The UK urgently needs an investment initiative for the cultural and creative industries, similar to those that exist for social enterprise, tech and the green economy, argues Caroline Norbury.
When Ian Livingstone and Steve Jackson went to their bank manager to borrow funds for what would become Warhammer, he looked at them - to quote Livingston - “like a dog watching television”. At the time, financing a games company seemed an unfathomably ridiculous idea. Games Workshop Group, the owner of Warhammer, now has a market cap of $4.4bn.
The UK’s creative industries have grown faster than the wider economy for the best part of two decades. The three largest global record companies are led by Brits. Our authors continue to dominate best seller lists and international film and TV franchises, and our advertising industry is one of the biggest drivers of GVA in the UK.
Organisations grow when they have capital to innovate and work within global markets; yet despite the huge GVA numbers generated, our creative economy remains undercapitalised compared to other industries and accessing investment remains one of the most significant barriers blocking growth in the creative economy, especially when it comes to early-stage creative businesses.
Creative UK is the UK’s national network for the cultural and creative industries. Throughout the pandemic we convened and advocated, alongside many others, for support for the cultural sector, resulting in the creation of the Cultural Recovery Fund, which saved many organisations from bankruptcy. We have also actively invested in and supported small, private-sector creative companies for the last decade, investing more than £50m into these businesses' promising creative ideas, and combating market failures in the sector.
Starved of investment
We are not a government body - we raise our funds from members and partners. In 2019, we pioneered a new creative financing partnership with the sustainable bank Triodos to launch a £20m venture debt fund – Creative Growth Finance. This has now been re-capitalised, resulting in an additional £35m in both debt and equity investment for the creative industries.
Why is this important for the cultural sector? Despite decades of research and economic impact studies demonstrating the value of arts and culture to health, wellbeing, social inclusion, educational attainment and place-making, very little has changed to increase the level and flows of a variety of investment sources into organisations and businesses that operate on the axis of cultural and the creative industries. And, while our museums, galleries and theatres attract visitors from across the world – and are frequently the key driver for international tourism – our cultural institutions are starved of investment.
The Labour Party claims to have a fix. At their recent conference, Shadow Culture Minster Thangam Debbonaire talked about Space to Create: The First National Cultural Infrastructure Plan to grow the creative industries. This commitment to protect, retain and help us flex our nation's creative muscle further and the enthusiasm for the value of creativity and culture is desperately needed.
Thangam’s plan seeks to embed civil servants in communities far from Westminster and instead will see them live and breathe the cultural needs of the region. She argues that where we lose key cultural hubs, we also lose the pipeline for young and emerging talent. I wholeheartedly agree.
Creating the right environment for growth must start with creative education. Current policy has been criticised for squeezing arts out of schools, but getting this right from the bottom will feed our entire ecosystem. Every corner of cultural and creative industries will benefit from a holistic approach. This has to be a priority for England.
Time for a radical rethink
Let’s now contrast the creative sector with the growth of the social enterprise sector, technology and the green economy. Each has had significant investment in new structural interventions that have led to new innovations and new markets. There are sector-specific interventions working well elsewhere. Big Society Capital, for example, was established with an initial one-off £400m investment via the UK government and £200m from banks. In the ten years of its operation, it has directed more than £9bn into social purpose organisations.
It’s time for a radical re-think. We urgently need a similar initiative for the cultural and creative industries to guarantee the right type of money is available at the right stage for creative organisations. A patient approach to long-term growth which recognises the inter-relationship between investing in culture, project funding, adventurous artistic R&D and huge, global commercial success.
The Culture Minister Lucy Frazer recently reiterated the government’s commitment to maximising the opportunity and potential of the cultural and creative industries, pledging to grow the creative industries by an extra £50bn and creating one million additional employment opportunities. Yes, the Creative Industries Sector Vision sets ambitious direction but, as Frazer too argues, it is in schools, employment and our cultural hubs is where our future success lies and making sure we maximise the potential of our industries is mission critical.
Bank of creativity
That is why I am advocating for a bank of creativity – an unprecedented opportunity to bring together the ability to find money and resources from a plethora of partners, ensuring the appropriate financial products and support are available to all those operating in our creative ecosystem across the country.
From individual artists and creators, through to sole traders, SMEs, and our renowned cultural institutions. A service which recognises that creators have uneven cashflows, and require investment to iterate and develop intellectual property, and to regularly invent and reinvent their business models. A financial backer that values return on investment not only in monetary terms, but which also understands - and values - the fundamental social importance of creativity in transforming our communities for the better.
At Creative UK we have been employing this patient capital approach for ten years. We are at a point where this results in profit, which we will use to further support organisations. Imagine if we could scale this and create a new type of financial institution that supports artists, practitioners, creative innovators and imagineers?
That’s what the bank for creativity could do for the cultural and creative industries - providing the capital needed to ensure the UK’s creative prowess continues to be a big, beautiful success story for decades to come.