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Spring Budget 2023

Updated: Jun 15, 2023

Yesterday, the Chancellor of the Exchequer shared his Spring Budget with the House of Commons and the nation. In this Culture Commons: Snap Briefing, we’re going to take a quick look at some the measures announced and think about how they could affect the UK’s creative and cultural sectors.

 

You can download this Snap Briefing in PDF format here:

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Context


The Spring Budget has been firmly framed as delivering on three of the Prime Minister’s ‘five priorities’: to halve inflation, grow the economy, and get debt falling. Alongside the Budget, the Office for Budget Responsibility (OBR) published its own economic forecasts that make several important predictions including that inflation looks set to drop (to not too far away from the Bank of England’s “normal times” target of 2%), the economy is on track to avoid a ‘technical recession’ and overall debt should fall in the medium term too. This is important because industry and investors – including those in and supporting the creative and cultural sectors – widely regard the OBR as marking the Government’s homework when it comes to Budgets like this.

So, things are looking a bit better than experts predicted just a few short months ago. Nonetheless it’s still the case that this is an extremely challenging time for people and businesses, with the economy reeling from the combined effects of Brexit, Covid-19, the war in Ukraine and a cost-of-living crisis.


If you haven’t yet caught them, here are a few of the “headline” policies that we see the public focussing on right now:


  • A £2,500 energy price cap on household costs continues for three more months until prices are expected to fall; pre-payment meters, often used by the poorest households will have their prices levelled with direct debit payments and their forced installation temporarily suspended

  • £11 billion added to Defence budget for next five years – that’s nearly 2.5% of GDP by 2025, building on the military support already given to Ukraine; A new £30 million package for ex-servicemen and women

  • Draught beer relief raised by up to 11p

  • A £63 million fund for public leisure centres and pools

  • Fuel duty to be frozen and the previous 5p cut maintained


So, let’s get into how the budget speaks to the creative and cultural sectors; the headlines:


Tech:

  • £2.5bn over 10 years for quantum tech

  • £20bn over 20 years for carbon capture and low carbon tech

  • Partial reversing of the R&D tax credits cut

  • £100m for the Innovation Accelerators Programme

  • A new 'AI Challenge Prize' for AI research, awarding £1m each year for 10 years

  • An AI sandbox for developing and testing AI technologies

  • £900m to build an exascale supercomputer and establish an AI Research Resource

  • A new "plan" to unlock pension fund money to invest in startups

  • Expansion of the 'Seed Enterprise Investment Scheme'

Arts:

  • Extended tax reliefs for theatre, music, museums, TV and film

  • £20m of additional funding for the BBC World Service over the next 2 years

  • £8.6m to support Edinburgh’s festival economy


What could this mean for the creative and cultural sectors?

After a noticeable spell of omission from the UK Government’s top-level narrative, it was encouraging to hear the Chancellor explicitly name check the contributions that the creative and cultural sectors make to the UK economy at the dispatch box. Standing up in front of MPs in the House of Commons, he explained that the creative industries are “growing at twice the rate of the UK economy” and celebrated the fact that we now have the largest TV and Film industry in Europe; as well as the brilliant job “our theatres, orchestras and museums” do in “attracting tourists to London and the UK”. Thankfully, the Chancellor moved beyond rhetoric to set out some interesting measures that will undoubtably support the creative and cultural sectors.

Within the government’s plans to support “enterprise” in all parts of the economy, the Chancellor positioned the creative industries as one of five “high growth sectors in the UK”. We know that the creative industries were growing four times the rate of the economy before the pandemic, so we should be aiding their recovery and getting them firing on all cylinders again. Like many in the creative and cultural sectors, we’re really pleased to see further reforms to audio-visual tax reliefs, including new expenditure credit at a rate of 34% for film, high-end television and video games, 39% for the animation and children’s TV sector, alongside the extension of temporary higher rates of tax relief for theatre, orchestra and museums and galleries for a further two years notched up to 50% until April 2025. Speaking with colleagues with several subsectors this morning, these measures have been a relief for so many and will help them to make some strategic decisions in the coming months. Collectively, we hope the tax relief measures will combine to both galvanise those key growth sectors the Chancellor talked of, as well as support those subsectors that we know are still feeling the effects of Covid-19 pandemic and who are also now at the sharp end of the cost-of-living crisis.

At Culture Commons, we’ve long highlighted the uneven distribution of creative businesses, sectoral productivity and cultural infrastructure we see across the UK, so we welcome the Government’s continued commitment to growing the economy “everywhere”. In particular, £200 million of ‘Levelling Up’ cash for new regeneration projects, a commitment for a third round of the Levelling Up Fund and the announcement ‘Levelling Up Partnerships’ with access to £400 million to provide “bespoke place-based regeneration” - these will be focussed into 20 of England’s areas “most in need of levelling up” - are to be welcomed. Nonetheless, we’ve still got very little detail on how the government has identified these areas, and whether they represent a truly strategic, fair and needs-based approach to addressing inequalities across, and within, the UK regions and nations. We think the government should now set out how areas receiving investment were selected, and, if a further assessment and/or selection process applies, how they will ensure it doesn’t place yet another burden on to local officers who have been competitively bidding in to circa 16 disparate Levelling Up related funds for some time now.

We’re also interested in the creative industries being centred as part of a refocused ‘Investment Zones’ package, promising access to some £80 million over five years to “catalyse 12 potential knowledge-intensive growth clusters across the UK”. We know that several creative clusters in the chosen areas have universities and other anchor institutions interested in the creative and cultural sectors that are extremely well placed to receive targeted support and invest that in new and innovative ways. We’ll of course need to monitor how the creative and cultural sectors ultimately feature in the mix. We’re now going to be in touch with the areas earmarked for an ‘Investment Zone’ and share some of the thinking we’ve been doing here at Culture Commons on how regeneration programmes incorporating the creative and cultural sectors can have significant social spillovers. We hope this will help areas take ‘Investment Zones’ beyond purely extractive economic vehicles for industry towards being key pillars of thriving, creative communities instead.


We’re encouraged to see that a devolution-based approach remains at the heart of the government’s plans. This includes the new “trailblazer deeper devolution deals” in Greater Manchester and West Midlands Combined Authorities that will see increased autonomy over local growth and place, transport and regeneration policy (we did a short report on those new deals here). With both promises for deeper and extended devolution, as well as responsibility for local economic regeneration transferred away from Local Enterprise Partnerships (LEPS) to local authorities, we call on the UK Government to set out how it plans to accommodate a more devolved approach to ‘cultural policy’ too. We feel there is real opportunity now to bring thought leaders, decision makers and members of the public together in Greater Manchester and the West Midlands, to really interrogate what ‘cultural devolution’ looks like in practice, and consider what macro-level policy mechanisms might be needed to best support it. We also think models like our proposed national level ‘Culture Forum’ programme could help ensure the public are brought into more robust decision-making processes associated with the creative and cultural life of local places.


We note the £1 million AI innovation award which will be given out every year for 10 years and can understand some of the benefits that a flagship scheme like this might bring (including increased awareness). We’ll need to see more details of the programme before being able to judge whether it is, in and of itself, worthwhile.


We welcome the newly appointed Chief Scientific Advisor, Professor Dame Angela McLean, who has now been tasked with overseeing “future reviews” across key sectors, including the creative industries. We encourage the government to push a "future review" for the creative and cultural sectors to prepare government to support these sectors, and we look forward to the “further policy announcements” associated with this coming soon.

Lastly, while it was heartening to see increased funding promised to key cultural assets and festivals across the UK, such as increased support to Edinburgh’s Fringe and funding to restore Holyhead Breakwater at Holyhead port, no further commitments were made to ringfence cultural funding or protect cultural programming that is going to be central to the UK’s Government own ‘Levelling Up’ approach.


What’s not there?


So what didn’t we see in the Spring Budget that could have been helpful to our sectors?


Well, firstly we think that the Chancellor could have folded creative and cultural sector research and development (R&D) activity into existing tax relief systems in order to bring the UK into line with comparable OECD nations. The creative and cultural sectors are keen to innovate, not just on new technologies and the digital products of the future, but also on new processes and approaches that could have transformative impacts on the lacking equity, diversity and inclusion we see across all DCMS subsectors. We think there’s a real policy dissonance coming from government on this point: on the one hand saying we want to create an “innovation and research superpower”, and on the other not enabling some of our most dynamic and inventive sectors to make investments with confidence.


We also learned little today of how the government will support the workforce that underpin the success of creative and cultural sectors, including the significant number of freelancers and self-employed who make up a very large proportion of the overall workforce (33%), and the majority of some subsectors (up to 75% in theatre and live performance). Over the next few weeks, Culture Commons will consider how the range of ‘cost of living’, energy and employment support measures, including the 30 hours of free childcare for working parents in England expanded to cover one and two-year-olds, and the abolishment of the Work Capability Assessments, might impact on the creative and cultural workforce specifically. It’s at moments like this when we feel it’s right to resurrect our calls for the UK Government to appoint a Commissioner for Freelancers, who could dig down into the impacts of Budgets like this and feedback to decision makers, help freelance, self-employed and atypical workers to access core state support and pioneer new ways of working that are fit for a 21st century Britain.

 

If you or your organisation would like to discuss how the Spring Budget might affect you, get in touch with us at www.culturecommons.uk

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