Britain's got talent

Have restrictive laws stifled British creativity? David Cameron thinks so, and a government review is due shortly. Simon Wilson looks at Britain's creative industries and what the future might hold.

What is meant by creative industries?

The phrase has been popular since the late-1990s as a catch-all term for Britain's creative and cultural business sectors. According to the Department for Culture, Media and Sport (set up in 1997 to help foster Britain's creative industries), the phrase means "those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property". That's a pretty broad phrase that covers advertising, publishing, music, TV and film, the performing arts, architecture, design, fashion, and art and antiques.

How big are the creative industries?

Gross value added (GVA) measures the contribution to the economy of each individual producer, industry or sector in Britain. As such, it is similar to GDP but strips out taxes and subsidies. As a proportion of the economy as a whole, the creative sector accounted for 5.6% of GVA in 2008 (the last year for which official figures are available), up from 5.2% the year before. That made the sector worth £59.1 billion. There are 1.3 million jobs within the creative industries and a further million creative jobs in other businesses (on 2010 figures). The sector is one of six that the government (in a growth strategy paper published last November) says will be crucial to Britain's future prosperity.

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How many businesses are we talking about?

There are some 182,100 enterprises in the creative industries listed on the government's business register equivalent to 8.7% of all enterprises. So the contribution of the creative industries is not vast, but it is significant. This is especially the case in Britain, wher the sector makes up a higher proportion of GDP than in any other developed economy in the world. In other words, the national self-image that Britons are creative types, good at everything from fashion design to producing rock stars, is not just a myth; it's a fact. The music industry, for example for all its woes in terms of adjusting to new distribution models in the internet age remains a British success story.

How so?

We've heard a lot in recent years about how even major British stars are failing to break America these days as they routinely did until the 1980s as the music market fractures and American youth focuses on home-grown hip-hop. But the fact is that the UK remains second only to the US as the most successful producer of artists and repertoire in terms of global sales; and one of only three net exporters of music to the world. This country is also the third-largest market in the world, and the music business contributes nearly £5bn a year to the economy, employing some 130,000 people. The industry has been rattled by the internet, but it is hardly dying. Now the Brits are even cracking America once more.

Is UK talent really storming the US?

Anyone on nodding acquaintance with popular culture will have noticed that pop-soul sensation Adele's second album, 21, has taken up more or less permanent residency at the top of the UK album chart. But less publicised is the fact that the record has also been the top seller in America. Recently, indeed, the top three albums were all by British acts for the first time since 1985: Adele, Marsha Ambrosius, and the world's favourite faux-folkies Mumford & Sons. Together with the astonishing success of the film The King's Speech at the Oscars and commercially; the continuing stream of British TV formats conquering the world (everything from The Weakest Link to The X Factor); the ecstatic reception in New York for London stage hits Warhorse and Jerusalem; and the global success of UK-created computer games, there's a sense that Britain's creative industries are on a roll.

Will it last?

The principal challenge is to turn all that creative excellence into cash. Britain too often provides talent to foreign-owned enterprises but fails to cash in: from computer gaming to film rights, its intellectual property tends to get shipped abroad. The Sunday Times noted recently that only one of the three British music acts mentioned above is signed to a UK label. Even that label, EMI, looks set to be taken over again later this year. In terms of creating lasting value for the British economy our creative industries have often disappointed, and have been notably poor at growing businesses into large-scale global enterprises. BBC Worldwide (Europe's largest distributor of TV content) and marketing giant WPP are amongst a handful of notable exceptions. If the creative industries are going to drive UK growth, that has to change.

Is this the end for copyright

Many in the creative industries are eagerly awaiting the publication of a controversial Review of Intellectual Property and Growth, by professor of digital economy and ex-Independent editor Ian Hargreaves. Nicknamed the 'Google review' after David Cameron said he feared the firm could not have been founded in Britain due to overly-restrictive copyright laws, the report was due to be delivered to the Treasury this week. Hargreaves is expected to recommend legalising private copying of music, for example ("format shifting"). The most contentious recommendation will concern the US-style "fair use" copyright exemptions Google is lobbying for. It says a change is needed to encourage creative innovation. Opponents, including the UK music and film industry, say copyrights must be protected at all costs.