Creative Sector in the South of Scotland

Transcription

1 Creative Sector in the South of Scotland Report commissioned by Scottish Borders Council on behalf of the South of Scotland Creative Enterprise Initiative May 2012 EKOS Limited, St. George s Studios, St. George s Road, Glasgow, G3 6JA Reg Telephone: Web:

2 Direct enquiries regarding this report should be submitted to: Debbie Roberts, Senior Consultant, EKOS Tel: As part of our green office policy all EKOS reports are printed double sided on 100% sustainable paper

3 Contents Executive Summary i 1. Introduction 1 2. South of Scotland CI - Context 3 3. Economic Value of the CI Wider Impacts Qualitative Findings Conclusions 61

4 Executive Summary Introduction and Background Scottish Borders Council commissioned EKOS on behalf of the South of Scotland Creative Enterprise Initiative (SOSCEI) to provide a comprehensive baseline of intelligence about the creative sector in the South of Scotland. SOSCEI is a partnership set up between the two local authorities, Dumfries and Galloway and Scottish Borders, under the umbrella of the South of Scotland Alliance. The initiative is designed to support creative individuals and micro enterprises to develop their business skills and fulfil their business potential. The research was commissioned in order to support the SOSCEI by providing reliable data and fresh intelligence to help them target their actions. Results from the research programme will be continuously recycled into their Initiative to improve its impact. Study Approach The study approach comprised a number of elements: detailed review and analysis of existing economic data to describe the scale of the creative sector in the region; large scale telephone survey (500+ interviews) of creative businesses and practitioners across the region to gather data on the sector s contribution and populate a database of the creative industries in the South of Scotland; series of one-to-one and group consultations with regional and national stakeholders to explore the more qualitative issues affecting the arts and creative industries in the South of Scotland; in depth analysis and triangulation of data to provide overall estimates of the scale and structure of the sector; and production of the final report and user friendly database. i

5 Findings Economic Impact The creative sector in the South of Scotland is estimated to generate revenue of almost 60m per annum, employing 1,337 FTEs. This equates to an estimated GVA of 37-39m per annum. This is larger, for example, than forestry and fishing combined 1 and demonstrates the important economic contribution of the sector. Structure The sector is diverse and somewhat fragmented, with a different structure and character in each of the two regions. Software and electronic publishing (including newspapers) is the most significant employer in the creative sector in both regions. Publishing is more important to the creative industries in Dumfries and Galloway than in the Scottish Borders where advertising and architecture rank higher. Businesses are very small, with a high proportion of sole traders and companies operating below the VAT threshold, and a focus on local market opportunities. While these businesses often operate under the radar, their cumulative impact remains significant. The freelance community is also significant, and is a mixed economy of full and part time workers, formal and informal, many of whom have second jobs to supplement their creative income. Voluntary working is widespread in the creative sector in the South of Scotland, and volunteers play a particularly important role in helping to run festivals and events across the region. Arts and creative activity play an important part in tourism and in promoting the South of Scotland to potential visitors bringing valuable income for artists and local businesses. They also contribute to an image of the region as an interesting, vibrant and creative place. 1 According to BRES data, total employment in forestry and fishing activities in the South of Scotland in 2010 was 903 FTEs. ii

6 Trends Total creative employment grew slightly in the Scottish Borders but fell in Dumfries and Galloway in recent years, due mainly to declining employment in publishing and to a lesser extent in music and the performing and visual arts. This is similar to the pattern across the UK, as creative industries have felt the effects of the recession, particularly in areas like creative services (architecture, advertising and design) where clients have reduced their spending, and the arts for which public funding has come under increasing pressure. Social and Environmental Impact Existing research provides strong qualitative evidence of the important social benefits that the creative sector brings: through voluntary activity, local arts events offer opportunities for community participation in creative activity; the creative sector provides valuable training and development opportunities through voluntary working and internships; and artists and creative practitioners play a significant role in local rural communities due to their visibility and the strong community flavour of arts events and festivals. These activities help build community pride as well and provide participatory opportunities for local residents In relation to environmental impact, the study identified some contradictory drivers. While new technology enables content creation and distribution through digital channels, thereby reducing environmental impact, the geography of the South of Scotland is such that car travel is almost essential in many parts of the region. Combined with the impact of increased visitor traffic to arts events, it becomes difficult to provide a clear account of the environmental impact of the sector. Opportunities The research suggests that there are a number of areas of real opportunity for the creative sector in the South of Scotland, including: iii

7 creative services: although small, the creative services sector in the region offer potential for economic growth provided that businesses can develop market opportunities beyond the region as well as stimulating local demand. festivals and events: there is already a strong basis on which to build here, and the links between culture and tourism are strong. There is potential to continue to expand these links. Partners in the South of Scotland could start to develop propositions for unique events that play to the region s broader strengths, including sport and the outdoor tourism market and visual arts and crafts; film locations: the video and film sector has shown strong growth and Dumfries and Galloway in particular has secured more than its proportional share of mobile film production activity. There is an opportunity to build on this success and continue to develop the screen sector in the region; visual arts and crafts are a strength in the South of Scotland and with ongoing professional development and support in areas like entrepreneurship, business skills and marketing this remains an area of opportunity for the region; and promotion and market development: there is an opportunity to promote the South of Scotland s creativity on a wider stage as a means both of enhancing the region s reputation and appeal to visitors and also developing greater market awareness of the creative talent in the region. The Councils are already engaged in many, if not all, of these areas, and part of the need here is simply to ensure that this investment and support is sustained over the longer term. Issues and Barriers The research highlighted the main issues/barriers to growth as: difficulties in accessing finance, an issue made more difficult in the creative sector by lack of tangible assets within businesses against which to secure loans and by the high risk hits-driven nature of many of these industries; lack of business skills: too few creative practitioners have the necessary business skills to establish and run a growing commercial business; iv

8 fragmentation across the sector: this is a particularly acute issue in the South of Scotland where the geography can mitigate against effective networking and collaboration, particularly where the IT infrastructure is less well developed; local market focus: too great a reliance on local markets can create vulnerability to even small changes in market conditions or increased competition. rural location: creates challenges in relation to the costs of operating from more isolated locations, even if transport improvements such as the rail links in the Scottish Borders help. The extent and quality of broadband access across the region is also an issue; and talent drain is an issue facing many regional creative clusters (and not just in rural areas). Suggestions for Future Development Suggestions made for future development and consideration in relation to the sector were: Suggestion 1: There is a need for a clear strategy for the development of the arts and creative industries at the South of Scotland level as there is an opportunity to combine resources and realise a greater vision for the sector. Suggestion 2: There is an ongoing need for on-the-ground support and facilitation to keep networks alive. In this respect, the creation of a permanent position within Dumfries and Galloway Council is an important step in the right direction. Both CABN and the Creative Clusters project are coming to the end of their funding periods and should now be continued, albeit with the potential to develop a more consolidated offer to the sector. Suggestion 3: Basic business development and business skills support is an area of obvious need. A successor to CABN and Creative Clusters could provide essential signposting, bringing sector knowledge to the more generic support available via the Business Gateway. Joint events between CABN and the Business Gateway could also help cement the links between the two services, and encourage more creative businesses to seek support. v

9 Suggestion 4: Entrepreneurship and innovation should be key themes for any future support activity. Business Gateway, CABN and Creative Clusters all have a role in supporting and encouraging entrepreneurship, and further and higher education each have much to contribute in these areas. There is scope for further development of connectedness between FE/HE expertise and knowledge and the creative sector. South of Scotland Business Solutions (SOSBUS) is the main vehicle for facilitating these connections. Stimulating demand for this input is crucial, Suggestion 5: Festivals and events are an area of clear opportunity, particularly when linked into wider tourism development priorities in areas like mountain biking and outdoor pursuits. There is merit in facilitating a collaborative approach via a festivals and events network to share good practice, co-ordinate programming, develop joint marketing and promotional activities and provide a forum for future planning. Suggestion 6: Promotion and market development work should be clear priorities and should include: promoting the region s creativity to build the reputation of the creative sector itself and of the region as a culturally rich place; promoting cultural opportunities to people within the South of Scotland to build audiences and encourage participation in creative activity; helping businesses access opportunities in key markets beyond the South of Scotland, either in Scotland s central belt or down south into England; and facilitating the development of an infrastructure to support commercial market development across the arts and creative industries. vi

10 1. Introduction This report, commissioned by Scottish Borders Council on behalf of the South of Scotland Creative Enterprise Initiative (SOSCEI), provides a comprehensive baseline of intelligence about the creative sector in the South of Scotland. The research consolidates and augments intelligence about creative businesses in the South of Scotland to help SOSCEI target its future actions. 1.1 Study Aims and Objectives The overall aim of the study was to produce a reliable, comprehensive baseline of intelligence about the creative sector in the South of Scotland. The more detailed objectives being to: 1.2 Study Method build the contact database of creative individuals, businesses and organisations in the sector; determine the economic value of the sector and understand the sector s dynamics; assess the sector s broader impacts on the South of Scotland economic, social and environmental; and develop social impact measures and refine economic impact measures. The study method comprised a number of key elements: initial discussion and scoping with the client to refine the approach and definition of the creative industries; detailed review and analysis of existing economic data to describe the scale of the creative sector in the region; large scale telephone survey (500+ interviews) of creative businesses and practitioners across the region to gather data on the sector s contribution and populate a database of the creative industries in the South of Scotland; 1

11 series of one-to-one and group consultations with regional and national stakeholders to explore the more qualitative issues affecting the arts and creative industries in the South of Scotland; in depth analysis and triangulation of data to provide overall estimates of the scale and structure of the sector; and 1.3 Structure production of the final report and database. This report is structured as follows: Chapter 2 provides context to the research including an overview of the SOSCEI, strategic rationale and a review of previous research into the creative sector in the South of Scotland; Chapter 3 presents an analysis of the economic scale and value of the creative sector in the South of Scotland, including details of the trends, opportunities and threats driving the sector; Chapter 4 provides a review of the wider impacts of the creative sector including the associated social and environmental impacts; Chapter 5 discusses some of the more qualitative findings from a series of consultations with key stakeholders in the region; and Chapter 6 draws some conclusions and presents some areas for further consideration by the partners as they seek to develop the economic and social contribution of the creative industries to the South of Scotland. The report is supplemented by five Technical Appendices which provide the more detailed evidence base on which the conclusions are formed. These are: Appendix 1: Economic scale; Appendix 2: Sector feedback; Appendix 3: Overall size of the CI; Appendix 4: Sector breakdown; and Appendix 5: DCMS definition. 2

12 2. South of Scotland CI - Context 2.1 Introduction This section reviews the context for the creative industries in the South of Scotland, covering: the strategic context for the development of the creative sector; the support environment; and previous research into the sector. 2.2 Strategic Context A National Priority The creative industries (CI) have been a consistent priority within national economic strategies for some time. This is particularly reflected in the priorities of: Scottish Government Economic Strategy for Scotland; and Scottish Government Strategy for the Creative Industries. The Government Economic Strategy for Scotland identifies the CI as one of six key sectors considered to be of strategic importance to the future growth of the Scottish economy. There is also specific focus at national level on the CI both through the Scottish Government s creative industries strategy and the work of the Scottish Creative Industries Partnership (SCIP). The Scottish Government Strategy for the Creative Industries recognises that: the creative and cultural industries are not just economically beneficial in their own right; they have "spillover" effects which mean that they also act as catalysts for growth in other areas. For example they spur on technological innovation, while a strong cultural and creative sector can help to make regions more attractive living places for highly skilled workers in other sectors of the economy. 3

13 The strategy sets out how economic growth within the creative industries will be supported by focussing on four objectives: to improve Scotland's competitive position at UK and international levels; to build the scale of businesses, business activity, skills and investment; to attract business activity, businesses, skills and investment to Scotland; and to develop creative leadership and build the talent base in Scotland. The SCIP was established in 2009 as a means of co-ordinating and managing support for Scotland s creative industries. The members are: Creative Scotland; Scottish Enterprise; Highlands and Islands Enterprise; Scottish Funding Council; COSLA; and Scottish Government. SCIP established a series of reference groups addressing each one of the 13 subsectors of the creative industries identified in the DCMS definition. The groups continue to provide valuable industry insight and input to the ongoing process of supporting Scotland s creative economy Local Emphasis In the South of Scotland, the potential of the creative economy is recognised in the South of Scotland Competitiveness Strategy , with textiles, creative and crafts sectors highlighted as key industry sectors under priority 5 of the strategy which is focussed on the objective of realising the full potential of indigenous industry sectors. More locally, the Dumfries and Galloway Regional Economic Strategy provides the strategic context for the growth of the regional economy. The strategy is focussed on the development of a knowledge based economy, an area in which the 4

14 creative sector has a strong role to play. However, the strategy makes no explicit mention of the creative industries other than to note that the region is starting from a weak base in this area. Although it does identify targeted support for growth sectors as an objective, the strategy is not specific about what these growth sectors might be. In the Scottish Borders, the most recent strategic guidance is that provided in the Economic Blueprint for the Borders The document outlines the following vision for the region: By 2020, the earnings gaps to Scotland will be closer with the Scottish Borders becoming a location of choice for businesses and people living and working here. It will be a best performing and productive rural economy in Scotland. This vision is supported by three main strategic aims: A: future proofing the economy; B: maximising our assets; and C: providing leadership. The creative sector is a priority area for support through at least five of the strategy s sub objectives: A1: to create the conditions for business to compete; A3: to attract talented and entrepreneurial people who place a high value on access and quality of life; A7: to maximise recreational and cultural opportunities; B1: to ensure economic development maximises quality of life and rural assets; and B3: to maintain, enhance and build on entrepreneurial talent and dynamic business environment in the area. In addition, the new administration of Scottish Borders Council has just published its new Partnership Agreement for the Programme for Local Government Ambitious for the Borders The document outlines three main priorities: 5

15 we will ensure economic development is the key driver for the new Council administration; we will invest in our children and young people; and we will work to improve life in the Scottish Borders. Under the first heading, the document commits both to upgrading the broadband infrastructure in the region and to continuing support for the creative arts industries. The new administration at Dumfries and Galloway has also issued a similar partnership agreement. The economic value of arts and culture (including the creative sector) in promoting and contributing to health and well being, economic and social development, formal education and lifelong learning, leisure, architecture and tourism is also recognised in the Dumfries and Galloway Cultural Strategy. The strategy is built on five key principles which aim to develop and promote the cultural sector: considering culture in everything they do including working with third and community sectors; providing access to culture; increasing participation in cultural activities; providing and supporting world class cultural events; and adding value by monitoring performance. In the Scottish Borders, work is underway on the development of a new Cultural Strategy, and it is expected that the CI will feature in this guidance. Summary There can be no doubt that the creative industries are a national priority for economic development policy. This has been clearly and consistently articulated in national strategic guidance for many years now. At the regional level, both Dumfries and Galloway and the Scottish Borders have long prioritised culture, with the creative industries now rising further up the economic development agenda, most visibly in the Borders. 6

16 2.3 Support Environment South of Scotland Creative Enterprise Initiative The South of Scotland Creative Enterprise Initiative (SOSCEI) was established in 2010 with funding from the Creative Scotland Rural Innovation Fund and LEADER as a joint initiative to develop the creative sector across Dumfries and Galloway and the Scottish Borders. The aim of SOSCEI is to establish a lasting framework of support that responds to the needs of creative individuals and businesses in the visual arts, crafts, literature, film, music, performing arts and dance sectors. The project runs until the end of September The Creative Arts Business Network, CABN, is the brand name through which SOSCEI operates. CABN pre-dates SOSCEI and was established as a pilot in 2009 with funding and support form LEADER and Scottish Borders Council (SBC). The brand was then extended to cover the whole of the South of Scotland under the SOSCEI project. CABN provides dedicated support for the creative arts sector in the South of Scotland including the following: raising the profile of the sector and recognition of its contribution to the area; improved networking, communication and promotion; advice and information; training; peer support and mentoring; promotion of collaborative working; grants (i.e. in partnership with Creative Scotland, CABN runs the South of Scotland Visual Arts and Crafts Maker Awards); and a focus on infrastructure (creative spaces, web based knowledge exchange). The project is jointly co-ordinated by the Creative Arts Business Development Officer and Creative Leader at Gracefield Arts Centre (Dumfries and Galloway Council) and 7

17 at Heart of Hawick (SBC) respectively. While the post at SBC is funded by the project, in Dumfries and Galloway, this post is a mainstream permanent post within the Council. In addition, 13 Creative Business Advocates support these officers in the delivery of the project. Their role is to advocate on behalf of their sector ensuring that CABN is raising the profile of the Creative Arts sector, building effective communication, responding to identified needs and facilitating collaboration across the arts. CABN also supports some of the key voluntary sector arts organisations. These organisations are viewed as being important to the delivery and development of the arts both in terms of sustaining the creative businesses in the area and also for developing audiences. Creative Clusters project CABN works alongside the South of Scotland Creative Clusters project grant scheme. The scheme was supported by SBC, Business Gateway and the European Regional Development Fund. In response to the number of businesses operating in the creative industries sector, the project was designed to support the development of business clusters among creative services businesses. It is primarily focused on those creative businesses involved in business to business activity (e.g. design, architecture, web development etc) and supports: joint marketing campaigns; development of ICT applications that improve productivity; investment in equipment that will improve production; branding and signage; training activities; shared use of resources or equipment; expenditure that supports and encourages collaboration within business clusters; and alterations to property as part of the development of supply or production processes. The project runs until the end of September

18 South of Scotland Business Solutions South of Scotland Business Solutions (SOSBUS) is a three-year partnership project between the seven Further and Higher Education institutions (FE and HE) in the South of Scotland (Heriot-Watt University, Borders College, Dumfries & Galloway College, Scottish Agricultural College, Barony College, University of the West of Scotland and the University of Glasgow). It is funded by the Scottish Funding Council, the European Regional Development Fund through the South of Scotland Global Grants Body and partner contributions. All of the partners work together to link their services and knowledge and they act as a single point of contact for practical help and advice for businesses in all sectors. The following support services are provided business Health Check to identify/clarify opportunities for growth; promotion of workforce development; support for businesses with research and development opportunities; networking opportunities for local businesses; and access to resources and facilities within institutional partners. SOSBUS runs until December Local authority activity In addition to these business support programmes, both SBC and Dumfries and Galloway Council (DGC) deliver two other services of critical importance to the growth of the creative sector: Business Gateway; and arts development. Business Gateway is the main support structure for small businesses and is strongly focussed on business start-up and growth. Services are not sector-specific, but rather focus on generic business development issues from company formation to access to finance, business planning and marketing. 9

19 Both Councils have long established arts development services, and the arts services in SBC is part of a wider portfolio of services that are in the process of transferring to a trust structure for delivery. Arts development in each area provides core support to key arts organisations as well as funding for a wider range of festivals, events and arts initiatives at local community level. The arts development service in Dumfries and Galloway is also restructured into a series of four area arts hubs, with an overarching Chamber for the Arts working at regional level with the Council and Creative Scotland to provide a strategic approach. It is worth noting that both Dumfries and Galloway and Scottish Borders Council are both part of Creative Scotland s Place Partnership programme. The investment attached to this initiative is intended to enable the local authority and its partners to identify and support key strategic development opportunities or to address particular issues in the area. Summary The support environment for the CI in the South of Scotland comprises both sectorspecific and generic support mechanisms. Indeed, despite the somewhat less than specific focus at strategic level on the sector as an engine of economic growth (at least in Dumfries and Galloway), the commitment of each Council to the sector is apparent in their support for these key projects. 2.4 Previous Research Introduction This section provides an overview of previous research into the creative sector in the South of Scotland. Much of this research was undertaken several years ago, and focussed on specific sectors rather than the creative sector as a whole. Nevertheless, it does provide a basis for comparison against the findings of this research study. Rural Creative Industries The CI are a heavily researched sector, with a fast growing literature addressing a number of thematic concerns and issues such as economic growth, innovation, 10

20 clustering and regeneration, as well as a large research base addressing the more social impacts of arts activities. Much of this CI-related research work has focussed on urban areas as the natural concentrations of creative business activity. This is usually driven by the presence of large buyers (e.g. BBC), access to shared labour pools, including freelance labour, employment opportunities and well developed economic infrastructure. However, more recently there has been increasing interest in the structure and functions of creative economies in rural areas. For example, a study by BOP and Experian 2 examined economic data across rural areas in England and Scotland and drew a number of broad conclusions: there has been a widespread shift in rural economies toward service based activities, reducing the level of dependence on primary industries; in contrast to previous assumptions, the CI are not solely urban-based and are, in fact, alive and well in many rural areas across the UK; visual arts, crafts and designer-makers (classified as creative originals ) are usually proportionately more important components of the creative sector in rural areas than in their urban counterparts; the CI account for a larger share of employment in fast growing rural economies than in slow growing areas, with this link most marked in creative services (e.g. advertising, design, architecture etc); and there is evidence to suggest that sole traders and lifestyle businesses (which are a common feature of rural creative economies) can and do contribute to economic growth. The study concludes with a summary of how and where the CI fit within economic development policy for rural areas: areas of the sector concerned with the production of creative originals (e.g. visual arts, crafts) and experiences (e.g. festivals, performing arts) should be considered in the context of sustaining communities with links to tourism and strategies to attract businesses, investment and people; and 2 Creative Countryside, BOP/ Experian,

21 those creative business focussed on creative services (e.g. advertising, design) and content production (e.g.tv, film) should be included within strategies to promote business growth, innovation and the development of a knowledge-based economy in rural areas. South of Scotland Slims (2009) undertook a South of Scotland Economic Review on behalf of Scottish Enterprise to assess the size and scale of the economy 3. The review covered all of SE s priority sectors, and found that: 1,000 individuals were employed in 350 workplaces in the creative sector in 2007; these workplaces accounted for 3.5% of all creative workplaces in the South of Scotland; the average number of employees in the creative sector was 2.5 in 2007 in comparison to 10 in all industry sectors; total CI GVA was 2,200m accounting for 2.4% of all Scottish CI GVA in 2006; and average GVA per employee for the CI was 38,700 in 2006, below the average of 47,200 across all industries. Scottish Borders Much of the research that has been undertaken in the Scottish Borders underestimates the economic impact of the sector as a whole, but is nevertheless summarised below. A study carried by the University of Edinburgh in 2000 calculated the annual turnover of the creative arts sector in the Scottish Borders to be 8.5m. It also identified that that there are 396 FTEs employed across 210 businesses. This was split between visual and creative arts (230 FTE), performing arts (128 FTE), literature (22 FTE) and film and video (16 FTE). The research highlighted the importance of the visual and applied arts sector, estimating that on a per capita basis, it is more than twice the Scottish average. 3 South of Scotland Economic Review, SLIMS (2009). 12

22 The sector was found to be characterised by low income - 14,779 was the average income of a full time arts worker, with a substantial numbers earning less than 5,000. Other issues identified included undercapitalisation, the absence of a support infrastructure, a dependence on part time business and a deficit in business marketing skills and experience. There was little confidence in the future potential for earnings growth and the sector was found to be suffering from a brain drain of talent. The importance of community initiated arts activity, events, festivals, exhibitions, projects and workshops/classes, in contributing to a sense of place was also highlighted in the research. Dumfries and Galloway A number of studies of different parts of the creative sector have been conducted in Dumfries and Galloway over the last 15 years or so. These include research into: music (Jones Economics, 1999); arts businesses (Todd Associates, 2000); and visual arts and crafts (Todd Associates 2005 and 2008). The key findings of these studies are summarised below. Jones Economics (1999) in a development strategy for the music sector in Dumfries and Galloway surveyed 53 individuals in the music sector and identified the following characteristics of the sector: average annual income was low at 5,664 and much of this was sourced from public sector grants on which the sector was found to be heavily reliant; the sector rated themselves low in terms of business skills (financial planning, marketing and business planning); only a fifth of those surveyed were pursuing development plans such as developing new products/activities or trying to access new markets; lack of finance was considered one of the main barriers to growth and development (83%), the next most commonly identified barrier was suitable venues; 13

23 the sector was estimated to generate 700,000 in tourism spend and 75 FTE jobs in the local area; in total it was estimated that the music sector generates 1.7m of income to the area and supports 208 jobs; and it was also found to provide substantial social and community benefits through improvements to community events, business activity and facilities. Todd Associates study Arts and Crafts Economic Impact Appraisal in 2000 analysed the economic impact of the wider arts and crafts, visual arts and performing arts sector as well as the public and voluntary sector. It also incorporated previous research on the music sector to give a clearer picture. The economic impact of the sector was estimated as follows: total employment of 1,120 and turnover of 7.05m; o o o o o arts and crafts, 646 employed and 3.35m turnover; writing, film and cinema,35 employed and 0.65m turnover; public sector, 151 employed and 0.7m turnover; voluntary/community, 25 employed and 0.25m turnover; and music, 208 employed and 1.7m turnover. In addition, the study found that the sector is characterised as follows: very little evidence of direct collaboration or trading between businesses in the sector; a large number of very small enterprises scattered randomly throughout the region and operating predominately in isolation; and relatively stable with little sign of attrition and a small and stable stream of new entrants. Todd Associates study Art and Crafts Sector Trade Development Project in 2008 looked more specifically at the size and scale of the visual arts and crafts sectors in Dumfries and Galloway. The study found the following: 370 individuals operated in the crafts sector and 593 in visual arts, with increasing numbers operating in more than one sector (in comparison to 2005); 14

24 540 business generated 7.1m in turnover and employed 740 FTEs; drawing and painting subsectors accounted for the largest number of practitioners; and 63% operated in UK markets and 21% overseas markets. It was also found that the sector is dominated by sole traders (82%) with most individuals (92%) supplementing their income with a second job. Average earnings in the sector were low at 10,000, as was turnover at 13,900. Practitioners were found to be older, with 11% of those operating in the sector under 35 years of age and 28% over 60. Summary The existing evidence base for the creative sector in the South of Scotland is best described as patchy and methodological differences make direct comparison problematic. However, previous research does suggest some broad findings: CI matter to rural economies and can contribute both to community development and economic growth objectives; although the economic scale of the sector in the South of Scotland is modest, and earnings are low, the sector has an important social and cultural role; average productivity is lower than other sectors; the sector is characterised by high numbers of sole trader and freelancers, as well as part-time working; potential for future growth is uncertain and will be unevenly distributed across the sector; and key issues affecting future growth include business skills, finance and ambition. 15

25 3. Economic Value of the CI 3.1 Introduction This chapter provides an estimate of the economic value and scale of the CI in the South of Scotland. The analysis combines official economic data and the findings of an extensive survey of 510 business and freelancers working in the creative sector in the region. It also considers the market trends, opportunities and threats facing the sector. 3.2 Official Economic Data Defining the CI The Scottish Government follows the definition of the CI set out by the UK Government Department for Culture, Media and Sport (DCMS), which identifies 13 industries as making up the sector: Advertising Architecture Arts and Antiques Crafts Design Designer fashion Film and video Interactive leisure software Music Performing arts Publishing Software and computer services TV and radio The data presented in this section is based on this DCMS definition using official secondary data published by Annual Business Inquiry (ABI) data from 2006 to 2008 and Business Register Employment Survey (BRES) data from 2008 to The variables considered are: employment (latest data to 2010); and business stock (latest data to 2008); Data from official secondary data sources are based on DCMS definitions and SIC codes. BRES data (employment) is sourced using 2007 SIC codes whilst ABI 16

26 (business data) is sourced from 2003 SIC codes. A more detailed description of the DCMS definition is provided in Appendix 3. Data Issues There are limitations and issues surrounding the coverage of official secondary data that should be borne in mind. In particular: BRES employment data does not include freelance employment; and ABI data on numbers of businesses does not include self employed business or freelancers. Given that the nature of the CI is such that it consists of a large number of freelancers and small creative practitioners, particularly in a rural area such as South of Scotland, it is likely that the official data will considerably underestimate the scale of the sector. The BRES data is the most up to date but is limited in that it relates to ; the end of the growth period prior to the recession. Therefore, some sub-sectors which have subsequently declined post recession are likely to be shown as growth sectors during this period. In addition, the SIC system was designed for a manufacturing economy. Although this has been improved with new 2007 SIC codes, it provides far less detailed coverage of service industries, and within this there are specific problems in identifying and measuring the CI. For example, no SIC codes exist for crafts as the majority of businesses are too small to be picked up, and coverage of design and music is similarly constrained. Other sub-sectors such as architecture are contained within broader categories and disaggregation is not possible. Nevertheless, official data still provide a useful source of economic intelligence, particularly as they permit analysis of change over time as well as comparison with other sectors and geographic areas. The analysis presented here is also consistent with that produced by the Scottish Government, thereby offering a basis for wider comparison. However, in recognition of the issues with the official data, the analysis is supplemented with the findings from our survey of creative practitioners and businesses. This provides a more robust and complete analysis of the sector. 17

27 3.3 Survey Sample Introduction A wide range of businesses operating in the creative and cultural sector were asked to participate in an online or telephone survey to gather feedback with regards to future prospects, barriers to growth, importance of the sector and support needs of the CI in the South of Scotland. Contact details were gathered by collating the data in various databases provided by the two Councils. After removing errors and duplicate entries, this resulted in a total contact list with 1,949 entries. Of these, only 965 entries had sufficient contact information to permit their inclusion in the sample for the survey. In total, we gathered information from 572 contacts, 62 of which provided only contact information for inclusion on the CI database. The remaining 510 completed the full survey as reported below. This equates to 29% of all contacts identified, and 59% of all those invited to participate. Our experience is that this is a very strong response rate, particularly for studies of this nature in which there is no direct incentive to participate. Sample breakdown Most (41% of surveyed respondents) are operating as sole traders, with 19% working as a partnership or private limited company and 28% on a freelance basis. This highlights the importance of self employment, and further demonstrates that official economic sources may underestimate the scale and make-up of the CI in South of Scotland. 18

28 Table 3.1: Business Type Online Telephone Total % Freelancer (i.e. work on a contract-bycontract basis for other companies) % Freelancer -part-time occasional activity % Own business - part-time occasional activity % Sole Trader % Partnership % Private Limited company % Public Limited Company % Charity % Not-for-profit/voluntary/community organisation % Other % Total % Source: EKOS survey Most of the 366 business respondents were operating in visual arts (26.3%), followed by crafts (26%) and design (14%). These data include a mix of businesses and sole traders not captured in the official data reported below. In addition, most businesses (254 or 75%) were operating in more than one sector, with the main other sectors being visual arts (21.3%), crafts (18.8%) and design (18.3%). The main sectors that 144 freelancers surveyed operate in are visual arts (32.6%), photography (13%) and crafts (9.4%). Almost all work in more than one sector (141 out of 144), the most common other sectors being visual arts (57.6%), crafts (26.4%) and music (22.9%). These freelance operations are not captured in the official data below. More detailed analysis of the survey responses is provided in Appendix 2. 19

29 3.4 Overview According to official secondary data, 951 people were employed in 303 creative businesses in 2010 in the South of Scotland. When considering these figures it should be noted that the official secondary data from ABI (number of business data) is limited in that it does not include sole traders or freelancers. In addition, BRES (employment data) does not include freelancers. There is also no SIC code for the crafts sector for either, given that the nature of the CI is such that it consists of a large number of freelancers and small creative practitioners, particularly in a rural area such as South of Scotland, it therefore likely to underestimates the size and scale of the sector. Nevertheless, the data does give an indication of the importance and relative size of the sector in terms of businesses and employment. The sector is bigger in the Scottish Borders than in Dumfries and Galloway, and accounts for a larger overall proportion of total employment and business stock. Table 3.2 below provides an overview of the economic contribution of the CI in the Scottish Borders, Dumfries and Galloway and the South of Scotland, and provides comparative data for Scotland. Table 3.2: Economic Contribution of the CI Scottish Borders Dumfries & Galloway South of Scotland Scotland CI Employment (2010) ,770 CI Employment as % total economy (2010) 1.3% 0.8% 1% 2.1% CI Employment LQ (2010) % change % -5% 0% -9% Business Stock CI Business Stock (2008) ,272 CI Business Stock as % total economy (2008) 3% 2% 3% 5% % change % -5% 2% 8% Source: ABI (2008) and BRES (2010) 4 Data do not sum due to rounding issues 20

30 CI businesses (excluding freelancers and sole traders) account for 3% of the total business stock in South of Scotland. As with employment, this is lower than the national average. In addition, South of Scotland, Scottish Borders and in particular, Dumfries and Galloway all have a lower concentration of employment in the CI in comparison to Scotland (LQ =1). While the CI employment base (excluding freelancers) in Scotland has been falling by 9%, this has increased in Scottish Borders by 4% and decreased in Dumfries and Galloway by 5%. CI business stock has been increasing nationally as well as in the Scottish Borders but decreasing in Dumfries and Galloway. The following provides a summary of CI sub-sector employment and business stock structure and trends. Table 3.3: CI sub-sector performance and trends in South of Scotland (06-10) % of CI Employ ment % of CI Business stock Employment growth (08-10) Business stock growth (06-08) Advertising 5% 8% Significant decline Significant Growth Architecture 9% 16% Decline Significant Growth Arts & Antiques 2% 7% Significant decline Growth Design 7% NA Decline NA Designer Fashion 1% 3% Decline Growth Video, film and photography 13% 7% Significant Growth Decline Music, Performing & Visual Arts 12% 5% Significant decline Growth Publishing 12% 7% Significant decline Significant decline Software & Electronic Publishing 36% 44% Significant Growth Decline Digital& Entertainment Media 0% NA Significant decline NA Radio and TV 4% 3% Significant Growth Decline Total CI Decline Growth Source: ABI and BRES. Note: NA means no SIC code available. 21

31 3.5 Employment Total employment official data According to BRES data, 951 people were employed (not including freelance) in the CI in South of Scotland in 2010, 505 in the Scottish Borders and 447 in Dumfries and Galloway. The CI accounted for 1% of total employment in the region, lower than the national average of 2%. The contribution that the CI make to the economy is lower in Dumfries and Galloway, accounting for only 0.8% of total employment. Table 3.4: CI employment as proportion of total employment 2010 CI employment Total employment % Dumfries and Galloway , % Scottish Borders , % South of Scotland , % Scotland 48,770 2,311, % Source: BRES Employment in the CI fell slightly between 2008 and 2010, most of which is accounted for by a decline in Dumfries and Galloway. This should be unsurprising, as the fall in employment coincides with the credit crunch and the start of the global financial crisis. It is worth noting that employment fell in the South of Scotland at a lower rate than Scotland as a whole, although as noted above, this does not include trends in freelance employment due to BRES data issues. 22

32 Figure 3.1: Creative sector employment in Scottish Borders and Dumfries and Galloway Dumfries and Galloway Scottish Borders South of Scotland Source: BRES Employment Structure In 2010, the dominant CI sub-sector in South of Scotland was software (36%), followed by video, film and photography (13%). This was also the case in Dumfries and Galloway, while the Scottish Borders has a greater concentration of employment in architecture and design rather than in publishing (4% as opposed to 24% in Dumfries and Galloway). Arts and antiques, designer fashion and digital and entertainment media make very little contribution to employment in both areas, although this may be partly attributable to freelance working in these sectors. 23

33 Table 3.5: Employment in the CI, 2010 Dumfries and Galloway Scottish Borders South of Scotland Number % Number % Number % Advertising 15 3% 32 6% 47 5% Architecture 25 6% 57 11% 83 9% Arts & Antiques 5 1% 14 3% 19 2% Design 17 4% 49 10% 66 7% Designer Fashion 2 0% 10 2% 12 1% Video, film and photography 66 15% 56 11% % Music & the Performing & Visual Arts 52 12% 59 12% % Publishing 93 21% 18 3% % Software & Electronic Publishing % % % Digital & Entertainment Media 0 0% 0 0% 0 0% Radio & TV 19 4% 18 4% 37 4% Total % % % Source: BRES Software and electronic publishing are key sources of CI employment and business stock as well as key growth sectors in terms of employment. Only three sectors have experienced growth in employment in recent years; video, film and photography; radio and TV; and software & electronic publishing. Five sectors experienced significant decline. In terms of growth in employment between 2008 and 2010, the largest increase was in radio and TV (177%). Although this growth was from a very small base, this increase may also reflect growth in activity at BBC Scotland. Software and electronic publishing and video, film and photography are two of the largest sources of employment and both sub sectors also experienced growth. The publishing sector (another important source of employment) experienced a large decline in employment of 31% as did digital and entertainment media (-100%, but from a very low base) and music, performing and visual arts (-33%). This is detailed below in Figure

34 Figure 3.2: Change in CI employment in South of Scotland by sub sector Radio and TV Video, film and photography Software and Electronic Publishing Total Designer Fashion Design Architecture Arts and Antiques Advertising Publishing Music and the Performing and Visual Arts Digital and Entertainment Media -100% 0% -8% -12% -14% -17% -24% -31% -33% 23% 98% 177% Source: BRES Trends in employment growth were similar in Dumfries and Galloway and the Scottish Borders with the radio and TV and video, film & photography sub-sectors accounting for the largest increases in employment in both regions. However, sub-sector declines in employment varied by region with the digital and entertainment media and publishing sectors accounting for the largest proportional decreases in employment in Scottish Borders, and the arts and antiques and music, performing and visual arts accounting for the largest declines in Dumfries and Galloway. Employment Survey Data The 366 businesses surveyed were found to employ a total of 781 individuals, 570 full time and 211 part time - approximately 675 FTEs. The employment statistic of 951 reported above would include these surveyed businesses. Businesses were found to be very small in size, on average employing only 2.2 individuals each, with only 2% employing more than 10 and most employing one or less (63%). 25

35 This is consistent with the structure of the South of Scotland economy as a whole. Micro businesses dominate, and the average workplace in the South of Scotland employs 8.6 people, below the average of 13 across Scotland. Figure 3.3: Number of employees 60% 28% 3% 6% 2% Source: EKOS survey There has been an increase in employment within the businesses surveyed from 653 in 2009 to 781 in 2011 (an increase of 20%). In addition to direct employment, 25% of the businesses make use of freelance/ seasonal workers, 12% use volunteers and 7% use interns/apprentices. A total of 584 volunteers and 52 interns/apprentices are employed in a year by the 366 business. 26

36 3.6 Creative Businesses According to ABI data there were 303 CI businesses in the South of Scotland in 2008,136 of which were based in Dumfries and Galloway and 167 in the Scottish Borders. These accounted for 3% of the total in the economy and, as with employment, they made up a smaller proportion than the national average (5%). As noted above, due to ABI data limitations, these trends do not include freelance and sole trader businesses. The CI business stock contribution to the economy was lower in Dumfries and Galloway (2%) than the Scottish Borders (3%). This is detailed below in Table 3.6. Table 3.6: CI Business stock as proportion of total stock 2008 CI businesses Total businesses % Dumfries & Galloway 136 5,845 2% Scottish Borders 167 4,871 3% South of Scotland ,716 3% Scotland 8, ,470 5% Source: ABI In contrast to employment, the number of creative businesses in the South of Scotland increased between 2006 and Much of this was accounted for by the Scottish Borders, where employment increased by 9% as opposed to a fall in Dumfries and Galloway of 5%. The increase in the number of creative businesses in the South of Scotland was much lower than the national increase of 8%. Figure 3.4 provides an analysis of the changes in business stock in Scottish Borders and Dumfries and Galloway between 2006 and

37 Figure 3.4: Change in business stock % 8% 2% -5% Dumfries and Gallloway Scottish Borders South of Scotland Scotland Source: ABI CI business structure Similar to employment, the dominant CI sub-sector in terms of business stock in South of Scotland in 2008 was software (44%), followed by architecture (16%). This was also the case in both Dumfries and Galloway and the Scottish Borders (see Table 3.7). 28

38 Table 3.7: Number of businesses in the CI, 2008 Dumfries and Galloway Scottish Borders South of Scotland Number % Number % Number % Advertising 7 5% 18 11% 25 8% Architecture 28 21% 21 13% 49 16% Art and Antique 11 8% 9 5% 20 7% Designer fashion 4 3% 6 3% 9 3% Video, film and photography 14 10% 9 5% 22 7% Music & Visual and performing arts 5 4% 9 5% 14 5% Publishing 10 7% 12 7% 22 7% Software, Digital & entertainment media 54 40% 80 48% % Radio and TV 4 3% 4 2% 8 3% Total % % % Source: ABI There were slight variations between the two areas, with business stock more concentrated in architecture in Dumfries and Galloway than the Scottish Borders. Radio and TV, designer fashion and digital and entertainment media made very little contribution to the business base in both the Scottish Borders and Dumfries and Galloway. 3.7 Business Stock Trends A greater number of subsectors experienced growth in business stock than decline. The largest absolute increases between 2006 and 2008 in South of Scotland were in the architecture and advertising sub sectors; two of the second largest contributors to the overall business stock. The largest decrease was in publishing (Figure 3.5). 29

39 Figure 3.5 Change in CI businesses in South of Scotland by sub sector Total 2% Radio and TV -11% Software and Electronic Publishing -3% Publishing -16% Music & Visual and performing arts 6% Video, film and photography -4% Designer fashion 10% Art and Antique 3% Architecture 20% Advertising 32% Source:ABI Trends in business stock growth varied in Dumfries and Galloway and the Scottish Borders. The advertising and architecture sub-sectors accounted for the largest increases in business stock in the Scottish Borders, while in Dumfries and Galloway, growth was greatest in music & visual and performing arts and designer fashion. The growth in the business stock is mainly accounted for by the increase in six advertising and eight architecture businesses, with both accounting for a significant proportion of business stock. The publishing industry has suffered both declines in employment and business stock. The publishing sector includes newspapers, and there has been a recent change in ownership of local papers which have always been operated from the South of Scotland, and have now been moved to central offices in Glasgow, resulting in job losses. More generally, publishing is an industry under pressure as online channels continue to disrupt existing business models. The decline in the South of Scotland is therefore consistent with wide industry trends. 30

40 3.8 Income and turnover Survey data A total of 184 businesses (including sole traders) from a sample of 366 provided details of exact turnover, representing a response rate of 50%. This sample provides a confidence interval of +/-5.1%, (the market research industry standard) at the 95% confidence level. Thus, we can be 95% sure that the overall turnover value provided by the sample will vary by +/-5%. Turnover totalled 15.4m (an average of 83,696). When asked to provide details of turnover bandings, there was a much greater response. Turnover was concentrated at the lower ends with most (73%) generating turnover of less than 50,000 in Only 3.2% of responding business generated turnover greater than 500,000. Figure 3.6: Annual turnover, % 10.4% 11.6% 8.2% 3.8% 1.6% 1.3% 0.3% Source: EKOS survey In the period between 2009 and 2011 there was a slight shift towards higher levels of turnover, with a reduction in the number of businesses not earning any turnover and an increase in the numbers in the other bands (with the exception of k). Average turnover shifted from 64,764 to 83,

41 The main reasons reported for this positive shift were increased profile/ reputation/ word of mouth, growth in demand and increase/ change in services/ products offered. Freelancers Freelancers on average generated 17,800 per annum from creative freelance work and the level of income generated ranged from 0 to 250,000. Not accounting for two large outliers of over 200,000, average income was low at 13,000. Figure 3.7 reports on the approximate annual income generated by income banding. Figure 3.7: Approximate Annual Income from Creative Freelance Work 2011 Over three quarters generated less than 20,000 income from freelance related work, the largest proportion generated between 1k and 5k (24%) and an additional 13% of those operating as freelancers are generating no income. > 75k 50k- 75k 40k- 50k 30k- 40k 20k- 30k 10k- 20k 5k- 10k 1k- 5k < 1k 0 1% 1% 4% 7% 7% 10% 13% 13% 21% 24% Source: EKOS survey There has been a shift upwards in average annual income generated from creative freelance work between 2009 and 2011 from 15,234 to 17,800. Most noticeably (and positively) a much lower proportion are generating no income (fallen from 17% to 13%) and a greater proportion are earning between 10,000 and 20,000. Changes within other income bands have been marginal. The main reasons provided for positive shifts in income were overall growth in the sector, hard work and increased demand. 32

42 3.9 Overall size, scale and turnover in the CI As noted earlier, the official economic data from ABI and BRES are limited due to issues with definition and the omission of sole traders and freelancers. The survey gathered data from 572 businesses and practitioners operating in the creative sector in the South of Scotland, the majority of which (425 or 75%) were found to be either sole traders or working on a freelance basis. This includes additional data collected to populate the database rather than as part of the survey reported above. Although the survey data add to the official secondary data and give a clearer picture of the size and scale of the sector as a whole, it is still possible that the entire sector has not been covered by the statistics collected from both sources. As a result, the figures reported in Tables 3.8 to 3.10 may be an underestimation of the size and scale of the sector as whole. Further detail on the scale of the CI by subsector is provided in Appendix 3. Businesses According to data collected in our survey and for the database, there are at least 233 sole traders and 192 creative practitioners operating in the creative sector in addition to the number of businesses, taking the total number of operators to 754. Table 3.8: Number of businesses in the CI in South of Scotland Total % No of Businesses (ABI) % No of Sole Traders % Total Businesses and Sole traders % Creative Practitioners % Total % Source: ABI and EKOS survey 5 Including crafts businesses from the survey (as there is no SIC code in official data) 33

43 Employees The survey (including the database information) also identified that there are at least 194 individuals employed in crafts businesses (not covered in official data) and 192 creative practitioners operating in the creative sector in addition to the number of employees within businesses (including sole traders), taking the total number of employees to 1,337. Table 3.9: Number of Employees in the CI in South of Scotland Total % Employees (businesses/ sole traders) (BRES 2010) % Crafts (businesses and sole traders) % Creative Practitioners % Total 1, % Source: BRES and EKOS survey Total Turnover and Income According to financial data collected in our survey and for the database: average turnover of creative businesses/ sole traders is 101,260; and average income of freelancers is 14,659. This was grossed up to the total number of businesses/ sole traders and creative practitioners and the value of the sector in terms of turnover and income is reported in Table 3.10 below. Table 3.10: Turnover and income in the CI in South of Scotland Number of Businesses Average Turnover/income ( ) Total Value ( ) Businesses and sole traders ,260 56,908,210 Creative Practitioners ,659 2,814,528 Total ,722,648 Source: BRES and EKOS survey The total value of the sector in terms of turnover and income is estimated to be 59,722,648. This equates to an average turnover per worker of 44,669. The average turnover per worker for all businesses in Scotland is 130, These are included as there is no SIC code and the sector is not reflected in the official data 34

44 3.10 Economic scale by Local Authority The following provides an indication of the economic scale in terms of businesses, employment and turnover in the CI in both Scottish Borders and Dumfries and Galloway. It should be noted that 24 respondents did not provide address details and so we were unable to include these in the calculations. Therefore, there are slight differences between the data presented below disaggregated by Scottish Borders and Dumfries and Galloway and that reported above for the South of Scotland as a whole. Businesses According to data collected in our survey and for the database, there are at least 117 sole traders and 78 creative practitioners operating in the creative sector in the Scottish Borders in addition to the number of businesses, taking the total number of operators to 375. In Dumfries and Galloway, there are at least 103 sole traders and 103 creative practitioners operating in the creative sector in addition to the number of businesses, taking the total number of operators to 355. Table 3.11: Number of businesses in the CI in Scottish Borders and Dumfries and Galloway Scottish Borders Dumfries and Galloway No of Businesses (ABI) No of Sole Traders Total Businesses and Sole traders Creative Practitioners Total Note: 13 sole traders and 11 creative practitioners did not provide details of their address and so are not included 7 Including crafts businesses from the survey (as there is no appropriate SIC code) 35

45 Employees The survey and data collected for the database also identified that there are at least 134 and 60 individuals employed in crafts businesses (not covered in official data) in the Scottish Borders and Dumfries and Galloway respectively. In addition, 78 and 103 creative practitioners are operating in the creative sector in Scottish Borders and Dumfries and Galloway respectively in addition to the number of employees within businesses (including sole traders). The total number of employees in the Scottish Borders is 717 and the total number in Dumfries and Galloway is 609. Table 3.12: Number of employees in Scottish Borders and Dumfries and Galloway Note: 11 creative practitioners did not provide details of their address and so are not included Total Turnover and Income Scottish Borders Dumfries and Galloway Employees (businesses/ sole traders) (BRES 2010) Crafts (businesses and sole traders) Creative Practitioners Total According to financial data collected in our survey and for the database in Scottish Borders: average turnover of creative businesses/ sole traders is 136,186; and average income of freelancers is 14,448. This was grossed up to the total number of businesses/ sole traders and creative practitioners and the value of the sector in terms of turnover and income is reported in Table 3.13 below. 8 These are included as there is no SIC code and the sector is not reflected in the official data 36

46 Table 3.13: Turnover and income in the CI in Scottish Borders Number of Businesses Average Turnover/income ( ) Total Value ( ) Businesses and sole traders ,186 40,447,242 Creative Practitioners ,448 1,126,944 Total ,574,186 Source: BRES/ ABI and EKOS survey Note: 24 did not provide details of their address and so are not included On the basis of our findings, the total value of the sector in Scottish Borders in terms of turnover and income is estimated to be 41,574,186. This equates to an average turnover per worker of 57,984. The average turnover per worker for all businesses in Scotland is 130,000. According to financial data collected in our survey and for the database in Dumfries and Galloway: average turnover of creative businesses/ sole traders is 69,154; and average income of freelancers is 12,948. This was grossed up to the total number of businesses/ sole traders and creative practitioners, and the value of the sector in terms of turnover and income is reported in Table 3.14 below. Table 3.14: Turnover and income in the CI in Dumfries and Galloway Number of Businesses Average Turnover/income ( ) Total Value ( ) Businesses and sole traders ,154 17,426,808 Creative Practitioners ,948 1,333,644 Total ,760,452 Source: BRES/ ABI and EKOS survey Note: 24 did not provide details of their address and so are not included 37

47 Gross value added Gross value added (GVA) is a key measure of economic value and impact. However, accessing reliable data on GVA for the creative sector at small geographic areas is problematic. Even at the Scottish level, some of the GVA data are suppressed due to regulations surrounding disclosure. At the level of individual local authorities, this problem is considerably magnified. However, in seeking to provide an estimate of the potential GVA of the creative sector in the South of Scotland we considered two possible approaches: making use of GVA per employee figures for broader industry categories (in this case for arts, entertainment and recreation activities); and using existing data from other regions to provide broad estimates. The first approach involves the use of data from Scottish Annual Business Statistics (drawn from ABI) as follows: GVA per employee for arts, entertainment and recreation activities in Dumfries and Galloway is 26,106; and GVA per employee for arts, entertainment and recreation activities in the Scottish Borders is 29,716. Based on the employment data reported above, this results in the following GVA estimates: Dumfries and Galloway: GVA of 15,898,554 (609 x 26,106); Scottish Borders: GVA of 21,306,372 (717 x 29,716); and South of Scotland: GVA of 37,204,926. NB: It is important to note that this is an estimate only, and is based on what we would expect to be the lower value end of the creative industries spectrum (i.e. arts rather than digital media or TV production). 38

48 A previous study of the creative sector in the Highlands and Islands, found GVA per employee to be 29, On this basis, the GVA totals for the South of Scotland would be: Dumfries and Galloway: 17,775,492; Scottish Borders: GVA of 20,927,796; and South of Scotland: GVA of 38,703,288. It should be noted that these data were based on a different definition of the creative industries and are 2006 figures. Similarly, a study of the creative industries in Moray 10 identified total GVA of 69m and employment of 2,383, resulting in overall GVA per employee of 28,955. Given the degree of similarity between all of these figures, it seems reasonable to estimate the GVA of the creative sector in the South of Scotland as being in the region of 37-39m Current Markets Businesses Views from the survey were mixed on the current state of the market. Just over a third of businesses (35%) reported their market as static, while similar proportions (both 27%) reported that it was growing or declining. Most companies are operating in local markets. On average 57% of sales are made within local markets (South of Scotland), and on average a further 18% are made elsewhere in Scotland. The remaining 25% was exported to the rest of the UK and overseas. Despite this, most businesses (75%) reported that it is very important to access opportunities beyond the South of Scotland for the future development of their business. 9 Creative Industries Baseline for Highlands and Islands, EKOS, Creative Industries Audit of Moray, EKOS,

49 Businesses are also competing in local markets - just under half of competitors were based in the South of Scotland with very similar proportions elsewhere in Scotland and elsewhere in the UK, respectively (22%), only 9% of competitors on average are based overseas. For the majority of businesses there has been no change in the distribution of their work across the four areas. The area where the largest proportion of business have had an increase in turnover is other UK (21%). Figure 3.8: Change in Distribution of Turnover (last two years) Increased significantly Increased Remained at same level Decreased Decreased significantly Don t know 62% 66% 61% 72% 15% 16% 19% 15% 11% 10% 10% 11% 3% 1% 4% 6% 7% 1% 1% 2% 1% 3% 3% 1% South of Scotland Other Scotland Other UK Outwith UK Source: EKOS survey Freelancers Freelancers views on the current state of the market were also mixed. 26% expect growth (only 2% reported strong growth) and 22% expect decline. Freelancers are also operating mainly in local markets and, as would be expected, to a greater extent than businesses. On average, most of their work (63%) is within the South of Scotland and only a small proportion (4% on average) of income is generated from overseas work. Freelancers are competing in local markets. On average, 69% of the freelancers competitors are in the South of Scotland and on average 29% of competitors are based elsewhere in Scotland. Only 8% of competitors on average were based overseas. 40

50 As with businesses, the majority of freelancers (76%) do place importance on accessing markets beyond the South of Scotland. Greater proportions of freelancers have experienced growth in South of Scotland markets (24%) and Other Scotland (25%) than in the rest of UK (20%) and overseas (18%). See Figure 3.9. Figure 3.9: Change in distribution of freelancers work Increased significantly Increased Remained at same level Decreased Decreased significantly Don't know 51% 52% 59% 60% 22% 23% 18% 17% 19% 14% 16% 9% 11% 2% 2% 5% 2% 5% 4% 1% 1% 1% 2% 2% South of Scotland Other Scotland Other UK Outwith the UK Source: EKOS survey 3.12 Future Markets Businesses Aproximately half of the companies surveyed expected no change in the distribution of their turnover over the next two years. Similar proportions (25-26%) expected an increase in the South of Scotland, other Scotland and other UK, while in overseas markets, a greater proportion expected decline (28%) than growth (17%). Freelancers Limited proportions of freelancers expected growth in any markets over the next two years (no more than 36%) but those that did were more likely to expect growth in local markets. 41

51 Greater proportions expected increased sales in local and Scottish markets than the rest of UK and overseas markets, with the proportions of those expecting increases reducing the further away the market is from Scotland. No more than 31% expected increases in work beyond the South of Scotland and only 20% expected an increase in overseas sales. Figure 3.10: Change in distribution of work Increased significantly Increased Remained at same level Decreased Decreased significantly Don't know 48% 55% 60% 64% 34% 29% 25% 18% 15% 11% 7% 7% 6% 7% 2% 2% 2% 0% 1% 2% 1% 2% 2% 0% South of Scotland Other Scotland Other UK Outwith the UK Source: EKOS survey 3.13 Future Growth Businesses The majority (65%) expected their employment level to stay the same. However, a greater proportion were optimistic than pessimistic about future employment, with 21% expecting growth and 5% expecting decline. The proportion of companies expecting an increase in turnover was much higher (40%). However, this is not unusual as an increase in turnover would need to be of a reasonable level before companies would commit to taking on more employees. Many of the businesses are currently operating at a very low level of income e.g. less than 50,000 p.a., so an increase may result in them earning a better living rather than employing staff. 42

52 Those that expected turnover growth did so because they feel they are becoming more established, their profile is increasing and there are new opportunities/markets. For those that are expecting their turnover to decline/decline significantly the main reasons included planning to retire/cutting down time (29%), the economic climate and fewer opportunities. Freelancers Freelancers were relatively optimistic about the future, with greater proportions expecting growth (38%) than decline (15%). Just over a third expected their income to remain static. The main reasons reported for anticipated future growth were new and quality products, higher profile and winning commissions. Those who expected decline/no growth attributed this to lack of infrastructure and the recession/economic climate Opportunities Most businesses (60%) were confident/ very confident in the future of the CI sector in the South of Scotland and only 3.6% were not confident at all. In addition more freelancers are confident (51%) than not confident (26%) about the potential for future growth in the CI. The most commonly identified opportunities for the future were: advertising/ marketing; website/ internet promotion/internet sales; fairs/ exhibitions; access to funding; contacts/ networking/ collaboration; a healthy economy/ better economic climate; access to new markets; and tourism/ encouraging more tourists. 43

53 3.15 Threats and barriers The most common challenges facing organisations in the creative sector were identified as: finding work/ people not buying; raising profile/ marketing/ advertising; access to funding; economic climate; increasing costs; places to show work/ exhibition space; and lower prices being paid for work. The most common issues and barriers affecting the growth of the creative sector in the South of Scotland are considered to be lack of funding/ finance/ financial support, investment or general commitment from public sector bodies; economic downturn/ fall in consumer spend; access to public/ private sector finance; communication/ networking opportunities are low; lack of recognition of the value of the sector/ lack of importance attached; rising costs/ taxes/ travel costs; lack of infrastructure/ gallery space/ artists space; advertising/ promotion of the sector/ lack of awareness of its offering; training/ skills/ education issues; rural location/ accessibility and isolation; poor broadband; rural location/ accessibility and isolation; lack of ambition/ positive attitude and confidence within the sector; 44

54 access to markets/ breaking into new markets; and lack of networking opportunities. Suggestions as to how these issues should be addressed included: providing more funding for the sector in the form of: o o o o o o business start up funding for purchase of equipment funding exhibitions/ events specific project funding training courses promotion of the sector; greater commitment/ vision/ strategy for the region in making the sector a priority; greater promotion of the sector, more profile, build visibility and give it a voice; more communication with the sector in order to develop a better understanding of needs; building infrastructure, including venues; delivering more events/ projects/ festivals; and providing tax breaks/ VAT reductions. A number of companies suggested that a support organisation specifically providing support or provision of networking collaboration opportunities should be set up. It is worth noting that this is what SOSCEI already does, suggesting some issues with awareness of the project in art of the sector Economic Importance The majority of freelancers (over 50%) and businesses (79%) agreed that the creative sector is an important contributor to the regional economy. Reasons offered included that it brings people/ money into the area, the sector is an important player due to declining/ lack of other industries and it is a sector with potential for growth. 45

55 3.17 Public Sector Support Businesses and freelancers were asked if they feel that the public sector has a good understanding of the business needs of the creative sector. Table 3.11 shows that around half of each group feel that they are not well understood. Table 3.15: Public sector understanding of business needs of Creative Sector Freelancers Businesses Good understanding 29% 29% Moderate awareness/understanding 21% 25% No/limited understanding 50% 46% Suggestions for how the public sector could help the CI included: provision of greater investment/ funding in the sector in the form of business start up funding, finance purchase of equipment, funding exhibitions/events, skills and funding of specific projects as well as for marketing and promotion; become more involved, communicate more and increase understanding and awareness of the sector, suggestions of how this could be achieved included; o o o o introduce a shadowing scheme - where support providers work in a creative business for a day attendance by support organisations at more events/ workshops more ongoing dialogue and communication and in depth conversation with the sector arrange venues/ events for the sector to meet up with support providers and discuss what they do; give the sector more recognition, more value and profile through promotion and advertisement for example: o o o tourist board promoting the region more as a creative region publish booklets/ newsletters promoting and showcasing the sector encourage the public to become more engaged with the sector, increase their awareness of what the sector provides and exploit the sector and its offering; 46

56 provision of more low cost premises, workshops, exhibitions and trade fairs; provision of training and courses to help develop the skills of the sector; and provision and organisation of more events, workshops and fairs involving creative business. 47

57 4. Wider Impacts 4.1 Introduction This section discusses the social and environmental impacts associated with the creative sector based on a combination of evidence gathered from a review of existing literature and research and our own primary research. 4.2 Social Impacts There is an extensive research literature relating to the social impact of the creative sector, in particular the arts 11. This literature identifies a range of personal and social impacts typically found to result from participation in creative activities. Individual benefits: increasing individuals or communities confidence and sense of self-worth; providing a sense of empowerment and self-determination; enhanced creativity, development of transferable skills to the workplace, building creative skills for employment in these areas, enhanced employability; improved physical and/or mental health, stress reduction, pain reduction, reduction in morbidity, increased physical and mental activity, positive response to therapies, sense of well-being and positive outlook, improved quality of life; and increased enjoyment, friendship, increased contact with other cultures, enlarged social network, sense of belonging to a particular community. Community benefits sense of pride in community, more involved in the community (e.g. volunteering, helping organise local events etc); 11 See, for example, A Literature Review of the Evidence Base for the Arts, Culture and Sports Policy, Ruiz, J. (2004). Scottish Executive; 11 Measuring the economic and social impact of the arts: A Review, Reeves, M. (2002) Arts Council of England; and Evaluation of the Cultural Pathfinder Programme, EKOS (2009), Scottish Government. 48

58 people feeling more positive about where they live, feeling safer where they live, pride in own culture or ethnicity; provision of a forum for debate and discussion of community issues; development of partnerships; and facilitation of public consultation and participation. Importance in rural setting Although there has been little in the way of social impact work in the South of Scotland itself, other rural regions in Scotland have been examined. For example, a study published by Hi-Arts in 2001 assessed the economic and social impact of the arts across the Highlands and Islands. The study again pointed to the personal enrichment that participants typically experienced as a result of their involvement in arts activity, and it noted that the role of the arts in local communities was often more prominent and important in rural areas (i.e. the South of Scotland). A study of the social and economic impact of the arts in the Western Isles 12 also identified a commonly-held view that the potential for arts activity to have an impact in small, rural, communities was much greater than in an urban setting. The research identified the following social benefits of arts and creative activity: benefits accruing to artists and musicians who suggested that their participation in the arts events and activities had led to their gaining new skills, improving formal and informal learning and increasing self-confidence; positive influence on young people s behaviour reducing truancy, bad behaviour, and the propensity to offend; a positive impact on broader educational aptitude and attainment and employment prospects of young people; and health and wellbeing participation in creative activities promotes social inclusion and develops mental and emotional well being. 12 The Economic and Social Impact of the Arts in the Western Isles, Beattie, B. And Westbrook, S. (2004), Western isles Council 49

59 Contribution to social policy objectives In 2002, the Arts Council of England published a large scale review of the literature relating to the economic and social impacts of the arts 13. The report considered a range of studies that evaluated the social benefits and effects of arts interventions on a range of social policy issues, including education, regeneration, health and criminal justice. The report cites a seminal study by Francois Matarasso of Comedia 14, which identified a large number (50) of social impacts through his study of participative arts programmes. The study demonstrated the importance of arts in terms of the valuable contribution they make to social policy objectives and suggested that policy should explore creative approaches in tackling socio economic problems. Further to this, a literature review 15 carried out on behalf of the Social Exclusion Unit (1999) identified that arts and cultural activity can contribute to neighbourhood renewal and make a real difference to health, crime, employment and education in deprived communities. Public perceptions Research has also considered the views of the wider public and has consistently found that the public considers arts and culture to offer a wide range of social benefits. An NFO study surveyed over 2,000 people in Scotland and found that the majority were positive about the contribution that culture and the arts can make to society. Artists, performers and writers were found to give people a sense of pride and contribute to society and participating in this activity brings society together and helps enrich the quality of life 16. In 2004 the Scottish Arts Council undertook a survey with 2,700 individuals on levels of attendance and participation in arts and cultural activities and attitudes towards the arts among the adult population of Scotland 17. Similar to the NFO study, the research found that the majority of individuals considered the arts to offer a range of social benefits, with most agreeing that they offer value, enrich quality of life, and bring people together and they attract tourists to the area. 13 Measuring the economic and social impact of the arts: A Review, Michelle Reeves, Arts Council of England, Use or Ornament; The social impact of participation in the arts, Matarasso, F. (Comedia,1997) 15 Report to the Social Exclusion Unit Arts and Sport, 1999, Department for Culture, Media and Sport, Policy Action Team 10: 16 'Attendance at, participation in and attitudes towards the arts in Scotland 2001/02, NFO Taking Part Arts Attendance, Participation and Attitudes in Scotland, Scottish Arts Council,

60 In addition, the success of Scottish artists, performers and writers contributes to society and give people a sense of pride, with the success of Scottish art generating positive perceptions outwith Scotland. Measuring social impacts While there is a degree of consistency around these findings, the methods by which they have been generated are more varied. Most commonly, data on the social impacts of the arts have been collected via self-completion questionnaires provided to participants in arts activities. Case study methods have also been used. However, there is far less in the way of truly robust experimental design (e.g. pre- and post-test design and use of control groups) used in studies of this nature. While this is a gap in the literature, it is understandable given the costs of conducting such studies, and the practical difficulties in structuring research in this way. These issues notwithstanding, the literature does suggest a number of measures that might be of use in assessing the social impacts of creative activities. At the first level, it is important to establish the extent of community and public engagement with creative activities through measures such as: numbers attending arts/ cultural events; numbers participating in arts/ cultural activities; and numbers volunteering in creative activities. However, measures of the extent of engagement tell us little about the impacts of that engagement. This would require primary research with participants, and again the literature offers some useful pointers regarding possible measures, including the numbers (or proportions) of participants reporting/ experiencing: increased self esteem; improved skills and capabilities; new or expanded social networks; improved sense of well being; health benefits/ improvements; positive impact on educational attainment; 51

61 increased sense of community involvement/ pride; and reduced propensity to engage in anti-social behaviour. Social impacts in the South of Scotland Data on the extent of engagement in creative activity across the South of Scotland are hard to source. The latest report of the results of the Scottish Household Survey Culture and Sport Module 18 do not provide a breakdown by local authority area and it is likely that the sample would not allow such a comparison. However, analysis of differences in attendance and participation between urban and rural areas found little difference other than a slightly increased tendency towards participation in remote rural areas. The Scottish Arts Council s Taking Part survey (2008) provides some more useful data. It examined regional variations in attendance and participation by seven broad areas, one of which was the South of Scotland. Attendance was highest in Edinburgh and surrounds and South Western Scotland (both 77%) while participation was highest in the South of Scotland and Edinburgh and surrounds (both 79%). However, the level of attendance at arts events in the South of Scotland was the second lowest of the seven regions (70%) ahead of North East Scotland (69%). The fact that cultural participation levels are high should be encouraging, and also suggest that the lower levels of attendance might reflect a relative lack of opportunity rather than interest. As with previous research, the findings from the current study also highlighted the importance of the voluntary sector in terms of the creative sector in the South of Scotland. The region is considered to have a strong voluntary/ third sector involved in delivering activities and festivals to the benefits of local communities. However, much of this work is fragmented throughout the towns in the area and there is scope for this to become more joined up at a strategic level. An example of such activity is the Wigtown Book Festival in Dumfries and Galloway. The festival involves 90 volunteers from the local community and attracts over 18 People and Culture in Scotland 2008: Results from the Culture and Sport Module of the Scottish Household Survey 2007/08, Scottish Government

62 15,000 visitors over a ten day period every year, generating economic activity of around 800,000 (gross) 19. On a smaller scale, but typical of cultural events, the Alchemy Film and Moving Image Festival has been operating for the last two years and although the Festival was initiated through a partnership between CABN, Heart of Hawick (both Scottish Borders Council) and the Borders Arts Trust, with in kind and cash support from SBC and external funding, the management, organisation and delivery is heavily dependent on the voluntary sector and the Borders Arts Trust board of trustees. Festival attendances have been growing, bringing audiences into the area as well as individuals from the local area. Alchemy has an International profile, and a high quality programme and is indicative of how such new events are driven from the voluntary sector. Our survey of creative businesses also identified the importance of the voluntary sector in the South of Scotland in terms of creating voluntary opportunities and positions for internships and apprentices, which in turn create positive impacts in terms of local community participation and engagement as well as education, skills and training benefits. 12% of the 400 surveyed businesses use volunteers in their businesses, on average 14 volunteers per business and a further 7% use interns/ apprentices, an average of 2.4 per business. Businesses and freelancers were asked how important the creative sector is as a benefit to local communities. The findings support the evidence from the literature with over half of each group reporting that they consider the creative sector to be important in contributing to these issues. Specific social and community benefits identified included: brings individuals/ tourists into the area (26% businesses) (33% freelancers); adds variety/ enhances the community/ retains the culture (13% businesses) (18% freelancers); brings the community together/ creates pride in the community (12% businesses) (9% freelancers); and supports employment and income (10% businesses) (7% freelancers). 19 Information provided by Creative Scotland 53

63 In addition, shared understanding across departments, between Councils and other stakeholders of the community, social and economic benefits of the creative sector in the South of Scotland has been articulated. There is a shared belief that the arts can be integrated with the wider environment to link artists to visitors, and to wider community wellbeing. The creative sector is seen as a way of fostering a crucial sense of place as well as having a direct economic impact. Although the vast majority of creative businesses in the region are (and are likely to remain) microbusinesses, it is generally recognised that these play an important role in contributing to community cohesion (see Chapter 5). 4.3 Environmental Impacts Previous Research Work by Scottish Enterprise and Envirodigital (2011) 20 highlighted initiatives already underway in the creative industries sector such as the BBC s carbon calculator for television production, Festivals Edinburgh s Green Venue Initiative, the Federation of Scottish Theatre s climate strategy and Julie s Bicycle s certification programme Industry Green. It also identified a number of ways in which the creative and interactive industries can, and are, helping the transition to a low carbon economy: ICT and digital media provide underpinning technologies that will play a vital role in enabling other business sectors, individuals and communities to adapt to a low carbon society and economy; the creative and interactive industries have an important role to play in influencing wider public behavioural change through their content artistic product (performing, literary and visual arts), interpretational curation at museums, the behaviours rewarded in games and so on via the leverage of their communication channels and their communities. The sectors uniquely have communities of interest and support, together with direct communication channels to those communities; and the work of the creative and interactive industries is about increasing the wealth of human and social capital through its ability to nourish and inspire the human mind, soul and spirit. Creative and interactive industries can 20 Scottish Enterprise and Envirodigital (2011) The Low Carbon Transition: Implications for the Creative and Interactive Industries 54

64 influence the definition of the purpose of our economy and how we measure its success. Capital growth could take on a broader meaning: considering a real economy that includes the natural capital (and human and social capitals). Forum for the Future has been working with the Creative Industries Knowledge Transfer Network (CIKTN) on sustainability and how British creative businesses can innovate on issues such as energy, climate change and social equity, as well as becoming more sustainable themselves. They note that the UK s creative industries are great inventors and harnessers of technology, with an impressive track record of interpreting innovation, as the allencompassing conversion to the digital world proves. They go on to highlight that while sustainability presents challenges it also offers opportunities. Creative businesses and individuals have a lot to offer either through forging partnerships with other organisations, or taking the lead to employ their design skills, innovative thinking and technical knowledge to tackle some of the biggest challenges of modern life Study Findings The majority of the businesses and individuals surveyed found it difficult to make the connection between the CI sector and its role in moving to a low carbon economy. This is not peculiar to the creative industries, but rather it is the experience across a range of sectors. To a certain extent this may be influenced by how people approach the question. For example, if the CI encourage more tourists into the area then this in turn means more travel and more CO 2 emissions. Therefore, while viewed positively in economic terms would be viewed negatively in terms of the environment. Similarly people may work from home but as they are in the South of Scotland may have to travel further to meet clients. On the other hand, the digitisation of the content production and distribution process in many parts of the CI has undoubted benefits for the environment by reducing use of materials and transport. It is these apparent paradoxes that make it difficult for businesses and individuals to make clear cut statements on the sector s role in the move to a low carbon economy. 55

65 It is also true that very few (if any) businesses of the scale of very small creative enterprise have in place measures to track their carbon impact. Overall measurement of the environmental impact of the sector is therefore extremely problematic. There is a need for all sectors to re-evaluate their use of resources and to develop more efficient processes, and the CI sector is no exception. However the CI have roles which go beyond this, as identified in the previous research, including developing new technologies, encouraging changes in behaviour and helping people to re-evaluate the way we measure the success of an economy. Interestingly, a comment made by a number of businesses and individuals was that people in the sector are typically more aware of environmental issues and the sector is low carbon. While this is unlikely to be universally true where it does exist then this is conducive to achieving the aims of moving to a low carbon economy. 56

66 5. Qualitative Findings 5.1 Consultation Findings In addition to the main primary research with creative businesses and practitioners in the South of Scotland, the study also gathered views from a range of stakeholders at regional and national levels, including: members of SOSCEI; Dumfries and Galloway Council; Scottish Borders Council; and Creative Scotland. This section provides a summary of the findings from these discussions The role and importance of the creative sector All stakeholders agreed that the creative sector was important to the South of Scotland in four main respects: its economic contribution is already significant and has potential to grow further; the sector is an important part of the region s offer to visitors, in particular through festivals and events; it contributes the cultural vibrancy of the region; and creative organisations and practitioners play an important role in supporting community cohesion and local pride. There was, however, a degree of realism about the overall scale of the sector, and recognition that businesses are very small, with a high level of freelance working and sole trader businesses, as confirmed earlier. There was also recognition that earnings are often low in the sector, particular amongst arts practitioners, and that many hold second jobs to supplement their income from creative activities. 57

67 The sector was also reported to be somewhat fragmented and dispersed across the South of Scotland with some concentrations around Galashiels in the Borders and Dumfries, Kirkcudbright and Castle Douglas in Dumfries and Galloway. However, there is no real focal point - activity is more spread out across the region Structure Stakeholders generally reported a different character to the structure of the sector in Borders and Dumfries and Galloway. While both areas were reported to contain a growing community of small scale web development, graphics and online communications companies, visuals arts and crafts were felt to be stronger in Dumfries and Galloway. This perhaps reflects a long history of support for this part of the sector within the region as well as long standing traditions in these areas. Performing arts was consistently identified as an area of relative weakness in Dumfries and Galloway. In contrast, Borders was reported to be stronger in areas relating to creative services (architecture, advertising, design) perhaps reflecting a degree of spillover from Edinburgh, or creative professionals relocating out of the city for lifestyle reasons. Design was also highlighted as a strength, building on the rich heritage of the region in textiles, as well as the presence of Heriot Watt University s textiles department. Stakeholders reported that a large proportion of creative businesses were essentially lifestyle driven, with a relatively small proportion displaying major growth ambitions. Sole traders also do not follow traditional business growth trajectories, making it sometimes difficult for public agencies to offer effective support. Nevertheless, this was not felt to undermine their importance to local economies. The issue of fragmentation again came up in discussion, and some questioned the extent to which creative businesses and practitioners in the South of Scotland currently feel part of a wider creative community. Initiatives such as CABN and Creative Clusters have undoubtedly helped to develop networks and build a sense of community, but sustaining this in a geographically dispersed region is challenging. In a somewhat contrary vein, creative industries were also felt to lend themselves well to the rural setting in that digital technology now enables more working from home. This means that it is more feasible than ever before to run a creative business from even a quite remote location. However, the South of Scotland still suffers from 58

68 uneven broadband coverage, and this was highlighted as a barrier to sustained growth in the sector. Of course, as many consultees noted, many creative practitioners locate to the South for lifestyle reasons, and the distinctive geography and character of the region is something that many find inspiring. This was felt to be an advantage that could be further exploited, particularly during the Year of Natural Scotland (2013). It was also noted that although there is a strong higher and further education presence in the South of Scotland. The third sector and volunteers also play an important role in the sector, particularly in areas such as local festivals. This kind of contribution is often under the radar and tends to be overlooked in economic analyses of the sector. Nonetheless, this is an important factor in both economic and social terms, as it not only enables businesses to extend their reach through additional labour but also helps bind creative organisations to their communities Sector needs Many of the stakeholders felt that the creative sector is still not given due recognition for its economic and social contribution, particularly within some of the public agencies. In some ways this is unsurprising. Creative businesses, particularly those in rural areas, are often less formal and less traditional in their growth patterns than those in other sectors, and levels of understanding among many of the public sector partners may be less well developed. In terms of what the sector itself needs in order to develop, three issues were consistently identified: networking opportunities to build a stronger sense of a creative community and facilitate productive collaborations that would enable very small local businesses to complete in larger markets; market development to raise ambitions and provide creative businesses with the skills and knowledge that they need to compete for business beyond small local markets; and 59

69 business skills to professionalise the sector, encourage and support entrepreneurship and enable creative businesses to operate in a more commercially driven way. The need for ongoing professional and creative development was also highlighted as important Opportunities and Issues Many of the stakeholders felt that the areas of greatest economic opportunity were likely to be in creative services (e.g. design, advertising, digital media) and in generating visitor spend through festivals and events. Some also highlighted the recent growth and strong performance of the region (particularly Dumfries and Galloway) in attracting mobile film production due to its excellent locations and proximity to Glasgow. The Screen Commission project delivered through the Dumfries and Galloway Council economic development department was a key element in this development. The vibrant arts sector remains an important asset for the region, and many discussed the opportunities to continue to extend arts practice in community and educational settings along with the need to provide artists and crafts makers with the support they need to sustain themselves economically. In terms of the issues facing the sector, four now familiar themes emerged: the fragmented nature of the sector and its geographic dispersal, an issue not helped by the lack of a single focal point (such as a city) in which the sector can congregate; limited business skills (and sometimes growth ambitions) within the sector; limited connectivity between the arts sector and creative businesses, as well as a lack of clear strategy about how each should be engaged and supported; and inconsistent partnerships across key regional and national bodies, including the local authorities (although recognition that SOSCEI has helped to address this, at least to some degree). 60

70 6. Conclusions The study set out to examine the scale and structure of the creative industries in the South of Scotland, taking into account their contribution in economic, social and environmental terms. Here we present our conclusions, along with some initial thoughts about the future for the sector, and the role that the main public sector partners might play in stimulating growth. 6.1 Main Conclusions Economic Impact Based on the analysis of secondary data and additional data collected for the sector survey and database, the creative sector in the South of Scotland is estimated to generate revenue of almost 60m per annum, employing 1,337 FTEs. This equates to an estimated GVA of 37-39m per annum. This is larger, for example, than forestry and fishing combined 21 and demonstrates the important economic contribution of the sector. The sector is diverse and somewhat fragmented, with a different structure and character in each of the two regions, as shown below. 21 According to BRES data, total employment in forestry and fishing activities in the South of Scotland in 2010 was 903 FTEs. 61

71 Figure 5.1: Creative Sector Structure ranking of sub-sector by share of total creative employment (BRES) (where 1 is the most important) Dumfries and Galloway Scottish Borders Advertising 8 6 Architecture 5 3 Arts & Antiques 9 7 Design 6 5 Designer Fashion Video, film and photography 3 3 Music, Performing & Visual Arts 4 2 Publishing 2 8 Software & Electronic Publishing 1 1 Digital& Entertainment Media Radio and TV 6 7 Source: BRES As shown, BRES data suggested that software and electronic publishing is the most significant employer in the creative sector in both regions. Publishing is more important to the CI in Dumfries and Galloway than in the Scottish Borders where advertising and architecture rank higher. Official BRES data showed that total creative employment grew slightly in the Scottish Borders between 2008 and 2010 (4%) but fell in Dumfries and Galloway (by 5%), due mainly to declining employment in publishing and to a lesser extent in music and the performing and visual arts. This is a familiar pattern. Across the UK, creative industries have felt the effects of the recession, particularly in areas like creative services (architecture, advertising and design) and the arts, where clients have reduced their spending and public funding has come under increasing pressure. A recent report by EKOS (2011) 22 highlights that the fall in publishing employment is a longer trend as the industry adapts to changes in production and distribution technologies as well as falling circulations and changing business models. Growth in the sector has been driven by software and digital technology and again this is a pattern seen in creative sectors across the UK (and elsewhere). In the South of Scotland, there is a small but growing number of companies providing web 22 Ekos (2011). Publishing Sub-Sector Research, Scottish Enterprise. 62

72 development and digital communications services to mainly local markets but which may have the potential to expand into areas of faster growing digital media (e.g. social media). In broad terms, the creative sector in the South of Scotland demonstrates many of the characteristics typical of rural creative economies. Businesses are very small, with a high proportion of sole traders and companies operating below the VAT threshold and a strong focus on local market opportunities. While these businesses often operate under the radar, their cumulative impact is significant. Although earnings are typically low, there is evidence to suggest some improvement in this respect in the last few years, and certainly since previous research was conducted. The freelance community is also significant, and is a mixed economy of full and part time workers, formal and informal, many of whom have second jobs to supplement their creative income. The use of volunteers is another common feature of rural creative economies, and the South of Scotland is no different. Our research found voluntary working to be a widespread in the creative sector in the South of Scotland, and volunteers play a particularly important role in helping to run festivals and events across the region. This is an indication of both the economic and social impacts of the sector. There was also a common theme regarding the role that arts and creative activity can play in tourism and in promoting the South of Scotland to potential visitors. Events like Spring Fling and the Wigtown Book Festival in Dumfries and Galloway, and the Scottish Borders Film and Book Festivals attract visitors from outwith the region, bringing valuable income for artists and local businesses. They also contribute to an image of the region as an interesting, vibrant and creative place. Social and Environmental Impact Scaling social impact is problematic without conducting primary research with those participating in cultural activity, but the research provides strong qualitative evidence of the important social benefits that the creative sector brings, particularly through voluntary activity, local arts events and opportunities for community participation in creative activity. As highlighted, the creative sector provides valuable training and development opportunities through voluntary working and internships, practices that not only 63

73 provide important sources of labour to businesses and organisations, but also encourage connections with local communities. Artists and creative practitioners play a disproportionately significant role in local rural communities due to their visibility and the strong community flavour of arts events and festivals. These activities help build community pride as well as providing participatory opportunities for local residents which can, in turn, have many social benefits for individuals. In relation to environmental impact, the study identified some contradictory drivers. While new technology enables content creation and distribution through digital channels, thereby reducing environmental impact, the geography of the South of Scotland is such that car travel is almost essential in many parts of the region. Combined with the impact of increased visitor traffic to arts events, it becomes difficult to provide a clear account of the environmental impact of the sector. At the level of individual organisations and businesses this is even more problematic. Most small businesses simply do not have the time or skills to measure their carbon impacts, and although large parts of the creative community may have a natural affinity with environmental concerns, none were able to provide an account of their carbon impacts. The inevitable conclusion must be that the environmental impact of the sector is not known, and would require analysis at a level of depth beyond the scope of the current study. 6.2 Future Opportunities and Issues Sector Confidence While confidence in the future of the creative sector itself is generally high, businesses and individual practitioners are less optimistic about the potential for their markets to grow. This may reflect the prevailing economic climate, although it is important to note that while not confident about their markets, most did feel that their own position was more secure. In fact, a substantial proportion of creative businesses did expect to grow their turnover in the next few years, if not employment. This should be expected. In a difficult economic environment, businesses will be reluctant to take on the additional financial risks of employing more staff, even if they 64

74 can see potential for revenue growth. The challenge is that businesses in many parts of the creative sector are not easily scaleable. For example, a design consultancy can only expand significantly by increasing its workforce, and artists, while they can charge more for individual works, can only produce so much. This argues strongly for an approach based on collaboration, allowing small businesses to achieve greater scale while managing risk. Opportunities The research suggests that there are a number of areas of real opportunity for the creative sector in the South of Scotland, including: creative services: although small, the creative services sector in the region offers potential for economic growth provided that businesses can develop market opportunities beyond the region as well as stimulating local demand, and that collaborative approaches can help companies win business of greater scale. Support for collaborative ventures and pitching would be useful, and mentoring support is generally well received by creative businesses. Industry specific mentors can help less well established businesses with market contacts and advice about how to grow new business. It seems likely that the South of Scotland will be home to creative professionals in the later stages of their careers (i.e. downsizing from the main centres in Glasgow and Edinburgh), and these individuals could have an important role to play in mentoring local businesses. Finally, although promotional effort to raise wider awareness of the skills of creative services providers in the South of Scotland through the creative clusters project has been undertaken, further activity would also be useful in helping to attract new clients; festivals and events: there is already a strong basis on which to build here, and the links between culture and tourism are strong. There is potential to continue to expand these links into areas like mountain biking and the natural environment, taking advantage of the forthcoming Year of Natural Scotland. For example, the region has some noteworthy environmental artists (e.g. Andy Goldsworthy) and a high profile event based around environmental art could offer potential as a flagship arts initiative. There are also opportunities in the three years running up to the Commonwealth Games ( ) through the Year of Creative Scotland (2012), the 65

75 Olympic Games, Paralympics and Cultural Olympiad and the second year of Homecoming in These are all opportunities to highlight Scotland s strengths as a creative nation and help position the work of the cultural sector with the people of Scotland and potential and actual visitors. Partners in the South of Scotland could start to develop propositions for unique events that play to the region s broader strengths, including sport and the outdoor tourism market and visual arts and crafts; film locations: the video and film sector has shown strong growth and Dumfries and Galloway in particular has secured more than its proportional share of mobile film production activity. There is an opportunity to build on this success and continue to develop the screen sector in the region. This requires dedicated support from the Councils, and could be further developed with specific financial incentives for incoming productions; visual arts and crafts have long been strong in the South of Scotland (particularly in Dumfries and Galloway) and with ongoing professional development and support in areas like entrepreneurship, business skills and marketing (see below) this remains an area of opportunity for the region; and promotion and market development: there is an opportunity to promote the South of Scotland s creativity on a wider stage as a means both of enhancing the region s reputation and appeal to visitors and also developing greater market awareness of the creative talent in the region. The Councils are already engaged in many, if not all, of these areas, and part of the need here is simply to ensure that this investment and support is sustained over the longer term. Issues and Barriers Many of the issues and barriers that face the creative sector in the South of Scotland are common not only to the creative industries elsewhere but to small businesses across all sectors. Others are more specific to rural locations or to the South itself. The main issues are: difficulties in accessing finance, an issue made more difficult in the creative sector by lack of tangible assets within businesses against which to secure loans and by the high risk hits-driven nature of many of these industries. For parts of the sector (e.g. the arts) this is also a public sector 66

76 funding issue, although it should be noted that finance is available through the Creative Clusters project (grants), Scottish Borders Council s Business Grant Scheme, the South of Scotland Loan Fund and the Visual Artist and Craft Maker Awards run by CABN; lack of business skills: most small creative businesses are set up by creative people, and the initial drive is primarily creative rather than financial. As a result, too few of these practitioners have the necessary business skills to establish and run a growing commercial business. Independent research has consistently identified this as a barrier to growth across the creative industries in the UK and elsewhere 23. There is therefore a role here for local authority business support programmes, in particular the Business Gateways; fragmentation across the sector: this is a particularly acute issue in the South of Scotland where the geography can mitigate against effective networking and collaboration, particularly where the IT infrastructure is less well developed; local market focus: while local markets can offer small businesses a reasonable living, too great a reliance can create vulnerability to even small changes in market conditions or increased competition. Sustainable longer term growth depends on businesses expanding into larger markets; rural location: while the rural location has obvious lifestyle attractions for many, and can offer lower cost property, it can create challenges, not least in relation to the costs of operating from more isolated locations, even if transport improvements such as the rail links in the Scottish Borders will help. The extent and quality of broadband access across the region is also an issue; and talent drain is an issue facing many regional creative clusters (and not just in rural areas. Finally, many in the sector feel that the arts and creative industries are not properly recognised in the South of Scotland as economically or socially important. This is a perception only, and indeed many of the consultations undertaken as part of this study would suggest that this may be starting to change. 23 See, for example, Sector Skills Assessment for the Creative Industries, Skillset and Creative and Cultural Skills,

77 6.3 Suggestions for Future Development It is beyond the scope of the current study to make specific recommendations about support for the creative sector and its development. However, the main findings suggest some broad areas for further consideration. 1. The South of Scotland Creative Industries Enterprise and the development of CABN and the Creative Clusters project have helped to raise the profile of the sector within the local authorities and have fostered greater cross-border collaboration. However, there is, as yet, no clear strategy for the development of the arts and creative industries at the South of Scotland level. This is an opportunity to combine resources and realise a greater vision for the sector. However, any strategy should give due consideration to the related, but different priorities around: a. growing creative businesses b. developing culture, creativity and the arts c. cultural tourism d. community development activity 2. CABN and Creative Clusters have both helped promote the notion of a creative community and the benefits of networking and collaboration, but there is more to do. The creative industries database produced as part of this research is a useful legacy, but there is an ongoing need for on-the-ground support and facilitation to keep networks alive. In this respect, the creation of a permanent position within Dumfries and Galloway Council is an important step in the right direction. Both CABN and the Creative Clusters project are coming to the end of their funding periods and should now be continued, albeit with the potential to develop a more consolidated offer to the sector. 3. Basic business development support is an area of obvious need, and there may be more to do with Business Gateway and with specialist agencies such as the Cultural Enterprise Office in this respect. Business skills support is also a priority and should be tied in with business development provision. A successor to CABN and Creative Clusters could provide essential signposting, bringing sector knowledge to the more generic support available via the business 68

78 Gateway. Joint events between CABN and the Business Gateway can also help cement the links between the two services, and encourage more creative businesses to seek support. 4. The creative industries thrive on entrepreneurship and innovation, and these should be key themes for any future support activity. Again Business Gateway, CABN and Creative Clusters all have a role here, particularly in supporting and encouraging entrepreneurship, and further and higher education each have much to contribute in these areas. However, the degree of connectedness between higher and further education and the creative sector is not clear, and there is scope for further development. SOSBUS has an obvious role to play in facilitating these connections, and should be engaged in this process. Although the relative lack of degree courses in creative subjects in the South of Scotland is an issue, institutions elsewhere have made an effective contribution to skills and entrepreneurship through initiatives such as industry placements, work-based learning, live project briefs and industry involvement in course development. Glasgow Caledonian University for example, has established a Masters in television fiction writing in partnership with a leading production company, Shed Productions, and Glasgow School of Art has a strongly coordinated approach to work-based learning which involves design students working in partnership with a wide array of public and private sector organisations on real projects. Further afield, FuelRCA is the Royal College of Art s central professional development resource, aimed at helping current students and recent graduates develop their careers. It provides a coherent mix of inter-disciplinary events, information, training and mentoring designed to complement departmental provision from developing presentation skills and understanding intellectual property rights to debate on philosophical themes such as ambition and values. A distinctive feature of FuelRCA is that it is run by recent graduates of the RCA, who are supported by a network of experienced creative business advisors. As a result of its creative approach, the programme is now being recognised as a model of best practice by other universities and organisations such as Enterprise Educators UK. Each year, between 50 and 70 students regularly attend FuelRCA events and approximately 70% go onto set up their own business or pursue freelance careers. The programme has also helped RCA to recruit students as it is seen as a way of enhancing the chances 69

79 of professional success post graduation 24. Models such as these can help prepare students for life in a precarious labour market in which entrepreneurial skills are essential. In relation to innovation SOSBUS is the main vehicle for facilitating connections between FE/ HE expertise and knowledge and the creative sector. Stimulating demand for this input is crucial, as research shows that most creative businesses have only limited understanding of the ways in which FE/ HE expertise could benefit their businesses 24. Similarly, educational institutions need to be able to respond quickly and work in the collaborative and often less formal way that most creative enterprises recognise. 5. Festivals and events are an area of clear opportunity, particularly when linked into wider tourism development priorities in areas like mountain biking and outdoor pursuits. The Year of Natural Scotland may also offer opportunities to build links between the arts and creative industries and the region s tourism offer. Many of the events in the region are supported by the local authorities and other key partners. This is appropriate, but there is merit in facilitating a collaborative approach via a festivals and events network to: o o o o share good practice; co-ordinate programming; develop joint marketing and promotional activities; and provide a forum for future planning. For example, Festivals Edinburgh provides a collaborative approach to the management of Edinburgh s 12 festivals and is focussed on promoting Edinburgh as the world s leading festival city. The shared emphasis on a clear proposition has helped the festivals to consolidate and enhance their international reputation, as well as generating savings through joint activity and new project income. 6. Promotion and market development work are also clear priorities and have a number of facets: 24 For more examples, see Creating Prosperity: the role and contribution of higher education to the UK creative economy, EKOS, for Universities UK (2010) 70

80 o o o o promoting the region s creativity to build the reputation of the creative sector itself and of the region as a culturally rich place promoting cultural opportunities to people within the South of Scotland to build audiences and encourage participation in creative activity helping businesses access opportunities in key markets beyond the South of Scotland, either in Scotland s central belt or down south into England facilitating the development of an infrastructure to support commercial market development across the arts and creative industries (e.g. gallery space, workspace etc) Again CABN and Creative Clusters have a central role, particularly in relation to the last two priorities, and the local authorities arts development services already have a strong focus on the provision and promotion of cultural opportunities. Promoting the region s creativity and cultural offer is closely aligned with the marketing of key festivals and events as well as with wider tourism campaigns. 71