The Department for Digital, Culture, Media & Sport has published a report on research and development (R&D) in its Creative Industries Survey.
The UK’s creative industries contributed £111.7 billion to the UK economy in 2018 or 5.8% of total UK Gross Value Added. The report focused on the R&D and innovation activities undertaken by creative industries in the UK, and the constraints and enablers of that innovation activity. Research comprised a telephone survey of 625 respondents across nine creative industry sub-sectors and was undertaken before the COVID-19 lockdown.
Half (51%) of creative industries firms had introduced new or significantly improved products or services in the last three years, over a quarter (29%) had introduced new or significantly improved products or services that were completely new to the market. Additionally, a third (31%) of firms had introduced new or improved forms of organisation, business structures or processes. In total, three fifths (61%) of the firms interviewed were classified as ‘innovative’, meaning they had introduced new or improved products, services, forms of organisation, business structures or processes in the last three years. IT, software & computer services firms were most likely to be innovative (68%), with architecture least likely (32%). Likelihood also increased with firm size, from 60% of firms with 1-9 employees, compared to 76% of firms with 10-49 employees and 83% of those with 50 or more. In the last year, 71% of firms had used some form of IP protections for their technology, designs, content, products or services, the most common being non-disclosure and confidentiality agreements (43%).
There were high levels of R&D among creative industries firms. The report considered R&D in the creative industries using two existing definitions: (1) the broad OECD Frascati definition, used in official international surveys; and (2) the definition used by HMRC for tax credit purposes. More than half (55%) of firms had undertaken R&D using the broad Frascati definition, but only 14% had done so using the HMRC definition for tax. IT, software & computer services firms were the most likely to have conducted R&D activity under either definition (71%), with museums, galleries & libraries least likely (27%). Approaching one in 10 (8%) creative industries firms had a specific budget for R&D. Firms operating in crafts and music, performing & visual arts were most likely to have a specific R&D budget (13% and 12% respectively), followed by IT, software & computer services firms (11%). Across all firms, the mean investment in R&D activities in the last year was £30,000. Internal R&D accounted for around 90% of total spend. IT, software & computer services firms also had the highest mean R&D spend at £52,000. Just over one in 10 firms (13%) had funded or collaborated with a university or other external organisation on R&D activities in the last year.
Design firms were least likely to have collaborated on any recent R&D activities; 4% had done so, rising to 16% of those in IT, software & computer services. Creative industries firms had invested in a wide range of other innovation activities alongside R&D, with computer hardware or software the most common (71%), followed by licenses for technology, products or services (49%) and design (42%). The most commonly cited benefits of R&D and innovation were with improved profitability and the quality of goods and services. Across most sectors relatively few creative industries firms identified any link between R&D and innovation, and either exporting or growth in employment. Firms that had not undertaken any R&D in the last twelve months were asked the main reason for this decision. Overall, two-fifths (38%) of this group deemed R&D not to be relevant to their business activities, whilst around 1 in every 7 felt they did not have enough time/too busy (15%), or had no need for R&D (15%).
Constraints and enablers
The most commonly cited constraints on R&D and innovation activity were the market being dominated by established businesses, the costs of development being too high, and availability of finance. These constraints were broadly similar across sectors. Two thirds (65%) of firms stated that better access to public support schemes would have encouraged them to do more development activity and more than half (55%) would have been encouraged by improved access to network opportunities. Releasing these constraints would have helped firms conduct more development activity (54%), conduct it in a shorter timeframe (50%) or do better quality development activity (41%).
Funding and support
Access to increased public support was identified by firms as one of the key enablers for scaling, accelerating and improving the quality of innovation across the creative industries. Awareness of the R&D tax credit schemes among firms in creative industries was relatively high although take up – at less than 10% of firms – was limited in all sectors except IT, software & computer services. In IT, software & computer services both awareness (at 80% of firms) and use of the tax credit schemes (17%) were markedly higher than in any other sector. A small minority (3%) of firms had used other government or public sector funding initiatives for R&D or developing new products, services or processes.