Cios lep creative economy report

The creative economy in Cornwall and the Isles of Scilly

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The creative economy in Cornwall and the Isles of Scilly For Cornwall and Isles of Scilly Local Enterprise Partnership Prepared by TBR’s Creative & Cultural Team with Bev Hurley

Enquiries about this report can be addressed to; Martin Houghton, Project Director Michael Johnson, Project Manager

03 July 2017 Floor D, Milburn House Dean Street Newcastle upon Tyne, NE1 1LE Telephone: +44 (0) 191 279 0900 Fax: +44 (0) 191 221 2220 Email: michael.johnson@tbr.co.uk www.tbr.co.uk

Table of Contents Table of Contents EXECUTIVE SUMMARY................................................................................................ 2 1.

INTRODUCTION ................................................................................................. 6

1.1 2.

METHODOLOGY ......................................................................................................... 6 QUANTIFYING THE CREATIVE ECONOMY .......................................................... 8

2.1

ECONOMIC PROFILE .................................................................................................... 9

2.2

CREATIVITY ACROSS THE ECONOMY .............................................................................. 11

2.3

CHARACTERISTICS OF CREATIVITY IN C&IOS .................................................................. 12

3.

FACTORS AFFECTING THE PERFORMANCE OF CREATIVE FIRMS..................... 18

3.1

DRIVERS ............................................................................................................... 18

3.2

OBSTACLES ............................................................................................................ 19

3.3

OPPORTUNITIES ...................................................................................................... 19

4.

CREATIVE FIRMS’ SKILLS NEEDS .................................................................... 21

4.1

TECHNICAL AND PRACTICAL SKILLS NEEDS ...................................................................... 22

4.2

SOFT AND PEOPLE SKILLS NEEDS .................................................................................. 23

5.

CREATIVE FIRMS’ BUSINESS NEEDS ............................................................... 24

5.1

INNOVATION .......................................................................................................... 24

5.2

INFRASTRUCTURE .................................................................................................... 25

5.3

BUSINESS SUPPORT .................................................................................................. 26

5.4

FINANCE................................................................................................................ 27

6.

RECOMMENDATIONS ....................................................................................... 29

7.

APPENDICES .................................................................................................... 31

7.1

LITERATURE REVIEW................................................................................................. 31

7.2

ADDITIONAL ECONOMIC PERFORMANCE ANALYSIS ............................................................. 36

7.3

STAKEHOLDER MAPPING/ENGAGEMENT .......................................................................... 39

7.4

ADDITIONAL SURVEY INFORMATION .............................................................................. 41

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Executive summary

Executive summary The creative industries are seen by the UK Government as both a cultural and an economic asset. The skills and inspiration required to generate creative output are seen as a key competitive advantage for the UK economy. Crucially, these are not easily replicable by low-wage economies elsewhere in the world and are therefore seen as a source of sustainable economic prosperity. On this basis, a range of measures have been introduced by the UK Government in support of the creative industries.

The definition of the creative industries has expanded in recent years to embrace modern activities, such as digital gaming, alongside more traditional forms of creativity, such as visual art, crafts and sculpture.

The expanded definition is more likely to encompass elements of creative activity within otherwise noncreative firms. In much the same way that large businesses have for some time employed accounting professionals and/or legal counsel, their in-house capability may now extend to include an IT resource to manage their website and/or social media function. This notion is integral to distinction between the creative economy and creative industries; a detailed description can be found in the main report (Figure 1, page 9).

Cornwall & Isles of Scilly (C&IoS) has a long association with the creative industries, from the renowned visual artists that located in Newlyn at the turn of the twentieth century, to community theatre that has been popular since medieval times. More recently, the consolidation of Arts colleges under the banner of Falmouth University has developed an educational facility that commands an international audience.

Economic profile 

Between 2011 and 2015 in C&IoS…



o

…the number of creative firms in C&IoS increased by 26% (from 990 to 1,250). Increases in the number of firms were greatest in the Advertising, IT, software and computer services, and Film, TV, video, radio and photography sub-sectors. The total number of registered firms in C&IoS increased by 11% over the same period.

o

…employment in the creative economy increased by 12% (from 24,100 to 26,900) and employment in the creative industries decreased by 9% (from 12,600 to 11,500). Total employment in C&IoS increased by 4% over the same period.

o

…economic output in the creative economy increased by 7% (from £2.55bn to £2.73bn) and economic output in the creative industries decreased by 13% (from £1.34bn to £1.16bn). Total economic output in C&IoS decreased by 1% over the same period.

Between 2011 and 2015, growth in creative activity (employment and economic output) in C&IoS was concentrated in the creative economy outside the creative industries (i.e. by people fulfilling creative occupations in non-creative firms). A consequence of this is that initiatives that are designed to support the creative economy should not be restricted to creative firms; it is important to support the development of creative roles in non-creative firms, also.

Characteristics of creativity in C&IoS 

Despite not exhibiting specialisation across all creative industries combined, C&IoS exhibited strong specialisation in various sub-sectors, based on the number of firms and employment. The principal sub-sector of specialisation was Museums, galleries and libraries, followed by Crafts.



Within C&IoS, clusters of creative activity appear in a range of locations, varying by creative subsector. The exception to this takes the form of a ‘central belt’ that runs from the north coast to the south, between St Agnes and Newquay on the north coast, and Truro and St Austell on the south coast.



Analysis of TCR data suggests that firms that do not record turnover sufficient to register for VAT accounted for 16.8% of employment and 11.7% of economic output in the creative industries in 2015. This supports the supposition that official statistics underestimate the economic contribution of the creative industries because of the preponderance of self-employment and activity in businesses operating below the VAT threshold.

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Executive summary Factors affecting the performance of creative firms 

Overall, creative firms in C&IoS were positive about their current trading position; they were more likely to identify drivers of and opportunities for business growth than they were to identify obstacles to business growth.



Stakeholders were unequivocally of the view that local markets are not as profitable as those further afield.

Creative firms displayed some appreciation of this and many saw promoting their products/services nationally/internationally as a key business opportunity in the next two to three years.



Qualitative data suggested that creative people really value the quality of life that C&IoS offers, and that the physical landscape continues to inspire creative output.



The C&IoS brand is strong and stimulates tourism, which makes an important contribution to sales of many creative businesses. The brand is evolving and embracing modern life in C&IoS, with social media users referencing the ‘Falifornia’ hashtag.

Creative firms’ skills needs 

42% of creative firms in C&IoS reported current skills gaps in their workforce. Of these firms, 91% reported gaps in technical and practical disciplines against 61% reporting gaps in soft and people disciplines (55% reported both).



80% of creative firms anticipate skills gaps developing in future (perhaps a consequence of the rapidly changing market and keenness to innovate). Anticipated future skills gaps are also more likely to be technical and/or practical (79% vs 38% that anticipated gaps in soft and/or people skills [including 37% that reported both]).



Specialist skills or knowledge required to perform the role, Sales and marketing skills and Advanced or specialist IT skills were technical/practical skills selected by over half of respondents either as a current and/or future skills gap.



Sales and marketing skills (intentionally included in both technical/practical and soft/people classifications) was the only soft and people skills gap selected by over half of respondents.



Increasing revenue through online sales was an ambition that creative firms in C&IoS consistently made reference to; enhancing skills in Sales and marketing and/or Advanced or specialist IT has direct relevance to achieving this ambition.

Creative firms’ business needs 

The extent to which creative firms in C&IoS innovate varies; 55% are innovation active, whilst 45% are not: o

Those firms that do innovate are motivated by a desire to improve the quality of products/services and access new markets.

o

Of those that do not, half would like to innovate more, and this group cited the upfront investment required, uncertainty of demand, and unavailability of finance as constraints that deterred them from doing so.



Working with creative firms to raise awareness of corporation tax relief 1 and other financial support available for SMEs that are considering investments in research and development.



Established cultural assets play an important role in stimulating the visitor economy in and modernising perceptions of C&IoS. This is undoubtedly beneficial to creative firms. These assets could further support creative firms by retailing their products, for example.



Creative firms are keen to access business support services. Business growth and sales and marketing are the domains in which firms most like support. This supports the opportunities reported in section 3.3 and skills requirements reported in section 4.2.



A minority of creative firms intend to seek external finance in the next three years. Those that do are most likely to seek grant funding. Given that the availability of grant funding is likely to diminish

1

See: https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-small-and-medium-sized-enterprises

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Executive summary in future, the Local Enterprise Partnership and others should work with creative firms to improve their understanding of and willingness to consider other financial models.

Recommendations

1.

Traditional economic impact assessment is not a suitable measure by which to assess the vitality of the creative industry. ‘Employment’ creates a particular problem; creative enterprises with large, six-figure turnovers will often not employ anyone, they will collaborate with freelancers to deliver contracts. Recognising this is important to the creative industries because they often struggle to satisfy the metrics that are used to determine value for money. In response, a more sophisticated method of analysing the economic contribution of the creative industries in C&IoS should be developed.

This will shift the focus away from ‘growth in employment supported’ towards ‘growth in livelihoods supported’.

Creative firms that restrict their market to local customers will struggle to generate sufficient added-value to invest in business growth. Evidence in this report confirms that creative firms do want to expand their geographic reach. Therefore, business support activities should work intensively with creative firms that are keen to achieve sales growth from new markets outside South West England; this could be elsewhere in the UK or abroad.

3.

Furthermore, there is a sense that perceptions of creative output from C&IoS also need to be challenged and updated. This takes two distinct forms that require complementary action: 

Non-creative firms in C&IoS need to be made more aware of the services offered by local firms in the digital/design sector. There remains a sense that these services are best sourced from Bristol or London, whereas there are examples of local non-creative firms achieving first class digitisation/rebranding outcomes through engaging with local digital/design firms. Rodda’s clotted cream is an example that may present a powerful case study.



Markets outside C&IoS need to be made more aware of the quality of products produced by more traditional creative industries (such as crafts). This could take the form of coordinated attendance at suitable trade fairs in the UK and internationally. Under a banner of (for example) ‘Cornwall & Isles of Scilly presents…’ the LEP should coordinate attendance and offer sole traders the opportunity to attend and/or exhibit at a subsidised rate.

Current and/or future skills gaps are a concern for the majority of creative firms. Sales and marketing was identified as a skills gap in both the technical/practical and the soft/people classifications. Sales and marketing advice was also identified and the principal focus for business support that creative firms would like to access. It is, therefore, vital that provision of suitable, good quality sales and marketing training is made available immediately to creative firms. In addition, creative firms have largely been underwhelmed by the commercial impact of ecommerce activity that they have undertaken.

Creative firms are keen to develop advanced ICT skills to enable them to capitalise on the opportunities presented through ecommerce; training provision should reflect this desire, also.

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2.

4.

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Executive summary

5.

Falmouth University plays a valuable role in the development of the creative industries through attracting talented individuals to C&IoS and developing their talents through the provision of higher education that is respected by local creative firms. However, creative firms were more ambivalent about the role of Falmouth University as a provider of business accommodation and source of enterprise support. In future, Falmouth University should work more closely with established creative support agencies in activities that it pursues, beyond attracting and developing talent, in support of the development of the creative industries in C&IoS.

The C&IoS brand is important to developing the visitor economy. This is evolving and major cultural institutions play a valuable role in extending the visitor offer beyond straightforward ‘bucket and spade’ tourism. This does benefit creative firms in C&IoS. However, cultural institutions should do more to support local creative firms by retailing their products, engaging them in early discussions around how to capitalise on opportunities presented by touring exhibitions, and advocate on their behalf where possible.

7.

Grant funding dominates creative firms’ perceptions of external finance. Loan finance is often more difficult for creative firms to secure because they typically lack the capital assets to secure loans against. Working with specialist providers of finance, such as Creative Industry Finance2, should be a priority for agencies that work with the creative industries in C&IoS to enable creative firms to become more accustomed to accessing and managing financial investment secured on commercial terms.

Growth in creative activity in C&IoS was concentrated in creative occupations outside the creative industries between 2011 and 2015. Across England employment growth in the creative industries kept pace with growth in the creative economy, and in South West England exceeded it, over the same period. This suggests that this trend is restricted to C&IoS and likely to continue into the future. As a consequence, support for the creative activities in C&IoS should not focus exclusively on creative firms, but also on creative occupations; these individuals will be found in creative firms, but also in non-creative firms, which is where we forecast growth will continue.

2

6.

8.

See: https://www.creativeindustryfinance.org.uk/about-us/lenders-2/

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Introduction 1. Introduction This report presents the findings of research carried out by TBR working with Bev Hurley, CEO of YTKO Group. This study was commissioned by the Cornwall and Isles of Scilly (C&IoS) Local Economic Partnership (LEP) to explore the growth potential of the Creative Industries in C&IoS. It also seeks to enhance the understanding of the development needs of the creative industries in C&IoS. Thus the principle objective of the project is to inform C&IoS LEP priorities and this report includes recommendations for future activity in relation to the creative economy, as well as providing up to date evidence on the relationship between these Creative Industries and the rest of the C&IoS economy to align with the LEP’s Strategic Economic Plan refresh.

There were four main stages of the project, consisting of; a literature review, economic profiling, stakeholder consultation, and business engagement, as described in the methodology below. This report draws together these various research and analysis strands.

1.1 Methodology Literature review: At the start of the study, we undertook desk-based research to capture all of the relevant contemporary data available. This was done through reviewing key publications from relevant agencies (e.g. Department for Culture, Media and Sport [DCMS]) . The findings of this desk research are appended to this report (section 7.1, page 31).

Economic profile: TBR analysed Office for National Statistics (ONS) data to map the creative industries in C&IoS. The work utilised datasets such as the Business Register and Employment Survey (BRES) and Annual Population Survey (APS) and was consistent with DCMS creative industries definition and analysis1. These secondary data sources are used to establish the firms, jobs, and economic output generated by the creative economic activity in C&IoS. These analyses are presented in summary in Section 2 (page 8). More detailed data are appended to this report in section 0 (page 36).

ONS data often underestimate the economic contribution of microbusinesses, particularly sole traders and freelancers, because their level activity does not take them above the VAT threshold. This is particularly prescient to the creative industries, where working on a freelance basis is more common. This report supplements ONS data with data from TBR’s in-house longitudinal business database (TCR). TCR is able to capture more sole traders and freelancers and locate all activity to a more detailed geography.

Although the report defers to ONS data as a consistent benchmark for headline economic analysis, TCR data have been used to generate a more detailed assessment of localised clustering within C&IoS. Stakeholder consultation: Alongside the literature review we engaged in a programme of desk research to map the stakeholders and delivery partners that have provided business support services across C&IoS (including to the creative industries). This informed a programme of stakeholder engagement that provided a valuable perspective on the issues to focus on in later stages of the study.

The findings of this stakeholder engagement are appended to this report in section 7.3 (page 39).

Business survey: An online survey was designed and delivered by the research team. This was completed by 79 businesses from across the Creative Industries in C&IoS, further details of the composition of participating firms are appended in section 7.4.1 (page 41). The survey was designed to capture evidence on:         

drivers of growth in the sector and sub-sector barriers to growth opportunities for growth any skills gaps and needs (current and future) levels of, and motivation for, innovation opportunities knowledge transfer across networks perceptions of the quality of physical and digital infrastructure any future needs for business support, and access to finance the relationship between creative and non-creative industries in C&IoS © TBR

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Introduction Following the survey, TBR undertook thirteen in-depth interviews with creative businesses, to discuss their survey responses in more detail and explore further the opportunities, issues and business needs creative businesses in C&IoS experience. These telephone interviews provided a rich qualitative addition to the quantitative data generated through the online survey.

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Quantifying the creative economy 2. Quantifying the creative economy The Department for Culture, Media and Sport (DCMS) regards the creative industries as: ‘those activities which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property’. Cornwall’s (2008) Creative Industries Strategy uses this DCMS definition of creative industries 2. DCMS defines the following industries as creative3:

Table 1: Description of creative sub-sectors Creative sub-sector

Description

Advertising

This sub-sector includes the whole suite of marketing and advertising activity needed for an organisation to develop and deliver its message to the public and potential customers.

This ranges from advertising agencies designing adverts to companies managing advertising billboards as a form of public interaction.

Media and PR forms part of this sector, including organising print advertising campaigns in newspapers through to digital marketing and brand development.

Architecture

This sub-sector covers everything associated with planning, designing, and overseeing the construction of buildings and surrounding landscapes. Combing traditional paper based drafting, model making and digital CAD architecture encompasses a range of technical skills.

Overseeing construction and providing technical consultancy are also included in this subsector.

Crafts

The statistical definition of crafts is relatively narrow – covering manufacturers of jewellery, and related products such as gems and items made of precious metals – our survey reached individuals and organisations who work in a much wider range of crafts such as wicker baskets, and those working with other materials such as wood and pottery.

Design

Like architecture, design combines traditional and new technology, ranging from hand drawn textiles design to graphic design. The products of the design industry are used in nearly all sectors; whether company logos, furniture or interior decoration.

Film, TV, video, radio and photography

This sub-sector covers activities over the whole life-cycle of film, TV, video and radio; writing, filming, recording, editing, production and post-production, broadcasting, and distributing including cinema screenings.

Photography includes all types of photographers ranging from photojournalists, wedding photographers to wildlife photographers. Picture agencies, photo development, editing and printing are all part of this sub-sector.

IT, software and computer services

This sub-sector covers the creation, production, supply and maintenance of tools and applications and software products, including web design for both business and domestic customers. This includes, database design and analysis, computer game design, and computer programming and coding for software (including that used in devices such as smart metres, smart appliances, and cars).

Museums

The museums subsector also includes libraries, archives and galleries. All museums are covered, whether privately run, local authority-led, Trust-operated, or volunteer-run museums and includes museums which are both Accredited and non-Accredited by Arts Council England.

Retail, catering and other associated activity at museums, libraries and galleries is also included.

Music, performing and visual arts

This multi-faceted subsector can be split into several categories. Music includes writing, recording, publishing, producing and teaching.

Performing arts covers all performance activity and support activities, such as dance, theatre and music, and costumes, lighting and set-design. Venues such as theatres and concert halls are also included.

Visual arts consists of a range of artistic creation, such as fine art, modern art, engraving and sculpture – essentially all individuals or organisations who classify themselves as artists.

Other artistic creation such as playwrights, poets, journalists, reviewers authors are part of this sub-set.

Publishing

Publishing includes all aspects of publishing such as: books, magazines, newspapers, trade directories, posters, pamphlets, journals and manuals.

Publishing is another area which includes digital activity, with a mix of online publishing (e.g. newspapers, forms, directories, academic journals) and e-book publishing covered in this sub-sector.

Creative employment and economic output are defined by one of two classifications, set out in Figure 1, below.

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Quantifying the creative economy Figure 1: Distinguishing between the creative economy and the creative industries 1. The Creative Economy, which includes the contribution of all those who are in Creative Occupations outside the creative industries as well as all those employed in the Creative Industries.

2. The Creative Industries, which is a subset of the Creative Economy that includes only those working in the Creative Industries themselves (and who may either be in creative occupations or in other roles e.g. finance).

2.1 Economic profile The analysis presented in this section is based entirely on ONS data. ONS data sometimes underestimate the number of micro-businesses across all sectors of the economy. This limitation often leads to the exclusion of sole traders and freelance individuals who may operate below the threshold at which they are required to register for VAT. These groups represent an important component of the creative industries.

Key messages 



Between 2011 and 2015 in C&IoS… o

…the number of creative firms in C&IoS increased by 26% (from 990 to 1,250). Increases in the number of firms were greatest in the Advertising, IT, software and computer services, and Film, TV, video, radio and photography sub-sectors. The total number of registered firms in C&IoS increased by 11% over the same period.

o

…employment in the creative economy increased by 12% (from 24,100 to 26,900) and employment in the creative industries decreased by 9% (from 12,600 to 11,500). Total employment in C&IoS increased by 4% over the same period.

o

…economic output in the creative economy increased by 7% (from £2.55bn to £2.73bn) and economic output in the creative industries decreased by 13% (from £1.34bn to £1.16bn).

Total economic output in C&IoS decreased by 1% over the same period.

Between 2011 and 2015, growth in creative activity (employment and economic output) was concentrated in the creative economy outside the creative industries (i.e. by people fulfilling creative occupations in non-creative firms). A consequence of this is that initiatives that are designed to support the creative economy should not be restricted to creative firms; it is important to support the development of creative roles in non-creative firms, also.

These headline observations present a challenging narrative; in what circumstances would registered firms increase simultaneous with employment and output decreasing? A plausible explanation could be a selection of large employers have ceased trading and former employees have set up as freelancers; some of these have achieved turnover sufficient to be liable for VAT, but many still operate below the VAT threshold. The impact of this sequence of events would be that much economic activity goes unidentified © TBR

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Quantifying the creative economy by official statistics, with the exception of firm registrations, where aggregate counts increase despite the average size of each firm reducing.

Further to this; it also appears that growth in creative activity (employment and economic output) was concentrated in the creative economy outside the creative industries (i.e. by people fulfilling creative occupations in non-creative firms). Based on the secondary ONS data, it is impossible to discern precisely what form this trend has taken. There are various plausible explanations. For example, it could be that people that previously worked for creative agencies commissioned by non-creative firms were ‘poached’ to work in-house by those non-creative firms. Alternatively, it could be a cohort effect; those leaving the creative workforce were more likely to work for creative firm, those entering it are more likely to work in a creative role for a non-creative firm.

2.1.1 Creative enterprises The number of registered enterprises presents an indication of economic activity in a specified sector and at a specified geography. Although generally a good indicator of economic vitality it is imperfect; sometimes businesses achieve growth through merger/acquisition, which can increase employment and GVA despite there being fewer registered firms.

There were 1,250 creative enterprises in C&IoS in 2015, representing an increase of 26% between 2011 and 2015. Growth in the number of enterprises was observed across most creative sub-sectors, but particularly strong in Advertising (growth of 56%), IT, software and computer services (41%), and Film, TV, video, radio and photography (40%). The number of enterprises fell very slightly (by 4% between 2011 and 2015) in the Music, performing and visual arts sub-sector.

2.1.2 Creative employment Table 2 presents trends in employment in the creative economy and creative industries in C&IoS between 2011 and 2015, relative to total employment in C&IoS over the same period. Almost 27,000 people were employed in the creative economy across C&IoS in 2015, an increase of 12% since 2011. This represented 10.6% of all employment in C&IoS in 2015, the greatest proportion of any year between 2011 and 2015. 11,500 people were employed in the creative industries across C&IoS in 2015, a decrease of 9% since 2011; this represented 4.5% of all employment in C&IoS in 2015.

Equivalent data for South West England (Table 9) and England (Table 10) are appended to this report (page 37). Across the South West, employment in the creative economy increased by 27.8% and employment in the creative industries by 33.3% between 2011 and 2015. The proportion of the workforce employed in the creative economy increased from 7.4% to 8.9%, and in the creative industries from 4.7% to 5.8%, over the same period. Across England, employment in the creative economy increased by 20.6% and employment in the creative industries by 20.5% between 2011 and 2015. The proportion of the workforce employed in the creative economy increased from 8.7% to 9.7%, and in the creative industries from 5.6% to 6.3%, over the same period.

Table 2: Creative employment across C&IoS, 2011-2015 Classification Creative economy

Proportion of total employment in C&IoS Creative industries

Proportion of total employment in C&IoS Total employment in C&IoS

2011

2012

2013

2014

2015

Change (2011-2015)

24,100

20,900

24,300

24,200

26,900

+12%

9.9%

8.8%

9.9%

9.4%

10.6%

-

12,600

11,000

12,500

12,800

11,500

-9%

5.2%

4.6%

5.1%

5.0%

4.5%

-

244,600

236,800

245,300

257,600

253,700

+4%

Source: ONS Annual Population Survey (TBR ref W1/S7&S8). Data round to nearest 100.

The contrast between growth in employment in the creative industries in C&IoS and South West England/England between 2011 and 2015 is stark. At a time when employment growth has been 20.5% across England and 33.3% across South West England, a decline of 9% represents a cause for concern.

Annual Population Survey (APS) sample sizes in C&IoS are small and that the scale of the disparity is © TBR

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Quantifying the creative economy threrefore overstated. Nonetheless, the entire disparity cannot be ascribed to inadequate sample sizes.

Although employment across the creative economy increased by 12% across C&IoS between 2011 and 2015, this increase was at a slower rate than equivalent growth in England (20.6%) and South West England (27.8%) over the same period, and therefore represents a relative decline.

2.1.3 Creative economic output Table 3 presents trends in economic output of the creative economy and creative industries in C&IoS between 2011 and 2015, relative to total economic output in C&IoS over the same period. Trends in economic output across the creative economy and creative industries follow a similar pattern to employment. In 2015, the creative economy contributed £2.73bn to the C&IoS economy, 10.6% of all economic activity in C&IoS and an increase of 7% since 2011. Conversely, the creative industries contributed £1.16bn to the C&IoS economy in 2015, 4.5% of all economic activity in C&IoS and a decrease of 13% since 2011.

Table 3: Creative economic output across C&IoS, 2011-2015, £bn Classification

2011

2012

2013

2014

2015

Change (2011-2015)

Creative economy

£2.55

£2.28

£2.64

£2.44

£2.73

+7%

9.8%

8.8%

9.9%

9.4%

10.6%

-

£1.34

£1.20

£1.35

£1.29

£1.16

-13%

5.2%

4.7%

5.1%

5.0%

4.5%

-

£25.92

£25.78

£26.58

£25.94

£25.75

-1%

Proportion of total GVA in C&IoS Creative industries

Proportion of total GVA in C&IoS Total GVA in C&IoS

Source: ONS Annual Population Survey (TBR ref: W1/S11&S12). Data rounded to nearest £10m.

2.2 Creativity across the economy The very nature of some sectors means it is axiomatic that creative activity will take place in non-creative sectors, with people employed in creative occupations in non-creative businesses across the economy.

This would include people employed as web designers within non-creative businesses, such as accountancy firms, for example. We call this the Creative Economy.

As shown above in section 2.1, in 2015 the creative industries employed 11,500 people in C&IoS, whilst a further 15,400 were employed in creative roles outside of the creative industries. Thus, the total number of people employed in creative occupations in C&IoS was 26,900.

The fact that more people are employed in creative occupations outside of the creative industries than within in them shows the important role creativity plays across the economy in C&IoS. The sub-sectors that exhibit this trend most prominently are design, and film, TV, video, radio and photography; in both sub-sectors, only half of all creatives in C&IoS are employed within the creative industries. Design occupations are graphic designers (Standard Occupational Classification [SOC] 3421) and product, clothing and related designers (SOC 3422). Film, TV, video, radio and photography occupations are arts officers, producers and directors (SOC 3416) and photographers, audio-visual and broadcasting equipment operators (SOC 3417).

Whilst it is challenging to assess which non-creative industries employ creative personnel, ONS data can provide some insight. Having analysed average employment levels by non-creative sector over the period 2011-2015 it appears that that the principal sectors of employment were wholesale and retail and manufacturing. These sectors account for approximately 25% and 21%, respectively, of creative employment outside of the creative industries.

Links between creative industries and non-creative industries are also important. For example, it is likely that digital marketing agencies sell their services to a whole range of non-creative sectors. However, such links are less obvious for makers and practitioners of crafts, for example.

Our survey and interviews only engaged with businesses and individuals operating within the creative industries, and provided mixed views on the linkages between creative and non-creative industries. © TBR

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Quantifying the creative economy For example, one artist consulted works freelance in the care sector, visiting care homes to provide art lessons to elderly and disabled residents.

In terms of the relationships between creative industries and non-creative sectors, businesses interviewed tend to think the ecosystem could be more supportive. This ranges from supply chains, to retail outlets, and the extent to which local industries buy local products.

“We have approached the National Trust about retailing – Eden Project as well, could all do more when it comes to supporting small businesses.”

Craft firm

“The marketplace is not sufficient for this [local businesses to buy from local artists]: galleries are too expensive, have limitations in that are too touristy/commercial orientated and touring studios is too time consuming for businesses”

Music, performing and visual arts firm

One exception was an organisation interviewed who are not producers or makers of products, but a creative venue with retail and catering on-site:

“We work with local makers, local food & drink producers, and a local bookshop. It is difficult making a distinction between creative and non-creative, and not helpful.”

It is also important to consider the links between different creative sub-sectors. There appears to be much more of a tendency for similar sectors to link together:

“We do not actually do much with the digital end of the creative spectrum so maybe [there would be] value to [engaging] more there. More collaborations between digital and non-digital creative business would be beneficial.”

Music, performing and visual arts firm

2.3 Characteristics of creativity in C&IoS The headline economic data presented in section 2.1 provide a useful summary of activity but do not explore the nature of creative activity in C&IoS. Of particular interest is sub-sectoral specialisation or clusters of creative activity. This section explores the nature of specialisation in C&IoS overall, relative to concentrations of creative activity across England and is based on ONS data. It proceeds to explore clusters of creative activity by geography within C&IoS. It also considers the role of self-employment within the creative industries in C&IoS. Key messages 

Despite not exhibiting specialisation across all creative industries combined, C&IoS exhibited strong specialisation in various sub-sectors, based on the number of firms and employment. The principal sub-sector of specialisation was Museums, galleries and libraries, followed by Crafts.



Within C&IoS, clusters of creative activity appear in a range of locations, varying by creative subsector. The exception to this takes the form of a ‘central belt’ that runs from the north coast to the south, between St Agnes and Newquay on the north coast, and Truro and St Austell on the south coast.



Analysis of TCR data suggests that firms that do not record turnover sufficient to register for VAT accounted for 16.8% of employment and 11.7% of economic output in the creative industries in 2015. This supports the supposition that official statistics underestimate the economic contribution of the creative industries because of the preponderance of self-employment and activity in businesses operating below the VAT threshold.

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Quantifying the creative economy 2.3.1 Location quotients Location quotients (LQs) were calculated to assess the concentration of creative industries firms in Cornwall relative to England. LQs are an analytical indicator that measures an area’s sector specialisation relative to a larger geography. A sectoral LQ of 1 indicates parity with the larger geography; the sector is of equal significance to both the area under review and the larger geography to which it is compared.

The larger the sectoral LQ is above 1, the greater the degree of specialisation. A sectoral LQ greater than 1.25 indicates that a locality (in this case C&IoS) specialises in that sector, relative to England.

Table 4 presents a broad LQ analysis; considering the full definition of creative industries at the full C&IoS geography. This analysis suggests that, at this aggregated level and relative to England, there was a not a concentration of creative industries in C&IoS, either in terms of firms (an LQ of 0.48) or employment (an LQ of 0.74). A more granular analysis of activity within the creative industries in C&IoS is presented in Table 5 and Table 6.

Table 4: Creative industries enterprise/employment LQs in C&IoS, 2015 Unit Enterprises

Employment

Geography C&IoS England C&IoS England

CI count

Total count

CI %age

1,250

23,145

5.4%

238,130

2,116,295

11.3%

11,500

253,700

4.5%

1,616,700

26,373,600

6.1%

C&IoS LQ 0.48

0.74

Source: ONS UK Business Counts (enterprises) and Annual Population Survey (employment) (TBR ref W1/S3,S9,S10). Enterprises rounded to nearest 5, employment to nearest 100.

Table 5 demonstrates that, despite C&IoS not exhibiting a specialisation in creative firms in aggregate, there are sub-sectors within the creative industries in which C&IoS does display specialisation.

Specialisation in museum activities and motion picture projection activities are particularly noteworthy.

Table 5: Sub-sectoral creative specialisation in C&IoS, enterprises, 2015 2007 SIC

Sub-sector

C&IoS LQ

9102

Museum activities

2.66

5914

Motion picture projection activities

2.34

9101

Library and archive activities

1.56

5814

Publishing of newspapers

1.33

Source: ONS UK Business Counts (TBR ref W1/S3). Data round to nearest 5.

Table 6 presents further evidence that the apparent absence of specialisation in C&IoS at an aggregate creative industries level conceals a range of sub-sectoral specialisations. Data presented in Table 6 suggests that the employment LQ below 1 observed in Table 4 is a consequence of low employment LQs in some of the larger, office based creative sub-sectors; architecture and IT, software and computer services. Conversely, sub-sectors such as crafts and museums, galleries and libraries exhibit very high employment LQs within the creative economy and, still greater, the creative industries.

Table 6: Sub-sectoral specialisation in C&IoS, employment Sub-sector

Creative Economy LQ

Creative Industries LQ

0.57

0.594

0.504

0.504

Crafts

2.50

4.384

Design: product, graphic and fashion design

0.87

0.97

Film, TV, video, radio and photography

0.92

0.81

IT, software and computer services

0.40

0.50

Advertising and Marketing Architecture

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Quantifying the creative economy

Sub-sector

Creative Economy LQ

Creative Industries LQ

4

2.214

Music, performing and visual arts

1.65

1.75

Publishing

0.63

0.67

Museums, galleries and libraries

1.66

Source: ONS Annual Population Survey (TBR ref W1/S9&S10)

2.3.2 Clustering within C&IoS Although LQs are an established and transferable method of analysing sectoral specialisation, publicly available data are not available with sufficient granularity to identify localised sectoral clusters. Clusters can be hyperlocal and, although not significant in the context of a whole-LEP economy, can be integral to local economic ecosystems.

TBR’s in-house business dataset, TCR, was utilised to visualise geographic clusters of economic activity among sub-sectors of the creative industries in C&IoS. A combined measure of economic activity incorporating concentrations of firms, employment and economic output at the level of postcode sector was developed for each of the nine sub-sectors (based upon TCR data and weighted to the sub-sectoral proportions identified in ONS data). This analysis is presented visually in Figure 2 through Figure 10, with short commentaries to accompany each map.

Figure 2: Advertising in C&IoS

Figure 3: Architecture in C&IoS

Each sector has been split into four quartiles, with the first quartile (dark orange) representing the highest levels of clustering. We can see for the advertising sub-sector a concentration of activity to southwest and the north east, and more centrally between St Blazey and Wadebridge.

The clusters of activity in the architecture subsector are more concentrated to the north and east of C&IoS. There is a moderate amount of clustering to the southwest of the mainland, and the Isles of Scilly demonstrate a higher level of clustering than areas in central Cornwall.

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Quantifying the creative economy

Figure 4: Crafts in C&IoS

Figure 5: Design in C&IoS

We see that crafts activity is sparse across most of C&IoS, with a small number of dense clusters, and large areas exhibiting little activity at all. The highest concentration activity is seen towards the southwest tip of Cornwall, an again the Isles of Scilly showing more clustering than much of the mainland county.

The design sub-sector exhibits a high degree of clustering to the south and southwest of Cornwall, and in the area north of St Austell. It is interesting however that there is a lower concentration of design activity to the north and east of Cornwall, despite this area having clusters of complementary sectors such as advertising and publishing.

Figure 6: Film, TV, video, radio and photography in C&IoS

Figure 7: IT, software and computer services in C&IoS

Film, TV, video, radio and photography is one of the densest clusters in C&IoS, which we can see in Figure 6 is in the same quartile as the most southwesterly parts of the Cornish mainland.

Activity in this sector is relatively sparse through the centre and southeast of Cornwall.

This sector is one of the best represented across C&IoS with nearly of all the north, east and southeast of Cornwall showing high or moderate levels of clustering. Like design, IT is one of the few sectors where the area from Lizard Point to Falmouth has a high level of clustering.

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Quantifying the creative economy

Figure 8: Museums, galleries and libraries in C&IoS

Figure 9: Music, performing and visual arts in C&IoS

Museums, galleries and libraries do not have a large level of clustering throughout C&IoS, with the darkest areas of Figure 8 corresponding to the main urban areas and more rural visitor attractions such as Lands’ End and the Lost Gardens of Heligan. The Isles of Scilly is in the second quartile, showing its highest level of clustering

The music, performing and visual arts sector shows a similar distribution of activity to the design, TV and advertising sectors. Whilst not showing as much activity across C&IoS as IT for example, this activity is not as sparse as crafts. Again we that the Isles of Scilly display a higher level of clustering than many areas on the mainland.

Figure 10: Publishing in C&IoS The publishing sub-sector (Figure 10) shows a similar distribution of activity and pattern of clustering as the music, performing and visual arts sub-sector.

2.3.3 Role of self-employment As referenced in the project methodology (section 1.1, page 6), official statistics often underestimate the significance of freelancers and sole traders (referred to herein as self-employment) to the economy. This is because official statistics are based upon VAT-registered firms; UK firms with an annual turnover of up to £83,000 are not VAT-registered. Self-employment is generally accepted as being more prominent in the creative industries than it is in the economy overall; as such, it is important to seek to move beyond official statistics within this analysis.

TBR’s in-house business dataset captures economic activity undertaken by firms operating below the VAT threshold and can therefore profile self-employment more accurately. TCR data do not align precisely with the ONS data analysis presented in section 2.1. This restricts the use of absolute data values, but TCR data have been weighted to reflect the ONS sub-sectoral composition of the creative industries in C&IoS. This enables TCR data to model the relative significance of economic activity in the creative industries in C&IoS that falls below the VAT threshold. © TBR

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Quantifying the creative economy TCR data suggest that c36% of firms, c17% of employment, and c12% of economic output in the creative industries in C&IoS in 2015 was undertaken by firms reporting turnover below the VAT threshold. Median employment for these firms was one and mean GVA was £46kpa, in 2015.

In context, across all sectors in C&IoS, c23% of firms, c5% of employment, and c3% of economic output were accounted for by firms reporting turnover below the VAT threshold. This validates the supposition that, in C&IoS, self-employment represents a greater proportion of economic activtyactivity in the creative industries than it does in the economy overall.

Based on the proportions introduced above (c36% of firms, c17% of employment, and c12% of economic output) we can infer that official data may underrepresented economic activity in the creative industries in C&IoS by the following factors: 

the total number of firms in the creative industries in C&IoS (summarised in section 2.1.1, page 10) could conceivably need to increase by a factor of between 0.5 and 0.6. Based on a figure of 1,250, this could indicate an additional 625-750 enterprises.



employment in the creative industries in C&IoS (presented in Table 2, page 10) may need to increase by a factor of between 0.15 and 0.25. Based on a figure of 11,500, this could indicate additional employment of 1,725-2,875.



economic output in the creative industries in C&IoS (presented in Table 3, page 11) may need to increase by a factor of between 0.08 and 0.18. Based on a figure of £1.16bn, this could indicate additional output of £92.8m-£208.8m.

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Factors affecting the performance of creative firms 3. Factors affecting the performance of creative firms Understanding the drivers of, obstacles to, and opportunities for growth in the creative industries in C&IoS was a key research question that this project sought to answer. This section presents evidence from primary research activities (quantitative and qualitative) delivered as part of this project.

Key messages 

Overall, creative firms in C&IoS were positive about their current trading position; they were more likely to identify drivers of and opportunities for business growth than they were to identify obstacles to business growth.



Stakeholders were unequivocally of the view that local markets are not as profitable as those further afield.

Creative firms displayed some appreciation of this and many saw promoting their products/services nationally/internationally as a key business opportunity in the next two to three years.



Qualitative data suggested that creative people really value the quality of life that C&IoS offers, and that the physical landscape continues to inspire creative output.



The C&IoS brand is strong and stimulates tourism, which makes an important contribution to sales of many creative businesses. The brand is evolving and embracing modern life in C&IoS, with social media users referencing the ‘falifornia’ hashtag.

3.1 Drivers Creative firms in C&IoS attributed business growth both to factors wholly within their control (such as the introduction of new products/services and improvements to existing products/services) and to factors at least somewhat outwith their control (such as demand for established/new products/services).

The proportion of creative firms attributing success to investments made in their business (either in technology and/or premises and/or workforce) has increased in the last year (Figure 11). This is encouraging, because the positive experience should give these specific firms more confidence to invest in future. Furthermore, awareness of this experience may percolate to other creative firms through professional and social networks.

Figure 11: Factors driving business success None of the above

2-3 years Last year

Don't know/no opinion Improved quality of products/services supplied by new…

Improved quality of products/services supplied by existing…

Investment in workforce Investment in premises External business support/advice Improvements to existing products/services Investment in technology Introduction of new products/services Demand for new products/services Increased demand for established products/services n=79

0%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: TBR 2016 (TBR ref W2/S2)

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Factors affecting the performance of creative firms 3.2 Obstacles Although market competition may sometimes be viewed as a driver of improved business performance, brought about through a need to improve products/services, creative firms in C&IoS reported that competition in the market had been the greatest obstacle to business growth, both in the past year (39%) and in the preceding two years (32%). The proportion of firms that experienced this obstacle in the last year increased from the proportion in the previous two years.

Figure 12: Obstacles to business success Don't know/no opinion Workplace pensions

2-3 years Last year

National Living Wage None of the above Any other major issues or obstacles Staff recruitment and skills Regulations/red tape Availability/cost of suitable premises Late payment Obtaining finance Taxation, VAT, PAYE, National Insurance, business rates Competition in the market n=79 Source: TBR 2016 (TBR ref W2/S3)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Data analysed in section 2.2 (page 11) suggest that concentrations of firms in specific creative sectors are actually quite rare in C&IoS. Furthermore, qualitative data suggest that creative firms embrace opportunities to collaborate with other local firms (creative and non-creative) and that this adds value to their activities:

“There is a network of photographers/filmographers so we pass each other work.”

Film, TV, video, radio and photography firm

“Have improved collaborations as the people I am working and collaborating with are of a higher standard. This is due to good networks in Cornwall, and we have invited/attracted people from outside. Cornwall has a good amount of talent.”

Music, performing and visual arts firm

“A real strength is being located in Cornwall, and easier to connect with art schools and artists. E.g. Newlyn, St Ives. Good access to reasonably priced studios and space, not much pressure on prices as in London and elsewhere”

Music, performing and visual arts firm

As such, activities that (further) encourage firms that offer similar products/services to work collaboratively to develop the reputation of their locality as a leading provider of that product/service would be worthwhile.

3.3 Opportunities A simple matrix of customers and products/services, Table 7, suggests that, when selling to new customers, creative firms are more likely to view existing products/services (61% in the next year, 47% in the subsequent two years) as a business opportunity than new products/services (46%, 38%). This difference is negligible amongst existing customers. This suggests that creative firms value the relationships that they have with existing customers and feel more confident introducing them to new products.

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Factors affecting the performance of creative firms Table 7: Selected opportunities: products/services and customers Existing products/services

New products/services

Next year

2-3 years

Next year

2-3 years

Existing customers

54%

42%

53%

42%

New customers

61%

47%

46%

38%

Source: TBR 2016 (TBR ref W2/S4)

Creative firms in C&IoS see opportunities to increase revenue extending nationally and internationally. In the immediate term (the next twelve months), they expect to undertake promotional activity that is more locally focussed, but that the reach of this activity will extend nationally and internationally in subsequent years.

Figure 13: Opportunities for businesses success 2-3 years Next year

Don't know/no opinion Capitalise on the relative weakness of sterling Relocate to more suitable premises (within CIOS) Introduce new skills through recruitment of new staff Promote products/services internationally Sales of new products/services to new customers Sales of existing products/services to existing customers Sales of existing products/services to new customers n=79 Source: TBR 2016 (TBR ref W2/S4)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The focus on expanding into markets further afield was reinforced by qualitative evidence:

“We are looking to develop market in smaller products with e-commerce.”

Design firm

“We use Cornwall craft galleries to sell. If Cornwall Crafts Association had resources to help that would be good, but they are too busy. [It] would be good to work with someone else e.g. [to] organise a few more exhibitions in London and elsewhere for Cornish makers, getting together collections of work and going out [of] the county more.”

Craft firm

Stakeholders provided an interesting commentary on local market conditions. Those with an overview of the economy tended to reflect on the impact of low value-added local demand ‘locking’ creative firms into pricing structures that were below the national market average. Firms that begin trading further afield often find that they are able to increase their charges (and margins). Providing creative firms with the knowledge and confidence to trade outside of the local area offers an opportunity for growth.

Based on this intelligence and the stakeholder view that creative firms in C&IoS should look to trade in more profitable markets elsewhere in the UK and abroad, working with firms to bring forward promotional activity outside C&IoS would be worthwhile.

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Creative firms’ skills needs 4. Creative firms’ skills needs Workforce skills remain a high profile component of the UK Government’s attempts to improve productivity in the economy. Improving the supply of skilled workers and the availability of training is a central element of this, but to achieve maximum impact the skills and training delivered must accurately reflect the needs of employers. This section presents evidence from primary research activities (quantitative and qualitative) delivered as part of this project.

Key messages 

42% of creative firms in C&IoS reported current skills gaps in their workforce. Of these firms, 91% reported gaps in technical and practical disciplines against 61% reporting gaps in soft and people disciplines (55% reported both).



80% of creative firms anticipate skills gaps developing in future (perhaps a consequence of the rapidly changing market and keenness to innovate). Anticipated future skills gaps are also more likely to be technical and/or practical (79% vs 38% that anticipated gaps in soft and/or people skills [including 37% that reported both]).



Specialist skills or knowledge required to perform the role , Sales and marketing skills and Advanced or specialist IT skills were technical/practical skills selected by over half of respondents either as a current and/or future skills gap.



Sales and marketing skills (intentionally included in both technical/practical and soft/people classifications) was the only soft and people skills gap selected by over half of respondents.



Increasing revenue through online sales was an ambition that creative firms in C&IoS consistently made reference to; enhancing skills in Sales and marketing and/or Advanced or specialist IT has direct relevance to achieving this ambition.

Figure 14 and Figure 15 present the proportions of creative firms in C&IoS that feel that they either currently have skills gaps in their workforce (Figure 14) and or anticipate skills gaps emerging in the future (Figure 15). Secondary data from the UK Employer Skills Survey 2015 (UKESS 2015) suggest that 16% of all employers in Cornwall reported a skills gap within their workforce; this is a much smaller proportion than the 42% of creative firms in C&IoS that reported a current skills gap. There is also a clear difference between the proportion of creative firms in C&IoS that reported current skills gaps (42%) and the proportion that anticipate skills gaps emerging in future (80%).

Figure 15: Creative firms forecasting future skills gaps

Yes

0%

20%

No

40%

Source: TBR 2016 (TBR ref W2/S5)

60%

n=79

Don't know

n=79

80%

100%

Yes

0%

20%

40%

No

60%

80%

Don't know

Figure 14: Creative firms with current skills gaps

100%

Source: TBR 2016 (TBR ref W2/S6)

Of the creative firms in C&IoS that reported current and/or anticipated future skills gaps, a greater proportion reported gaps in technical/practical disciplines than in soft/people disciplines. This was true both of current (38% vs 26%, including 23% that reported both, Figure 16) and anticipated future skills gaps (73% vs 35%, including 34% that reported both, Figure 17).

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Creative firms’ skills needs Figure 16: Nature of creative firms’ current skills gaps

Figure 17: Nature of creative firms’ forecast future skills gaps

n=79

0%

20% 40% 60% 80% 100% Both technical/practical and soft/people skills Technical or practical skills Soft or people skills Don't know

Source: TBR 2016 (TBR ref W2/S5)

n=79

0%

20% 40% 60% 80% Both technical/practical and soft/people skills Technical or practical skills Soft or people skills Don't know

100%

Source: TBR 2016 (TBR ref W2/S6)

In terms of training provision in C&IoS, quantitative survey data suggested that creative firms were not fully satisfied by the extent to which education providers (secondary, further, and higher) were meeting their needs. The three categories each polled a mean rating of between 4.9 and 5.3 out of 10 (see Figure 30, page 42). However, qualitative responses provided a stronger endorsement:

“It is very easy to recruit skills because of Falmouth – if there were ten of me I could run ten businesses with graduates from Falmouth”

Film, TV, video, radio and photography firm

“Falmouth University is good but more creative than technical; more about creativity than making things.”

Design firm

“The availability of local technical skills has been invaluable. We are able to offer great lifestyle to staff; our competitors are based in Cambridge and labour market dynamics are different in C&IoS.”

IT, software and computer services firm

“We have had five or six interns. Creative Employment programmes a massive boost to the sector, but finishes in March [2017]. Waiting for the next element of this.”

Music, performing and visual arts firm

The detailed nature of the technical/practical skills and soft/people skills required by creative firms in C&IoS are presented in sections 4.1 and 4.2, below.

4.1 Technical and practical skills needs Those survey respondents that reported skills gaps in technical and practical disciplines (either current or anticipated in future) selected up to three specific skills that represented the most significant gaps, from a closed list of fourteen. Figure 18 presents the responses; it is immediately clear that three disciplines were selected more frequently than others. Specialist skills or knowledge required to perform the role, Sales and marketing skills and Advanced or specialist IT skills were all selected by over half of respondents either as a current and/or future skills gap.

Figure 18 also presents the nature of technical and practical skills required by firms across all sectors in the South West of England (the most granular geography publicly available for this measure) in the UKESS 20155. Responses to the UKESS 2015 indicated that skills gaps are more evenly distributed; this reinforces the specificity of skills needs in the creative industries.

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Creative firms’ skills needs Figure 18: Specific technical and practical skills required, current and future SW England Future Current

Reading and understanding instructions, guidelines, manuals or reports Don't know Manual dexterity Basic numerical skills and understanding None of the above Communicating in a foreign language Writing instructions, guidelines, manuals or reports More complex numerical or statistical skills and understanding Computer literacy / basic IT skills Knowledge of how your organisation works Adapting to new equipment or materials Solving complex problems requiring a solution specific to the situation Knowledge of products and services offered by your organisation and organisations‌ Specialist skills or knowledge needed to perform the role Sales and marketing skills Advanced or specialist IT skills

0%

n=30(current) 62(future) 812 (SW England)

20%

40%

60%

80%

100%

Source: TBR 2016, UKESS 2015 (TBR ref W2/S5)

Although specialist skills or knowledge required to perform the role tend to be role-specific and therefore more difficult for public agencies to respond to, sales and marketing skills and advanced or specialist IT skills are more universal and therefore more cost effective to deliver. Supplementary qualitative data suggest that the IT skills that creative firms are keen to develop are dominated by boosting sales revenue through e-commerce; interviewees reported having accessed training to develop a basic online presence and use social media to try and drive traffic towards their website, but that the sales impact of this was below expectations. Where interviewees were equivocal over their specific skills needs, many felt that there was always more to learn about sales and marketing and/or that they would like to understand what was possible through advanced IT applications, rather than necessarily acquiring the skills to deliver them.

4.2 Soft and people skills needs Those survey respondents that reported skills gaps in soft/people disciplines (either current or anticipated in future) were asked to select up to three from a closed list of eleven that represented the most significant gaps. Figure 19 demonstrates that the soft/people skills required by creative firms in C&IoS are more dispersed than the technical/practical skills gaps introduced in section 4.1. Each of the eleven disciplines was selected by at least 20% of respondents either as a current or anticipated future skills gap, while Sales and marketing skills (intentionally included in both the technical/practical and the soft/people classifications) was the only discipline selected by over half of respondents. Figure 19 also introduces data from the UKESS 2015.

Figure 19: Specific soft and people skills required, current and future SW England Future Current

Don't know None of the above Making speeches or presentations Leading or inspiring other staff Customer handling skills Team working Persuading or influencing others Managing their own feelings, or handling the feelings of others Ability to manage own time and prioritise own tasks Setting objectives for others and planning human, financial and other resources Managing or motivating other staff Instructing, teaching or training people Sales and marketing skills

n=20(current) 30(future) 812 (SW England)

0%

20%

40%

60%

80%

100%

Source: TBR 2016, UKESS 2015 (TBR ref W2/S5)

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Creative firms’ business needs

5. Creative firms’ business needs This section captures information on the support that creative firms in C&IoS may need. This encompasses becoming more innovative, improving superfast broadband coverage, achieving greater leverage from the value of local cultural assets, accessing advice related to business growth and sales and marketing, and securing external financial investment.

Key messages 

The extent to which creative firms in C&IoS innovate varies; 55% are innovation active, whilst 45% are not: o

Those firms that do innovate are motivated by a desire to improve the quality of products/services and access new markets.

o

Of those that do not, half would like to innovate more, and this group cited the upfront investment required, uncertainty of demand, and unavailability of finance as constraints that deterred them from doing so.



Working with creative firms to raise awareness of corporation tax relief6 and other financial support available for SMEs that are considering investments in research and development.



Established cultural assets play an important role in stimulating the visitor economy in and modernising perceptions of C&IoS. This is undoubtedly beneficial to creative firms. These assets could further support creative firms by retailing their products, for example.



Creative firms are keen to access business support services. Business growth and sales and marketing are the domains in which firms most like support. This supports the opportunities reported in section 3.3 and skills requirements reported in section 4.2.



A minority of creative firms intend to seek external finance in the next three years. Those that do are most likely to seek grant funding. Given that the availability of grant funding is likely to diminish in future, the Local Enterprise Partnership and others should work with creative firms to improve their understanding of and willingness to consider other financial models.

5.1 Innovation Innovation is recognised as an important contributor to business growth; taking an idea from conception to execution could represent either a product or a process innovation, depending on the nature of the activity. 

Process innovations would include developing new processes that will help a business to enhance its performance, either through growth, expanding its customer base, and staying relevant or ahead of the game.



Product innovations would include developing a service or product to fill an existing market gap, meet changing market demand, or disrupt a moribund market.

Over one quarter of creative firms (27%) ranked their levels of innovation as ten out of ten (the definition provided to firms to assist this self-assessment is appended to this report in section 7.4.2, page 42). However, over four in ten (45%) firms scored their levels of engagement with innovation at five or less. Furthermore, amongst the firms that scored themselves five or less, the ambition to innovate more is mixed. Half of these firms (50%) stated they want to spend more time on innovation, with around four in ten (41%) expressing no desire or uncertainty to innovate more.

Creative firms who engaged with innovation identified a desire to improve the quality of products/services and access new markets as key motivations behind their innovative activity (Figure 20).

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Creative firms’ business needs The three most frequently selected motivations to innovate, all stated by a third of innovating businesses, were entering new markets, improving quality of goods or services, and increasing value added.

“A lot of competition so we wanted to find new avenues. We have diversified the business, moving from taking photos [from our boat] to sell, to running trips for film crews and other photographers”.

Film, TV, video, radio and photography firm

Figure 20: Motivations to innovate Don't know/no opinion None of the above Meeting regulatory requirements (including standards) Improving health and safety Improving flexibility for producing goods or services Reducing costs per unit produced or provided Reducing environmental impact Increasing market share Improving capacity for producing goods or services Increase range of goods or services Replacing outdated products or processes Entering new markets Increasing value added Improving quality of goods or services

0% n=41 Source: TBR 2016 (TBR ref W2/S7)

20% 40% 60% 80% % of firms that currently innovate

100%

Conversely, firms that were not currently innovative but would like to become more innovative identified three principal barriers to innovation; each was reported by over a third of these firms (35%, Figure 21).

The three barriers were that upfront costs of investing in innovation are high, finance to fund innovation is scarce, and a lack of confidence that increased demand for products will make investment in innovation worthwhile.

Figure 21: Constraints to innovation UK Government regulations EU regulations Don't know/no opinion Market dominated by established businesses Lack of information on technology Lack of information on markets None of the above Cost of finance Excessive perceived economic risks Lack of qualified personnel Uncertain demand for innovative goods or services Direct innovation cost too high Availability of finance

0% n=17 Source: TBR 2016 (TBR ref W2/S7)

20%

40%

60%

80%

100%

% of firms with a desire to be more innovative

5.2 Infrastructure In addition to commenting on the extent to which local educations institutions met their business needs (covered in section 4), creative firms also reflected on the provision of telecommunications and transport infrastructure in C&IoS. Views on both aspects of infrastructure were mixed.

Firms felt that broadband speed and coverage had improved in recent years and was now met their business needs in the larger conurbations within C&IoS. However, this did not extend to the more © TBR

Page 25

Creative firms’ business needs remote areas of C&IoS, where connection speeds remain slow; this sometimes disrupted a desire to work flexibly from home. It is important that reliable, superfast broadband is universally available; not only will this enable existing firms to increase productivity, it will also address the concerns of firms who may wish to establish in C&IoS but be reluctant to locate outside a major urban centre.

Stakeholders reported that experience of (relative) geographic isolation had led to creative firms in C&IoS being accustomed to communicating virtually with clients and suppliers. This has been advantageous when opportunities to trade internationally have arisen.

Firms spoke positively about the frequency of flights from Newquay to London (whilst noting that Gatwick was not the best airport for onward connections), but felt that the local connectivity with Newquay airport now needed to be improved to ensure that this benefit was more accessible to businesses. Firms also felt that a private car was essential because, with the exception of point-to-point travel between the major towns, public transport is inadequate.

5.2.1 Cultural infrastructure In addition to more traditional aspects of infrastructure, firms were also asked about the role of cultural infrastructure in supporting the creative industries in C&IoS. This included the role of cultural assets Major cultural assets were acknowledged as important to the development of the C&IoS brand; they are integral to the visitor economy, moving C&IoS away from simple ‘bucket and spade’ tourism towards a more sustainable, year-round offer with higher value added. Providing a stimulus to visit C&IoS has a direct, immediate impact on the creative industries (through retailing) and an indirect impact (raising awareness of the creative industries in C&IoS). In this sense, the major cultural assets make a valuable contribution to the creative industries.

High profile cultural institutions, such as the Eden Project and Tate St Ives were seen as assets to the creative community but firms did feel that they could increase their do more to promote local creative industries. For example, galleries of all sizes tend to need to exhibit more accessible artwork to be sustainable; this limits the opportunities for more cutting edge artists.

“We have approached the National Trust about retailing – Eden Project as well, could all do more when it comes to supporting small businesses.”

Crafts firm

Stakeholders reported that the difficulty travelling to the Eden Project, particularly during tourist season, made it impractical as a venue for local business networking. However, the Eden Project’s creative leadership ‘HotHouse’ initiative is an example of direct engagement in activity introduced to support local creative firms7. Small businesses can sometimes overestimate the resources and profitability of high profile cultural institutions; the Eden Project, for example, has only recently started to attract people for multiple visits (this has involved diversification through, for example, staging musical events).

The provision of business incubation space in the creative industries needs to reflect the uniquely messy nature of some creative activity. Standard B1 office premises are suitable for some creative firms, such as architecture practices and design agencies, but not for others, such as artists/sculptors. Established messy workspaces, such as the universally acclaimed Krowji, have a wealth of intelligence and market insight that should be exploited to inform future projects.

5.3 Business support Nearly two-thirds (62%) of creative businesses surveyed anticipated seeking business support in the next three years, while a further 20% were unsure (Figure 22). The fact that only 20% of creative businesses state they will be unlikely to seek support indicates the important role that business support organisations will have in continuing to grow the creative industries in C&IoS.

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Creative firms’ business needs Figure 22: Likelihood of seeking business support in the next three years n=79

Yes

0%

10%

20%

30%

No

40%

50%

60%

Don't know

70%

80%

90%

100%

Source: TBR 2016 (TBR ref W2/S9)

The most frequently cited areas of business support creative industries in C&IoS anticipated needing are focused on growth, with almost 60% anticipating seeking sales and marketing support and over half (53%) support for growing their business (Figure 23).

Figure 23: Types of business issues support will be sought for Other Recruiting Exports New products/services Regulations Surviving Cashflow IT Finance Growing Sales and marketing 0% 10% n=49 Source: TBR 2016 (TBR ref W2/S9)

20%

30%

40%

50%

60%

70%

80%

90%

100%

The different types of support creative firms intend to seek does suggest some variation in the strength of businesses and levels of ambition. For example, in contrast to the businesses who will seek support with growing their business, Figure 23 also indicates that 29% of businesses will seek support just to survive. Furthermore, whilst there is a desire for support to improve sales and marketing and growth, the relatively small number of firms that intend to seek support with exporting suggests that creative firms do not necessarily see exporting as a route to growth.

Firms also talked about the desire for more support to enable small business to access more markets and more opportunities to sell. Making people around the UK aware of the quality of the creative products made in C&IoS is difficult for small businesses, and support from a central organisation or network would help.

Stakeholders warned of the dangers of creative firms in C&IoS delivering generic products/services more cheaply than competitors elsewhere in the UK. Competing on the basis of cost undervalues the talent and skill present in the labour market and risks (a) reinforcing a perception of C&IoS as a low-wage economy and (b) losing trade in future to other locations that can offer a cheaper cost base.

5.4 Finance A third of creative businesses (34%) think it’s likely they will seek external finance in the next three years and nearly a quarter (23%) say they don’t know (Figure 24). This is compared to 43% who indicate it is not likely they will seek external finance in the next three years. © TBR

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Creative firms’ business needs Figure 24: Likelihood of seeking external finance in the next three years n=79

Yes

0%

10%

No

20%

30%

40%

50%

Don't know

60%

70%

80%

90%

100%

Source: TBR 2016 (TBR ref W2/S10)

Amongst those businesses likely to seek external finance, grant/trust funding was the most frequently selected source of finance (Figure 25). However, this outcome is likely to be influenced by the sectoral composition of survey respondents (see Figure 26, page 41). Interestingly, as many businesses anticipate trying to raise finance through Peer-to-peer (P2P) and Crowd Funding (26%) platforms than do from bank overdrafts. In fact, more businesses are likely to turn to P2P & Crowd Funding than traditional loans from banks and other financial institutions (22%).

Figure 25: Sources from which external finance is most likely to be sought None of the above Equity finance Factoring/invoice discounting Commercial mortgage Leasing/HP Other Credit cards Loan from bank or other financial institution P2P/Crowd Funding platform for debt Bank overdraft Grant/trust n=27

Š TBR

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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Recommendations 6. Recommendations

1.

Traditional economic impact assessment is not a suitable measure by which to assess the vitality of the creative industry. ‘Employment’ creates a particular problem; creative enterprises with large, six-figure turnovers will often not employ anyone, they will collaborate with freelancers to deliver contracts. Recognising this is important to the creative industries because they often struggle to satisfy the metrics that are used to determine value for money. In response, a more sophisticated method of analysing the economic contribution of the creative industries in C&IoS should be developed.

This will shift the focus away from ‘growth in employment supported’ towards ‘growth in livelihoods supported’.

Creative firms that restrict their market to local customers will struggle to generate sufficient added-value to invest in business growth. Evidence in this report confirms that creative firms do want to expand their geographic reach. Therefore, business support activities should work intensively with creative firms that are keen to achieve sales growth from new markets outside South West England; this could be elsewhere in the UK or abroad.

3.

Furthermore, there is a sense that perceptions of creative output from C&IoS also need to be challenged and updated. This takes two distinct forms that require complementary action: 

Non-creative firms in C&IoS need to be made more aware of the services offered by local firms in the digital/design sector. There remains a sense that these services are best sourced from Bristol or London, whereas there are examples of local non-creative firms achieving first class digitisation/rebranding outcomes through engaging with local digital/design firms. Rodda’s clotted cream is an example that may present a powerful case study.



Markets outside C&IoS need to be made more aware of the quality of products produced by more traditional creative industries (such as crafts). This should take the form of coordinated attendance at suitable trade fairs in the UK and internationally. Under a banner of (for example) ‘Cornwall & Isles of Scilly presents…’ the LEP should coordinate attendance and offer sole traders the opportunity to attend and/or exhibit at a subsidised rate.

Current and/or future skills gaps are a concern for the majority of creative firms. Sales and marketing was identified as a skills gap in both the technical/practical and the soft/people classifications. Sales and marketing advice was also identified and the principal focus for business support that creative firms would like to access. It is, therefore, vital that provision of suitable, good quality sales and marketing training is made available immediately to creative firms. In addition, creative firms have largely been underwhelmed by the commercial impact of ecommerce activity that they have undertaken.

Creative firms are keen to develop advanced ICT skills to enable them to capitalise on the opportunities presented through ecommerce; training provision should reflect this desire, also.

© TBR

2.

4.

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Recommendations

5.

Falmouth University plays a valuable role in the development of the creative industries through attracting talented individuals to C&IoS and developing their talents through the provision of higher education that is respected by local creative firms. However, creative firms were more ambivalent about the role of Falmouth University as a provider of business accommodation and source of enterprise support. In future, Falmouth University should work more closely with established creative support agencies in activities that it pursues, beyond attracting and developing talent, in support of the development of the creative industries in C&IoS.

The C&IoS brand is important to developing the visitor economy. This is evolving and major cultural institutions play a valuable role in extending the visitor offer beyond straightforward ‘bucket and spade’ tourism. This does benefit creative firms in C&IoS. However, cultural institutions should do more to support local creative firms by retailing their products, engaging them in early discussions around how to capitalise on opportunities presented by touring exhibitions, and advocate on their behalf where possible.

7.

Grant funding dominates creative firms’ perceptions of external finance. Loan finance is often more difficult for creative firms to secure because they typically lack the capital assets to secure loans against. Working with specialist providers of finance, such as Creative Industry Finance3, should be a priority for agencies that work with the creative industries in C&IoS to enable creative firms to become more accustomed to accessing and managing financial investment secured on commercial terms.

Growth in creative activity in C&IoS was concentrated in creative occupations outside the creative industries between 2011 and 2015. Across England employment growth in the creative industries kept pace with growth in the creative economy, and in South West England exceeded it, over the same period. This suggests that this trend is restricted to C&IoS and likely to continue into the future. As a consequence, support for the creative activities in C&IoS should not focus exclusively on creative firms, but also on creative occupations; these individuals will be found in creative firms, but also in non-creative firms, which is where we forecast growth will continue.

3

6.

8.

See: https://www.creativeindustryfinance.org.uk/about-us/lenders-2/

© TBR

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Appendices 7. Appendices 7.1 Literature review This section frames the development of the sector in a national and international context, identifies current gaps in research and identifies the current political, economic, strategic and technological context for the C&IoS creative sector. This helps to provide a background and current status of the sector.

7.1.1 Strategic context

7.1.1.1 International World-wide the UK is known for its creative industries. When people are asked overseas what they like about the UK, many will talk about its art and culture, heritage and creative talent8. It is a world leader in exporting creative goods, and the UK’s creative services are in great demand overseas. International players are increasingly choosing to locate in the UK to produce films and TV series, and inward investors are attracted to the UK’s creative and digital talent, fiscal incentives and geographical clusters of excellence9.

In 2011, the UK exported £15.5 billion of creative industries services, representing 8% of the UK’s total export services. This was an increase of 5.3% on 2010, which was an increase of 10.2% on the previous year. More must be done to turn the positive perceptions of the UK into commercial value. The UK is one of the leading business locations in the world, and the number one destination for inward investment in Europe, and the creative sector must play its role in attracting more new inbound business investment.

To help grow the UK’s share of the global market for the creative sector, the following targets have been set: 

To double creative industries exports (from £15.5 billion in 2011 to £31 billion in 2020)



UK Trade and Investment (UKTI) to help 15,000 UK creative industries companies to export per annum by 2020 (up from 7,500 in 2013/14). Moreover, as a sector, to increase the number of creative businesses exporting by 20%



To increase by 50% the UK share of the global market for inbound Foreign Direct Investment in creative sectors (from 10% in 2009-2013 to 15% in 2020)10.

7.1.1.2 National Creative industries make an important contribution to the UK economy. In 2014 the creative industries generated Gross Value Added (GVA) of £81.4 billion, or 5.2% of the whole economy. In 2015, they accounted for 1.9 million jobs. Creative industries GVA grew by 8.9% between 2013 and 2014 – almost twice as fast as the UK economy as a whole, while creative industries jobs grew by 5.5% (compared with 2.1% in the UK workforce). In 2007, the average creative firm size in the UK was just under 4 workers; by 2014 this figure had declined to 3.311.

The UK’s economic future depends on the performance of its creative and high-tech economies. These are sectors where the UK is recognised as a world leader. They are innovative, fast growing, and offer jobs that are less likely to be automated, providing sustainable future employment. The Geography of the UK’s creative and high-tech economies 2015 offers a systematic analysis of employment in these two crucial parts of the UK’s economy. It covers their size, segmentation, growth and geographic distribution, showing that the creative and high-tech economy are large and rapidly expanding sectors, with employment in the creative economy growing swiftly. However, the creative economy is unevenly distributed around the country; the report therefore calls on the UK government to better support creative clusters across the UK. In the UK the creative industries sector is in an excellent position to grow, and builds on very strong foundations: 

© TBR

£1 of advertising spend generates £6 for the economy. The £16 billion spent on UK advertising in 2011 generated £100 billion in the UK economy.

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Appendices 

The UK is a recognised global leader in the field of architectural education, and there are approximately 15,000 students currently distributed amongst 47 schools of architecture in the UK.



Craft is a core component of the UK’s thriving creative industries, employing over 100,000 people, and showing an above average increase in Gross Value Added (GVA) between 2008 and 2012.



The UK has the second largest design sector in the world, and design accounted for £131 million of services exported in 2011.



In 2012, British films earned a worldwide gross of $5.3 billion, which amounted to 15% of global box office. The UK is the second largest exporter of television in the world by hours behind the United States. International sales from UK TV programmes were £1.2 billion in 2012.



Fashion’s total contribution to the economy via indirect support for supply chain industries and included spending of employee’s wage income is estimated to have risen to over £46 billion.



IT, software and computer services increased employment by 15% between 2011 and 2012, to over half a million jobs. The UK games industry, which is the largest in Europe, is responsible for creating some of the most recognisable games in the world.



The UK is home to some of the world’s biggest publishing companies. The estimated value of the entire UK publishing industry is £10 billion, with 40% of revenues coming from exports.



The UK music industry generates around £3.5 billion globally and is the largest global exporter of music after the United States.



The arts in England created a GVA of £5.9 billion in 2011 12.

The creative industries are in a position to be able to make an even greater contribution to the UK economy. Over half of Local Enterprise Partnerships fail to mention the creative industries in their strategy plans. Creative clusters are complex. Industrial activity, talent and networks are important for their success. A Manifesto for the Creative Economy 13 points out that local policymakers who want to develop creative clusters should pay attention to all of these factors, and to the linkages between them, instead of looking for a single ‘silver bullet’ intervention.

Nesta made five recommendations for government policy. These build on the comprehensive strategy that was set out in A Manifesto for the Creative Economy: 

The government should end the bias against multi-disciplinary education in the education system – turning STEM into STEAM (Science, Technology, Engineering, Arts and Mathematics).



BIS and DCMS should establish a competitive £100 million strategic fund using Regional Growth fund money to develop creative clusters outside London, with matched funding from the private sector, local authorities and cultural funders.



The government should ensure that the UK’s digital infrastructure allows creative businesses to develop the next generation of world-beating content, services and apps by creating a £100 million Ultrafast Digital Demonstrator fund.



Public funders should make their arts funding go further by promoting new and innovative finance models.



The government should establish a National Lottery distributor for the video games industry, following the model of the BFI14.

Investment in skills, infrastructure and innovation in the UK is low. Productivity (output per an hour worked) is 17% lower than the average for the rest of the G7 nations. This is the widest gap in over 20 years15. There is also growing evidence that technological progress has created a ‘sagging middle’ in the labour market, with machines and computers replacing employees in many routine jobs in the middle of the income distribution. This has contributed to record increases in income inequality 16. In all countries © TBR

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Appendices there is evidence of increasing worker dissatisfaction and disengagement, with low levels of intrinsic motivation across the workforce17.

The UK Government is concerned by the lack of productivity growth in the UK. This led it to launch its Productivity Plan in July 2015, which consists of 15 different policy areas, built around two ‘pillars’. The Productivity Plan stated that there was evidence of insufficient and ineffective investment in developing or improving basic and intermediate skills of the workforce, stating that this was particularly true in ‘technical and vocational skills’ which was restricting productivity growth.

The Enterprise Bill gives apprenticeships the same legal protection and status as university degrees. The Productivity Plan report found that there remains a mismatch in the level and types of skills required by the economy, which could be narrowed by addressing the perceived distinction between ‘formal’ Higher Education and ‘vocational’ Further Education. One of the most significant announcements, in terms of skills, in the Summer Budget 2015 was the proposed introduction of an apprenticeship levy. This is explained further in the Plan: ‘The levy will apply to large employers and will support all post-16 apprenticeships. In England, any firm will be able to get back more than it puts in by training sufficient apprentices. The government will put control of the funding in the hands of employers via the digital voucher scheme to ensure that it delivers the training they need’. The apprenticeship levy recognises that some businesses invest heavily in training and development but have a smaller proportion of apprentices because of a smaller need in that business 18.

7.1.1.3 Definition of creative industries The UK’s decision to produce the first Creative Industry Mapping Document in 1998 was an important international milestone. The definition and list of industries were soon noticed and taken up, particularly in East Asia. Hong Kong, Singapore, Taiwan, Korea and China all developed analyses of their creative industries, based to a lesser extent on the UK model. In most cases, the model has been adopted to fit local needs. Singapore, for instance, has produced a classification framework which groups the creative industries under three broad headings: arts and culture, design, and media. Other parts of the world, notably Australia, New Zealand and Scandinavia, took up the notion too, though sometimes with significant differences from the UK’s approach. Sweden, for example, talk about the ‘experience economy’, which while including the creative industries, also embraces the likes of the restaurant business. In India, the definition includes lifestyle and products and services, like yoga and Ayurvdeic medicine.

7.1.2 Local context At almost 552,000 in 2015, the combined population of Cornwall and the Isles of Scilly has risen steadily every year since 1991, creating an aggregate increase of 17% over that period 19. This suggests that C&IoS remains somewhere that people want to live. The cost and availability of housing remains a challenge both for people who currently live and those who wish to live in C&IoS. According to figures provided by Cornwall Council, Cornwall has 29,105 second homes and 242,213 main residence homes.

The average house price is £324,00020; eighteen times the typical local annual salary of £15,000-£17,000 and it is not uncommon for properties to sell for over £1million21. If the area is to thrive it needs to attract and retain more working age people, and ensure that a higher proportion of them are employed in higher value-adding jobs22.

Whilst C&IoS continues to be renowned for its natural environment, it also displays examples of socioeconomic isolation and disadvantage. 2015 Indices of Multiple Deprivation (IMD) data confirm that 17 of Cornwall’s neighbourhoods are the most deprived decile in England, an increase from 8 in the 2010 iteration of the IMD. A further 27 neighbourhoods are in the second most deprived decile, a similar figure to the 25 observed in 2010. The Isles of Scilly falls is classified as one area and falls into the seventh most deprived decile23.

7.1.2.1 Economy The agri-food sector is a key element of the local economy. 11.3% of Cornwall’s employment is in core agri-food (compared to 15% for the UK), and 29.1% in all food and drink related sectors (compared to 15% for the UK). While underpinning the employment base of C&IoS, it also represents over 6.5% of © TBR

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Appendices GVA (the equivalent figure for the UK is 3%). C&IoS is the second most important area in the UK in terms of quality pasture land, and in the top ten in Europe. Therefore it is by no surprise that dairy farming is the most important form of primary food production in the region, producing some of the foods most associated with Cornwall, such as Cornish Clotted Cream, Cornish Yarg and Cornish Blue Cheese24.

The creative sector is important to Cornwall, both in economic and employment terms. The Creative Industries play an important role in COIS’s economic development, and have been pivotal to the development of the county’s knowledge economy. C&IoS’s vibrant creative sector is one of the regions strengths, which can drive innovation, entrepreneurship and economic growth, and have been identified as one of C&IoS’s high growth, high value sectors by the European Structural and Investment Funds (ESIF) Strategy.

7.1.2.2 Creative Industries Creative place-making and creative clustering theories can sometimes suggest that creative communities can only develop in densely populated urban environments. This has been inspired by the American urban theorist Jane Jacobs and popularised by Richard Florida, who argue that dense urban areas benefit from access to amenities, creative diversity and local ‘buzz’, which attract creative talent and the creative businesses that employ them. In cities like London, Bristol, Manchester, Edinburgh and Cardiff, creative industries are engines of growth, and they tend to rely on the creative talent that are often highly skilled and supplied by universities25.

C&IoS is rare amongst rural areas in the UK, in that it supports a density of creative businesses that are normally found in urban environments. The 10,000 FTEs estimated to work in the sector 26 benefit from, and contribute greatly to, the quality of amenity, quality of life and distinctiveness of C&IoS. Recent improvements in the digital infrastructure and higher education provision mean that the sector is well placed to improve the value and reach of its Intellectual Property, products and services.

Landscapes in Cornwall, notably the Areas of Outstanding National Beauty, are an inspiration to artists and craftspeople. They are a reason why people live there and also come to visit, and are a key contributor to the economy of Cornwall and to the wellbeing of the population. Fishing and the marine industries contribute greatly to the character of the AONB, and the landscape is the inspiration for many creative industries. According to the 2007 Quality of Life survey for Cornwall, photography was revealed as being the most popular creative and cultural activity. 38% of those surveyed said that they had taken part in this activity within the last 12 months 27.

The White Paper for Culture 2012 aimed to identify within the sector, stakeholders and communities a

number of significant, large scale projects that would dramatically improve the cultural offer in Cornwall, or significantly increase the performance of the creative economy. The C&IoS’s Integrated Territorial Investment Strategy 2016 aims to develop a strong creative sector with world class art, theatre and heritage. Falmouth University has a strong creative and cultural specialism. Driving innovation and building national and international links, the university has an integral role to play in the development of Cornwall’s Creative Industries Strategy. There is also a programme of apprenticeships, bursaries and investment schemes to support new ideas in digital content creation, film making and design. For children and young people in the South West the Cornish creative organisation (RIO) is the strategic creative Bridge organisation. This contract is valued at over £900,000 per year. The success of Cornwall’s creative industry was noted on a national level in Staying Ahead 2007 where it stated that ‘A dynamic creative sector has an important role in helping to revive British cities and regions – a role successfully played in Glasgow, Gateshead and Cornwall’.

Organisations in Cornwall include Tate St Ives, Eden and University College Falmouth, as well as a host of vibrant SMEs. Notable projects include: 

Tate St Ives Two – World class gallery space, with technical and educational facilities to maximise the benefits of the Tate collection, brand and profile to Cornwall and the South West



Porthmeor Studios – Unique visual arts studio cluster, allocated £1.2 million in Arts Lottery funding to refurbish and secure the building

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Appendices 

University of the Arts – Linked to the relocation of Dartington College to Falmouth and the development of the Academy of Innovation and Research at UCF to provide a unique arts subject mix for the region.

Professor Anne Carlisle, Vice-Chancellor and Chief Executive at Falmouth University comments: “The UK creative industries are well established and admired on a global stage. With market leading talent blazing the trail for the creative industries in the UK, now is an exciting time to be in the sector. Our gaming and motion picture industry in particular is world class – with Grand Theft Auto V and Downton Abbey being well known examples – and the UK economy must continue to capitalise on this lead” 28.

Exports of goods and services from the creative industries are expected to grow strongly. To meet growing demand for quality creative professionals, Falmouth offers a variety of courses including BA (Hons) in Fashion Design, Creative Advertising and Digital Games. Falmouth produces more than 1,300 graduates each year, with 95% of these in employment or further study six months after graduation and 24% are in self-employment or setting up their own businesses – this figure is more than four times the national average29.

Cornwall has a tradition of creativity, ingenuity and innovation. It is known for its quality of life, fantastic environment, vibrant culture, great recreation offer and abundance of heritage assets. The 2050 vision for Cornwall aims for it to be the first choice destination for creative businesses (Economy and Culture Strategy, 2013). It is hoped that businesses will be attracted by its excellent connectivity, fantastic culture and healthy environment.

7.1.2.3 Technology C&IoS’s unique positioning in the context of the information economy mean that it benefits from the most extensive commercial and residential deployment of superfast broadband in a rural setting in the UK. Connectivity in C&IoS is comparable or superior to broadband connectivity in central London. This makes the area an ideal Digital/Information Economy ‘test-bed’. In the digital age this is significant. ICT and software businesses in the digital and creative industries/interactive media can now operate and remain in rural Cornwall, as in Media City or London. This has resulted in many successful businesses choosing to locate and operate from Cornwall. The growth and expansion of the ICT and creative digital industries in C&IoS has been significant, and is two of the few growth sectors during the recession.

There are a cluster of globally competitive and digital creative businesses; these include Dogbite, TigerX, ikandi and Spider Eye30.

Superfast broadband has served as a significant advantage to businesses in the developing digital and creative sectors. Opportunities for innovations exploiting the broadband infrastructure are broad and wide ranging, impacting on sectors as diverse as e-health and wellbeing, smart grids, smart buildings, space related industries, the creative industries and specialist design and manufacturing31.

C&IoS is able to build on the following opportunities: digital economy and remote working, its local culture and heritage, rural and coastal economy, community engagement and inclusion, research and modelling to increase understanding and project viability and organisations working together under a common strategy. While on the other hand, some of the challenges that it faces include: declining economic diversity, high living costs, lack of inspiring opportunity for young people, deprivation that is masked by tourism success, unemployment and benefit dependency and high town centre business rents and rates32.

© TBR

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Appendices 7.2 Additional economic performance analysis 7.2.1 Creative enterprises Detailed sub-sectoral time series firm counts are presented in Table 8, below.

Table 8: Creative enterprises across C&IoS, 2011-2015 Sub-sector

2011

2013

2015

Change (20112015)

Advertising

80

100

125

+56%

Public relations and communication activities

10

15

25

+150%

Advertising agencies

60

65

80

+33%

Media representation

10

20

20

+100%

80

95

110

+38%

Architecture

Architectural activities

80

95

110

+38%

15

15

15

0%

15

15

15

0%

125

135

160

+28%

125

135

160

+28%

100

110

140

40%

Motion picture, video and television programme production activities

45

45

60

+33%

Motion picture, video and television programme post-production activities

5

5

10

+100%

Motion picture, video and television programme distribution activities

0

5

0

-

Motion picture projection activities

5

5

5

0% 0%

Crafts

Manufacture of jewellery and related articles Design

Specialised design activities Film, TV, video, radio and photography

Radio broadcasting

5

5

5

Television programming and broadcasting activities

0

0

0

-

Photographic activities

40

45

55

+38%

255

295

360

+41%

Publishing of computer games

0

0

0

-

Other software publishing

10

5

10

0%

Computer programming activities

40

90

105

+163%

Computer consultancy activities

205

200

240

+17%

20

20

25

+25%

IT, software and computer services

Museums

Library and archive activities

5

5

5

0%

Museum activities

15

15

15

0% -4%

Music, performing and visual arts

235

235

225

Sound recording and music publishing activities

15

15

15

0%

Cultural education

5

10

10

+100%

Performing arts

55

55

50

-9%

Support activities to performing arts

5

10

10

+100%

Artistic creation

145

140

130

-10%

Operation of arts facilities

5

10

10

+100%

80

80

90

+13%

Book publishing

15

15

20

+33%

Publishing of directories and mailing lists

0

0

0

-

Publishing

Publishing of newspapers

5

5

5

0%

Publishing of journals and periodicals

25

30

30

+20%

Other publishing activities

30

30

30

0%

Translation and interpretation activities

5

5

10

+100%

All Creative Industries Source: ONS UK Business Counts (TBR ref W1/S2). Data round to nearest 5.

990

1,090

1,250

+26%

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Appendices 7.2.2 Creative employment

Table 9: Creative employment across South West England, 2011-2015 2011

2012

2013

2014

2015

Change (20112015)

187,000

201,000

202,000

230,000

239,000

+27.8%

7.4%

8.0%

7.9%

8.8%

8.9%

117,000

126,000

128,000

156,000

156,000

4.7%

5.0%

5.0%

6.0%

5.8%

2,516,000

2,517,700

2,555,900

2,616,800

2,687,000

+6.8%

Change (20112015)

Classification

Creative economy

Proportion of total employment in South West England Creative industries

Proportion of total employment in South West England Total employment in SW England

+33.3%

Source: ONS Annual Population Survey (TBR ref W1/S13&S14). Data round to nearest 1,000.

Table 10: Creative employment across England, 2011-2015 Classification

Creative economy

2011

2012

2013

2014

2015

2,127,000

2,255,000

2,322,000

2,436,000

2,565,000

8.7%

9.1%

9.2%

9.5%

9.7%

1,377,000

1,497,000

1,524,000

1,618,000

1,659,000

5.6%

6.0%

6.0%

6.3%

6.3%

24,572,000

24,848,100

25,212,700

25,727,000

26,373,600

Proportion of total employment in England Creative industries

Proportion of total employment in England Total employment in England

+20.6%

+20.5%

+7.3%

Source: ONS Annual Population Survey (TBR ref W1/ S13&S14). Data round to nearest 1,000.

Table 11: Employment in creative occupations by sub-sector in C&IoS, 2011-2015 average Sub-sector

Creative Economy

Creative Industries

3,100

*

*

*

Crafts

2,300

*

Design: product, graphic and fashion design

2,100

1,000

Film, TV, video, radio and photography

3,100

1,600

IT, software and computer services

3,700

2,600

*

*

Music, performing and visual arts

6,000

3,500

Publishing

2,000

1,200

24,080

12,080

Advertising and Marketing Architecture

Museums, galleries and libraries

Total creative employment

Source: ONS Annual Population Survey (TBR ref W1/S7&S8). Data round to nearest 100.

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Appendices 7.2.3 Creative economic output

Table 12: Creative economic output by sub-sector in C&IoS, £bn, 2011-2015 average Sub-sector

Creative Economy

Creative Industries

£0.33

*

*

*

Crafts

£0.24

*

Design: product, graphic and fashion design

£0.22

£0.11

Film, TV, video, radio and photography

£0.33

£0.17

IT, software and computer services

£0.39

£0.27

Museums, galleries and libraries

£0.22

£0.13

*

*

£0.63

£0.37

£2.53

£1.27

Advertising and Marketing Architecture

Music, performing and visual arts Publishing Total creative output

Source: ONS Annual Population Survey (TBR ref W1/S11&S12). Data round to nearest £10m.

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Appendices 7.3 Stakeholder mapping/engagement 7.3.1 Local market conditions Some larger (non-creative) businesses in C&IoS are accustomed to engaging with creative firms from London/Bristol and generally unaware of the quality available locally. This is changing, however, as creative firms become more active amongst local business networks in C&IoS and local businesses express a greater desire to source locally. Rodda’s clotted cream is an example of a business based locally but with a national profile that engaged a local agency to deliver its rebranding exercise.

Not all of C&IoS is uniform in terms of creative industries intensity or the attention it receives. The east of Cornwall, both north and south, are somewhat neglected (draw a north-south line from Wadebridge to St Austell). St Austell – Truro – Falmouth was described by one interviewee as the Golden Triangle.

7.3.2 Creative industries market structure Traditional economic development activity and business growth measures typically focus on the expansion of individual businesses. Established definitions of high growth businesses exclusively concern increases in headcount and turnover, for example. This is entirely misaligned with the way economy activity is structured in many creative industries; working freelance is far more common and a successful freelancer is unlikely to ‘grow his/her business’ by recruiting more staff. It is more likely that they will be more selective about the work that they do and recommend alternative freelancers to the clients that they no longer have capacity to work for. Interviewees referenced C&IoS businesses that commission freelance input totalling c£200kpa but don’t employ anyone. This form of economic activity may need to be captured under a new indicator, such as “collaborative turnover”.

The proliferation of freelancers, sole traders, and microbusinesses in the creative industries in C&IoS is often not captured by official statistics and, perhaps as a consequence of this, insufficient attention is given to the views and requirements of this cohort. Census data on homeworking and self-employment are a means of developing a robust assessment of the prevalence of working patterns in C&IoS. Benchmarking can be slightly insular; firms across all sectors are more inclined to reflect on their market position within C&IoS rather than within the UK. Having said that, the creative community are generally collaborative and there is a pervasive sense of cooperation. This might be reflective of the dominance of freelancers and sole traders that frequently have to combine skills in order to secure and deliver projects.

In this regard, shared creative spaces such as the Workbox in Penzance and Krowji in Redruth were highly commended.

The role of more generic business skills, such as sales and marketing and client management are not always prominent within the creative industries but they should not simply be overlooked; they are important.

Visual art has historically been very prominent in C&IoS. Although it is some time since St Ives was the centre of the art world, people are able to sustain careers in the visual arts in Penzance and Newlyn.

This heritage is supplemented by performing arts (particularly open air and DIY theatre) and crafts, all of which enjoy a strong (if less well documented) history in C&IoS. The role of tourism is generally more important to these elements of the creative industries, accounting for 25%-30% of audiences at summer open-air theatre performances. Most areas will feel that their creative industries are unique; need to make sure that this is evidence-based.

7.3.3 Support required and provided The presence and contribution of training providers within C&IoS was recognised and considered an asset in terms of supplying the skills needed by creative firms. Interviewees often felt that local people had inherent strengths in creative skills that were linked to the self-sufficiency of rural life, however, and that more could be done to capitalise on the benefits of this 33. Furthermore, the retention of creative talent was something that remained a challenge in C&IoS. Some interviewees felt that attracting creative people as undergraduates was sufficient; even if they chose to leave C&IoS upon graduating, a positive experience of living there whilst at university would make them more likely to return in future (assisted

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Appendices by quality of life, creative network, high speed broadband). Others felt that more should be done to retain graduates, who found the cost of living prohibitive, amongst other things.

There is a general perception that publicly funded business support is rigid and fails to respond to the needs of the creative industries. Mainstream business support services have often sought to change microbusinesses and not to work with them. This extended to cynicism over the claimed outputs supported by public business support agencies; it was claimed that industry-led bodies could deliver superior performance more quickly and more cheaply. The flexible workspaces available within C&IoS tend to be ‘clean’ units better suited to desk based activities. Although this does not exclude the creative industries, it favours digital ahead of arts and crafts. Krowji was acknowledged as an exception to this.

Falmouth University’s Launchpad initiative was identified. Although the general contribution of Falmouth University was endorsed as a means of generating talent, contributing to the renewal of the Cornish brand, commitment to offering opportunities for local people who would like to study and enter the creative industries, there was some scepticism about their direct involvement in the development of the creative economy. Developing talent to populate the creative workforce is invaluable, but it is the businesses and entrepreneurs who will drive forward economic activity and they should be left to accomplish this; providing quality education requires a different ‘corporate skillset’.

There was general concern that the eventual cessation of European Union convergence funding will make it more difficult to offer financial support that will develop the skills that businesses need. Furthermore, some of the most highly regarded creative hubs have been sustained through European funding; it is difficult to imagine how the sector would have developed without this.

Arts Council England’s Creative Local Growth Fund has provided funding for the Creative Kernow project34.

7.3.4 Lifestyle The role of lifestyle as a driver of the creative industries is difficult to quantify, but could be significant.

Anecdotal evidence suggests that quite a number of senior creative professionals relocate from urban clusters to the picturesque landscapes of C&IoS. They often continue to work in their chosen field, but are in a position to determine the intensity of their work. This shouldn’t infer that C&IoS represents semi-retirement; people may relocate for lifestyle reasons but continue to work extremely hard. These individuals are unlikely to want to scale up their activity should the opportunity arise. The increased presence of respected freelancers has driven up the quality of creative firms’ output within C&IoS, which has been beneficial.

For reasons outlined above, scaling up in the creative industries is hard, even when the proprietor is very keen for this to happen. The notion that many key figures within the creative industries are likely to resist scaling up adds a further complication to the already idiosyncratic creative business model.

7.3.5 Branding In different ways, interviewees talked about the impressive concentration of cultural assets in C&IoS, but that this had not translated to a more modern image of the place. The lack of an urban centre and a collection of clusters in smaller conurbations was seen as a key (perhaps unique) asset. Promotional activity continues to be more about cream teas and scones than contemporary art and the ‘Falifornian’ lifestyle.

Despite this, many interviewees felt that the Cornwall brand remained strong and did contribute to the success of the creative industries.

One aphorism that has gathered some currency is that C&IoS offers ‘a few pearls not yet strung together properly’. The Cornwall 365 initiative 35 develops coordinated cultural itineraries for visitors as part of the Arts Council England and Visit England’s Cultural Destinations programme. This approach could be further developed beyond cultural amenities to deliver a more coherent tourism offer.

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Appendices 7.4 Additional survey information As outlined in the project methodology, an online business survey was developed specifically for this project. It covered four specific themes; all directed towards answering key research questions.

7.4.1 Survey firmographics The survey was completed by 79 eligible firms. The sectoral and geographical distributions of the firms that completed the survey are presented below. Figure 26 compares the sectoral profile of the creative firms that completed the survey with the sectoral profile of firms identified through 2015 ONS data (see Table 8, page 36). It is clear that the profile of survey respondents deviates from the overall profile of creative firms; advertising firms and IT, software and computer services firms are notably underrepresented, whilst craft firms and music, performing and visual arts firms are overrepresented.

Survey

ONS counts

Figure 26: Sectoral profile of creative firms

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Advertising

Architecture

Crafts

Design

Film, TV, video, radio and photography

IT, software and computer services

Museums Music, performing and visual arts Source: TBR 2016, ONS 2015 (TBR ref W2/S1)

Publishing

Figure 27 presents visually the location of the 79 firms that completed the survey by postcode district.

The concentration of completions around Redruth (fourteen) probably reflects the welcome promotion activity undertaken by business support agencies in that locality.

Figure 27: Geographical location of survey participants

Source: TBR 2016 (TBR ref W2/S1)

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Appendices 7.4.2 Definition of innovation This section asks about innovative activities that your business may have undertaken. Innovative activities do not have to be complicated; often the most effective innovations make only a small change to how goods are produced or services delivered. For the purposes of this survey, innovation means making changes to something established, especially by introducing new methods, ideas, or products.

7.4.3 Additional data

Figure 28: Engagement in innovation, by sub-sector Music, performing and visual arts

5.6

Museums

8.0

IT, software and computer services

6.3

Film, TV, video, radio and photography

8.0

Design

8.3

Crafts

5.8

Architecture

4.7

Advertising

10.0

All sub-sectors

6.3 0.0

2.0

4.0

6.0

8.0

10.0

Average innovation level (ranking out of 10)

n=79 Source: TBR 2016 (TBR ref W2/S7)

Yes

0%

10%

20%

No

30%

40%

50%

No answer

Figure 29: Desire to spend more time innovating

Don't know

60%

70%

80%

90%

100%

% of firms who have limited engagement with innovation

n=34 Source: TBR 2016 (TBR ref W2/S7)

Figure 30: The extent to which infrastructure meets business requirements in C&IoS Higher education

5.3

Further education

4.9

Secondary education

5.0

Telecommunications

6.3

Transport

5.5 0

n=between 27 and 59 Source: TBR 2016 (TBR ref W2/S8)

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2 4 6 Average infrastructure ranking (out of 10)

8

10

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Appendices

1

2

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/546259/DCMS_Sectors_Economic_Estimates_-_Methodology.pdf

Cornwall County City Council (2008) Cornwall’s Creative Industries Strategy 2008-2012 British Council (2010) Mapping the Creative Industries 4 Employment figures for these sectors are based on very small sample sizes in C&IoS. These LQs should therefore be interpreted with caution.

5 The technical and practical skills options offered to respondents intentionally mirrored those of the UK Employer Skills Survey to aid comparison. The exception to this was sales and marketing skills, which was included as a technical/practical skill and a soft/people skill in this survey (and hence no comparison in Figure 18).

6 See: https://www.gov.uk/guidance/corporation-tax-research-and-development-tax-relief-for-small-and-medium-sized-enterprises 7 See: http://www.edenproject.com/learn/for-businesses/hothouse-eden-projects-creative-leadership-programme 8 British Council (2010) Mapping the Creative Industries 9 Creative Industries Council (2014) 10 Creative Industries Council (2014) 11 Nesta (2016) The Geography of Creativity in the UK 12 Creative Industries Council (2014) 13 Nesta (2013) A Manifesto for the Creative Economy 14 Nesta (2015) The Creative Economy and the Future of Employment 15 ONS (2015) ‘International Comparisons of Productivity – Final Estimates, 2013’ See: http://www.ons.gov.uk/ons/rel/icp/international-comparisons-of-productivity/2013---final-estimates/stb-icp0215.html 16 Manning (2013) ‘Lovely and lousy jobs’ CentrePiece Autumn 2013, Centre for Economic Performance. See: http://cep.lse.ac.uk/pubs/download/cp398.pdf 17 Gallup (2013) ‘State of the workplace’. See: http://ihrim.org/Pubonline/Wire/Dec13/GlobalWorkplaceReport_2013.pdf 18 The Governments Productivity Plan 2015-16 (2016) 19 ONS Population Estimates, accessed via www.nomisweb.co.uk on 20th September 2016 20 Rightmove (2016) 21 Guardian (2016) ‘English out’: Cornwall’s fightback against second homes 22 St Ives Area Local Economy Strategy & Project Development Framework 2016-2030 (2016) St Ives Town Council 23 IMD 2015 Analysis Cornwall Council (2015) 24 Cornwall & Isles of Scilly Integrated Territorial Investment Strategy (2016) 25 Nesta (2012) Creative Clusters and Innovation 26 Counting on Creativity Perfect Moment, 2007 27 Cornwall Cultural Strategy, 2010 28 https://www.falmouth.ac.uk/content/creative-industries-worth-ps100bn-uk-economy-2018 29 CEBR (2014) The current and future contribution of the creative industries to the UK economy: Report for Falmouth University 30 Cornwall & Isles of Scilly Integrated Territorial Investment Strategy (2016) 31 Cornwall & Isles of Scilly Strategic Economic Plan (2014) 32 St Ives Area Local Economy Strategy & Project Development Framework 2016-2030 (2016) St Ives Town Council 33 Falmouth University has a target of 25% of its intake being from Cornwall. This is currently 17%.

34 See: http://www.artscouncil.org.uk/sites/default/files/download-file/Creative-Local-Growth-Fund_Successful-applicants_February2016.xlsx 35 See: http://cornwall365.org.uk/ 3

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