The Creative Industries Valued Contribution
The arts are an inherent part of the UK’s cultural scene and yet it is this industry that is failing economically. Television, film, gaming and art makes a huge contribution to both the cultural and creative industries; from providing employment, to its creative exploration of different cultures that represent the UK both internally and internationally.
However, this industry is left vulnerable in terms of investment in education and funding and the development of its infrastructure as a whole. The cultural and creative workforce has suffered from the consequences of cuts to welfare provision as part of the austerity measures aimed at tackling the economic deficit. Government cuts seem to be aimed at the creative arts and cultural sector as it is not seen to be valuable, negatively affecting the sector’s financial health.
ICAEW reports that the creative industries contribute £92bn per annum to the UK’s economy. Failing to recognise its contribution to economic growth, this industry has become dependent on income from other sources including the lottery, BFI and grants. It is not a self-sustaining industry as despite the grants, the outgoings are far greater than the profits made by consumer expenditure.
The UK is in a period of embedded austerity that has reduced levels of public spending and investment in the Cultural and Creative Industries and on top of this Brexit has created a fragmented government which has in turn produced an unstable economic environment. As a result, small and large creative organisations are failing to adapt as the budget cuts have exacerbated the financial difficulties that they already facing. If the government is willing to make these cuts, the repercussions need to be addressed and provisions need to be put in place if this industry is to cope, and its financial health is to improve.
As the government is failing to support SME’s and CIBs, these organisations are forced to seek income from elsewhere. More and more directors of companies within the cultural and creative sector are having to seek side projects and other jobs to generate revenue in order to sustain their companies. An alternative to this is to apply for funding through business loans.
The creative industry would highly benefit from loans and it could be a more attractive route for clinching funding opportunities and support. Many loan providers require collateral in return for their funding and this limits accessibility for those businesses that lack assets to offer. However, if creative businesses are to flourish, they need to trust loan companies to carry them through financial difficulties. Likewise, loan companies need to work with creative businesses on a more collaborative scale. For the most part the creative industry is an entirely uncertain market; there is no security in terms of profit, reliability of the product or indeed the very talent of the representative. The unpredictable market of the creative industries is not a secure haven for funding and it is this risk venture that loan companies need to adjust to.
There needs to be a realignment in the way loans are marketed to SME’s to alleviate discouragement and to increase future productivity in terms of financial gain. In a report for BIS and DCMS conducted by IFF Research it states that ‘whilst lack of business assets or security does not affect the decision on whether to lend, it does affect the price and other terms of the lending. Therefore, personal securitisation, or fees/pricing in line with the increased risk of the lending through lack of business assets, might be required to approve the loan or overdraft’.
To encourage creative organisations to seek financial loans the government needs to develop a collaborative financial ecosystem. An alliance between the government, investors and businesses is vital to ensure funding opportunities are not only accessible but also a more feasible route of gaining finance. According to GOV, ‘the Department for Digital, Culture, Media and Sport (DCMS) should work with public and private investors and cultural leaders to deliver a new investment model for the publicly funded elements of the Cultural and Creative Industries that will maximise their commercial potential. This model should attract private and public investors and stimulate a greater degree of commercial return and benefit to the originating individual or organisation ought to be capitalised upon’. The UK needs to target inward investment through the close collaboration between the government and all sectors of the creative industries, so then the government can pinpoint weaknesses and give support where needed in order to solidify the creative and cultural sector as a whole.
A self-sustaining industry dependent on a new financial business and investment model is vital in order for the creative industries to flourish. The financial market needs to be readdressed to fit the negative economic climate. This investment model would allow potential to develop a self-sustaining industry, partnerships across the arts network both internally and internationally, and solutions to rectify issues with access.