Regional Growth Fund Consultation
Northern Film & Media response
We welcome the proposed introduction of a Regional Growth Fund and are supportive of the focus
on private enterprise.
Historically, in the North, there has been a lack of focus to public sector business support and
investment and poor integration with private sector investors, local funds have also been poorly
structured and commercial incentives have been misaligned. The Regional Growth Fund offers a way
of bringing clarity and impetus to fragmented funding streams.
1 Are there benefits to be had from allocating different elements of the fund in different
ways?
Yes. The principle benefit is in creating a coordinated focus on particular sectors across a range of
Local Enterprise Partnership and Local Authority areas.
The commercial creative industries play a central role in the UK economy and generate significant
profile for the UK abroad, this is at a time when technology is offering new platforms, distribution
mechanisms and revenue opportunities for the creative content industries.
As an example of the benefits of a focussed approach -
Northern Film & Media’s business support scheme cost £200K and resulted in new turnover
for participating businesses of £7.2million.
Northern Film & Media has formed a formal partnership with Venture Capital Fund North
Star Ventures to make commercial investments into the creative sectors using a mix of
public and private finance.
It is clear that the creative industries offer a significant opportunity for wealth creation and growth.
It is unlikely that all LEPs and Local Authorities would be able to build a cost effective and expert
structure to develop this sector. If an element of the fund were to be allocated to creative industries
it would drive a proper coordinated focus on this sector rather that many separate, expensive and
inexpert responses from individual areas.
2 What type of activities, that promote the objectives outlined above, should the fund
support and how should the fund be best designed to facilitate this?
We urge ministers to consider specifically supporting growth in the Creative and Digital sectors.
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For such a tiny island the work of the UK’s creative talent is exceptionally popular. Wherever films
are produced, music created, television written and directed and games coded, British talent will be
high up in the creative teams.1
It is vital that we are able to harness the economic potential of the creative industries across the
whole country if we are to build real growth for the UK’s creative industries.
Currently, there is a wealth of creative talent across the whole country, but it tends to migrate to
London or the television hubs in the West of the country. It is important to ensure that we are
tapping into this talent early and across the whole country, we have to ensure that creative
individuals and companies can access support and investment no matter where they are in the UK.
Though many of the individuals creating wealth in the creative industries are now based in London,
very few of them actually began there. Creative content in digital form is a weightless export,
professional digital production tools are now cheap and sophisticated, and broadband speeds are set
to increase across the country.
There has never been a better time to drive real growth in the creative and digital sectors and there
are very few sectors that can operate successfully outside London. For these reasons we urge
ministers to consider specific focus on the creative and digital sectors for the Regional Growth Fund.
3 Do you think these are the right criteria for assessing bids to the Regional Growth Fund?
Many of the criteria are sensible, but not sophisticated, they also throw up some anomalies that are
important to address.
We believe the criteria do not offer enough clarity between the economic and social impacts
desired. Private sector growth and social enterprise are very different and investment tools
to drive growth in these areas are very different, the two should be kept completely
separate.
Historically, the public sector focus on job creation has held back growth in the private
sector. The emphasis should be on growth and wealth creation not on job creation. Job
creation is an important by-product of economic growth not a function.
The fund is designed to be for two years, yet needs to generate long term benefits that will
be felt over a much longer period. There is a danger that with no ability to phase funding
over the life of a project the assessment criteria on long term impact will lack teeth.
1
The UK is the third largest music market in the world, in 2008 one in ten albums sold in the US were made by
a UK act, four of the top ten best selling artists were British. (UK Music, 2009)
With 2.5 million hours of television broadcast in 2008 and revenues of £11.2 billion the UK’s television market
is second only to the USA in revenues percapita. (OFCOM, 2008)
The UK film industry generates £3.7 billion in revenues and the UK is the third largest film market with UK films
and coproductions accounting for 21% of releases and capturing 31% of the global box office. 5 out of the top
20 films globally in 2009 were of UK origin. In that year 17% of all major film awards went to UK films and
talent. (UK Film Council, 2009)
th
The UK’s Games market generated £3.3 billion in 2009 making it the 5 largest games market in the world.
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We agree on the importance of a strategic fit with an area, but are not in full agreement that
a ‘package’ approach would be the most effective. The level of compromise on a package
approach may lead to a lower overall impact of projects. It may also result in new layers of
monitoring being created to manage the packages. More detail on definitions would be
required.
We welcome the requirement for private sector backing. This kind of market validation has
been missing from regional policy for too long.
It will be important to provide clear and concise guidance on the meaning of ‘green
economic growth.’
We welcome the focussed high impact approach of bids at £1m plus.
Again clear and concise guidance will be required on State Aid compliance. Even after a
number of years of working under state aid rules, this does not currently exist.
We do not agree that bids should address market failure; we urge strongly that, if possible,
bids should address market opportunity.
4 Do you think we should operate a two-stage bidding process?
In our experience, there is a considerable amount of work to be done between the outline of an
application and the final application. A two stage process allows for proper consultation and
discussion to take place and helps to focus bids on the needs of the fund. We support a two stage
process.
5 Should Regional Growth Funds become a long term means of funding activity that
promotes growth?
A two year fund is too short to provide long term impacts, it forces applicants into higher risk
scenarios, allows no time for evolution of projects during their delivery and will therefore have a
much lower success rate than a longer fund.
A two year period removes any portfolio management process and removes the ability to stage fund
over the life of a project.
There is significant academic evidence that short funds have less impact.2
We believe a longer commitment is required; however, the form of the fund may evolve
significantly, particularly if it is able to harness and partner with private sector Venture Capital.
2
See BOULEVARD OF BROKEN DREAMS - Professor Josh Lerner also HOW PUBLIC AND PRIVATE
INVESTMENT CAN WORK BETTER TOGETHER TO BUILD THE CREATIVE INDUSTRIES IN THE UK – Tom Harvey
http://bit.ly/dpuzaz
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For real growth to be achieved in the long term we would urge an early relationship with private
sector Venture Capital which would bring further finance, expertise, networks and routes to market
that might not be achievable for the Regional Growth Fund operating alone.
We believe the Regional Growth Fund could and should be the start of something bigger, and the
drive to be this should be built in from the start rather than a primary focus as a measure of
alleviation.
About Northern Film & Media
Northern Film & Media is the screen agency for the North East of England. Our vision is to create a
strong commercial creative economy in the North East by commercialising talent and ideas.
Historically we have generated £4 for every £1 of public money we have invested and operate on an
overhead budget of 9%.
We provide the link between talent, experts and the market, introducing the talent to the market
and introducing the market to the talent.
We invest in talented individuals and innovative companies, ensuring that creative enterprise
succeeds in national, regional and international markets.
We are industry focused and entrepreneurial. We are an independent entity with an industry board.
We have a small core staff, low overheads and simple, transparent operating procedures.
We take an entrepreneurial rather than bureaucratic approach, drawing funding from a number of
sources to deliver a high economic return for the North East. However, funding is only part of the
picture. Because we are industry-led and agile, we use seed investment, influence, leverage, industry
expertise and partnership working to make an impact.
We have become an efficient and dynamic entity for supporting creative industry development and
are keen to work with the Regional Growth Fund on building the commercial creative sectors.
We have an industry board, including practitioners from film, television, games, web, mobile, games
and music. The views contained in this paper represent the views of our industry board who have
broad experience across the creative sectors and also deep experience of the region.
We do not require our submission to be confidential. We would welcome the opportunity to give
oral evidence if required.
Contact:
Tom Harvey, Chief Executive, Northern Film & Media, Studio 3, The Kiln, Hoults Yard, Walker Road,
Newcastle upon Tyne, NE6 1AB. Email tom@northernmedia.org Telephone 0191 275 5930
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