The creative sector - Brexit impacts and solutions

Mike Buckley, Director of the Independent Commission

James Bond and Harry Potter. Glyndebourne, The Old Vic and Shakespeare’s Globe. The Tate Gallery, Tracey Emin, Chris Ofili. Adele, Sam Smith, and Ed Sheeran. From film and television, through theatre and art, to popular music, the British creative industries stride the globe and rival the output of any nation.

The creative industries are big earners, too. Collectively they employ one million people in the UK and are worth £111 billion to our economy each year, which accounts for about 6% of the UK economy. UK film accounted for 19% of the revenue generated in 23 markets across the globe. The music industry contributed £5.8 billion to the UK economy in 2019, with music exports accounting for £2.9 billion. 

The creative industries have suffered much in recent years and were second only to the food and accommodation sector in negative COVID-19 impacts. The creative industries’ June 2020 Gross Value Added was down 44.5% in March of the same year.

70% of the sector’s workers were furloughed. Many musicians fell through the net due to the govt imposed criteria to apply for the Self Employment Income Support Scheme (SEISS) The creative industries proved resilient and as the pandemic waned, they bounced back. Monthly GVA totals for the calendar year 2021 are approximately £104bn. This compares to £95bn for the same measure in 2020 when the pandemic was in full swing. For 2019, this figure was £107bn.

The sector’s resilience and recovery is welcome albeit with a reduced workforce. But it is a recovery which must be nurtured by Government.

Damaging as COVID-19 was it distracted attention from the more permanent harm which threatens to be done by the nature of the Brexit agreements.

After the Brexit referendum of 2016, the UK government and the European Union began the difficult process of disentangling their economies. The eventual result was the Trade and Cooperation Agreement (TCA) and the Northern Ireland Protocol (NIP). Unfortunately, the cultural sector was largely forgotten in the negotiations and little thought was paid to their needs.

As many have pointed out the services sector as a whole ended up with a no deal Brexit. While provisions, inadequate though they may be, were made for continued goods trade no such provisions were made for the services sector.

As part of that sector creatives, like architects, financial and professional services, lawyers and others have been left to make the best of the situation they find themselves in. Many are unable to do so, and have either had to end trading with Europe or close down.

For creatives, many of whom before 2020 relied on income from touring, exhibiting, selling merchandise or collaborating in Europe, the impact has been severe. And without significant change to the Brexit agreements this will not change, it will get no better.

Few in government understood the importance of touring the continent for musicians, theatre groups and orchestras. But the truth is the barriers thrown up by the TCA and the NIP, and the failure of those negotiating them to account for the creative industries’ needs, threaten an existential crisis for many working within the sector.

The challenges facing the sector start with the need for visas and/or work permits. There is no single system to cover the EU and creatives must negotiate 27 different rules. Despite some visa/work permit free provision it’s by no means a level playing field.  They are further restrained by the 90-day out of a 180-day limit on time spent in the Schengen area.

Many musicians and technical experts work for more than one artist, but the time limit locks them out of their biggest, closest market for half the time. Visas are financially punishing, too. UK creatives find themselves at a significant economic disadvantage compared to European-based colleagues. In effect, they are ‘priced out of their own jobs’ on the continent.

Whilst the major artists with the support of their managements and the ability to play large arenas may be able to better weather the storm, there is still significant additional costs involved. The smaller independent artists and medium sized bands will suffer the most. The UK talent pipeline is under serious threat.

Even if they get a visa, they then have to negotiate equipment manifests known as ‘ATA carnets’ to transport kit into the EU. Even a quick, one-off event or show can require a carnet and applying for one is expensive, both in time and money.

The only other option is to hire equipment in the EU. This bears its own costs and deprives UK providers of business. As with visas, the carnet system is complex and confusing.  Paperwork problems at borders have forced musicians and artists to cancel gigs, which can be both financially and reputationally ruinous.

Merchandise sales, which make many tours or gigs viable, are also affected. These are subject to customs rules which apply to shipments into the EU above a certain value. Creatives have to register for, and pay, VAT in each country merchandise is sold. They have to keep a tally of income earned in each country and often keep funds in separate bank accounts. Once again, this entails time-consuming paperwork, checks at borders, and additional duties and charges. 

Road haulage limits in the EU are another hurdle. There are limits for UK registered vehicles transporting commercial goods and equipment to events, restricting them from making over two stops after dropping off goods from the UK. Despite legislation being passed allowing for dual registration of trucks in the EU and UK, this only affects the top 5 event haulage companies.

This legislation allowed many major tours to go ahead in 2022 which was welcomed, however smaller firms and orchestras with their own vehicles

remain constrained by the Cabotage and Cross trade rules meaning a tour is restricted to just three stops on the continent, before it must return to the UK. This is economically punitive and damaging to the environment.

Creatives in Northern Ireland find themselves doubly hit, having lost easy access to both the EU and the rest of the UK.

But the good news is there is a solution. As we explain in our report, a cultural exemption should be included in the TCA as soon as possible. This should remove visa and work permit restrictions on short-term, cultural visits to the EU; replace the burdensome carnet with a more agile system better suited to the temporary movement of small amounts of goods and equipment; and reduce limits on road haulage stops for cultural activities, which would enable financially viable touring once more.

The creative industries are economic powerhouses and ambassadors for our nation. They have shown great resilience in the face of the COVID-19-19 pandemic. But a greater threat are the restrictions forced on it by the TCA and NIP. Unless these are dealt with, irrevocable harm is the likely result.