Creative-led innovation and growth

The recently published Bazalgette review of the creative industries made much of the importance of creative clusters. But, despite using the term on a regular basis, there was a surprising lack of commentary or policy recommendations relating to the ‘creative economy’. There has been a raft of recent evidence on the impact of the creative industries and creativity across the wider economy and it is a surprise that Bazalgette opted not to address this or make recommendations which might further exploit a key facet of the creative industries which might appeal to the Treasury.

Creative Economy – scale and growth

The ‘creative economy’ is a term, formally recognised by DCMS, which refers to the economic contribution of those who are in creative occupations outside the creative industries as well as all those employed in the Creative Industries. So, in addition to creative businesses, it embraces creative professionals and activities employed in other sectors (for instance designers working in the automobile industry). According to the most recently published figures, the Creative Economy was worth £133.3bn, accounting for 8.2 per cent of the UK economy in total. Of this, 63 per cent was from the Creative Industries (£84.1bn) and 37 per cent (£49.2bn) was from Creative Occupations outside the Creative Industries.


As the graph above shows, there is an apparent correlation between the ‘creative intensity’ of sectors and their performance – sectors employing creative people outperform other sectors by some margin:

  • The economy as a whole grew by 12.1% between 2011 and 2014
  • Those sectors employing creative people and with a greater level of creative ‘intensity’ grew by 24.9% – more than twice the average
  • The Creative Industries, where creative intensity is highest, grew even faster, at 29%.

This is a very striking set of figures.

Understanding the Creative Economy

NESTA has trail-blazed work on both the Creative Industries and their contribution to innovation. Among a strong body of work, NESTA has shown that:

“For a wide range of innovation measures, firms with stronger links to the creative industries have a superior innovation performance. For example, firms that spend double the average amount on creative products – 6 per cent compared with 3 per cent of their gross output – are 25 per cent more likely to introduce product innovations.” (Creative Innovation, 2008)

Building on this, NESTA undertook work to identify how creative-led innovation affects some sectors more than others. The concept of ‘creative intensity’ was developed, to quantify the intensity of creative activity and employment in particular sectors, through the designation of certain activities (identifiable through SIC codes) as creative.  This work has highlighted the ‘intensity’ of creative employment across a very broad range of sectors, including for example the manufacture of games and toys (a creative intensity of 27%), or chemical products (at 24%) – compared to a creative intensity of 89% in artistic creation. (Dynamic Mapping of the UK’s Creative Industries, 2013)

The extent to which creative activity is embedded within digital companies has been developed through separate work undertaken with the support of the AHRC. This work focused in on a particular business cluster (Brighton) and identified the key role of the creative people – or, more specifically, people with an ‘arts and humanities’ education – in fuelling growth in the digital economy. The Brighton Fuse report concluded that “the single most important finding from the project is to highlight the economic importance of arts and humanities as sources of innovation and economic growth”.

More recently, the KTN has been undertaking some work which builds on this, investigating different creative processes, practices and attributes, uncovering the different ways in which creativity can contribute towards innovation across the economy.

Policy options

“As technology progresses, creative skills will become more important, meaning that places that have specialised in creative work will most likely be the main beneficiaries of the digital age”.
NESTA, Creativity v Robots, 2015

To be fair to Peter Bazalgette, his report did highlight the contribution of creative disciplines to R&D (although his references to R&D tax-credits were limited to creative businesses).

  • It would be good to explore the scope for broadening the interpretation of the current R&D Tax-Credits regime to encompass creative inputs beyond design.
  • As well as investing further in creative industries, Innovate UK should also consider developing a version of their ‘Design Foundations‘ programme – exploring how creative inputs can inform the innovation process across a range of other sectors, through some kind of ‘Creative Foundations’ component to all of their programmes.
  • All of the reports cited here have begun to articulate the impact of design, creative industries or arts and humanities skillsets on the wider economy – but more research is needed.




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