How to develop Creative Clusters: Keynote in Manchester



As you know the UK has the largest creative sector in Europe. This includes film, TV, video games and publishing, architecture, art, design, fashion, film, video games, music and software.


The UK’s creative industries are now worth £71.4 billion per year to the UK economy and represent 6 per cent of the UK GDP.


The sector a whole is growing at twice the rate of the rest of the economy and it now accounts for over two million jobs.


Gov Know


Increasingly our creative sector is a vital aspect of our international trade and investment especially our Films and our TV content. Exports are worth £16 billion annually, or 8% of all UK goods and services exports.


A crucial factor in recent growth has been the tax treatment of film production. This was followed by high end drama and animation and earlier this year video games relief. The new theatre production tax relief will have an impact too. A further new childrens’ television tax credit was announced in the Autumn Statement.


The tax treatment of film production has supported more than £5bn of investment into British films and contributed to a 70 per cent increase in the film production workforce since its introduction.


Changes to the cultural test and budget measures have made the film tax relief more flexible for visual and special effects especially in the light of the success of “Gravity”.


As Innovate UK formerly the Technology Strategy Board say in their creative Industries strategy document last year:


“The UK has a share of around 5% of the global export market for creative goods. It is a broad and diverse sector which ranges from advertising and crafts to performing arts and video games. As well as their direct economic value, these industries play an important role in catalysing innovation across the wider economy, through the products and services they provide, but also as means of originating and spreading new ideas, knowledge and ways of working.”


As they also say, major trends of digitisation and convergence

have all contributed to the emergence of a digital landscape of increased complexity. Now in the digital economy there is increasing convergence –indeed symbiosis- between platform and content, between the tech sector and the creative industries.


Government have recognised the value of creative industries, as well as their cultural and economic importance. The Creative Industries Council was established at the beginning of the Parliament. It has now produced an excellent industrial strategy, Create UK focusing heavily on education & skills and access to finance.


The strength and depth of the UK’s creative industries is a huge advantage for Britain.We also have expertise not just in the creative industries themselves but in developing creative clusters, media hubs, film studios and the like.


We have learnt that what are called the “agglomeration effects” are crucial.


Clustering now in terms of innovation, creativity, finance, promotion and skills is the name of the game. Clusters or Hubs in Cities are of huge importance to the Tech and Creative Industries and there are many more than just in London.


Our major cities have done much to turn themselves into creative hubs, through action plans

  • facilitating networking groups,
  • providing incubator space,
  • investing in infrastructure,
  • championing particular sectors,
  • facilitating cultural apprenticeships,
  • building strong links with their universities and Further education colleges.


With private sector accelerators and incubators encouraged to establish


We now have as a selection:

  • MediaCityUK in Manchester
  • Manchester Airport City Enterprise Zone is becoming a northern digital hub with the aid of £800m of Chinese investment.
  • Liverpool’s Baltic Triangle
  • Dotforge in Sheffield
  • Fuse in Brighton


To name but few


Our clusters often specialize in a number of discrete areas. For example video games and special effects in Dundee.


But how can we strengthen our clusters further? How can we make them competitive in the global economy?


This raises the whole question of whether our cities are of the right scale and whether they have the necessary powers and control over their own finances.


In the past few years in the context of economic growth and rebalancing the economy the cause of City Devolution and Connectivity has been taken up.


I was at the opening of the International Festival for Business in Liverpool earlier this year and a great showcase it was both for Britain and Liverpool.


The acknowledged godfather to this movement is Lord Heseltine built on his own experience of Liverpool with his influential paper about cities and regeneration, “No stone unturned in pursuit of growth” written with Sir Terry Leahy and published in 2012, that looked at the myriad ways in which the UK could spread economic growth across the country.


I was much struck by his words


“What Liverpool forced me to confront was the extent to which these conditioning qualities had been driven from municipal England. The dynamism that had built the city was gone. Leadership relied on London. Liverpool’s challenges could only be overcome if the local community was engaged and enthused to harness its resources and build on its strengths in a much more effective partnership with central government.


Over many decades, power and initiative have shifted under governments of all persuasions from provincial England to its capital city and its bureaucracies. Strong local leadership in our great cities created the industrial revolution and made us what we are. London did not dominate.”


Lord Heseltine argued that the UK has one of the most centralized political systems in the western world. As a result investment in much needed infrastructure and development required to attract international business and investment has been delayed.


The major RSA project, the City Growth Commission chaired by Jim O’Neil which reported in October this year chimed exactly with this . The RSA said: “Too many of the UK’s urban areas outside London are failing to achieve their growth potential”. “The UK’s main challenge is to bridge the gap between its capital and the metros beyond”


The Chancellor has responded to this by supporting the creation of a “Northern Powerhouse”, the development of a hub of economic activity, concentrated around a band comprising the north of England’s largest cities designed to create an economic zone to rival the success of London and rebalance the UK economy.


A major new science facility the new Sir Henry Royce Institute for advanced material science here in Manchester is part of this with a £250 m investment. Projects such as the part funding of the new theatre in Manchester “The Factory” demonstrates the importance of culture to this vision.


The Deputy Prime Minister has introduced “Northern Futures” as a platform to facilitate a more open debate about decentralisation and economic growth in the North of England.


The word of the moment is devolution. Politicians and people in the North of England in particular recognise in the Scots’ desire for greater powers of taxation and fiscal autonomy something they too want – the power to create local prosperity and shape their own destiny, achieved through greater devolution of powers from Westminster.


It is of course important that we build on initiatives like the LEP’s, the City Deals and the Regional Growth Fund.


The number of City Deals and Growth Deals have grown, not just in the bigger cities but in places such as Brighton and Cambridge too. The Regional Growth Fund has already delivered 99,000 jobs and £1.8 billion of private investment.


Local councils and particularly the newly created Local Enterprise Partnerships (LEPs), such as the Greater Manchester LEP, have already been granted new powers and responsibilities that allow economic growth to flourish.


But we need to go further.


The creation of LEPs should have paved the way for further devolved powers, including powers relating to hiving off a portion of stamp duty and business rates taxes for local enterprise initiatives, but the Government has held off giving them.


We need to give the cities greater powers, especially over finance. More than 90% of tax is collected by central government. We need to devolve more economic decision making to local areas and away from national government.


The City Growth Commision has called for “Devo Met” alongside “Devo Max” and proposed that Westminster should devolve powers to UK cities at the same time as devolving powers to Scotland – an action that would boost the economy by £79bn per year according to their calculations.


Political parties of all colours are making more positive noises about the importance of de-centralisation in helping to promote and build thriving regional economic centres.


One proposal put forward by my own party is to introduce ‘Devolution on Demand’, enabling devolution of powers from Westminster to councils or groups of councils working together.


I expect the next government – irrespective of which party or parties that may comprise – to endow local councils and LEPs in the north of England with further powers, as a way to assuage the cries for more representation and less London-centricity.


The unlocking of LEPs should undoubtedly help drive further local growth in the north. However, strong regional leadership is key if these ‘super hubs’ are to be forged.


One only has to look at the example of London to see the benefits that a conurbation mayor can bring. Mayoralties can provide the necessary leadership to champion issues of importance to a local area, inspire businesses and residents alike to take pride in their city and provide greater accountability for decision making.


Mayors can help to attract businesses, investment and skilled workers to cities through highlighting the successes of the region and throwing their weight behind local infrastructure and commercial initiatives.


Lord Heseltine called for legislation to be passed to enable combined local authorities that wish to elect a conurbation mayor to do so.


As you will know the Government has now reached agreement with the 10 local authorities of Greater Manchester to create the first metro-wide elected mayor outside of London. The first mayoral election is expected to take place in 2017.


The mayor will lead Greater Manchester Combined Authority, chair its meetings and allocate responsibilities to its cabinet, which is made up of the leaders of each of the area’s 10 local authorities and control of budgets and power to decide what happens with transport, housing, planning and policing.


The Government has promised control over a further £2bn of public money, better transport links, an Oyster-style travelcard and more investment in skills and the city’s economy.


Then as the City Growth Commission say in their paper “UniverCities”, Universities have the scale to be the engine of ecomonic growth in their host city and metro and need to be instrumental in retaining and attracting talent to northern cities.


The CGC identified that more efforts should be made to encourage students to stay and find employment in the area after graduating. Universities need to invest in employability and align with local and regional economic development. We need to tie them in as incubators for innovation and creativity. In fact they cite the University of Manchester as a model in this respect.


The skills agenda for our clusters is vital. It is notable that this July Channel 4 Creative Skillset on behalf of the creative industries secured unprecedented funding from the Employer Ownership of Skills Pilot to develop the education and skills recommendations of the Creative Industries Council’s strategy, Create UK I mentioned earlier.


There is a strong Manchester component of the programme. Here are just a couple of examples.


  • A new ITV soaps training programme for new trainees working on Coronation Street and Emmerdale productions, led by experienced staff who can pass on their skills.
  • SharpFutures, based at The Sharp Project in Manchester, a Creative Digital agency that supports young people into Creative Digital employment, will take on 15 new apprentices and 33 placements. The aim is to develop a pool of talented, work-ready people to work across a range of companies from broadcast production to web app development.


The combination of mayoralties, combined authorities, more devolution and close university connections would also help boost the power and prestige of our cities, which would bring the benefit of making them more desirable as partners for foreign cities.


I believe we now have a great opportunity for “Creative Britain” to partner with China to promote creativity and growth both inbound and outbound in a variety of ways


Following the UK’s Shanghai Expo Pavilion and the Olympics I have seen real enthusiasm in China for partnership with British creative industries and creators. This enthusiasm for coproduction, partnership and investment in the tech and creative industries is now particularly alive among younger business people in China.


A good example is Buckinghamshire-based Pinewood Studios which last year signed an agreement with Dalian Wanda Group to advise on the design and construction of a new film and television studio complex in Qingdao. Once completed, it will be one of China’s largest film and TV studio facilities.


The Film Co-production Treaty negotiated by the BFI and signed earlier this year will give Chinese-led productions access to UK Film Tax Relief and the BFI Film Fund. Eligible co-productions will not be subject to China’s quota on foreign films. This will lead to real partnership between UK and Chinese filmmakers.


In The UK China Twinning Report, written by Carl-Johan Carlstedt and Christopher Georgiou the authors argue that twinning UK with Chinese cities would bring strong regional growth for both parties but that often there is an imbalance between the Chinese and the UK twinning partner.


This is another argument for the expansion of decentralisation of decision making to our city regions.


They too emphasize that the structures and responsibilities of our local authorities in our major city regions need changing if they are to begin to match the conurbations of China and deliver the fruits of twinning.


We also need much better transport and digital connectivity between what Jim O’Neill and the City Growth commission call Metros. We need to invest in major transport improvements and infrastructure to create a so called ‘Northern Economic Corridor’.


Sir David Higgins in his Report on Phase 2 of HS2 said” “Capacity problems in the South and Connectivity in the North are exacerbating our unbalanced national economy”.


He uses the example of the low level of commuting between Manchester and Leeds, only 40 miles apart, and argues that connectivity both digital and of infrastructure is vital for the development of knowledge based economies. It allows the vital pooling of skills.


Creating the appropriate infrastructure to facilitate this economic transformation is vital and the mooted High Speed 3 project should be strongly supported. Creating a high speed rail network linking our great northern cities as suggested by One North and the City Growth Commission – is an essential component of the Northern Powerhouse vision.


Whatever the outcome in terms of devolution and infrastructure we need to beware of trying to create a single homogeneous economic hub.


In conclusion however each of our cities has its own character, culture and specialisms especially when it comes to different aspects of the creative industries


We need, as the Victorians did, to celebrate the diversity of cities such as Manchester, Liverpool, Leeds, Birmingham and Sheffield and try to enhance and enlarge the 21st century cultural and commercial niches they have already begun to carve for themselves.


If we building on the areas of strength already established by our great cities, combined with world class transport links and digital connectivity our cities can reach new heights of prosperity and creativity.





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