Regional disparities remain embedded in the creative industries sector too, says Bruce Tether.
In recent years the UK’s creative industries sector has been growing rapidly both in terms of employment and economic output. But as a recent paper I wrote for the Creative Industries Policy and Evidence Centre revealed, big regional differences remain.
Using official government estimates, the paper examined the distribution and growth of the creative industries in the UK at a regional level. What we found was that creative industries are very unevenly distributed across the country, both in absolute terms and relative to economic activities as a whole.
Interestingly, this unevenness is considerably more pronounced in terms of the value of economic outputs than it is for employment, with London and the South East dominating the former much more than the latter.
This implies substantial inter-regional differences in labour productivity. Indeed, the implied labour productivity of some of the creative industry sub-sectors in the northern and western regions of the UK is strikingly low.
The analysis highlights the scale of the policy challenge in reducing regional inequalities. The UK government and devolved authorities rightly recognise the economic and socio-cultural significance of the creative industries, and that they can be expected to continue growing into the future at a faster rate than the economy as a whole.
The government is also committed to narrowing the gap between London and the rest of the UK, both in relation to the creative industries and the economy as a whole, and the policy challenge can be summarised as how to maintain growth in London and the South East while ensuring the rest of the country catches up.
This implies that the creative industries need to grow faster in the rest of the UK than in London and the South East and, to be meaningful. 'Catching up' here means not only narrowing the gap in terms of employment, but also in terms of productivity.
This is a major challenge. As a share of total employment, the creative industries have been growing fastest in London, such that between 2011 and 2018 they increased their share of total employment by, on average, 0.26 of a percentage point each year.
In the rest of the UK, excluding London and the South East, the creative industries share of employment increased by just under 0.1 of a percentage point each year. If we extrapolate these trends, then in 20 years the sector would account for just over 18% of all employment in London, 14% in London and the South East, but just 6.4% of all employment in the rest of the UK.
So for the rest of the country to catch up to this 14% figure, the creative industries in the regions would have to grow their share of employment by half a percentage point every year for the next 20 years. That amounts to roughly five times their present rate of growth, and twice the rate of growth achieved by London in the 2011-2018 period.
Narrowing the gap
Narrowing the gap is not impossible, but it is important that policymakers recognise that growing the creative industries outside of London and the South East is a major, long term challenge, and that relatively small, short-term initiatives will prove inadequate.
I question whether the current emphasis on ‘clusters’ in general, and ‘creative clusters’ in particular, is up to the task, particularly as the largest, strongest, and fastest growing clusters are predominantly in London, while clusters in the regions outside London (and the South East) tend to be much smaller. To be clear, I am not opposed to the current clusters-based policy. My concern is whether this will be sufficient to start narrowing the gap.