Chasing the creative industries

Rhys David says the Welsh Government should get the basics of the Welsh economy in place before hoping for a sector–led revival

Rhys David, a trustee of the IWA, writes on economic and business issues.

For the nations and regions of Britain chasing new investment over the past twenty years one sector has been consistently at the top of their wish lists. The creative industries, defined very broadly to include everything from the performing arts to software, architecture and advertising, have been seen to offer high quality, knowledge intensive jobs – a way of jump-starting economic recovery, boosting tourism and offering new sources of employment to replace jobs lost with the decline in manufacturing.

The US academic Richard Florida’s ideas have also been influential. He postulated that highly educated workers preferred to live in tolerant, bohemian places and that knowledge intensive companies in the high tech sector had little choice but to follow these individuals to creative cities. Bilbao, too, with its Guggenheim Museum (pictured) attracting visitors from all over the world, offered the supreme exemplar of the way in which culture could regenerate tired, older cities.

Inevitably, the theory is now being challenged in favour of a more nuanced picture. In a recent paper delivered to the Regional Studies Association Chris Gibbon, a senior consultant at BOP Consulting, argues that while the creative industries may be growing they may not work best in older industrial areas such as south Wales where their contribution to employment is most needed. Indeed, London seems to win again. The growth of the creative industry sectors may simply be reinforcing the capital and its surrounding regions’ dominance over the rest of the UK.

London and its two surrounding regions – the South East and East Anglia – already house the biggest proportion of creative and digital industry jobs. The capital itself has one third of all those jobs in the UK (as against 15 per cent of all jobs) and with its two accompanying regions the total reaches 58 per cent (23 per cent of all jobs). Creative industries account for a 10 per cent proportion of London’s jobs, against fewer than 5 per cent in the North East, Yorkshire and Humberside, and the West Midlands. The figure for Wales, which does not feature in the paper, would also be around 5 per cent.

There is also a close correlation with employment in knowledge intensive high technology services, with exactly the same areas within the broader south-east – central and west London through the Thames Valley – showing high concentrations in this area of activity too.  The mutually reinforcing effect goes even further. According to Gibbon, creative businesses such as those in design and advertising help spread new ideas along the production chain both to customers and suppliers. As a result they may be deepening existing divides by helping to strengthen the local economies of areas in which the private sector is already doing well. As the paper notes:

“Advertising, marketing, software consultancy and design… are at the forefront of the increasing convergence of the creative industries around digital technologies. Furthermore, they are not just employers in their own right: the services they provide seem to play an important role in boosting the competitive advantage of the wider private sector economy.”

The conclusion is that cities cannot simply decide as a matter of policy that they are going to develop their presence in the creative industries, but need to have strong economies to begin with. Creative industries businesses tend to be small and to serve primarily local or regional markets. As a result they tend to be concentrated in areas with an existing strong private sector, affluent consumers, good transport links and a pleasant physical environment. The south east, par excellence, it would seem.

A very significant proportion of creative industry businesses – as many as 94 per cent in London – employ fewer than 10 people. In short, they are lifestyle businesses operating from smaller towns and cities. The important factor for those in the south-east is the proximity and accessibility to London where the companies and individuals needing the sort of services provided by creative industry companies are congregated. For this reason towns such as Milton Keynes, Basingstoke, and Reading all register highly as centres for creative industry employment, with software design and development an important element for the latter two.

Creative businesses have characteristics which mean they are suited by certain environments more than others. They are heavily reliant on educated labour and seem to thrive in places where they have access to wealthy consumers and a buoyant private sector affluent enough to buy business-to-business services. In Britain these features are to be found in a polycentric London city-region that stretches from Peterborough north east of the capital to Southampton in the south-west. Bristol which has the highest proportion of creative industry jobs of any of the core English cities is clearly also being drawn in.

The lesson for the regions outside London’s existing arc seems clear enough. The creative industries are nice to have as part of the overall balance – indeed Britain is especially good at them – but they are no panacea. On their own they do not produce jobs in other sectors – rather, it is the reverse, other sectors produce jobs in the creative industries. Moreover, the more technically – advanced the other industries, the higher the quality of service sector and creative industry jobs that will follow.

Weaknesses in local economies such as shortages of highly skilled labour, an over-dependence on public sector employment and relatively weak private sector demand will impose constraints on the potential contribution of the creative industries, the paper notes. By implication the usefulness of creative industries as a tool for economic regeneration is called into question.

The need in the Welsh situation, therefore, is once again for a better balance in the economy – with a stronger manufacturing sector, a bigger financial services sector, more corporate headquarters, and more domestic ownership of Welsh businesses. This should be the real priority in the review of Welsh economic policy that surely must now be underway in the wake of last month’s Assembly election. Dreams of a creative industry–led rescue of the economy will only disappoint.

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