Hasan Bakhshi and Alan Freeman - 23.01.2012
Statistics on the UK's creative industries released by DCMS in December have provoked negative reactions. The creative industries account for only 2.9% of Gross Value Added (GVA), far lower than previous estimates have suggested, following the removal of two 'standard industrial codes' from the definition of the Software sector and a 'scaling adjustment' that the DCMS used to apply to the estimate of whole economy GVA.
In this blog, we respond to some misconceptions that the negative reactions betray, in order to identify the real problems and suggest a roadmap for improvement.
The new figures do not show the creative industries to be a fanciful invention, or that we have lost a world lead, nor that we have misled the world about Britain's genuine achievements. They do show that hype without proper evidence is a risky game. Governments, marketing agencies, and business leaders have been happy to ride a creative industry wave that reflects genuine British leadership and a decisive new growth sector. Now we need to get real, correcting a woeful lack of attention to decent creative statistics. Until now, we have got evidence on the cheap, because we were there first. Now we have to put real resources into getting the numbers right - so that the minuscule band of under-resourced statisticians can react to the direct experience of industry, of experts in the field, and to countries like China, the US and Germany who are rapidly catching up and who, unlike Britain, take their statistics seriously.
First, let's deal with some silliness. In 2010, DCMS said the creative industries produced 5.6% of GVA; in 2011 they said it was 2.9%. The first figure makes us look good because it's bigger than the European and US figures we use when we like the comparisons. Does this mean the UK's lead never existed? No, it means that these other estimates have not been adjusted like ours have. If similar methodological changes were applied to these estimates, their figures would fall too.
There is no 'collapse' in Britain's standing. UNCTAD's authoritative work[1] reports the UK creative share of GVA as 5.8% compared to France's 2.8% and the USA's 3.3%, and its export figures - the most reliable and long-running - confirm the UK's strength, but show our competitors are catching up, a cause for concern. The fact that DCMS has chosen to revise its own estimates, whilst the other estimates remain fixed, has no bearing whatsoever on these comparisons.
This highlights a much more serious problem. The real scandal is that no proper international study of creative industries GDP in different countries has been done since John Gordon and Helen Beilby-Orrin's[2] study of 2003 (and older) data from which most GDP comparisons (including UNCTAD's) are drawn. The truth is not that DCMS has misled us, but that it can't actually tell us if the comparisons are still good, because successive governments have been happy to quote eight-year old statistics without putting any work into checking if it's still sound.
Just as silly is any notion that the creative industries are 'really' only 2.9% of the economy or that the creative industry hype is based on pure conjecture. Jeremy Silver rightly notes the crux of the problem: "If we took into account the warp and weft of micro-companies and the convergence with Digital Industries - it would not be surprising if the numbers leapt back up and then exceeded previous estimates of the UK's Creative Industries economic contribution."
Across the board, DCMS estimates are based on outdated definitions. Another 'unnoticed quirk' is the output of Designer Fashion at £120 million - a minuscule 0.01% of the economy. A report from the British Fashion Council (BFC)[3] estimates this at £20.9 billion - 200 times greater, and more than twice the size of chemical manufacturing and automotive manufacturing. A single adjustment accounts for this vast discrepancy: DCMS divides all its fashion numbers by 200! It is diligently executing the 13-year-old definition which fashion leaders gave it when seeking to distinguish 'Haute Couture' from tawdry mass production. Reality has moved on, and the BFC study, combining extensive industry consultation with scrupulous statistical methodology, is more accurate.
Yet the scandal is not some kind of 'geeks' revenge', but that the DCMS and ONS were not at the table when the report was prepared - because they are not given the resources to do so. This is like a war without intelligence. The lines of communication between industry and the statisticians have been cut off by the quartermasters.
Now let's get down to the real problem. There is no agreement on a single definition of the creative industries. UNCTAD makes the problem clear on page 6. At least four different conceptions are used to define the 'creative industries': the DCMS model which still leads the pack; the 'symbolic texts' model; the 'concentric circles' or value-chain model, and the 'copyright model' used by WIPO. These simply produce different results, which is why countries and industries diverge so widely about their own importance. The French want to include Cooking, the Italians Religion - both on the (unexpected) grounds that they are part of the visitor economy. Naturally, pecking orders change dramatically if a sector is added or deleted. With UNCTAD's definition of 'design', a portmanteau extending from furniture to high-street jewellery, Italy becomes Europe's top exporter. Without it, the UK comes out top.
There is a genuine reason for this babel-like diversity; culture itself is diverse. Furthermore, the creative industries are changing rapidly, as fashion shows, as does the way that digitisation is systematically reshaping one industry after another, cutting swathes through music, film, video, books, live performance and creating entirely new products like online games and social networking.
Bold measures are needed. Instead of blaming the statisticians, we should empower them to talk to industry and experts. We should explore new ways to produce high-quality data in the digital age - responding to diversity and change with new partnerships between data providers, data-users and data-creators. This requires, above all, genuine resources to be allocated to evidence provision for what remains a decisive industrial sector for Britain's future.
![Dotted line grey 400px [original]](http://admin.nesta.org.uk/library/images/dotted_line_grey.jpg "Dotted line grey 400px [original]"){kind=small}
Hasan Bakhshi, Director, Creative Industries, NESTA Policy & Research Unit, and Research Fellow at the ARC Centre for Excellence for Creative Industries and Innovation at Queensland University of Technology
Alan Freeman, Research Fellow at the ARC Centre for Excellence for Creative Industries and Innovation at Queensland University of Technology and Visiting Professor at London Metropolitan University
[1] http://www.unctad.org/en/docs/ditctab20103_en.pdf
[2] Gordon and Beilby-Orrin, International Measurement of the Economic and Social Importance of Culture, OECD (2006) http://www.oecd.org/dataoecd/26/51/37257281.pdf
[3] The Value of Fashion, http://www.britishfashioncouncil.com/uploads/media/62/16356.pdf
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tomharvey
01 Feb 12, 6:38pm (1 years ago)
A regional perspective - recounting differently
I’ve been fascinated to read the contributions on this important topic and I offer the following observations from a regional perspective, which may carry some relevance to the national approach.
In the heady days of RDA support, we had to produce endless reports on the size of the sectors, not, sad to say, to inform investment decisions but to justify them. The creative industries are a vital part of the North East economy, not just because of their growth rate or size, but because a mixed economy is important to the region and we would rather not go back to sending blokes down mines. Public money was therefore always going to go into the creative sectors but it needed justification hence the weighty tombs of impressive numbers.
It was important to ensure that the North East’s ‘creative industries’ were seen to be of sufficient size to attract public investment when compared to other regional sectors. Thus the work became a constant competition to push interpretation of numbers to their maximum. It was in no ones interest to produce a gritty piece of work that, in Martin Smith’s words, would be ‘
Inconvenient and unsettling’…..until now.
With the demise of the RDA we have been able to jettison the past definitions of the creative industries, an artificial and not particularly useful grouping of vaguely related activities, and one that produced a creative industry ‘turnover’ in the North East of £1billion.
Instead we have focused on the industries that we know and deal with every day, film (mostly incoming production but also local production and post production companies) television (similar to film but exclude local BBC because we can’t influence there decline) web and mobile (we know what that means even if you don’t) and games (that’s computer and online games companies, and new ap. focused plays that spring up every day) and music (minus ticket sales, can’t remember why we excluded that now….) With our new, and highly scientific approach, and a lot of help from Olsberg SPI and TBR here in the North East, we come up with GVA of £100million for the creative sectors that we care about. Which is pretty much what we expected when we factored up our anecdotal and day to day information. We see the accounts of half the creative companies in the region because we invest in them.
This information is incredibly useful for us, not least because we want to be as realistic as we can about our sectors, but it remains difficult to interpret or cross compare with other datasets, so it’s not really of any use to anyone except us.
The lesson, though not new, but useful to restate, is to understand in whose interest it is to arrive at useful and comparative data that is often ‘inconvenient and unsettling’. It is not government, and its not the agencies who champion those sectors, so statisticians are wasting their time if they are expecting help from that quarter.
I fully support Martin’s call for an Institute for Cultural Economics, and it’s funding would have to provide it with enough distance from the sectors it was scrutinising to maintain a sensible independence.
TH
martinsmith
29 Jan 12, 6:10pm (1 years ago)
How big are the UK's creative industries?
There is much to agree with both in Hasan and Alan's original piece and some of the subsequent comments. From my perspective three supplementary observations seem pertinent.
1. Sector definition. As those who were intimately involved back in 1998 will attest, the mapping of the CIs was always primarily a political project. Nothing wrong with that, and indeed much good has flowed from it in terms of public attention, but it was always the case that this work was not conceived to withstand the weight of heavy duty economic analysis. It was always bigger on the "creative" bit of the "creative economy" than on the economics. It's time to move on. In my view this means subjecting all available sector definitions to renewed scrutiny, however inconvenient and unsettling that may be. That would be a logical and positive response to the current debate on the latest DCMS Estimates.
2. The politics. One might have expected some comment from the politicians on this debate, but I haven't seen one. HB and AF deploy a military metaphor ("intelligence" and "quartermasters".) The fact is that the generals have not much interested themselves in the intelligence for many years now, content merely to use what was available to construct a narrative based to a significant degree on hype. This was noted and punctured by Larry Elliott and Dan Atkinson (amongst others) in their book "Fantasy Island" in 2007, drawing on employment data which showed serious evidence of decline in some parts of the creative sector, for example in the music industry.
If we are to move forward beyond "boosterism" to the satisfaction of all the practitioners involved the politicians must will the means to allow this to happen. An acknowledgment that all is not as it should be in terms of relevant resource allocation would be a good place to start.
3. "Lobbynomics". The CIs, though not uniquely, the way of the world being what it is, are bedevilled by this phenomenon. In the film industry the old UKFC wrote the book. That is why I and others have called for the establishment of an Institute for Cultural Economics to ensure that the independent analysis of relevant data, and the building of new data sets, can provide us with a measure of objectivity.
Finally, I think it very likely that the "problem" as regards industry statistics is very much worse that even now appears. I am happy to share intelligence based on Ingenious custom and practice, previously only disclosed to AF in private communications, with others.
At Ingenious we register scores of new companies (special purpose vehicles) every year. These are all registered under a single generic code - not because the company secretarial people are lazy, but because these are investment entities based on one or more embryonic creative ideas whose ultimate outputs (the film, the TV show, the festival, the multi-platform digital creation) cannot in most cases be known at the time of registration. I am reliably informed that this is common practice in the big accounting firms for more or less similar reasons. Who knows to what extent this custom distorts subsequent analysis!
None of this is to throw mud at the statisticians in the DCMS. To respond to these challenges is a task that must be owned by ministers. That in turn requires a long term vision and a long term strategy for the sector, neither of which are currently on view unless I have missed something!
MS
afreeman
25 Jan 12, 9:03pm (1 years ago)
Creative Industry Data - what's the best way to fix it?
Thanks to PhiKern and KateO for their useful comments.
To avoid misunderstanding, we should make it clear that the DCMS numbers are wrong: to put them right, however, we have to understand why. Not because the statisticians mis-defined the creative industries, or applied the definition badly, but because their clients failed to keep the definition on track. It is out-of-date with industrial reality and international knowledge. So how should it be updated and who is responsible?
Our point: it’s the government’s job, and it’s our job to make sure the government does its job. Would we excuse a lunar mission that failed because the controllers chose flawed data? If you want good government, get good evidence. The evidence is bad. Go figure.
How should it be done? Proper engagement with industry, and with the international community. Phikern’s points are well-taken, but we cannot just drop our existing definition because KEA have come up with a new one: this would cause an even greater fuss, and rightly so. What’s needed is systematic engagement with industry, international partners, and experts, to forge a recognised world standard, whilst (and this is the tricky part) providing for cultural diversity within it.
This brings us to KateO’s comments. She says we “dismiss criticism of the revised numbers as silliness”. No, we don’t. Criticism is never silly. What’s silly is to say the UK’s position has slipped because the UK has unilaterally revised its numbers downwards. That’s not dismissing criticism, it says where any sensible criticism has to start: that there is no international standard, and that international comparisons without one are a nonsense.
Next KateO accuses us of underestimating hype. Now we know how Cassandra felt. If as empirical researchers we had a penny for every time we urged care on those who misused our data, we could join the 1%. The main thing we said? If you want to make comparisons, get a standard.(1) Otherwise, it’s hype. And it’s silly.
The real problem is this: ‘lobbynomics’ as Professor Hargreaves rightly dubs it, has cherry-picked numbers that make it look good, never recognising the research and evidence-gathering needed to get the numbers right, whilst scorning the very idea that evidence-provision is a worthwhile activity. This fair-weather approach to evidence finds an ally in the anti-metric prejudices of those fortunate enough to make up in influence and status for what they cannot provide in hard facts.
It does the public no service to complain about numbers without a systematic plan to make them better: the alternative is to treat facts as an unfortunate encumbrance in place of which we should rely on the advice of our elders, our betters, and the suitably-endowed.
We point out that the last meaningful international comparison of creative economic activity was conducted using 2003 data and older. The ONS has not even committed itself to a definition, much less a regular statistical series. Little if any work is being done to co-ordinate cultural and creative statistics with the industries they are supposed to represent. Cultural economics is the poor cousin of economics and DCMS is the poor cousin of the ministries. This is wrong now when the numbers are uncomfortable: the uncomfortable truth is that it was also wrong when the numbers were comforting.
If the numbers have hit the fan then it’s time to clean them up, not flush them down the toilet.
(1) See for example http://static.london.gov.uk/mayor/culture/docs/cultural-audit.pdf
AlanFandHasanB
KateO
23 Jan 12, 4:14pm (1 years ago)
UK CI Statistics
I think its useful to provide clarification here and continue the debate, but I wonder if it's wise to dismiss criticism of the revised numbers as 'silliness.' Not because the statisticians aren't doing their job properly, they may well be doing it better than they were before, but because I think you're underestimating the hype that lies behind this and hence the reaction to the hype. From about 1998 onwards, we were repeatedly told that CIs were about 8 per cent of the UK and 'growing twice as fast as the rest of the economy.' In every subsequent revision of the data, the numbers have gone down. That's fine, the stats have got better. But the political rhetoric has never really caught up with this and until very recently people were using 'twice as fast as the rest of the economy' when seeking public money and/or attention. I'm not suggesting that anyone was acting in bad faith here, simply that this is an important part of the policy story, which isn't really addressed by a debate about numbers.
On a more minor point, in what way are statisticians not 'empowered' to talk to industry and experts currently?
phikern
23 Jan 12, 3:35pm (1 years ago)
big and statistics
1. KEA undertook an international study on the creative industry in Europe for the European Commission in 2006 - the European definition excludes the computer software sector, under our methodology Value added to UK GDP was 3% (not 5.6%)...
2. A Eurostat working group just proposed a definition - very complex one.
3. Why not use the KEA proposed definition which by the way inspired the DCMS to copy our circles in 2007. It was an easy to use compromise of the different definitions used in Europe.
4. yes Jeremy Silver is right: the contribution is much higher because statistical instruments are not adapted to capture the creative industries'contribution.
5. "Economy of Culture in Europe" is on www.keanet.eu