Creative Industries Leadership Group: Working Group Reports and Ministerial Response – March 2022

How can we increase the resilience of the creative industries sector?

Recommendation 1: Collect meaningful economic data from the creative industries

Summary of recommendations

• The working group considers that SIC codes do not provide accurate or useful data for the creative industries. It proposes creating new codes for each creative industry sector, drawing up a representative list of companies in each. It proposes top line financial information would be collected from each company on a regular basis and for information to be aggregated to provide an accurate estimate of the size and scale of the creative industries and its sub-sectors.
• The working group recommends that all agencies should ensure that they have the same top line data including identical lists on what constitutes the creative industries sector as defined by the Scottish Government and adopting the same data and taxonomy agreed on, and provided by the sector.

The statistics published by the Scottish Government on the creative industries are based on a grouping of Standard Industrial Classification (SIC) codes that align with the 16 sectors that are commonly agreed to comprise the overall industry. As SIC codes are a fundamental feature of a range of economic statistics published within Scotland and the UK, and are based on internationally agreed code structures, they are a fundamental organising approach for generating comparable, reliable and robust data on business activity within Scotland. However, we recognise that, in some instances, the design and operation of the current SIC codes may create challenges in identifying businesses that play a key role in facilitating the creative industries when their characteristics are more closely aligned with activities that sit outwith the creative industries. We recognise that there are limitations around categorisations of economic activities in the current SIC framework, as this was last refreshed in the mid-2000s, and as such may not fully reflect the range of economic activities that take place today. We also agree that there may be inconsistencies between the definition of the Creative Industries adopted in Scotland and those used in other parts of the UK, based on different choices around the set of SIC codes viewed as falling within the scope of the sector.

Relatedly, the Scottish Government recognises the concerns within the sector about the availability of data on the creative industries, particularly around quantifying the economic footprint of those who are self-employed, those who work on a freelance basis, and of businesses that fall below the VAT and PAYE registration threshold. These present challenges to using datasets based on registered enterprises, such as the IDBR and the Business Register and Employment Survey (BRES).

The subgroup’s recommendation suggests replacement of a SIC-based approach to defining the creative industries through the development of new economic codes for the creative industries, and undertaking new data collection from a representative set of companies from each segment of the creative industries outwith the existing set of business and employment surveys currently undertaken by ONS. Initial advice from Scottish Government statisticians and analysts in the Enterprise Agencies suggests that this proposal would be inconsistent with approaches taken for other sectors, such as Life Sciences, where a SIC code-based approach is augmented with agency intelligence on additional registered companies that are active within the sector. Additional data collection from existing businesses may create additional burdens and survey fatigue; it would also require substantial time and resource commitments to develop data collection frameworks and agreements; and would be unlikely to generate substantial additional information to those already available through existing business surveys. As the proposal focuses on a representative set of companies, it would also be unlikely to address the data gaps identified by the sub-group around freelance workers, self-employed workers, and microbusinesses.

The Scottish Government is keen to identify areas where targeted interventions can be made with existing datasets to improve the data available on the creative industries. Scottish Government analysts are reviewing the coverage of the current definition of the cultural sector used within the National Performance Framework to identify options for how this could be broadened to better capture the extent of cultural and creative activity. Analysts are also exploring the potential to use the Annual Population Survey (APS) as the data source for the National Indicator on the cultural workforce, in order to better capture the scale of self-employment within the sector and the characteristics of the workforce overall. These may have broader applicability to the data available for the creative industries. There will also be further analytical work undertaken in response to the National Partnership for Culture’s recommendations on data and evidence, which may support the aims of the sub-group.

In the longer term, it is worth noting that the ONS are developing a Statistical Business Register (as a replacement to the IDBR). This may include HMRC self-assessment data, which would allow for better estimation of business data associated with activities of smaller businesses, freelance workers and the self-employed.

Furthermore, the UN Statistical Commission (UNSC) is also undertaking a consultation with international statistical bodies and governments to review the list of International SIC codes. The proposed list is available here. This will impact some of the codes that are used to define the Scottish Government Creative Industries growth sector (for example those in section S which covers the Arts). In general, it is considered that the changes will help improve capturing of the creative industries sector. It is expected that the complete structure of the revised ISIC will be submitted to the UNSC for approval in 2023. This will form the basis of a revised set of UK SIC codes, and following publication, the Scottish Government will undertake a refresh of the definition of the Growth Sectors, including the Creative Industries.

The Scottish Government and its partners welcome the opportunity to work with CILG to continue to build on its knowledge of the sector.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

4.1 The Scottish Government will engage with the CILG to identify priority areas where targeted data improvement can be explored via existing datasets.

4.2 The Scottish Government will provide the CILG with an overview of ongoing workstreams to amend measurement approaches for the National Indicators on the cultural economy and workforce.

4.3 The Scottish Government will provide updates on developments on the UNSC consultation on SIC codes to the CILG as significant milestones are reached.

Recommendation 2: Establish and empower specialist network hubs to connect and interact with creative industry operators

Summary of recommendations

• The working group recommends that network hubs should be funded based on economic, social and environmental capital that they generate through the value of their networks and the impact of their strategic interventions.
• The working group recommends that research should be undertaken to understand the value of network hubs created by them and the unrealised potential for growth.

The Scottish Government and its public sector agencies welcome the current creative and cultural networks across Scotland. It is pleased to see the more collaborative and place-based partnership development with a community wealth-based focus taking place.

Creative Scotland currently provides funding support for a range of organisations, governed independently of it, that provide network support in the way defined here. They apply for funding support according to their needs and ambitions and support is assessed according to the fund criteria. In 2019, using National Lottery funds, Creative Scotland piloted the Create:Networks fund with the explicit purpose of providing an opportunity for organisations, creative businesses or practitioners to create new, or develop existing, local creative business networks in Scotland.

The Scottish Government agrees that there is a need to better understand the relationship between the public and industrial levels at all levels, the regional clusters particularly from a regional economic development perspective, and their place within all of the six programmes of the recently published National Strategy for Economic Transformation.

The Scottish Government understands that the resilience working group has been providing feedback to Scottish Enterprise on cohort-group working. Scottish Enterprise has been appreciative of that feedback. Scottish Enterprise will continue discussions with CILG to explore how this approach may be used in future to support the sustainable growth of the sector.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

5.1 The Scottish Government asks CILG members to further consider the value of network hubs and the case for further support: are there hubs which CILG could engage to explore group or cohort working on a geographic, business development or innovation basis?

Recommendation 3: Create specialist agile departments in public agencies to support and develop high value creative industry sectors

Summary of recommendations

• The working group recommends that there is a growing support and demand for transforming the music department in Creative Scotland into an equivalent of Screen “Scotland” with a similar operating model to it.

Although the model for Screen Scotland came about in a context of high international demand for film and high-end TV content, the opportunity to consider how to help develop other sub-sectors is one that both the Scottish Government and Creative Scotland would welcome. This would need to be underpinned by extensive and significant evidence, including that of demand.

The Scottish Government and the public sector agencies supporting the creative industries would encourage the creative sector to work with them to explore a range of solutions to sector growth. These can often be achieved without the creation of new organisations.

Research has identified that innovation – product, service and workplace – are key tenets to long term stability and growth. CILG members should consider how they can contribute to the Scottish Government’s policies around innovation and entrepreneurship which can then be supported through the public sector agencies.

Creative sector businesses are encouraged to participate with Scottish Enterprise in sector agnostic business development and innovation input which has been carefully designed to provide guidance to all companies at a range of life-cycle stages.

The creative industries sector is encouraged to work closely with Scottish Funding Council and organisations including Interface to make the most of academic input that Scottish universities and colleges can offer industry.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

6.1 The Scottish Government would welcome a discussion between CILG and Screen Scotland about what can be learned from the way that it is developing the Screen sector.

6.2 The Scottish Government and Creative Scotland would welcome the opportunity for CILG to consider how to develop different sub-sectors within the creative industries, including music.

6.3 The Scottish Government meets regularly with music stakeholders including the Scottish Music Industry Association and Scottish Commercial Music Industry Taskforce and will ensure the recommendation of the Resilience working group is discussed in detail.

Recommendation 4: Change the language and reform funding; investment and support

Summary of recommendations

• The working group recommends that funding should be repositioned as investment rather than support.
• The working group recommends that public agencies need to be able to communicate information, including economic information, in language that they can understand.
• The working group recommends the use of streamlined processes in applying for public sector support, as was undertaken during covid-19 pandemic.

The Scottish Government recognises that the public sector support landscape can be daunting for any business and individual to navigate. It understands the logic of re-branding public funding as investment rather than as support from the perspective of the recipient.

The Scottish Government recognises the value in direct (and possibly indirect) funding being termed as “investment” and the additional contributions of advocacy, signposting, partnership building, access to internal delivery expertise etc being delivered through the agencies under a broader category of “support”. However, it is concerned that this further definition will not be readily understood, though it is important to capture and support the breadth of investment and support available to creative businesses and individuals.

The Scottish Government agrees that public sector communications need to be able to be understood both by the public sector and the creative industries. Without it, it is difficult to establish common understanding and achieve outcomes.

This is achieved in various ways. The Scottish Government and its partners are continuing to ensure that their websites, including publications, are as accessible as possible. This is in accordance with the Public Sector Bodies (Websites and Mobile Applications) (No. 2) Accessibility Regulations 2018. In addition, all documents need to be written in accordance with all internal guidance and policies.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

7.1 The Scottish Government welcomes consideration from CILG around their ambitions to develop the creative industries and their collective priorities for public sector input. These should be considered for ongoing consideration and discussion.

Recommendation 5: Value the freelance workforce properly by understanding its nuances and supporting people, not employment or business categories

Summary of recommendations

• The working group recommends that financial and in-kind support offered to creative practitioners should be flexible enough to accommodate ‘freelancers’ operating in a number of businesses, recognising that the term ‘freelancer’ does not capture the complicated and flexible workforce.

The Scottish Government and its public sector partners recognise the complexity of the workforce in the creative industries. Specific workforce definitions can be a restriction that stops people accessing opportunities. Agencies are instructed and monitored according to Scottish and United Kingdom regulations on public spending, competition and other accountabilities and this has an impact on the information collected, collated and reported on an non-inclusive individual and business basis.

Due to the variety of their offers, it is important the partner agencies which support the creative industries, including Creative Scotland and Screen Scotland and Skills Development Scotland, as well as Business Gateway and Local Authorities, work together to build a collective understanding and offer which caters for all people within the creative workforce.

Scottish Enterprise will continue to work with sub-sectors in the creative industries where most of the workforce is freelance. It is keen to explore further opportunities with the sector or sub-sectors which clearly articulate opportunities in business development and the creation of more good jobs.

Skills Development Scotland was able to respond directly to supporting freelancers in its formation of the National Transitions Training Fund Creative Industries Freelancer Workforce Recovery programme, where potential recipients of the programme were described as freelancers, sole traders and / or micros.

Skills Development Scotland commissioned research to better understand the experience of the creative industries workforce in the Covid-19 pandemic in early spring 2021. This evidence enabled it to alter the programme to suit this broader range of applicants and to enable it to respond to a clear demand from respondents to boost their portfolio working skills and to work with providers seeking to support them to explore new opportunities across the fair work, net zero and community wealth building and well-being agendas.

Across Scottish public sector investment and funding there remains an issue of whether support is defined as being primarily for people (individuals) or for economic entities (freelancers/micro businesses). The Scottish Government agrees that any action – or its absence – that it takes impacts on both.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

8.1 The Scottish Government and its public sector partners will continue to work together to develop and provide support, which recognises the complexity of the workforce.

Recommendation 6: Champion leadership and success in the creative industries

Summary of recommendations

• The working group recommends that the creative industries should celebrate what it is good at. This could include award ceremonies, positive media coverage and promoting best practice case studies.
• The working group recommends that operational costs for enterprises and networks in the creative industries should be considered differently to applications from individuals.

The Scottish Government and the public sector partners that provide support for the creative industries undertake a range of activities that profile success in the sector. It recognises success through for example, Ministerial visits to successful projects, recognition in speeches, press coverage and other activities.

Creative Scotland undertakes a range of activities to profile individual success stories as well as generic campaigns to grow awareness of the importance of creative activity. It consistently profiles individual stories through its website and social media channels (e.g Twitter 96.5k followers, Instagram 19.4k followers). Last year Creative Scotland launched the successful and positively received Our Creative Voice campaign to highlight the crucial role of creativity in making us healthier, our economy stronger and our communities more vibrant.

The Scottish Government and its partners welcome the opportunity to be able to share success stories and will continue to look to see how we can celebrate what the creative industries is good at across Scotland, ensuring that the tools that are used to promote this are appropriate and cost effective. For example, Scottish Enterprise can amplify success stories through its business-to-business channels.

In regard to the recommendation that operational costs for enterprises and networks in the creative industries should be considered differently to applications from individuals, where funding schemes permit this, business are able to apply for working capital.

Annex A sets out the work that the Scottish Government and its public sector agencies are already undertaking in respect of this recommendation.

Potential next steps and opportunities for discussion at CILG

9.1 The Scottish Government recommends that Creative Scotland is invited to speak to CILG about the Our Creative Voice campaign at a future meeting.

9.2 The Scottish Government asks members of CILG and the creative industries, which is in an ideal place to undertake its role, to consider how it can make use of its networks to promote its success stories.

9.3 CILG and the creative industries should consider what does success look like and where there are great success stories that can be told, including those relating to interdisciplinary work, and relating to the delivery of the wellbeing economy and the Just Transition to Net Zero.

9.4 The Scottish Government recommends that this recommendation is discussed within the Advocacy discussion highlighted in the response to Recommendation 1 of the Skills report.

Recommendation 7: Compel government-funded organisations to buy from creative businesses and individuals in their sectors

Summary of recommendations

• The working group recommends that government funded organisations could be required to buy products and services from operators in their sectors. This should include local options.

This recommendation recognises the power of public procurement to drive positive change across Scotland.

This is something which is recognised in law – the Procurement Reform (Scotland) Act 2014 compels public bodies in Scotland to consider how, in conducting a regulated procurement exercise, they can: improve the economic, social and environmental wellbeing of their area; facilitate the involvement of small and medium enterprises, third sector bodies and supported businesses in the process; and promote innovation.

Procurement legislation, which applies both to public bodies and to organisations which are not industrial or commercial in character but are financed for the most part by the public sector, does not, however, allow the Scottish Ministers to compel organisations to buy from any particular businesses or individuals.

The question of what goods or services need to be procured is rightly a matter for each individual organisation to determine. Once a need has been identified, however, the question of how to procure that good or service is one which is governed by the procurement legislation (principally the Public Contracts (Scotland) Regulations 2015 and the Procurement Reform (Scotland) Act 2014).

The legislation places a requirement on the purchaser to act transparently and to treat all bidders equally and without discrimination. Thus, if the intention of the recommendation is that public bodies only buy from specific sectors of the market and also give preference to local suppliers, that is unlikely to be consistent with legal obligations, which in part implement the UK’s international obligations. There are some exceptions to these rules, however, which are discussed in more detail in Annex A.

The Scottish Government already supports a range of activity to improve opportunities for SMEs and the third sector in public contracts, however, and it may be that the sector can benefit more from this support.

Potential next steps and opportunities for discussion at CILG

10.1 The Scottish Government and its public sector partners will provide any relevant updates relating to procurement affecting the creative industries to CILG.

10.2 The Scottish Government will facilitate a meeting between its procurement officials and CILG to discuss how it supports SMEs who wish to bid for public sector contracts.

Recommendation 8: Nurture the talent pool; train and take care of tomorrow’s creatives

Summary of recommendations

• The working group considers that creative industry disciplines must be valued in schools and further education with the same mission-led approach as the promotion of STEM subjects. There is a need to ensure that there is a supply pipeline of creative talent.
• The working group comments on the need to look after the people working in the creative industries. It recommends that business support and skills development initiatives should encompass mental health and physical health as well as work skills and business acumen. Public sector support needs to empower creative people to take care of themselves and each other.

The Scottish Government agrees that there is a need to ensure that there is a strong pipeline of creative talent between schools, further education and the creative workforce. There is already work being undertaken in this area, as outlined below and in Annex A, which the Scottish Government and partners would be happy to discuss further with CILG.

Skills Development Scotland is focused on a number of key policy areas in relation to the nurturing of the talent pool. A key development in 2023 will be a review of the current Modern Apprenticeship Frameworks for the creative and cultural occupations. It anticipates that well-being, fair work and net zero transformation will be key components of this development.

Creative Scotland has worked closely with partners in Education Scotland, Scottish Funding Council and Skills Development Scotland to ensure that creative talent is encouraged and supported to thrive. One example of Creative Scotland’s work in this area is the sustained partnership work with Education Scotland. Scotland’s Creative Learning Plan was first published in 2013, setting out a shared vision for the importance of creativity in education and as a result we have seen growth in a shared language and common understanding of creativity and creativity skills. The Creative Scotland and Education Scotland Action Plan continues to bring that vision to life through tangible actions, especially given the impact of Covid-19 on children and young people.

Recent bilateral discussions between Culture and Health and Social Care Cabinet Secretaries have highlighted areas of crossover. They have resulted in a commitment to continue working together to develop policy links across both Culture and Health.

Improving mental health is a priority for the Scottish Government and it’s never been more important to look after ourselves and each other. It wants to ensure that people are able to think about their mental health alongside their physical health and that they have the information and support to be able to do that.

In May 2021, the Scottish Government established an employment and mental health working group to help it identify the key issues and challenges that employers are facing in terms of supporting the mental health and wellbeing of their workforce.

The group, consisting of policy officials, employer groups, trade unions and mental health organisations, is leading work to help take forward key employment and mental health actions. The final output in this first phase will be the production of a single, easy-to-access online platform for employers that streamlines mental health resources and guidance, including guidance on hybrid working, and will be supported by a range of case studies and employer examples that showcase promising practice.

Potential next steps and opportunities for discussion at CILG

11.1 Skills Development Scotland will share, in due course, the review of the current Modern Apprenticeship Frameworks for the creative and cultural occupations.

11.2 The Scottish Government recommends that the Creative Learning Plan is discussed at a future CILG meeting.

11.3 The commitment of Culture and Health and Social Care Cabinet Secretaries to work together to develop policy links across both Culture and Health will continue to be taken forward.

11.4 Scottish Government Creative Industries policy officials will connect with the Employment and Mental Health Working Group to seek an update on its work and to discuss how the online platform can cater for those working in the creative industries.

Recommendation 9. Ensure digital inclusion is nationwide and genuine

Summary of recommendations

• The working group recommends that superfast broadband, whether wired or mobile, must be a fundamental right available to all in Scotland.

The Scottish Government agrees that Superfast broadband, 4G and 5G coverage in Scotland is still not where it should be. The playing field is far from level. Shifting trends to remote working and hybrid policies by businesses, regarding splitting time between home and their premises, make proper internet access vital. Businesses and creative individuals who are not served well by good internet, which is especially true in rural communities including many of Scotland’s islands, are disadvantaged compared to counterparts in well-served areas such as most large towns and cities. Superfast broadband, whether fixed or mobile, must be a fundamental right available to all.

The Scottish Government agrees and recognises that digital infrastructure is a key economic enabler and a critical part of its plans for a green and resilient economic recovery from covid-19. It is also vital for the future of our creative businesses.

The Scottish Government is making substantial investments in Scotland’s digital infrastructure, despite responsibility for telecoms being reserved to the UK Government. These are detailed in Annex A.

The Scottish Government also agrees that lifelong digital skills development is also important for a prosperous, advanced wellbeing economy. Its National Strategy for Economic Transformation sets out that a skilled population is fundamental to business productivity and economic prosperity. Scottish Enterprise is playing a lead role in the implementation of the enterprise recommendations made in the recent Logan Review. It is part of the Scotland-wide approach ensuring that the Scottish Government helps grow more technology companies of scale in more parts of Scotland. This will deliver more high-quality digital jobs in more communities. The existing and growing strength of Scotland’s gaming and software design sectors provides a positive Launchpad for the creative sector. Scottish Enterprise is encouraging creative businesses to build their digital capacity as a route to business resilience and market expansion.

Next Steps

The Scottish Government has a Programme for Government commitment to revise its Creative Industries Policy Statement to articulate its priorities for the future development of the creative industries, in light of the impacts of EU Exit, the COVID‑19 pandemic, and its ambition to build a greener and fairer future.

The Scottish Government is keen to ensure that the refreshed Policy Statement will reflect the priorities of both Scottish Government, our partner agencies, and importantly the creative industries itself. It wants to ensure it is action-focused. The recommendations of the CILG’s two working groups highlight areas which the Scottish Government will ensure are reflected in the new statement. Specifically, the CILG’s working groups have highlighted the importance of business training with a creative context, the importance of digital skills in the sector, further work needed to address EDI barriers to entry into the creative industries and strengthening the talent pipeline between education and the creative industries. The Scottish Government will bring back a revised Creative Industries Policy Statement for feedback to the CILG before publication.

This response to the two working group reports includes a large number of suggested next steps and actions for both industry, the Scottish Government, and public sector partners to consider taking forward. The next step is for this response and suggested actions to be considered by CILG members at the meeting on 8 June 2022 in order to determine areas of priority, joint-working, and further exploration for Government and industry. This will be the start of a conversation between CILG, the Scottish Government and its public sector partners, that is hoped will help shape its aspirations for the sector and its collective priorities for sector growth.

Following the discussion in June 2022, it is suggested that the CILG industry co-chair, with the support of the Scottish Government policy team, develops a work plan for the next year of CILG discussions. This work plan would be based on the joint-priorities emerging from the recommendations, Government response, and following CILG discussion. Priority areas to consider may be, for example, advocacy, business training and support, including digital training, specialist network hubs, creative learning and education.

The work-plan, based on agreed areas of priority between Government and industry, could include discussions on specific actions noted in the above response, with invitations to Scottish Government policy teams, public sector partners, or industry representatives to discuss how the creative industries can be better represented in current schemes or projects or to discuss the potential for future projects.

We would once again like to thank the CILG working groups for their reports and we are keen to work with the group to progress areas of joint priority, as highlighted in this response.