30th November, 2017
Cornwall’s economy is growing slowly. It may not be growing as rapidly as hoped, but Cornwall Council’s most recent ‘State of the Economy’ report showed an increase in GVA of 4.1% from 2014 to 2015. There has also been an increase in the number of successful business start-ups within the last 12 months, alongside a 45.2% reduction in unemployment since 2010.
We may hear lots about tourism; agriculture and fishing, but the county’s successful creative sector has been quietly aiding economic growth for well over 100 years. Even in the 19th century, the county benefitted from the creativity of the Newlyn and St Ives Schools of artists.
More recently, we have seen the re-opening of Tate St Ives with a new £20 million extension that is predicted to bring an additional £11 million to the local economy. Alongside this, the introduction of superfast broadband has enabled the growth of high-quality design; software and technology businesses that can compete on a world stage. Objective One funding has also assisted new business development and growth within these fields.
But have any of these advances in areas as seemingly niche and diverse as packaging design; crafts; environmental design or photography, actually benefitted the county as a whole? PFA Research investigated and found at least 6 compelling reasons why we all stand to gain from the growth of the creative sector in Cornwall.
What exactly is the creative sector?
The Department for Digital, Culture, Media and Sport (DCMS) believe that there are 9 industries that can be termed ‘creative’. These are:
The UK government perceives that the creative sector is crucial to the country’s post-Brexit economy and recently made it 1 of the 5 growth areas worthy of special support in its Industrial Strategy Green Paper.
#1: The creative sector has significantly aided Britain’s post-recession recovery
ONS statistics show that the creative sector contributed £87.4 billion GVA to the UK economy in 2015. This equates to £8.8 million per hour or 5.3% of the total GVA. It is comparable to the UK construction or information sectors, which means that creative firms played a key role in the UK’s economic recovery following the 2008 to 2009 recession. Furthermore, the sector is the fastest growing in the UK economy and grew by an impressive 34% between 2011 and 2015.
This growth was not limited to London and the surrounding areas. Statistics from global innovation foundation, Nesta, show that Cornwall and the Isles of Scilly saw a 7% or £2.73 billion increase in economic output from the sector between 2011 and 2015. This equates to 10.6% of all economic activity.
Cornwall is well-known for its abundance of small and medium sized businesses. Those starting a business form part of a community of just over 22 000 VAT-registered businesses, most of which are SMEs. There are believed to be just as many businesses under the VAT-threshold.
There was a 26% increase in the number of creative firms registered in the region between 2011 and 2015, which compares well to the 11% increase in the total number of firms registered within this time period. This increase means that the total number of creative firms in Cornwall increased from 990 to 1250.
The most popular sub-sectors for new firms include:
DCMS anticipates that the sector will be worth £128.4 billion to UK economy by 2020.
#2: The creative sector is enabling sustainable employment growth in Cornwall
It is often the case that jobs are outsourced to lower-cost countries, so that companies can save on labour bills and operating expenses. These jobs may include engineering; manufacturing and certain types of back office work.
Despite this, a recent independent review carried out on behalf of the government found that the creative sector can provide a source of sustainable employment growth both within the UK as a whole and Cornwall. The Bazalgette review showed that creative businesses can offer a unique source of competitive advantage because they are not easily replicable by low-wage economies in different parts of the world. After all, it is certainly difficult to draw upon Cornwall’s unique culture and heritage without spending significant amounts of time in the local area.
This is reflected in employment growth statistics. The ONS reported that employment within the creative economy grew by 19.5% between 2011 and 2015, but average employment growth across other sectors was just 6.3%. The increase in employment provides the equivalent of 300,000 full-time jobs and it is predicted that there will be 1 million new jobs within the field by 2020. Employment in Cornwall’s creative economy increased from 24,100 to 26,900 or 12% during this time period. This is larger than the 4% average growth in employment across all sectors in Cornwall.
Additionally, the Bazalgette review found that creative occupations are highly resistant to automation. A total of 87% of creative jobs are at low or no risk of being automated, thus meaning that the creative share of the workforce is likely to rise steadily over the next few years. This is excellent news for those of us in roles commonly identified as most at risk of automation, including accounting, data entry and hand sewing, as it should provide an opportunity to reskill.
It should also be noted that there are a large number of freelancers and micro-businesses operating within Cornwall’s creative sector. These people and entities are often underrepresented in ONS statistics, as their business activity does not take them above the VAT threshold. Therefore, it is likely that the full economic impact of the sector in Cornwall is higher than commonly reported.
#3: The creative sector holds real potential to contribute to Cornwall’s export plans
The UK creative sector is a net exporter of services. It generated an £11.1 billion surplus in 2014 with music, film and design being the most popular services. This means that the sector has great potential to lead the way in exporting from Cornwall.
Exporting has been identified as integral to the success of the Cornish economy. Both local and national government are keen to encourage growth within this area. Local businesses have benefitted from EU-funded export support via the Export Cornwall and Export for Growth programmes, amongst other initiatives. Despite this, the latest data from 2010 shows that only 17.8% of local firms are exporting and that Cornwall and the Isles of Scilly is 38th out of 39 LEPs.
Brexit is currently offering an advantage to UK-based exporters, including those within Cornwall’s creative sector. The reduced value of the pound means that UK products are more affordable and competitive. This provides at least a short-term opportunity to develop export markets, perhaps by introducing new products or services and encouraging brand loyalty.
A participant in a recent PFA Research roundtable said, “The vote to leave has helped with our global competitiveness due to the renormalisation of the value of the pound to where it probably should already have been, versus the US dollar or euro… The overinflated pound had been limiting our ability to increase export prices to cover increasing costs at home, including the living wage, auto-enrolment, etc.”
Another commented that his design business was better able to financially compete with businesses from other countries, including North America, China and India.
Whilst competing on price is clearly not sustainable in the long-term, it certainly provides a valuable opportunity for Cornwall’s creative sector to introduce products and services to new markets, thus increasing growth and employment for all within the county.
#4 Creative organisations play a key role in creating a strong Cornish brand identity
Cornwall is heavily dependent upon tourism in order to survive. It received 4.3 million overnight visitors and 14.7 million day visitors in 2014. This generated £2.6 billion of business turnover and subsequently supported 53,000 jobs. Therefore, a strong Cornwall and Isles of Scilly brand identity is essential to attract visitors to the region and retain this source of annual income.
Those working within the creative sector often note that there is a strong synergy between the creative and tourism sectors. Marketers; advertisers and crafters all play a role in creating ‘Brand Cornwall’. Similarly, Cornwall’s distinctive museums, galleries and libraries all stimulate tourism. The recent Tate St Ives reopening attracted thousands of visitors to the town.
Furthermore, PFA Research’s qualitative findings show that the physical landscape of the region continues to inspire creative outputs. One participant commented, “Cornwall offers a great mix of inspiring environments, connectivity and a pool of creative students and graduates.” Many within the creative sector report that well-known Cornish landmarks, such as St Michael’s Mount, the rugged beaches of West Cornwall or the surrounding moorland, inspire their work and play a role in their business activity. Another participant commented that, “Brand Cornwall acts as a strong marketing tool.”
A report by TBR Economic Research noted that the creative sector helps to evolve and modernise ‘Brand Cornwall’, which in turn, encourages visitors to the area and increases revenue for local businesses. This effect has not been limited to those within traditional arts or crafts businesses. IT users have used the ‘Falifornia” hashtag on social media sites to refer to the beauty of Falmouth and the surrounding areas.
#5 The creative industries provide a valuable opportunity for flexible working in Cornwall
PFA Research often finds that business owners and workers really value the quality of life offered within Cornwall. Surveys and focus groups often indicate that workers in Cornwall are willing to accept a lower than average salary in order to enhance their work-life balance or spend more time with family.
Interestingly, a recent study by TBR Economic Research found that there are numerous creative businesses in Cornwall with a six figure turnover, but no employees. This is because they choose to collaborate with freelancers in order to deliver contracts. Those seeking flexible employment are likely to be pleased by such an approach to work, although it should be noted that critics may draw attention to the lack of security that this inevitably brings.
#6: Creative businesses are keen to collaborate with those from other sectors, especially those that can offer business support services
Finally, a range of research has shown that firms within the creative sector are keen to collaborate with business services firms. The Cornwall and Isles of Scilly LEP, Unlocking Potential and TBR Economic Research all found that many entrepreneurs within the creative sector are seeking support in areas, such as accounting, marketing, sales, intellectual property and IT.
These entrepreneurs are particularly keen to learn how to access finance in order to expand, as traditional sources of grant funding have long been in decline. They are also keen to use the county’s digital connectivity to develop revenue streams.
This provides an exciting range of opportunities for people and businesses seeking to work with creative organisations. It will also help the Cornish economy as a whole.
This article was produced for and published in the November 2017 edition of Business Cornwall magazine.