Autumn Statement 2022: where creative freelancers may see an upside
With the UK having now entered a recession -- according to chancellor Jeremy Hunt on Thursday, and inflation driven mostly by energy prices and other supply bottlenecks, some difficult days might lie ahead for creative industries freelancers, writes Benjamin Kulka, research manager for the Creative Industries Policy and Evidence Centre at Nesta.
Acutely aware of the gloomy economic backdrop, Mr Hunt used Autumn Statement 2022 to announce a fiscal tightening to the tune of £55billion, through both spending cuts and tax rises.
A historic reduction in household income? It’s only part of the backdrop…
But alongside his statement, the Office for Budget Responsibility (OBR) expects a real term reduction in household income of seven per cent over the next two years. That reduction would be the largest in decades.
Unfortunately, the cost of living crisis -- brought on by the rising energy prices as well as interest rate increases, partially to offset the inflation, leaves little wriggle room for government budgets. And, as to future interventions by the Bank of England (September’s Mini-Budget 2022 prompted such an intervention), the OBR has calculated that every percentage point increase in interest rate increases the government’s short-term borrowing costs by a swingeing £13billion.
Backbone, crisis, and a regretful omission
Yet freelancers are still the backbone of the creative industries. Almost one-third of the sector’s workforce is made up of freelancers (in comparison to 16% across the UK more broadly). Also, 95% of creative organisations are micro-businesses. Ominously, research has already shown that there is clear evidence of the scale of the jobs crisis within creative occupations.
Regretfully, Thursday’s Autumn Statement did not mention the self-employed -- specifically. Nonetheless, it made some other announcements which may have positive impacts under these certainly difficult circumstances, on at least some creative freelancers. Of course, the degree of those positive impacts will vary between creative industries, and their subsectors, and depend on what region of the UK you happen to be operating out of as a creative industries professional.
Audio-visual tax relief consultation is good to see
Regarding sectors, for example, the government states at Autumn Statement 2022 that a consultation on reforming the audio-visual creative reliefs will take place. Following the success of the creative industry tax relief, which covers film, animation, high-end TV, children’s TV and video games, the government says at chapter 5.53 of its Green Book that it will consult on a series of proposals that plan to further incentivise the production of UK based “content,” and support the growth of the audio-visual sectors.
Similarly, we welcome the announcement that the government’s aim at Autumn Statement to invest £20bn on research and development (R&D) by 2025, is going ahead.
Research and development boost won’t hurt creatives
While not all R&D interventions suit the needs of the sector, for many businesses in creative industries that rely on support for R&D, for product and process innovation, whether inhouse or in cooperation with universities, this green light is good news.
Related, the so-called ‘nine Catapults centres’ -- which span some 40 locations across the UK, will see a funding increase of 35% over this period, which includes the Digital Catapult centre in Northern Ireland.
Meanwhile, and further welcome are the government’s policies on ‘levelling up’ which aim to decrease economic differences that exist between places in the UK. Our centre’s research on creative clusters, for example our Creative Radar which maps the UK’s creative industries, has shown that creative industries locations are more widespread across the UK than often believed.
Deals with promise for freelancers outside of London and the South-East
However our research also shows that if past trends with a higher growth rate in London and the South East continue, then employment growth in the rest of the UK would have to increase five-fold over its current trend to catch up in 20 years! To counter this, we welcome the new devolution deals announced in the Autumn Statement. These are planned to deliver new devolution in additional areas, as well as deepening existing ones with the Greater Manchester and West Midlands Combined Authority, to include skills and economic growth funds, which are crucial to the sector.
Additionally, some potential high growth knowledge-intensive local clusters will receive support in the form of some potential deregulation, as well targeting local research strengths. Freelancers outside London and the Greater South East, who work in or with these clusters, could potentially benefit.
TBC: Culture department funding
Less positively, Autumn Statement 2022 leaves the specifics of the culture department’s budget still unclear. So we remain in the dark about the distribution of arts funding to the different programmes and funding bodies financed by the Department for Culture, Media and Sport (DCMS). In the current economic climate, perhaps we should not be overly surprised, or critical, that this announcement is ‘TBC.’ Reassuringly, we understand the budget details of DCMS will actually be decided in the near future -- and our centre will continue to work with stakeholders on this.