,000 a year. This is not helped now by the current economic climate, when there seems to be an increasing public reluctance to pay for music. Yet falling CD sales in a download culture are having a smaller impact on jazz income than might have been expected, and ticket sales and public and private subsidy have all showed modest but significant increases.

There is a thriving small-scale recording scene among British jazz musicians with widespread and growing use of the internet to sell recorded music. A different kind of jazz venue has emerged, located in a church, library, museum or community centre in response to the red tape challenge to pub gigs imposed by the new licensing laws. Jazz festivals have also expanded and brought new money.

My noble friend Lord Clement-Jones has been successful with his Live Music Bill, which has completed its passage in this House, but the current situation over the licensing of live music, which has such a detrimental effect on young musicians, is utterly confusing. Licensing Minister, John Penrose, has described live music restrictions as "mostly bonkers red tape" and suggested that plans to cut red tape for live music are essential but out of his hands and dependent on consent from the Department for Work and Pensions and the Home Office.

The only arguable justification for a licensing regime pre-emptively criminalising the provision of live music, subject to prior consent from the public or the local authority, or both, is where there is the potential for a significant negative impact on the local community that cannot be adequately regulated by existing legislation. This is clearly not the case for the vast majority of small gigs taking place within reasonable hours. It is gradually becoming clear that the red tape is being retained for small gigs in bars and restaurants under the Government's sweeping "deregulation" proposals published in September.

It would be helpful to have a definitive statement on licensing and small venue exemption. Even if the entertainment licensing requirement is abolished, it seems to me that live music licence conditions will in fact remain in pubs, bars, restaurants and any other premises with an alcohol licence, however small. Such conditions often include restrictions on performer numbers, genres, times or days of performance, with the onus on the licensee to pay to apply to have these removed. It can cost £89 for a minor variation or several hundred pounds for a full variation, with the final decision remaining with the council. The promise is to get rid of the red tape. The Live Music Bill of my noble friend Lord Clement-Jones represents the only genuine deregulatory measure in the legislative pipeline for small-scale performances of live music. Earlier this year, I asked my noble friend the Minister whether she could clarify this situation. May I repeat my request for clarification?

The annual turnover of the jazz sector of the British music industry is in excess of £88 million. The report by Jazz Services, as part of its Arts Council development project, found that sales of CDs through shops, websites and at gigs reached almost £40 million, while ticket sales for jazz concerts and festivals were worth £22.5 million. That makes it an important creative industry and one that would benefit from an understandable licensing policy.

1:33 pm
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Lord Macdonald of Tradeston (Labour)

My Lords, as I recall, the term "creative industries" was first coined by the new Labour Government back in 1997 to define activities that deserved strong support. The subsequent growth over the years until 2010 was, I believe, among the finest achievements of Labour in power. No doubt this debate-I congratulate the noble Baroness, Lady Bonham-Carter, on initiating it-will help make the measure of Labour's success more familiar to your Lordships.

The creative industries now provide more than 2 million jobs and their growth rate over the past decade has been nearly twice that of the economy as a whole. Indeed, Labour's legacy is that the UK now has the largest creative sector in Europe, and perhaps the largest of any country in the world relative to GDP. Yet what we see now is that success being threatened by cuts across our creative industries: witness the 20 per cent cuts imposed on the budget of the world's most respected broadcaster, the BBC; the abolition of the UK Film Council; the failure to incentivise the video games sector; the cuts suffered by the Arts Council and the lack of progress on the protection of intellectual property in our creative industries.

Like the noble Baroness, Lady Jones, and other noble Lords, I fear that the foundations of creativity are being undermined in our schools. In schools the Conservative focus on so-called traditional subjects will be at the expense of more socially useful, creative and cultural subjects. Does the Minister recognise the transforming role of creative activities in encouraging the assimilation of many young people from disadvantaged communities into the mainstream of British life and culture? This educational process has brought great vitality, breadth and diversity to our hugely successful cultural sector, yet in higher education government reforms will hit the arts and humanities hardest. Design and media courses will suffer, especially in those universities in deprived areas which recruit from lower-income families. These are not policies that encourage our creative industries.

However, the Government deserve credit for investing in success in one sector of great significance-the digital economy. We know the astonishing success of the digital cluster in California's Silicon Valley. Now Britain's digital businesses are being encouraged to cluster just next door to London's most famous existing cluster-that of financial services in the City of London, which is beleaguered at present but still of great importance to the UK economy and world markets. As befits a truly global city, London also has other creative clusters of international renown in television, journalism, publishing, advertising, marketing, performing arts, fashion, video, software and digital companies-a cluster of creative clusters.

The Government's commitment to the capital's digital economy is through its East London Tech City initiative, whose hub is Old Street "Silicon Roundabout" in Shoreditch. The initial signs are positive for Tech City with 170 start-up companies attracted last year, 340 start-ups forecast for this year and a new Google headquarters planned at its heart. Oddly enough, as Chancellor of Glasgow Caledonian University, I take a particular interest in Tech City and its adjacent creative clusters. Indeed, we have our own start-up in Tech City. Yesterday, Her Royal Highness the Princess Royal launched our new London campus in Spitalfields. Glasgow Caledonian University is the first Scottish university to open a campus in London. Our postgraduate applicants told us that they liked the creative courses that we offer in fashion, marketing and finance but that they were also irresistibly attracted by the lure of London, with its unique cluster of creative opportunities. Already our overseas applications surpass all expectations. That is a small benign example of the convergence of universities and creative companies in the digital economy promoted by my noble friend Lord Hollick.

I hope the Government come to appreciate all the complex factors that have helped make the UK's creative industries so successful. I urge the Minister to ask the Government's Creative Industries Council to move to repair the damage being done across so many areas of cultural activity. My concern is not just for growth and jobs but for the enrichment that has made life for ordinary people so much more stimulating and enjoyable than it once was in that rather dreary Britain in which so many of us grew up.

1:38 pm
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Baroness Randerson (Liberal Democrat)

My Lords, we should do this more often; that is, spend three hours talking about the creative industries. Indeed, we could spend three hours speaking about each of those creative industries given their importance to our economy. Many noble Lords have talked about the economic importance of the sector. It is worth pointing out that the CBI predicts that by 2013 the sector will employ more people than the financial services industries, although I imagine that the average rate of pay might be slightly lower.

The term "creative industries" came to prominence at the time of the Tony Blair premiership. I am pleased that the noble Lord, Lord Smith of Finsbury, will speak in the debate given the contribution that he made to this sector at that time. Creative industries are a very broad church. It is the strength of the creative industries that they are such. From advertising to fashion and design and from publishing to the arts and music the contrasts within the sector are unlike any other sector of industry and that is its strength. It means that when one sector is not doing so well, another industry will still be motoring on very well indeed.

One of the advantages of the creative industries is that they are often not capital intensive and it is therefore relatively easy to establish a new business. Indeed, the sector is dominated by SMEs, although some sub-sectors are the exception to that. Publishing, for example, involves very large businesses. Creative companies of similar types tend to cluster together to feed from each other and to establish concentrations of specialised skills. When I was Minister for Culture in Wales for three years, I recognised the immense potential of the creative industries in a country which continues to suffer from the decline of its manufacturing. As a result I produced the first strategy for Welsh culture and the creative industries called Creative Future. That was as much about economic development as national cultural identity. I wish to pay tribute to the tremendous contribution of the noble Lord, Lord Rowe-Beddoe, to the achievements that we had following that strategy. The noble Lord, Lord Rowe-Beddoe, has spoken about the importance of the creative industries to Cardiff but it is important to emphasise that Cardiff has the largest concentration of media employment outside London with the big broadcasters BBC, ITV and S4C, of which your Lordships have heard a great deal recently. We also have a cluster of content-driven providers, including in animation, design, gaming, TV production, film and music. The Drama Village has been mentioned. It is one of the interesting pastimes of citizens of Cardiff to watch "Doctor Who" in order to spot the streets they know masquerading as being from another world. The important thing is that there are 7,000 workers in Cardiff engaged in the media sector. That is 3.5 per cent of the workforce and it is growing rapidly.

With so many of the creative industries heavily dependent on IT, it is a major problem in Wales that broadband speeds are still so poor across much of the country, as indeed they are in Scotland. I draw noble Lords' attention to the report out this week from Ofcom on the broadband network which has highlighted this problem of very low 3G speeds in Wales and Scotland. I urge the UK Government to work closely with the devolved Administrations to overcome these problems. Throughout the world the ebb and flow of economic prosperity depends in large part on the speed with which each country can seize the technological initiative. The economic prize goes to the area which picks up the newest technology and runs with it, so it is vital that we stay ahead and lead the field. Our video games industry, which has been mentioned by several noble Lords, is the largest in Europe with a projected growth of 7.5 per cent over the three-year period ending in 2012. It has many thousands of highly skilled jobs and 80 per cent of employees in that industry are graduates. But there are still problems with the skills that our young people are being provided with not being relevant to that industry. I repeat what many noble Lords have said about the importance of computer science courses-not standard office-based IT courses but courses involving programming and software skills-up to and including university level if we are to stay ahead.

Finally, I wish briefly to mention the importance of providing good finance for these industries. They are not, as Demos has pointed out, risky businesses any more than those in any other sector of the economy.

1:44 pm
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Viscount Clancarty (Crossbench)

My Lords, I, too, thank the noble Baroness, Lady Bonham-Carter, for initiating this important debate. I very much enjoyed the excellent and passionate maiden speech of the noble Viscount, Lord Colville. The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Randerson, mentioned the Demos report, Risky Business, on the creative industries, which has just been published. The title is slightly ironic since the report compiled by researchers close to government and with an introduction by Ed Vaizey seeks to puncture the idea that creative people are primarily preoccupied by their art to the exclusion of a concern for business. Consequently, Demos gives a stronger definition of the creative industries than DCMS in 2001:

"We define the creative industries as businesses that ultimately seek to make a profit through the sale of something that is based on an original creative idea, and the surrounding businesses that enable this".

The Demos report tries to draw a distinction between what it terms "creative businesses", such as Studio Lambert which makes television shows to sell at a profit, and "creative organisations", such as the National Theatre. It quotes the owner and designer of a fashion business as saying:

"You build a company because you have a vision but you also want to make money out of it ... If you don't-there is no point in doing it".

That is a long way from the belief of many artists, including fashion designers, that their work is the prime consideration irrespective of financial gain.

It is useful at this moment in time when there appears to be a crisis in the way the political sphere treats the arts to take a look at the terminology that is being used by both the Government and the Opposition in respect of the arts and the creative industries. I have long held the belief that the worth of art is not through exchange into money or art for art's sake, which is an insular argument, but that the artist's work is itself the contribution to society. What, then, is the relationship between art and the creative industries? Do this Government see the two terms as interchangeable or is "creative industries" a blanket term that contains, or has perhaps even subsumed, the arts? Does the new shadow Culture Minister Dan Jarvis's repeated use yesterday on his blog of the term "arts and cultural sector" signal a differently nuanced approach from the Opposition? After all, "creative industries" was a term which emerged partly in response to the need to democratise the arts and the battle between high and low art is now largely over. These are legitimate questions. David Cameron has pledged to help the creative industries which Demos defines as "strongly market-orientated". This is happening through Creative England. But he has not pledged to help the arts unless they are prepared to become businesses and creatives. I say this with great respect for the significance of the commercial sector. It is impossible to seal off the creative industries from the significant background story of continuing cuts to the arts. As ever, it is outside London where the cuts are felt most. The noble Lord, Lord Shipley, has pointed out that the Baltic in Gateshead has had huge crowds to see the Turner Prize exhibition. Entrance to the exhibition is free and that is an investment in the future. That prompts me to ask the Government: are they still committed to free admission for the national museums, considering that the National Maritime Museum continues to charge for some of its sites?

The distinction should be kept and preserved between those art forms which are inherently commercial and those which are not commercial-either because they are not yet commercial or because they never should be commercialised-whether we are talking about the BBC or small performing companies. The non-commercial, subsidised arts, when properly funded, provide a public space or arena, both geographical and mental, in which the public meet and where artists are able to experiment and have the right to fail, as Julie Walters pointed out in the Guardian this week. But if we remove this non-commercial component of the landscape we greatly narrow our horizons and impoverish the culture as a whole.

It is true that the success of the commercial creative industries depends, and has depended in the past, on the subsidised arts and other areas, as countless rock stars and fashion designers have confirmed. A good example of this creative symbiosis is the hugely commercially successful Frieze Art Fair started in 2003, which was made possible only by the opening of Tate Modern. Tate Modern has also benefited from this relationship, not least through purchases from the fair. By the same token, recent cuts to the subsidised sector, such as S4C, have resulted directly in 10 per cent cuts to the staff of Boomerang, one of the largest independent production companies in Wales.

I want to make it clear that my defence of a subsidised sector for the arts is not a rearguard defence of old technology opposed to new. The great majority of artists, as the Design and Artists Copyright Society backs up, strongly supports the proper teaching of ICT in schools, as the noble Lords, Lord Puttnam and Lord Willis, passionately spoke to during proceedings on the Education Bill last week. The Government also need properly to reassess their commitment to the teaching of the arts and creativity at both school and higher education level, a topic that is worthy of a debate on its own. Whatever money the Government allow for the newer industries will in the end mean much less if those industries are not supplied with a workforce that is untrained and unknowledgeable.

Many of the most interesting artists of today are able to arm themselves with a panoply of techniques. It is true, too, that the art, music and fashion scenes have been hugely invigorated by students from abroad. Wolfgang Tillmans, Tomma Abts, both of whom are Turner Prize winners, and more recently Thomas Zipp, are just some of the remarkable artists who spring to mind. The current Government's insular attitude towards foreign students may well, unfortunately, change this.

1:51 pm
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Lord Sharkey (Liberal Democrat)

I, too, thank my noble friend Lady Bonham-Carter for providing the opportunity to debate such an important issue, and I congratulate her on her forceful and insightful analysis of the creative industries and their contribution to the life of the United Kingdom.

I will focus my remarks on one particular sector of our creative industries: advertising. In April this year Alexandra Albert and Dr Benjamin Reid produced a report under the auspices of the Work Foundation, entitled The Contribution of Advertising to the UK Economy, acreative industries report. The executive summary of this report says, in part:

"The advertising industry has been a UK success story for much of the 20th century, developing as a base for globe-spanning organisations, and taking a central role in the broader creative industries sector. The 21st century advertising industry makes a major contribution, both directly and indirectly, to the UK economy".

The figures, as we have heard this morning, bear that out. The creative industries as a whole represent 8.7 per cent of all UK businesses and employ 1.3 million people. As the noble Lord, Lord Macdonald, pointed out, the creative economy represents a larger percentage of GDP in the UK than anywhere else in the world. It is twice as big as its nearest competitor in Europe. Paradoxical as it may seem, the advertising sector is in many ways an unsung hero of the UK creative economy. Its products are highly visible but the industry itself is often not. This is in part perhaps because the industry has a strong tradition of self-reliance and self-regulation and does not attract or seek public subsidy.

In fact, the Secretary of State for Culture, Media and Sport addressed a gathering of senior advertising people recently and spoke eloquently and forcefully about the importance of the creative industries without once mentioning advertising itself. Advertising is a driver of growth in the creative economy. Its gross value added-at around £7.8 billion in 2008-was bigger than the film, TV, radio and designer fashion sectors combined, and does not include the multiplier effects of indirect and induced economic impacts.

Other than the public purse and the BBC, if those can be said to be two different things, the advertising industry is the single biggest funding stream for the core arts, the film production and post-production industries and the cultural industries such as commercial TV and radio. According to the Institute of Practitioners in Advertising's Bellwether report last month, every year around £30 billion of marketing and media money circulates around the UK economy. For every £1 spent, company turnover increases on average by £3 to £5, and profitability by £1.50 to £3. These are truly remarkable figures and show clearly the key economic significance and contribution of the UK advertising industry.

Advertising in the UK has another less direct effect. It provides access to corporate brand budgets, which can be and frequently are directed towards the funding of music venues, film and book festivals and independent programming. Without advertising, ITV and Channel 4 would not be in business, and nor, perhaps slightly more equivocally, would the Millennium Dome. Of course, the diversity, range and freedom of our press would be directly threatened. All this is to speak about the quantitative aspects of our advertising industry.

The qualitative aspects of the industry are just as important, perhaps even more important. I am not entirely impartial here and should perhaps declare a by now somewhat historic interest. I have spent 30 years of my commercial life working in and around the advertising industry. I am proud to have been managing director of Saatchi & Saatchi here when it was the largest advertising agency in the world and producer of the highest quality creative work. But even allowing for a slight partiality, I believe it is true that we have here in the UK one the two best advertising industries in the world. External rankings consistently put the US or the UK in the No. 1 or No. 2 positions. Given our relative sizes, this is a truly astonishing achievement. In the UK, the advertising industry is a truly world-class industry.

The advertising industry has undoubtedly been very successful in the UK, but as with other leading creative industries it faces new and very fierce challenges. The Work Foundation report notes that:

"It is likely that the global centre of advertising creative and production gravity will continue to shift away from the western countries and towards the BRIC and SE Asian markets".

The industry is alive to this challenge and so I believe, very largely, are the Government.

The industry is proactive in positioning itself as a creative and innovation hub to the largest and fastest growing companies in emerging markets, with a view to encouraging them to take their brands global. For example, the Institute of Practitioners in Advertising has just launched a new consumer R&D service in China. Speaking of China, the number of IPA member agencies with offices in China has risen from 23 to 62 in the past three years. With the active support of the DCMS and UKTI, the industry runs trade missions to promote our skills, our expertise and our companies. There was a mission to China at the end of September, and there will even be a mission to Silicon Valley and Hollywood, which is due to leave next week.

The UK is a collection of world-beating industries. Our future prosperity will depend more and more on our ability to sustain and develop our creative leadership in advertising as in all creative industries. As someone who has dealt professionally with creative people for 30 years or so, perhaps I may close by saying to my noble friend the Minister that I have always found it useful when dealing with creative people to bear in mind two key principles: first, be very supportive, especially at an earlier stage; and, secondly, keep well out of the way.

1:58 pm
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Lord Smith of Finsbury (Labour)

My Lords, I warmly congratulate the noble Baroness, Lady Bonham-Carter, on securing this important debate, which has led us into a fascinating and illuminating discussion from all parts of the House. I have a especial word of congratulation for the noble Viscount, Lord Colville, on a very moving and interesting maiden speech. I should, of course, note a number of interests: I am chairman of the advertising standards authority, a non-executive board member of Phonographic Performance Ltd, and the person who has been asked by the Government to lead the review of policy on the film industry that is currently under way.

When I became Secretary of State at DCMS in 1997, and looked at the creative sector of the economy-those activities that depend for their economic value on the product of individual creative skill and talent, ranging from music film and the high arts at one end through to advertising, architecture, design and many other enterprises at the other-I sensed that this was a body of activity that was not just of great aesthetic importance but of huge economic importance to the country. I discovered, however, that no one knew the exact extent of those industries. No one knew what the trends or challenges were or what was happening to them, and more importantly, the rest of Government did not acknowledge that they were important.

The picture has of course changed since then. A lot of work from a succession of Ministers and departments in both Governments has been put into establishing the importance of the creative industries, but perhaps that importance is still not recognised sharply enough. If the Chancellor of the Exchequer is looking for where the growth in the economy is going to come from in the next few years, this is above all the area that he should be looking at. Over the last 20 years, the creative sector has consistently grown at a faster rate of growth than the economy as a whole, and that is still the case. The first and most important thing that a Government can do is recognise that fact and its importance.

Two other things are also vital and both have been touched on in the course of our discussions. The first is the importance of education for the success of the creative sector. That starts with the nurturing of creative spirit in our schools. That does not just mean the chance to absorb, enjoy and develop a passion about dance, drama, the visual arts and the richness of our museums, film and music; it is also about giving every pupil in our schools the chance to play music, to direct a play, to make a movie, to be part of the creative process and not just the enjoyment of the creative process.

We need to ensure the development of skill and talent is taken forward not just in our schools but post-school at higher education and further education level. If we are not training the new generations to become the directors, the designers, the lighting specialists, the wizards at special effects, we are not going to have these industries to cherish at all in the future. Education also needs to consider how to encourage and assist the people who are developing their creative talents and skills to learn business skills as well, because they have to be able to become entrepreneurs as well as hone their creativity.

The second hugely important area in relation to the creative sector is the protection of intellectual property value. This is, after all, where the economic value, the creation of wealth, in these creative sectors comes from. The creator has to be properly remunerated for their talent and skill. I cannot emphasise too strongly how important this is. It is especially important in the digital world where online communication is simultaneously the creator's best friend and potential foe. We need to ensure that value can be properly and legitimately realised and returned to the creator. That is why I urge the Government to press ahead urgently with the implementation of the Digital Economy Act. The Hargreaves report was all very well-Hargreaves got some things right and some things wrong-but we must not forget the Digital Economy Act in the process.

The creative industries add enormously to the wealth of the economy and to the richness of our lives. That needs to be recognised not only in the heart and soul of DCMS-and I know the noble Baroness absolutely understands this-but in the heart and soul of the Secretary of State for Business, the Secretary of State for Education, the Chancellor of the Exchequer, and the Prime Minister as well.

2:04 pm
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Lord Stevenson of Balmacara (Labour)

My Lords, I thank the noble Baroness, Lady Bonham-Carter, for securing this debate. As the noble Lord, Lord Grade, quipped, at a time of bad economic news it is a chance to celebrate a success story, and not just in TV. As the noble Baroness, Lady Randerson, said, the time has passed far too quickly and we could have gone on for much longer to discuss this. I also add my congratulations to the noble Viscount, Lord Colville, on his excellent maiden speech. I think it is one of the best of the year. It was gracious and wove personal experiences with wider perspectives, elegantly moving from a wide shot to a tight close-up when he pressed the case for looking again at internships and the whole question of cherishing our talent in this sector.

It is about two years since your Lordships House last discussed this topic, when my noble friend Lord Bragg introduced a similar debate. As then, we have had a very high quality discussion, much enhanced by the contributions from noble Lords with direct experience in these industries, as well as from those with a passionate engagement with the sector. The main themes that seem to have emerged this morning are: a continuing concern to improve skills and training; worries about the way creativity is being squeezed out of the core curriculum, with particular reference to the EBacc; a decline in the arts and creative courses being taught in higher education because of the cut in the teaching grant; the need for an appropriate solution to stimulating finance for these high risk businesses, not that they are any more risky than others, but the risk is of a different quality-it is a "hit" industry that needs specific attention; how deregulation of the BBC and ITV might help; the need to preserve diversity on and off screen; the need to preserve live music and the performing arts more generally as the seed-bed of all these creative industries; and, as we have just heard, concern about preserving and ensuring that the IP that is created is well used and able to provide a return that is appropriate for its investment.

My noble friend Lord Macdonald of Tradeston raised the question of when the term "creative industries" was actually coined. It was certainly not around when I was working at the British Film Institute in the 1980s and 1990s. It seemed to arrive fully formed in 1997, so perhaps the then incoming Secretary of State, the noble Lord, Lord Smith of Finsbury, had more to do with it than his natural modesty permitted him to say.

Success has many parents so we will probably never know, but by any measure the UK creative industries grew considerably as an industrial sector between 1997 and 2010, sometimes growing at twice the rate of the national average. In London and in several other major cities such as Cardiff, Manchester and Salford, as we have heard, it has become a significant economic sector in its own right and is at the forefront of the UK's international competitiveness. Data show that exports of services for radio and TV, advertising, architecture, film, video and photography doubled between 1997 and 2007, and almost quadrupled in the case of publishing and software, computer games and electronic publishing. Other figures are just as impressive. The sector as a whole saw an average GVA growth of 5 per cent per annum over that period, with computer games and electronic publishing rising annually at an average of 9 per cent, representing an increase in GVA of nearly 200 per cent over the 10 year period.

Mention has also been made of the fact that the UK has a strategic international lead in the production and export of creative goods and services. Although comparisons are complicated, Eurostat data appear to confirm that the UK is now the European leader on most indicators, while UNCTAD data show that this lead extends to the rest of the world, with the UK currently the second world exporter in cultural goods and services after the USA, which is an impressive achievement. However, as has been said in this debate, the UK's position is under threat, with emerging economies in particular showing fast growth in all global sectors as a result of the major priority they gave to becoming new centres of growth for these sectors. In addition, the UK is vulnerable in globally mobile sectors, such as film, and in areas where world leadership rests elsewhere: for example software, which remains dominated by the US, and specialist sectors such as fashion.

Some noble Lords spoke about the wider economic and social challenges facing our country, and one of the main themes that emerged this morning was the need for an economy in the UK that looks and feels very different than what we see today, with more opportunities for more people to get better jobs in good companies. There is every reason to believe our cultural industries can play a major part in this recalibration. If that is to happen, we need an active intelligent Government who support an industrial strategy to foster good, high growth, high productivity companies that create great jobs. The challenge, and the opportunity, is significant. We need to equip ourselves with an understanding and commitment to those things that will drive creative, competitive success in a global context.

The last Government can be proud of their record on the creative industries. They recognised that the creative industries would quickly become an increasingly vital source of skilled jobs and economic growth. The coalition Government have said repeatedly that they view the creative industries as key drivers of jobs and growth, but on a number of critical issues they have been accused of failing to respond to the challenges threatening the future strength of the sector.

I will give three or four examples. The announcement of a creative industries council in the last Budget was welcomed, but it remains to be seen whether it is just a talking shop or a focal point for action in areas other than training and skills. This seems to be the one area that is making good progress, although it is hampered-as the noble Lord, Lord Clement-Jones, said-by the fact that there are two sector skills councils operating in a limited space when perhaps Skillset should be in the lead.

Why has there been such a delay in the rollout of universal broadband and a lack of progress in implementing the Digital Economy Act? As many noble Lords argued, intellectual property is at the heart of all that the sector has to offer and do. It must be supported. The Government's higher education plans are resulting in significant cuts in art and design education, and the changes to the EMA are denying many young people the chance to develop education and training opportunities linked to the creative industries. Britain's immigration rules are making it difficult to bring in artists and performers to study, perform and teach. Something must be done about this.

There must be some doubt about whether current government policies will nurture talent, foster growth and widen opportunity in the cultural industries. Clearly, DCMS cannot do this on its own. It is a cross-departmental challenge that requires bold leadership from DCMS. As the Minister is about to respond, perhaps I may suggest that these are the key questions that she and the department should address.

The skills required for the creative economy are changing. We must assess the suitability and impact of current schools policy for the creative industries. Can DCMS re-engineer the relationship between our education system and our support mechanisms for arts and culture so that we grow and nurture talent for the creative economy? The UK has a strong talent base but lacks some of the technical and business abilities required for a digital era, particularly if we want to see more microbusinesses grow. Can the DCMS bring forward an apprenticeship scheme, building on the work of the BBC in Wales that was described by the noble Lord, Lord Rowe-Beddoe? It might be tailored more appropriately for companies operating in the creative economy.

A major challenge for public policy is a shortage of risk capital for creative companies in the content sectors. There will be inevitable consequences for UK competitiveness if we fail to address those issues successfully. My noble friend Lord Hollick drew attention to the predisposition towards debt finance. This structural weakness prevents us from acquiring or owning the economic benefit of creative output, and confines us often to service company status. Will the DCMS work with the Treasury to ensure that appropriate new schemes to bring in risk capital are introduced, and to ensure that the current support through the tax system is not curtailed by the threatened introduction of new eligibility rules? Thirdly and finally, what can DCMS do to widen the UK creative talent pool? Without that, there may be significant detrimental impact in the longer term on a sector that prides itself on the generation of diverse creative content.

The Government need a coherent strategy for the creative industries. They are a key sector for jobs and growth, and the UK needs a framework that underpins confidence, investment and innovation. British young people in the creative sector have extraordinary talent. We must make it as easy as possible for them to flourish, if only to aid growth. I look forward to the Minister's response.

2:13 pm
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Baroness Rawlings (Conservative)

My Lords, I start by adding to the sentiments of all noble Lords who spoke in appreciation of my noble friend Lady Bonham-Carter having given us the opportunity to discuss the role of the creative industries in the United Kingdom. As we heard, not since the debate on the same subject in June 2009, secured by the noble Lord, Lord Bragg, have we been able to debate at length the importance of their impact. In 2009, it was clear that there was a vast knowledge and commitment in your Lordships' House; today, it is evident once again that your Lordships are as passionate and committed as ever to the creative industries and their contribution to the UK economy.

Perhaps I may especially commend the maiden speech of the noble Viscount, Lord Colville. It was delivered with great modesty. He highlighted the issue of unpaid internships, which is certainly a pressing challenge for these industries. The key will be to find a balance between making these valuable opportunities available to young people and making certain that they are not exploited and that these are genuine learning experiences. It is already clear that your Lordships' House will benefit from the noble Viscount's wide experience in areas ranging from his work as a BBC producer on "Newsnight" in Moscow during the collapse of the Soviet Union to his current projects, one of which is a programme about the physics of the climate. We wish him luck and look forward to hearing him very frequently in this House.

My noble friend Lord Grade, in his eloquent and naturally well informed speech, raised an important point about television advertising and the continuing competition remedy known as contract rights renewal. CRR has formed a major part of the recent Communications Select Committee's inquiry and subsequent report on the regulation of TV advertising, which we will debate later today. I hope that my noble friend might be able to speak in that debate as he knows so much about the subject. My noble friend also raised the issue of "must carry". I relished the reference to Ongar, which was part of my old Essex South West constituency, being "one station beyond Barking". A number of responses to the Secretary of State's open letter on the communications review raised the issue of transmission charges paid by the BBC and other PSBs to satellite operators. No doubt we will consider the issue in the communications review Green Paper.

I listened with great interest to my noble friend Lord Black's concern about the local press. The question we must consider is whether one reference decision by the Office of Fair Trading is enough to undermine the whole merger regime. Obviously this appears not to work for local newspapers, and I believe that the answer should be no.

The noble Lord, Lord Smith, answered many noble Lords' questions regarding the film industry's role within the creative industries. We are grateful to him for chairing a body with an eight-strong independent panel of industry experts. I will come back to further points made by the noble Lord later.

In answer to the question of my noble friend Lord Clement-Jones about economic contribution, the UK's creative industries are part of the digital economy to which we can look with confidence for growth in future. In these challenging economic times, that makes them particularly important. I will mention later what the Government are doing on this. However, the figures speak for themselves: the creative industries contribute 5.6 per cent to the UK economy as a whole-around £59 billion a year; 1.3 million people are employed in creative jobs; and UK creative exports were worth £17 billion in 2008, which represented around 4.1 per cent of all goods and services exported. Over the past decade, the creative industries have grown faster than the rest of the economy. Recent forecasts by PricewaterhouseCoopers suggest that the UK entertainment and media market will grow by an average of 3.7 per cent per year for the four years to 2014, compared with 2.6 per cent over the same period for the economy as a whole.

My noble friend Lord Fowler asked whether BBC Worldwide should be considered in the forthcoming communications Green Paper. We are discussing this and I hope that the Green Paper will be produced soon. It will look at whether any change is needed to the law. The Communications Act 2003 has held up well, but we need to give it a proper check-up, which will take into account works such as Hargreaves and the Leveson inquiry.

I would like to outline just a few areas where the UK has demonstrated its particular strengths. The status of English as a global language has made the UK a world leader in creative content, giving UK producers a huge advantage in global markets. This is illustrated by the strength of our publishing and music industries, and the value of TV programming, both at home and especially in export sales. In 2010, the UK strengthened its position as one of the only two net exporters of music, growing its trade balance three times faster than the US. British talent is behind many iconic, globally successful games titles too. I am told that these include "Grand Theft Auto" and the UK online video game "Moshi Monsters", now with 50 million users and one of the fastest growing children's entertainment brands in the world.

Among other topics, my noble friend Lady Randerson, the noble Earl, Lord Clancarty, and the noble Lord, Lord Bichard, mentioned the importance of fashion. I agree with them. The UK is at the cutting edge of international fashion and this year industry forecasters named London Fashion Week the number one fashion week in the world, overtaking Paris, New York and Milan. The noble Lord, Lord Bichard, referred to Vivienne Westwood. She even designed the graduation robes for King's College, London.

Britain is one of the few countries in the world to have not one but five dedicated PSB broadcasters: BBC, ITV, Channel 4, channel Five and not forgetting S4C. British television produces programmes that are popular around the world, such as "Doctor Who" and "Downton Abbey".

My noble friend Lord Razzall talked of our success in Cambridge. He is right about our many creative industries there. As we heard on the "Today" programme this week, ARM Holdings, a global company with its headquarters in Cambridge, is the world's leading semi-conductor intellectual property supplier and as such is at the heart of the development of digital electronic products. We need consistently to work to maintain these successes, and continue to retain our share of the growing global market, estimated by UNCTAD to be worth nearly $600 billion, for creative goods and services in an increasingly competitive world.

I can reassure the noble Baroness, Lady Jones, that the Government and especially the Secretary of State fully understand the importance of the arts, both culturally and economically. I suggest that the Arts Council's settlement was not bad in the current circumstances. I am sorry that the noble Baroness, Lady Jones, felt a need to criticise the Secretary of State. Perhaps she needs to improve her computer skills as both the Secretary of State and the Minister Ed Vaizey are constantly producing new ideas and are on the wavelengths. As our Secretary of State Jeremy Hunt set out in his superb speech at the Royal Television Society conference this year, which is on the web, our first priority must be to capitalise on the extraordinary opportunity presented by our digital and creative industries to drive economic growth.

The noble Lord, Lord Bilimoria, wanted to know whether the Government had given this area top priority. I can say to him yes. In March this year ThePlan for Growthincluded a package of support for the digital and creative industries. These measures are designed to achieve strong, long-term, balanced growth that is more evenly shared across the country and between industries. The Government have established the Creative Industries Council to be a voice for this most important area, and to be a place where Government and council members, who are leading figures drawn from across the creative and digital industries, can work together to tackle barriers to growth facing the sector.

My noble friend Lady Benjamin stressed the challenges identified by the council, including lack of access to finance, skills shortages, the need for better access to export markets and the need to improve the intellectual property regime. I know of the noble Baroness's preoccupation with children's programmes and I note her concerns. We have discussed this frequently and no doubt we will come back to it. The council has established working groups on skills and access to finance as a first priority and it will report in 2012, so I agree with the noble Lord, Lord Bilimoria, and the noble Lord, Lord Hollick.

My noble friend Lord Clement-Jones rightly lays emphasis on skills. In tandem with the skills working group of the council, a number of actions have been taken forward to improve skills in the digital and creative industries. These include identifying 360 science, technology, engineering and maths-STEM-ambassadors from the creative and digital industries, and encouraging graduates from the sciences, technology and maths to seek out careers in these sectors.

I have great sympathy with the worries of my noble friend Lady Bonham-Carter and of several others about not including the arts, such as music, and computer sciences in the EBacc. This is a matter for the Education Secretary, but it does not stop these subjects being taught in schools.

My noble friend Lady Randerson and several noble Lords were concerned about superfast broadband. Superfast broadband is a key business growth enabler, and £530 million is being invested over the next four years in order to create the best superfast broadband network in Europe by 2015. We heard the other day that one of Italy's problems is that it has fallen behind with broadband compared with what we are doing here. The Government have taken further action towards the goal of making certain that all businesses in enterprise zones have access to superfast broadband by 2015, with Broadband Delivery UK considering and addressing where there are gaps in local broadband plans. I know this is an area in which the Secretary of State is particularly interested.

The noble Lord, Lord Rowe-Beddoe, mentioned the importance of the Hargreaves review of intellectual property and growth, which set out recommendations for how the UK's intellectual property framework can further promote entrepreneurialism, economic growth and social and commercial innovation. The Government published on 3 August its response to the Hargreaves report. This included a commitment to establishing licensing and clearance procedures for orphan works. Government will shortly consult formally on proposals taking forward the Hargreaves recommendations. I am happy to address the noble Lord's concerns on music and congratulate him on stressing the importance of the conservatoires.

The national plan for music education will be published shortly and will set out new arrangements for creating local music hubs expected to support all young people's music making and offer routes for progression. These might include music industry-based provision and information. I am also fully aware of the importance of the jazz industry, mentioned by my noble friend Lord Colwyn, and I hope his suggestion of jazz will be included.

My noble friend Lord Colwyn also pointed out the need for clarification around the licensing of sites for live music. The Government remain committed to scrapping unnecessary red tape. We support the Bill introduced by my noble friend Lord Clement-Jones and are consulting on a broader approach. I will make sure that my noble friend's concerns are made known, and I will take them back to my department. However, I must not pre-empt the consultation, and there are concerns on the other side.

This debate has highlighted the fact that the creative industries make a strong contribution to the UK economy. They are worth £59 billion to the economy, and a significant number of people are working to create a dynamic and innovative part of our economy. I wholly agree with the noble Lords, Lord Smith and Lord Stevenson, about the importance of the value of intellectual property in a digital world. We are committed to implementing the Digital Economy Act, and we hope that the initial obligations code will be abolished shortly.

The noble Lord, Lord Smith, also mentioned that it would be wrong to see the creative industries in purely economic terms. My noble friend Lord Shipley also explained this point very clearly. The creative industries make an enormous cultural contribution to this country and to the wider world, and what is being developed in Salford and the north-east is also important. Indeed, the creative industries enhance our reputation as a global creative and cultural leader. It is vital that we understand and continue to make the case for the importance of the close relationship between the arts and the creative industries.

I quite rightly pay tribute to our recent successes in the cultural sphere, which were mentioned by the noble Baroness, Lady McIntosh, whether they be the successes of UK-produced plays such "War Horse" or "Jerusalem" on Broadway, "Downton Abbey", written by my noble friend Lord Fellowes, winning four Emmy awards, the Frieze Art Fair bringing the world's collectors to London or the film "The King's Speech" sweeping the board at the Oscars.

My noble friend Lord Glasgow and other noble Lords asked about the film industry. It is a cultural achievement of which we should be proud. It illustrates the strength of the UK's creative industries.

The noble Lord, Lord Stevenson, asked about games tax relief. I will write to him with the details.

As we have heard in your Lordships' House today, the creative industries are a sector that we ought to celebrate as a nation. The Government will continue to play their full part in making certain that they remain a global success story. I thank all speakers in today's extensive debate who have shown such an interest and offered such well informed views. I have certainly learnt a great deal, and in this short time I hope to have answered most noble Lords' questions. I ask for forgiveness from the noble Earls, Lord Glasgow and Lord Clancarty, and the noble Lords, Lord Macdonald, Lord Sharkey and Lord Stevenson, if I have not answered all their questions. I will read Hansard, and I will, of course, write to any noble Lord who has not had their points addressed and put a copy of the letter in the Library.

In conclusion, I once again thank my noble friend Lady Bonham-Carter, who has brought this important topic to the House.

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Lord Clement-Jones (Liberal Democrat)

My Lords, I apologise for interrupting the Minister but, specifically, I wonder whether she will write on the question of finance for start-ups in the creative industries. I did not hear anything specific on that, and that question was asked by a number of noble Lords and is crucial to the creative industries.

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Baroness Rawlings (Conservative)

My noble friend raises the point at a very opportune moment, with my noble friend Lord Sassoon sitting next to me. No doubt it will be taken into account.

I applaud again the maiden speech by the noble Viscount, Lord Colville, on this important topic that my noble friend Lady Bonham-Carter raised, which has afforded your Lordships such a constructive and creative debate.

2:34 pm
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Baroness Bonham-Carter of Yarnbury (Liberal Democrat)

My Lords, I am grateful to the Minister for her response and to all noble Lords who have taken part in this debate. In particular, I am grateful to the noble Viscount, Lord Colville. Listening to his speech, I was reminded of the advice that he gave me when I was being sent off to the Soviet Union. He said, "You'll know how important the person you're interviewing is by the number of telephones on their desk. They won't ring, but it is a status symbol". Of course, the creative industries have got rid of that status symbol, and I would be interested to hear from him what he thinks the new one is.

As our time is running out, I will just say that I agree wholeheartedly with what the noble Lord, Lord Smith, said. This is something where all government ministries must get together in order to ensure that the creative industries can provide the economic growth that we need so much. This has been a good debate, and I beg leave to withdraw the Motion.

Motion withdrawn.