Oral evidence: Creative Industries in Scotland, HC 332
Monday 19 October 2015
Ordered by the House of Commons to be published on 19 October 2015.
Written evidence from witnesses:
- Ukie
- TIGA
-School of Arts, Media and Computer Games, Abertay University
- STV
Members present: Pete Wishart (Chair); Kirsty Blackman; Mr Christopher Chope; Mr Jim Cunningham; Margaret Ferrier; Mr Stephen Hepburn; Chris Law; Maggie Throup
Questions 1-62
Examination of Witnesses
Witnesses: Brian Baglow, Director, Scottish Games Network, Jeff Meek, Finance Director, TIGA, Dr Jo Twist, CEO, UKIE, and Professor Gregor White, Head of School of Arts, Media and Computer Games, Abertay University, gave evidence.
Q1 Chair: Welcome, all, to the Scottish Affairs Committee and our first evidence session on the creative industries in Scotland. We are all quite excited about how many people have turned up today; I think a couple of selfies will be in order later on. We are particularly excited to be here in Dundee today, which is a world-class hub for the computer games industry as well as a whole range of other activities associated with the creative industries. Why we are here today obviously is to learn a little bit about the success of this city and this sector, but also to properly understand—or better understand—some of the difficulties and challenges and what we can do as a Committee to try to ensure that we have the right type of policy framework to ensure that this fantastic type of industry is supported as we go forward.
We have four fantastic panellists with us who are going to give us what we know in advance will be excellent evidence. What we are going to do is go from left to right and just ask you to identify yourself. We are not going to ask for an opening statement unless you are absolutely desperate to say something to us, because time is very, very constrained and we want to get down to the questions as quick as possible. But if there is something that you feel absolutely compelled to tell us, then this will be your opportunity. Professor White.
Professor White: My name is Professor Gregor White. I am Head of School of Arts, Media and Computer Games here at Abertay University.
Dr Twist: My name is Jo Twist. I am the Chief Exec of UK Interactive Entertainment. We are the trade network that represents the games industry across the UK and we are here to make the UK the best place in the world to make and sell games.
Jeff Meek: Hello, I am Jeff Meek. I am Treasurer of TIGA, which is the independent trade body for computer games developers.
Brian Baglow: Good afternoon, everyone. My name is Brian Baglow. I am the Director of the Scottish Games Network.
Q2 Chair: Fantastic, thank you. We did not even have an opening statement or any remarks, which will help us get straight on to the questions.
The first question is a very general one and I would like to have a response from each of you on this, if I can. We are having great difficulty assessing the size of the sector. We have seen various contributions in terms of written evidence and we are completely dumbfounded about what the size of the sector is. According to the Creative Scotland report, for example, it suggested that the gross value added for the computer games industry in Scotland is zero, that only 200 people—which we find very hard to believe—are employed in the industry. Tell us, how big is the sector? Professor White, maybe you can kick us off on that one.
Professor White: As I am sure you are aware, there are a number of different organisations that publish figures about the size of the Scottish games industry. The Creative Scotland report is a bit of an anomaly; I think it can only be that that was not an accurate representation of it. TIGA themselves—and maybe Jeff can shed some more light on it—have regularly published figures, an annual figure of the profile of the games industry in the UK, in which they can segregate out Scotland and go into some detail about the sector in Scotland, and Nesta have also produced figures about the games industry in Scotland, none of which kind of agree with each other, so there is no definitive statement, I think.
Q3 Chair: I would like to come to Mr Meek, because again I have two sets of figures here that almost are contradictory, in that we have figures from TIGA and from UKIE that say that Scotland has either 11.1% or 5%—irrespective of the total number—of the UK development companies. Could you help us with that?
Jeff Meek: Obviously we do not know how UKIE produce their figures. TIGA has produced an annual survey for some years and it has been produced by a combination of doing desk research on the various companies that are listed at Companies House, but also by phoning the companies we know of and checking on a regular basis their movements. We feel it is reasonably accurate on the basis that it is regularly reviewed and the basis of quite a lot of work going into the depth of the figures, but also there is an element of what defines a games company. There is a lot of people out there who are one-man bands, two-man bands who will do consultancy work for other companies; some people will be members of more than one company, your classic sub-set problems of having multiple companies relating to the same people.
Q4 Chair: Is any of this having an impact on just how the sector has been assessed and is this causing difficulties for the sector?
Dr Twist: Yes.
Brian Baglow: May I?
Chair: Mr Baglow, yes.
Brian Baglow: You are absolutely right, Mr Chairman. There is no real hard and fast data out there about the size or the scope of the games industry in Scotland. The research that has been done—and there is some very good research—has been piecemeal and we do not have a holistic overview at all.
I am very glad you mentioned the 2012 report looking at the economic impact of the creative industries, because it was one of the most wrong-headed pieces of research ever produced. The fact that we are still talking about it coming up to the end of 2015 shows why it was so dangerous to have out there, because it did underestimate the size of the industry, the value of the industry in almost incalculable terms. It has done a great deal of damage because there are policies being made that use this as hard evidence; there are pieces of legislation. It is an issue that we have, which is that until we understand the scope, the size and the locations of the games industry here in Scotland, it is very difficult to do anything effectively, based on actual hard data.
Chair: Excellent. That is the sort of thing that we are looking to pick up as we go through this evidence session, so this helps us in order to shape our response to what we are hearing.
The other thing that we have been hearing, this is another general question to—
Dr Twist: Mr Chairman, sorry, can I—
Chair: Sorry, yes.
Dr Twist: Do you mind if I just intervene in the data question, just because we commissioned Nesta to do that cluster map report? What we know is that most data are based on standard industrial classification codes. There is not an adequate code that neatly captures what games companies and service companies are related, whether they be in development or in publishing or in technology—for example, data services and middleware services—that directly are helping to make and sell games. They do not capture that. It is a very hard to job to change SIC codes, but they are simply built for an analogue age, not for a digital age.
What we attempted was a big data approach, because what we also found, speaking to the ONS, was that the SIC codes do not capture many micro-studios and small companies that have not quite reached a particular tax threshold. We know that the majority of our industry is very young now. The majority of our members certainly are less than five years old. We attempted a big data approach, which is a mix of official data, Companies House data, and web scraping of data and our combined databases that we have of contacts. We intend to take this on to an online platform. We figured that if we were in Silicon Valley, we would be doing this in real time, not two years out of date with inadequate data. It does underpin everything.
Q5 Chair: Thank you for that. Again, if there is anything further that you feel that you could usefully contribute just about some of the categorisations and some of the ways that we could help to identify the sector, it would be useful to this Committee.
I want to talk just a little bit about the sector in general, because we know that we have been through not just one revolution when it comes to computer games, but probably several. Again, some of the evidence that we have received has suggested just the ever-evolving and changing nature of the sector just now. Roughly where are we? If we are looking at the terms of support that you feel Committees like ours could offer, what things could we do? I particularly want to make reference to the fact that while we have some of the big global companies, we have both Rockstar and 4J Studios, what we have seen in the evidence that has been presented to us is that the most dynamic sector is the micro-businesses, the ones that are evolving almost on a daily basis. What does that mean in terms of how we could offer support to this sector? The different range, from Rockstar down to some guy and an app in a bedroom, what do they need? Is there any way that we could be doing all this together? I will ask Dr Twist first.
Dr Twist: They need a co-ordinated approach to support. Games often fall in-between two stalls, as software and IT and tech or creative and content-creative industries. At the moment, we have been pushing quite hard to make sure that creative industries and screen-based support also extends to other screen-based sectors such as games, because we are that unique blend of content, creativity and innovation and technology. Most of the skill shortages are around commercial and business skills. These are very vulnerable companies, they need to have that injection of access to finance and capital in order for them to hire more people and to build their portfolio so that then they can reach the stage where they can take full advantage of the tax credit and the R&D tax credits that are now in place. I have lots more, but I will hand over to someone else.
Chair: We are going to come to tax credits, so it is helpful you raised that. Professor White.
Professor White: I suppose locally we are in an interesting phase of development, so we are in what locally we call the post-Realtime Worlds phase. Dundee’s industries have had various evolutionary steps over the years they have existed. At this current moment, it is a particularly interesting one, I think: what we are seeing is a diversification of the industry in all sorts of different directions. We have seen a kind of stratification in Scotland, where we have layers of scale and complexity in the games sector, so Realtime Worlds is sort of floating somewhere above Edinburgh in its own economy and you have these reasonably robust kind of consolidated companies like Outplay and Tag, who have been around for a while now and have found a place in the market. Then you have this very dynamic start-up community, which is very mobile, a real high turnover of studios; they are very experimental but very innovative.
Then sitting below that, the kind of space that I became interested in as an educator is that sort of pre-start up, that incubation phase, where students are working together with professionals in informal settings of game jams and places like the MakerSpace in Dundee and organisations like Dundee Games Collective, which are not formal businesses, but what they do is promote interesting work and interesting new partnerships, new collaborations. We have had interesting projects this year working with Crop Research Centre, working with epidemiologists in St Andrew’s, working with the Care Commission, all sorts of different organisations who are beginning to see games as part of their operations now, so they see it as an engagement tool or an advertising tool or a marketing tool or just a way of interacting with their clients or customers. I think the differentiation in support across these strata is the important thing.
Chair: Thank you. Either of you gentlemen?
Brian Baglow: One of the only constants in the games industry is change. It is an industry that is constantly being driven forward by new devices, new routes to market, new business models and so on. When I started—only 20 years ago, believe it or not—you needed a very large team and a very large amount of money upfront invested in your company in order to make games. That has now changed radically. The tools for making and publishing games worldwide are now in the hands of teenagers and it is only getting easier for people to create their own content and put it out alongside the big video game companies that we are all aware of. You mentioned, quite rightly, 4J Studios and Realtime Worlds. They represent the sort of 800-pound gorilla end of the market. The vast majority of companies out there are much smaller, micro-studios, less than 15 people in most cases, and unlikely to grow beyond that. It is a challenge finding a way to support the new entrepreneurial studios right through to the very large ones.
However, I think it is just a matter of understanding, and it does come back to detail, it does come back to games being seen as an isolated industry out on its own, whereas if you look at interactive media as a transformative technology and how it is starting to converge with film and television, music and literature, not just the rest of the creative industries but, as Professor White said, medical educational areas as well. Games can truly transform the way that people interact with so many types of data and new experiences. It is a real challenge, because it is only going to accelerate from this point.
Chair: Thank you for that. I think we have seen examples of that this morning about the games industry and the games sector, we are getting all these other disciplines in the sector starting up. That is very helpful.
Mr Meek, just briefly, if you can, because we know we only have a limited amount of time.
Jeff Meek: As Brian has pointed out, I think the sector is made up of many different size companies. Quite a lot of the smaller companies will do subcontract work for the larger ones and learn skills, which you can then build up. Many of the companies that have become large players, Realtime Worlds in the past started up as a small player doing mobile games, so the skills are transferable across platforms. Certainly the recent changes over the years to make more games based on iPads and iPhones has meant that the access to market is easier. The concerns and problems for games companies become more about accessing IP to distinguish a game from another and also getting access to the market in terms of advertising and marketing, so it becomes less an issue of building a big team, but more of getting sufficient funds to be able to raise the profile of the game.
Chair: Thank you for that. Jim Cunningham has a couple of questions just about the differential support for Scotland generally.
Q6 Mr Cunningham: Professor White, in your evidence you suggested that Scotland required support outside of the rest of the UK. Can you give us some examples of that?
Professor White: I think probably what I highlighted was areas where maybe the UK has taken actions that are much easier to do south of the border or around about London, where there is investment capital, there is access to all sorts of different services and there is this kind of diverse creative industry sector that is self-supporting and supports a mobile workforce and allows people to move around more easily. I think the interventions that need to be made in Scotland are to target these areas in particular, where Scottish companies do not have as ready access to investment or to venture capital. Maybe Scotland could intervene in a public sense to try to encourage that to happen or to bring the investors up to Scotland to meet the companies. It is not huge changes in policy, I think, it is just targeted interventions to level the playing field between London and Scotland.
Q7 Mr Cunningham: Is there a specific reason for that?
Professor White: Geographic. The volume as well, so there are smaller clusters in Scotland, they are geographically distributed, they are not so easy to find, so intervening and arranging for these organisations to meet the companies up here might just need a little bit of intervention rather than trying to allow it to happen naturally, which might take longer.
Q8 Mr Cunningham: You mentioned mobility there. What did you mean by that?
Professor White: I meant the workforce mobility.
Mr Cunningham: What are the difficulties with that, lack of skills or what is it?
Professor White: No. I think individuals within the workforce are very mobile, but there is a games sector in Dundee, there is a tech centre in Edinburgh, there is TE in Glasgow and they do not move around very much. If you are in somewhere like London, in my case, that has all of these sectors, then individuals can move from one sector to another and ply their trades in these things and it makes attracting people to work in geographical areas much more attractive if they can see that there is options for them in these areas.
Mr Cunningham: Would the rest of the panel agree with that?
Brian Baglow: Yes, to a great degree. It can be very, very difficult to get staff from overseas to come to Scotland. We have mentioned a couple of the big companies in the past and those are the only two companies out there that have any real visibility, so it can be difficult, because people are not aware of the thriving industry that we have here. It can be very, very difficult just to get even people from Edinburgh, Glasgow and Dundee together, let alone some of the larger companies in the global marketplace to come and visit us. There are even companies up in Elgin, God help them, and trying to get folk up there is a real job.
Dr Twist: Interventions such as B2B marketplaces, which are public interventions, but also very much supported by politicians, make a great statement internationally about the nature of the place. I think that Scotland misses out in not having that centre of gravity that can pull in investors, who are essentially quite lazy. They barely even go outside of the city in London, let alone the outskirts of London. So having a focal point that you shout loudly and proudly about on an international stage, much like the Liverpool International Festival of Business, I think would be a great remedy for this issue.
Q9 Mr Cunningham: Can we move on to the next question? The UK Government already has tax relief for computer games and there is the Video Games Prototype Fund, which is to be administered from Dundee to enable start-ups to get access to finance and development. To what extent have the Scottish developers taken up this support?
Jeff Meek: Quite a lot of the developers have made use for many years of the R&D tax credits that were brought in some years ago and that has helped them retain more money to develop their own IP and helped build the sector. The relief applies from the smallest companies to the largest, it is just proportionately obviously the larger companies will get more money because they spend more money. It is a relief that is primarily based on wages. There is obviously scope for some expansion of that. For example, in Canada the relief is topped up on a regional level as well as a state level and they also give the relief based on overheads such as rent and other costs, rather than just salaries. Ireland itself also too has matching costs on rent as well.
On the video tax credits themselves, where you get a degree of money back on the production of a video game, such as you would do on a film, I personally have done three claims for companies and I have another client who just received a large payment for about £500,000, so it is starting to take effect. There has been some teething issues because of the way it is has to be done and the interplay with the R&D tax credits. If you qualify for one, you are not allowed to have the other, even if you do not claim it, but certainly it is making a difference.
Q10 Chair: The Prototype Fund, when you are given it, we are quite keen just to see if these sort of things are making a difference, if anybody could help us with that.
Professor White: I think the Prototype Fund made a significant difference when it ran from Aberdeen initially. Again, it was at that period when the largest of these were closing and there was a lot of SME start-up activity in the city. I think it probably contributed significantly to the retention of the sector in Dundee at quite a difficult time.
Q11 Chair: Sorry, just so we do not lose this. The Prototype Fund has been operating from here. Would this be something that could be replicated in other sectors and other areas in computer games, like something in Edinburgh?
Professor White: We think the particular challenge that video games companies have is upfront cost. The model changed from a publisher model—traditionally or up to that point, publishers would invest in a company to build their game—to companies taking on that cost and risk of developing their own content and the Prototype Fund targeted that particular issue in games development.
Then the other thing to bear in mind with the original Prototype Fund was a proportion of that fund the project had to spend was ringfenced for Scotland, so part of the funds came from ERDF funding that was to be spent in Scotland. That would not be the case with the new one.
Chair: If you do not mind, I am keen to move on, because we only have another 15, 20 minutes.
Dr Twist: I just want to make a point about the issue of the stats for the games tax credit. BFI do not break down the stats. It is 89 games that have qualified for an interim or a final certificate, but they do not break down the stats officially for Scotland and perhaps that is something that easily could be done.
Chair: That is helpful and I am glad that you did come in with that point. These are the sort of things that we are determined to hear.
I want to talk a little bit about support that the sector gets from Scottish Enterprise and Creative Scotland. Maggie Throup has a couple of questions on that one for us.
Q12 Maggie Throup: Creative Scotland and a number of bodies involved in providing business support, including Scottish Enterprise, all have a role in supporting the creative industries in Scotland. Is it clear what the role of each is, and if not, what could be done to improve this?
Brian Baglow: Oh, please. That is a fantastic question and it is an issue that we have had on an ongoing basis. Individually, many of these organisations do some fantastic work. Scottish Enterprise and Scottish Development International, for example, have supported Scotland’s games sector for the last two decades and we have a presence at many of the big leading video games shows worldwide thanks to them, and that cannot be underestimated. However, where the boundaries lie between Scottish Enterprise, SDI and Creative Scotland and the other 15 to 20 organisations out there that help the games industry in Scotland in some way, shape or form are not clear. This is despite the fact that we do have the Scottish Creative Industries programme, which is supposed to provide a very high-level leadership. I know for a fact that many companies find it off-putting, not knowing exactly what each organisation can do to help them on a practical basis or indeed who they should be talking to on an ongoing basis.
Professor White: I think there are some challenges around about the Scottish Creative Industries partnership in that it is very focused on public sector support, there is no membership or partnership from the industry. If you look at the equivalent board of the Creative Industries Council, it is very well-represented by industry and they have a very close link to Government in terms of making their opinions known. I think the differentiated roles between Creative Scotland and Scottish Enterprise are becoming clearer. The draft strategy that came out from Creative Scotland very recently starts to put some distinction between the two organisations and the allocation of responsibilities, which will be helpful, but I think there needs to be more engagement with the industry itself.
Q13 Chair: Just on that, you mentioned the partnership. Is there more that could be done about this or could they try, if there are tensions, to have them resolved and ensure there is better clarification on how the sector is supported?
Professor White: I think there is probably less they could do. That would be good, if they were to engage with the industry and listen to the industry a little bit more and get that feedback and get support, bring people on board. At the moment it is populated entirely by public sector organisations, local government organisations and with the best will in the world, they will not have that close finger on the pulse of what is going on in the industry.
Q14 Maggie Throup: Which agency should be leading support for the video games industry? Perhaps a question that is applicable to Mr Baglow: what role should the Scottish Games Network play?
Brian Baglow: A much larger one is the short answer. To give you a tiny bit of background, the Scottish Games Network is graduates. It is something I started back in 2004, because the industry started to evolve and grow and it was just a focal point for everybody involved—and I mean everybody—to share what was going on and to find out what else was happening in Scotland. It has grown enormously in the last 11 years now—good grief—but it is no longer able to support the size of the industry or the scope of the industry that we find ourselves in. I am currently in the process of trying to turn it into a co-operative so that the industry as a whole, and in the widest possible sense, can come together and provide exactly the sort of industry focus that Gregor is talking about.
Q15 Maggie Throup: So if we come back in a year’s time, that should be up and running?
Brian Baglow: I like the way you do deadlines. That is a deal, if we say pre-Christmas.
Professor White: Can I just say there is a kind of logic to the division of responsibility if you look at that stratified model that I was thinking of? Creative Scotland has a lot more experience of working with creative communities and is less focused on business development and more focused on the cultural side and creating communities and creating networks that can support each other. I think Creative Scotland has a very important role in that space. Scottish Enterprise has done a great job in terms of looking at investment, looking at high growth, looking at regional assistance and bringing companies into the country. The tricky bit is the transition between that, so when talented people, young people make something that is exciting and interesting and has the potential to become a commercial success, how do you manage across that divide? That is where the congestion is. There is something like 30 organisations in that space, Business Gateway and Prince’s Trust and the Cultural Enterprise Office are in there. It is congested and very confusing to navigate for start-up companies.
Q16 Maggie Throup: Finally, how joined up is Scottish and UK policy that affects the video games industry?
Dr Twist: Obviously Scotland and the rest of the UK benefit from the video games tax credit, which should be protected and there should be some improvements made to it. We should ensure collectively, as the UK, that we get that recertified in 2017. I do worry about the PR around what is now the northern powerhouse, which seems to start at Watford and end at Manchester, as there is no north beyond. I also do have concerns: we first started working with UKTI on helping SMEs in handling their trade access programme grants, which have been substantially cut in recent years, and that helps companies get to international marketplaces. I worry about the GREAT campaign and the amount of money that is spent as part of that campaign, the promotional campaign, which did not feature anything about the UK’s games industry, let alone Scotland’s games industry. Those promotional vehicles have a lot of funding behind them. They are quite effective and I think there needs to be more co-ordination between clusters. We have to start acting locally and thinking globally as the UK, and as we get further devolved powers, working with local enterprise partnerships and working at local government level is the key to our success.
Q17 Chair: Just on that, what support should Scotland expect from the Creative Industries Council, for example, and UKTI? They are nominally represented by the UK when it comes to particularly international trade shows. Do you feel that we are getting that type of support? Is there more that they could do? Can anybody tell me what the Creative Industries Council does, because I am a bit mystified at some of the evidence that we have secured on this thus far?
Dr Twist: My very first meeting at the Creative Industries Council will be on Thursday, so I can tell you then. But we have been involved very heavily and we have industry representatives sitting on the actual council with the different working groups.
I think infrastructure and broadband reach is something that is a critical issue for the whole of the UK and for Scotland in particular, not just for consumers, but also for businesses, who need just as good upload speeds as download. We need to be able to encourage cluster growth and geographically dispersed teams, which the games industry and other creative sectors do very well.
Chair: Sorry, could somebody find out what that banging is and ask them to stop, please?
Dr Twist: It is probably Ed Vaizey, because I have mentioned broadband.
Chair: Thank you for that. Have you finished, Dr Twist? UKTI: is there anything we can—
Dr Twist: Yes. Also we are the trade partner for UKTI for certain global events and I think there could be a little bit more. Sometimes we feel like UKTI and SDI are in a little bit of competition and we should be acting as UK in some contexts and as different clusters and different nations in other contexts. But there is strength in numbers and the community of the UK’s games industry is something distinct and should be celebrated collectively, not in competition.
Chair: Great, thank you for that. Mr Baglow, again briefly, please.
Brian Baglow: Very short, I promise. I could not agree more. We do seem to be losing a lot of opportunities for synergy and working together. We may well be missing opportunities simply because there are these two entirely separate infrastructures for the creative industries in Scotland and then across the rest of the UK.
Chair: One of the things that we do want to explore as we go through, we are looking at the computer games industry here, but right across the creative sector is about how the range of different support is offered by the UK Government and the Scottish Government. If you have any further views about that—and I can see that Dr Twist possibly has—we are very interested in examining and exploring some of these issues, so please supply that to the Committee if there is anything further you have on that. Kirsty Blackman has a question.
Q18 Kirsty Blackman: About workforce planning, Professor White, in your evidence you talked about the importance of Scottish graduates. In terms of future planning and the courses that you are doing for tomorrow’s graduates, how are you ensuring that they are fit for purpose for the industry?
Also, the students that you teach here on computer game courses, you were talking about the range of different business support available and different places to get started. Do you teach them about that? Is that part of the course?
Professor White: We certainly expose them to the range of support that is available to them. We have often run an open day where we invite all these organisations to come and speak to the students, particularly the students on a Master’s programme. The Master’s programme was set up in discussion with the Scottish Funding Council. It was an interesting endeavour, in that it looks very much like an incubator, so we have teams of students working upstairs in groups across disciplines. There are small developments they do inhouse and they will work over the year with organisations, Sony and Microsoft and everyone that you could imagine, as well as some of the local companies here. The phrase it has been called—not by us but by others—is “workplace simulations”, simulating the conditions that they will go into. It develops these strong communication skills, collaborative skills and leadership and management can emerge from that. There is a school of thought that thinks that leadership and management and entrepreneurship should be part of the curriculum. I subscribe that it should be part of the experience, that they are living these challenges and they know how to apply them in the same way as they learn a program or learn how to create art. It is for a purpose.
The way that we teach has changed over the decades as well as the industry changes, so very early on we were creating graduates that were going into studios that had 200 or 300 people in there and they would be a very specific cog in the wheel of that machine. Now they are as likely to go and start up their own business or to work for a company that has five or six people and they need to be able to do marketing and do the pitching and chase finance as well as be able to program and create assets for a game. The way that we teach tends to follow the way that the industry is operating in general. I think that what we have seen recently is this kind of professional diversification in the industry as well, to being legal and accounting and advertising and marketing, as well as a growing cultural sector that is interested in games development and public sector work and service sector work. It is all building up around about the sector, so there are opportunities to develop people into these roles.
Chair: Thank you for that. We only have five minutes of this session left, so a couple of questions that we have from Stephen Hepburn and Margaret Ferrier and there is a couple of things I wanted to ask you after that. Stephen.
Q19 Mr Hepburn: It is just one question. Where in the world is the model—or as near as the model as you could get—that you would like to emulate in terms of partnerships, financial incentives, working together? Where would you point us to so we could look at it?
Dr Twist: I would say Scandinavia, the Tekes in Finland, and I know TIGA has written quite a lot about this in their submission. I think that it is very important to hothouse talent, to have public funding that is paying for this kind of acceleration of new talent and to invest in some of the good, innovative risky ideas in order for them to build their portfolios. It is the kind of thing that BBC and Channel 4 used to do for the independent television sector, but Jeff, I do not know if you want to say any more.
Jeff Meek: It is important to try to incubate companies at an early stage and give them the kind of push up so they can strive forward to get to the point where they are sustainable. There is obviously a happy balance between encouraging companies and ideas, but what we all want at the end of the day is a sustainable company that will create jobs and be able to live on its own without long-term support.
Mr Hepburn: So Scandinavia then.
Dr Twist: Can I also add, because one important element that we have not touched on, and maybe you are doing so in the questions, is how we teach creative computer science at school level, at primary school level. A great example of where that is done very well and reaps great rewards is Israel. We have been trying to emulate that model in England and Wales and I would be interested to know how that is being emulated in Scotland. My nieces personally do not get taught computer science in a very compelling way.
Chair: I am grateful, thank you for that. Margaret Ferrier.
Q20 Margaret Ferrier: Just quickly, Professor White, you spoke about the workplace emulation, the development studios. Apart from the well-known games companies, is there evidence of some smaller success stories coming out of Abertay University?
Professor White: Every year there are a number of success stories, some larger than others. Our graduates still do very, very well, both in terms of starting up their own companies and also in employment in the games industry. We would say that it is becoming harder and harder to have a career in the games industry in Scotland, a traditional career where you get promoted and you can pay the mortgage every month. These companies are still south of the border and graduates looking for that kind of career will still travel, not just to England but to Canada, across Europe now, to find that kind of employment.
We had some lovely stories this year. We had a team who won the Global Series Games award, a gold medal, for a game that they built with medics in St Andrew’s, which looked at identifying, mapping and stopping the spread of tuberculosis using real world data, the real epidemic data that has been collected over a number of years. It has gone down very, very well and the team have done an excellent job on that.
Q21 Chair: We only have a couple of minutes left. Chris Law has a question, but there is one question I will put to you. I went through your Centre of Excellence, which I always love doing when I am at Abertay University, and of course I have been a regular visitor here over the 14 years I have been an MP, but one of the things that struck me was all the students I spoke to were international students. This comes back to the point that you were making about the interchange of ideas and skills and personnel. One of the things that has come back again in the evidence is the way that immigration policy is impacting upon the ability to recruit and to obtain some of the best talent available. Again, very, very quickly, is there any view that any of you have about that?
Dr Twist: Yes. The reforms in the curriculum, certainly in England and Wales, and in terms of the reform in the Scottish teaching of computer science and creating polymaths, which are the future of the digital economy, are going to take a good 10 years to come through, so inspiring those young people into these creative digital economy jobs will take a long time. The current climate around immigration debates is potentially damaging to our ability to attract overseas talent and that must not happen. We must be able to continue to attract overseas talent while we are fixing our own home-grown talent pipeline. That must be protected and it is a priority if we are remain globally competitive.
Chair: I can see shaking heads all around there, so I take it that is—
Dr Twist: Nodding, I hope.
Chair: Nodding, indeed. Shaking in the right way, shall we say? Last question from Chris Law, then I am going to have to wrap it up.
Q22 Chris Law: It is a local question. This morning we have taken evidence from a range of the creative sectors within Dundee. The question was about Dundee being described as the perfect size city for co-ordination and working together. I wanted to know if that Dundee effect, let us say, was borne out and the retention of graduates here either in start-ups or going into the gaming sector was an advantage.
Professor White: Yes, and not just in the games sector. I have been involved with the City of Culture bid and the UNESCO City of Design bid and V&A discussions and things. There is that sweet spot that Dundee sits in, that it is not too big, you can get everyone that you need to get around the table at the same time and there is a real sense of sharing for the common good of the city in all of these discussions. It is true of the games sector as well; there is a very strong social part of being a games developer. They meet regularly in the pub and other venues, but what is great for us is they are very supportive. A lot of them are our graduates, but they are very supportive of the institution and they will come back and they will share their time and expertise.
Chair: Thanks. We have so many more questions, but unfortunately we have so little time because we have to be back down in London this evening for a series of votes in the House of Commons, but we are very, very grateful to you. I think we have managed to get through most of the questions that we wanted to ask. If there is anything that you felt that we missed, please again give us further evidence. We are determined that we are going to get a clear understanding of where we are and what is required in order to ensure this sector is supported. Thank you ever so much for your evidence today.
Examination of Witnesses
Witnesses: Chris van der Kuyl, Director, 4J Studios, Kenny Mitchell, Senior Research Scientist, Disney Research, Malath Abbas, Studio/Collective Founder, and Grant Alexander, Commercial Director, Beartrap Games, gave evidence.
Q23 Chair: Thank you ever so much. We only have half an hour and we want to get as much as we possibly can from you, so just quickly if we could go around the table, tell us who you are and what company or what interests you represent. I know Chris van der Kuyl, so we will start with him.
Chris van der Kuyl: Chris van der Kuyl. I am Chairman of 4J Studios, a games developer based here in Dundee and also in East Linton. I am an East Lothian. I am also, I suppose to declare an interest, Chairman of Entrepreneurial Scotland, the body that represents all of Scotland’s entrepreneurs. I also sit on the board of the Digital Catapult, so I have an interest across that as well.
Kenny Mitchell: I am Kenny Mitchell. I am a professor of computing at Edinburgh Napier University, heading the Game Technology Group and also Head of Research for Disney in the UK and I sit on the Digital Media Industry Leadership Group.
Malath Abbas: Malath Abbas. I am an independent games developer and studio founder, and most recently a founder of Game Collective in Dundee.
Grant Alexander: I am Grant Alexander, Commercial Director and co-founder of a local studio called Beartrap Games. I also sit on the Creative Skillset Council for the games sector.
Chair: Fantastic. I think we can sort of characterise you as the talent men when it comes to the computer games sector, so we are very grateful that you are here to answer a couple of questions. The reason we have come to Dundee, as you know, is that it is a world-class sector and there is something here that is obviously working and we are keen to grasp and understand that, as well the range of challenges and issues that confront the sector just now. It is these sort of things that we want to unravel from your experiences in the frontline in developing these things.
Margaret Ferrier has a couple of questions to kick this session off, so, Margaret, please.
Q24 Margaret Ferrier: As we are holding this evidence session in Dundee, one of the UK’s main hubs for the computer games industry, can you maybe tell us why you think Dundee is such a successful location for the video games company industry?
Chris van der Kuyl: If I pick it up to start with, I am born and bred in Dundee and I have been making games here since the mid-1990s, so on the back of a very early success by someone who is not represented here, David Jones, who founded DMA Design and came up with “Lemmings”, which was a global success in 1991. I think that, combined with the fact—and I have been on record as saying this before—that Dundee was the manufacturing base for the Sinclair ZX Spectrum in the early 1980s, which meant there was 100% penetration of Sinclair Spectrum per head of population, or actually about 600% penetration, to be honest, because all the people become very good at fixing the ones that were chucked in the skip in the back of a factory. As a result of that, everyone in Dundee grew up around that early phase of home computing, which also, by the way, was the catalyst to boost the UK games industry and the UK software industry out of the cluster at Cambridge, who helped the BBC, the very famous Model B that went into education. But that and the Spectrum built a whole generation of programmers who then set off on a journey, which in the case of Dundee led to about 10 years later David and his cohorts at DMA producing “Lemmings”, which then gave us this classic example in entrepreneurial culture of a peer group that you could reference next door to you who had done it. If he could drive a Ferrari down the road, why couldn’t I, because he was no different from me? I think that is very much the spirit that exists today, so success begets success. The more people we see doing it, the more people believe that they can do it too.
Margaret Ferrier: Any other comments you would like to add?
Malath Abbas: I would say likewise. I am not from Dundee. I came to Dundee about four years ago. I studied in Liverpool, I started my work in Liverpool and I came to Dundee because of the rich heritage that Chris mentioned, as well as the University of Abertay for the Dare to be Digital programme and since then I have stayed here because there is a good hub of activity that goes on.
Q25 Margaret Ferrier: I think we want to know what kind of support you get from public sector agencies, so can you tell us what level of engagement you have with Dundee City Council?
Chris van der Kuyl: I will let my colleagues in the more start-up area speak to that in a second, but as an established company, again, we dealt with all agencies as early as we could when we were starting out in the 1990s and Scottish Enterprise specifically became very important to the sector in that phase. But equally, Scottish Enterprise Tayside, which was a regional structure, led the way for all of Scotland—in fact, in many ways it led the way for the whole of the UK in terms of public sector support—but unfortunately it was completely demolished by the restructuring of Scottish Enterprise. It is kind of a team that half works out of Dundee but it does not work in any way as effectively.
Dundee City Council I think have been broadly supportive through their Economic Development Agency over the years. In recent years—and this is something we pushed quite hard as a sector—we have said quite firmly, “We do not need you to directly intervene in the development of video games and the development of the video games sector. What we need you to intervene in is the cultural environment in which we exist” because as creative and cultural businesses, the single most important factor we see to attracting and retaining talent is the environment that we live in. I would have to say Dundee, from the time it built the DCA over 10 years ago and now to the waterfront regeneration and the V&A opening in the next few years, has done an incredible job under Mike Galloway’s leadership in economic development. We are delighted that they are doing that, and more of that, please, I think is the answer from my perspective.
Grant Alexander: Yes, from the start-up perspective, I guess I have a slightly different angle, but like Chris, when we launched, immediately the first thing we did was make ourselves very aware to the local offering from Scottish Enterprise and from SDI. We are a tenant of the local council, so they provide us with affordable office space in the city centre, which has been massive for us. We have worked with SDI considerably over the last few years in getting ourselves out to America, because as a studio, we are fully aware that we are in a global marketplace and we are not particularly focused entirely on people on the doorstep.
Likewise, if we are honest, we have had difficulties with Business Gateway, which did not understand the games sector, and admittedly said it, so that is a stumbling block for a start-up sector. It is unbelievably difficult to get from one stepping stone, the Business Gateway, to the offering of Scottish Enterprise now. That is where we have had issues with them, but all in all, we work very closely with other bodies to great success.
Q26 Chair: It does seem there is a very complicated arrangement that you have for structural support right across the public sector. Is there any model that you have that would make this more efficient and would make it work better? What we have seen in the evidence, although I would not characterise it as unhappiness, is certainly concerns about Scottish Enterprise. I noticed Chris’s answer was that it seemed to work better under the old model, where it was Scottish Enterprise Tayside. We do not have time to go into this in great depth, but are there one or two things that could be done that could make all this work just that little bit better for you?
Chris van der Kuyl: In principle, the biggest problem is death by 1,000 cuts. All these things have been started and then they to try cover off too many bases and come down and down and down. Fundamentally, someone somewhere who has responsibility for this needs to pick the winner. If it is the games sector from a creative industries point of view, digital media more broadly, then everything should go into that. Right now, it is like taking a tiny sliver of butter and spreading it over everything; nobody tastes it. We need to focus. In business, we clearly make decisions every day to look after our own interests as a business. What we do is we look at the best-performing thing we have and give that everything it needs and then anything left over, we try other things. It would seem in the public sector that exactly the opposite happens. When some firm becomes successful, everybody else moans, because they are not getting what they are getting, and the thing that is the most successful ends up suffering.
From our perspective we should pursue the Israeli model, which they have followed for a long time. At one point, they had exactly the same size of budget as Scottish Enterprise in a population of equivalent size to us and 100% of it went to technology businesses, whereas we were trying to spend it on bridges, footpaths and all the other points in-between. Somebody somewhere needs to take a decision and focus is my personal view.
Q27 Margaret Ferrier: Do you feel there are other lessons that other Scottish and UK councils could learn from the way that Dundee City Council has been quite open towards the gaming industry?
Chris van der Kuyl: Please feel free to fire against me, but I will come back again on this. Yes, I think it has been a focus and it is also being, in my view, entrepreneurial and that is a very positive thing for local government, for local authorities, for civic government, the civil service to become entrepreneurial, think about taking risks, but manage them and just make decisions, see if it works; if it does, put more into it. That seems to be what is going on in Dundee right now.
To just very briefly mention some of the comments that came before, I support pretty much everything that was said. The one thing I think was not said is as an industry, we are on the cusp of our next phase of evolution. The successes are coming thick and fast now and it is time to step up the support for that across a wide variety of places.
Kenny Mitchell: I could probably add from a corporate perspective, if you are wanting to attract the likes of Disney, you need to have larger funding amounts to make worthy the financial and legal processing for these support options.
Chair: Chris Law, Dundee MP too.
Q28 Chris Law: Yes, thank you. Good afternoon. Just looking at the evidence that was given, it is clear that obviously there are major firms such as Rockstar and 4J, but there are also a lot more small companies that are going into mobile platforms for games, for example. I wanted to know, you obviously have different needs. What are these different needs and how can these different needs be ultimately balanced, if at all?
Malath Abbas: Shall I step into this? I represent a small micro-studio cell, which is what we have in Dundee. I would say I started my own studio about three years ago with the help of the Prototype Fund and I was incubated at Abertay University for a while, then we got our own space. We had a whole host of challenges, because we had the problem of Business Gateway, who did not get us, and Scottish Enterprise was the next tier up. They require a £500,000 turnover, crazy targets that we could not realistically achieve in a short spell of time.
What I have purposefully done this year is that I have started my own games collective and purposefully not got help from any government body at all. I have spoken to Creative Scotland, Scottish Enterprise and Business Gateway and I have made sure that they are aware that we do not need funding from them directly. However, when we prove our business model, we need more support structures like collectives, to have a community whereby we can attract different talents so that people like Chris could benefit from some talent worldwide coming to the city. We need a more diverse range of game developers in the city. That is how I feel. A game collective, incubator unit is the kind of way that I am trying to approach this problem.
Chris van der Kuyl: I would also follow up on that and say what is quite interesting, as some of the companies mature, like our own, what we are doing with the profits that we make and retained earnings is start to invest in the local sector. We are currently building a multi-million new office for us, but with space to house other developers, this kind of thing, the kind of things that the guys have been talking about. But indeed, we are actively investing in digital media businesses across Scotland, across the world really, but like someone said earlier, it is difficult to get investors out of the City. If you have investors in this city and they are going to look closer to home before they look anywhere else. I think that is an environment that will naturally occur and develop and we just need to make sure that interventions from Government, from other bodies, dovetail well into that and, in fact, do not ultimately end up conflicting with them. We welcome you guys coming up here today because oftentimes it seems to be decisions are taken in isolation from realities on the ground. Things move so quickly in this sector that what may seem like a sensible decision based on year-old data or two year-old data does not really make sense today.
The only other thing I would mention, Chris, based on your question, is some of those small mobile development companies, if they can think in the right way and have the right support to look at it, can become companies like Supercell, who recently have got valuations way over a billion dollars and have exited cash at that level, so they are genuinely worth it. These are the guys that make a game called “Clash of Clans” that started up in Finland, only a few years old, and they are now one of the most valuable companies in the games industry. The world has changed so much that these small or seemingly small businesses can become multibillion dollar corporations very, very quickly.
Q29 Chris Law: The impression I am getting is there needs to be an agency that moves fluidly and quickly in responding to your needs. There has been criticism in the past that public agencies are not quite listening and supporting. I would like to know who should be at the forefront of representing the Scottish games industry. Should it be Creative Scotland, the Scottish Games Network or perhaps even somebody else?
Malath Abbas: I think there needs to be a balance. I really like the idea of having a balance between Scottish Enterprise on the business side of things and Creative Scotland on the creative side of things. One thing that we must not forget is Dundee was famous for “Lemmings” and “Grand Theft Auto”. Since that time, we have not created that much original IP. We have benefited from really good businesses but no one has really created original IP in Scotland. This is another problem that we seem to forget. Chris mentioned of Supercell, a great company, small team, but these guys had millions in investment, a huge amount of support to enable that process. I think I would like to see a balanced approach from different bodies and the creative side of things is something that I favour in terms of brand new ideas and new IP.
Chris van der Kuyl: The short answer is if nobody is going to focus on it, nobody should do it. Right now, it sits somewhere in Creative Scotland in a digital portfolio. Fine, that is okay. In Scottish Enterprise, as I say, the focus that it did have has been decimated and shrunk down to a shadow of its former self. None of that represents the industry or could possibly know what is going on in the industry in totality. They could not champion the industry actively to look for trends and things to build up because they just simply do not have the resources; it is not that they are bad people at all. Either we decide that this is such a focus that we are going to get a games champion and put them into a position of strength so they are able to pull in the right agencies, come up with strategies, implement them quickly and have real teeth to do that, or we just have reactive generic agencies that we will all come knocking at if we so feel like it. But to go with the bit in the middle, where we pretend to do it, is a waste of everybody’s time and money.
Q30 Chair: Do you not think one of the difficulties is that perhaps the public sector agencies do not quite understand your sector, maybe because you are so diverse in terms of the different needs and different things that you do as you produce products and the way that you work collaboratively across different sectors? Would that be a fair characterisation of the relationship?
Chris van der Kuyl: No, I would not agree with that. The scale of this industry, Chairman, is such that “Grand Theft Auto”—and talking about your previous career—is bigger than the whole of the recorded music industry combined. One game is bigger than the revenue from that whole industry. This is the biggest entertainment industry in the world and Scotland has a serious foot in the door and we do not treat it that way. We do not think about it. We will talk about our TV industry and our film industry. Our film industry is nothing, nothing in terms of relative scale to our games industry, yet I do not think we appreciate the resource that we have, nor give it the focus that it deserves. If someone was focused in the way that I mentioned in the previous answer, of course we could understand it because that person would be expert, would have resources to focus on it, and would deliver results. It is back to my point: if we are not prepared to do that, then your answer is correct. Anyone else can only really play around the edges and cannot possibly understand it.
Q31 Kirsty Blackman: Can I ask each of you to answer this? What do you think is the most important thing that Government at any level can do to help the industry now?
Grant Alexander: From my point of view from a start-up company, I would suggest strongly that the real issue that we have is access to finance and funding and attracting investment. There are opportunities that we have had first hand of where we have attracted certain amounts of investment, we have attracted investors from overseas, in Asia, from London. We have not been able to attract them on our doorstep, which is very frustrating, but equally where we are getting access to certain funds, it is never quite enough as a small studio. I think TIGA proposed a creative content fund. Things like that would really, really help us with the development of the first stage of that cycle.
Malath Abbas: I would argue that there is quite a bit of funding if you go about your way. There is plenty of funding out there, not necessarily within Scotland but if you get out there, there is some funding. However, if we want Dundee or Scotland to have a good enough industry, we need support structures. A lot of the skills and the know-how that public sector individuals might not have are within the sector. If we had mentorship programmes, if we incentivise the industry itself to look after itself, I think that would be wonderful.
Kenny Mitchell: I am five years into establishing Disney Research in the UK and we have not been able to get Scottish support—we have been able to get European and UK support—and that is partly because the mechanisms and the scale of support is not sufficient for a corporate the size of Disney. I would repeat the earlier point that the scale is missing for attracting large multinationals.
Chris van der Kuyl: To answer your point specifically, one thing is required: there has to be a talent strategy but it must be focused. Jo Twist was very erudite in explaining the two areas. It is grassroots, fundamentally how you teach polymath skills of computing and digital arts and creativity, so you have to completely structure a curriculum and a focus. Scotland is in a very good place to adapt what it already has to deliver on that if it focuses on it combined with enlightened immigration policy. I think that immigration policy is twofold. First, it is about the kind of talent that Pete saw when he walked round, who have come here to study and effectively are fairly heavily leant on to get out of the country as soon as they have graduated; disastrous, because they are already prebuilt to enjoy Scotland and be part of it because they have spent several years here. Secondly, we must attract the world’s best, by saying that Scotland wants the world’s best, however that is defined, even early career, because in our immigration policy at the moment we are very well structured to invite people in who have already proven themselves. The fact is they are settled, they are probably not going anywhere. We need to attract talent in its very early career. It does not quite fit the current Home Office boxes, but it is exactly what we need in our companies. One thing they could do is deal with that talent strategy and they are just not doing it.
Q32 Chair: A last question to all of you again. The nature of this industry has changed quite dramatically in the few short years it has been in existence. Where do you see this all going now and will Scotland remain at the top table or just about at the top table? Where are we going to go from here?
Kenny Mitchell: I think the UK and Scotland in particular are uniquely positioned to draw on its talent base that has proven itself over the last two decades or more. From my own experience of applying game technology skills to all digital media, we have been able to double our size year on year for the past five years. I see that increasing if it is emulated by other companies in Scotland.
Malath Abbas: I think cross-sector collaboration is key. I am fearful, in fact, looking at Dundee or Scotland as a whole because I think the games industry is moving so fast all the time. I have had the honour of travelling to the States and Europe over the past two years and I have seen some of the hubs they have over there and some of the collectors and some of the medium-size studios. Quite frankly, they are ahead of us. They have a lot of investment and a lot of support structures. I am positive but I think a lot of work needs to go in.
Grant Alexander: Yes, I will second what Malath has just said there. It is, I would say, a relatively scary time for Scotland. I, again, had the privileged opportunity of being around Silicon Valley and seeing how it is done over there and that is something I would recommend to absolutely everybody looking at the sector. My biggest concern is the amount of turnover of the smaller micro studios. I have said publicly recently that we should be focused on trying to help grow these studios to a very sustainable and profitable size and creating content that puts Scotland back on the map. There is the concern that we are losing that. I do not think it has gone too far yet, but we need to do something fairly quickly to help retain Scotland’s position.
Chris van der Kuyl: I think when one looks back on this time, we live in a time where the pace of change has never been faster than it is today and no more so than in our sector. It will never be this slow again. The increased rate of change in things like virtual reality and augmented reality, which is just around the corner now, means that the growth opportunity for this industry is not 5% or 10% year on year, it is hundreds of per cent per year. Especially for a country like Scotland, who really have nibbled around the edges and done very well, the opportunity is huge. If I were to be asked to compare it to the opportunity in North Sea oil, I would say it will make North Sea oil look like a drop in the ocean. This is the ocean we are playing for this time.
From our perspective as an industry, it is often interesting because people say, “That is it, the games industry, that is where it is now and we are trying to hold it in that place”. We are just trying to hold a tiger by the tail. It really is a time when Scotland has all the raw materials it needs in terms of talent. It is not just limited to our sector. With creative industries talent and technology talent, we are seeing things like FanDuel and Skyscanner both dominating in the sector globally. FanDuel specifically has a strong investment from the Scottish Investment Bank. Scotland is going to return huge amounts of wealth through the success of that business, and I think we can repeat that again and again and again. If there was ever a time to get serious about this industry, now is it. I think my colleagues have said it: if we let this opportunity pass by others will take it and Scotland will languish. But we should not and I think we are brilliantly positioned to be successful.
Chair: Great. Well, on that relatively hopeful note, I think we are going to have to conclude this session. We are all very, very grateful for you coming along and spending that time with us and answering our questions. Again, like the other panel, if there is anything in particular you have heard, perhaps from your own panel or from others in the sector, please give us this information, any views about the development of the sector, because I think there are some sparky ideas we have coming forward there. If there are things that we could look at and suggest or recommend to bring forward, we would be very interested to hear from you. Thank you all very much for coming along this afternoon.
Examination of Witnesses
Witnesses: Ken MacQuarrie, Director, BBC Scotland, Ian MacKenzie, Nations and Regions Manager, Channel 4, Bobby Hain, Director of Channels, STV, and Alan Clements, Director of Content, STV, gave evidence.
Q33 Chair: Good afternoon, gentlemen. Welcome. We do not have much time because we have to be back down at the House of Commons for votes this afternoon and we all have flights booked to London, so we are going to try to be as quick as possible. Again, we would appreciate briefish responses; you will get brief questions from us so we can get through as much as possible. I think we have to start by if you could just tell us who you are and what you represent and if there is anything pressing that you need to tell us under the pressing category. Just tell us who you are and then we will come into questions. Ken, we will start with you.
Ken MacQuarrie: Ken MacQuarrie, Director of BBC Scotland. Thank you very much for the opportunity to discuss the BBC’s role relative to the creative industries. It is an important contributor to Scotland in terms of both the production that we make for Scotland itself, the network and also as a broadcaster across TV, radio and online.
Ian MacKenzie: Good afternoon, Ian MacKenzie. I am Nations and Regions Manager at Channel 4. Thank you very much to the Committee also to give us the opportunity to submit what we hope is a better understanding of the role that Channel 4 plays in Scotland and hopefully a more constructive role working particularly with public sector partners.
Bobby Hain: Good afternoon, Bobby Hain, Director of Channels at STV, looking after our output side in terms of our Channel 3 licence commitments, our new city services that are popping up around the country, and our increasing digital portfolio of services alongside our production business, which is represented by Alan here. We are very grateful for the opportunity to give evidence to the Committee.
Alan Clements: Good afternoon, Alan Clements, Director of Content. As Bobby says, I run the productions business. We make a little for our own channels but over 90% of our material is made for network channels across the UK.
Q34 Chair: Thank you ever so much for being concise. I think we are all pretty familiar with all of you gentlemen. You know what we are looking at. It is the creative industries in Scotland. What we want to try to understand is just the size of the footprint we have here in Scotland and how we are in a position to best support, develop and grow that sector. In the case of most of the people we will be looking at, responsibilities will be devolved. With broadcasting it is exclusively reserved and it is unusual that all the representative bodies we are going to talk to exist outside that creative architecture as being a devolved sector. How do you see that in terms of the relationship with the rest of the creative industry sector? Does that place you at a particular advantage, disadvantage? Does it make any difference? Is there something about being reserved to the United Kingdom that might be helpful or gets in the way of how you relate to the rest of the creative industry sector? We will start with you, Bobby, and then we will move round.
Bobby Hain: I think that obviously our licence commitments are as part of what is a UK-wide operation in terms of Channel 3. Channel 3 itself is a series of 15 licences, which come together to form a competitive service and have done since the 1950s. In that sense, as a broadcaster, being part of a UK system has its complications in and of the licensees because it has over the years been complicated to connect those licences together so they remain a competitive force, but I think we still are very much a competitive force as the largest commercial operator. In terms of our output and our regulation as part of a UK broadcasting landscape, overseen by Ofcom, that is relatively straightforward. I think the relationships that we form and that we continue to develop with our partners in Scotland, be they in a devolved or a reserved manner—some aspects of what we do obviously is reserved, as you say; some aspects are devolved—there are no great barriers in moving from one to the other. Wearing a Creative Skillset hat, as the chair of the advisory board here, I think there does need to be close attention as to how the skills agenda is developed both at UK and Scottish Government level in tandem to provide a solution, which could be in danger of falling between the gaps.
Ken MacQuarrie: Working within Scotland, if you like, with broadcasting reserved, I have found that I have been able to work with distinct needs in Scotland as far as both skills and the needs of the marketplace as far as the industry is concerned. For example, we have an MOU with the Royal Conservatoire, which has allowed the students to work very closely with our BBC Scotland Symphony Orchestra. We have an MOU with Scottish Television but also with bodies such as Creative Scotland. I have found that I have had the autonomy to work and make these relationships. I was a former chair of Creative Skillset and in terms of the emphasis of the need for distinct solutions for Scotland, I have not found a barrier to that in the current setup, Chairman.
Ian MacKenzie: As most of you will hopefully be aware, Channel 4 is a pan-UK broadcaster with very specific targets around commissioning from the nations and regions of the UK and, in fact, fairly recently committed to increasing our spend in the devolved nations over the coming years to a sustainable 9% by 2020. I would echo a couple of points, especially about skills. What I have seen is Channel 4 have been able to work quite successfully in the past with Creative Scotland, specifically around how you build and retain specific production talent here in Scotland. It is not something we are doing currently and I think the advantage that you will see in that across the UK is that that opportunity for production skills to be retained in Scotland is felt in network productions that are done for the UK network via Channel 4.
Q35 Chair: Just before we come to you, Alan, STV produces nearly all of its own original content. What role do you, therefore, see STV having in terms of supporting the Scottish production sector?
Alan Clements: Yes, thank you, Chairman. Do you want me to deal with that point first or the London point?
Chair: I think deal with them both. That would be helpful.
Alan Clements: Yes. In terms of STV’s discretionary spend, which is obviously slightly odd since Bobby has the chequebook on my right-hand side, I would say it is reasonably modest. Outside of news and current affairs there is a reasonably modest amount of production. We do a lot of it but, as I say, fundamentally it is quite a small part of our business. We take the view, or I certainly personally take the view, the more production we have in Scotland, it is good for everybody. Whatever the size of independent production company or whether it is the BBC doing it in-house, the more skills, the more production we have in Scotland, it is good for everybody. Sometimes those are productions that are culturally relevant to Scotland, but often they are I guess what you would call industrial productions where the show itself is of limited relevance to Scotland but is all made in Scotland for a network audience. I think that is brilliant. We ourselves make “Antiques Road Trip” for BBC One, a highly successful show. There is nothing inherently or intrinsically Scottish about it but it supports a lot of jobs in Glasgow. IWC, my former company, makes “Location, Location, Location” for Channel 4. Again, it is not a particularly Scottish show but it supports a lot of jobs in Scotland and it creates a lot of network production experience.
Chair: Thank you for that. We have a couple of questions about the out of London production process and we have Stephen Hepburn to ask them.
Q36 Mr Hepburn: What determines how much of your out of London spending goes to productions in Scotland and what would encourage you to commission more productions from Scottish-based companies?
Ken MacQuarrie: As far as the BBC is concerned, we set a target back in 2007 of reaching 8.6% of the overall UK network television spend to be spent in Scotland. The relationship between the spend and the population was broadly the measure that we took in that regard. That has been achieved through a programme called network strategy review, which is a bit of internal BBC jargon but that was what we were working with. To the extent that £200 million of annual spend was delivered from BBC Scotland and you include the network and the local TV spend, some £78 million of network TV spend—which was 9.2% of the eligible spend—is the current figure that we are working to at the moment.
Ian MacKenzie: From a Channel 4 perspective, I alluded earlier to the fact that we just recently renewed our licence with Ofcom, which committed us to building on our existing commitment to nations’ spend specifically. That is building towards what we very much see as a basement spend of 9% by 2020. Now, it is quite important that we feel that that is building on a sustainable basis working with production companies based in Scotland but also in other nations across the United Kingdom in order to ensure that when we are backing production companies, we are backing them on a continual basis, not on a basis that means we have bumps in the road where we might see a spend one year but then potentially a drop the year after. That is something where Scotland already represents two-thirds of our nation’s spend and our spend is up year on year by 20%. Scotland is in a very good position currently but is always open to increasing competition from counterparts in Northern Ireland and in Wales.
Bobby Hain: If I can add the position on Channel 3, STV holds two of the 15 licences in the Channel 3 system and at a network level there is no quota for nations’ production by nation in that service. ITV plc, which is now responsible for commissioning the schedule for the entire network, has a requirement to produce at least 35% of their commissioned material out of London but there is nothing about individual nations. I think I am right in saying there was nothing produced by ITV or commissioned from ITV in the latest year for which figures are available and that is partly because there is no quota for doing so. In the case of STV’s own regional production, our licence commitment is that nearly 100% of what we produce has to be made in region, so either in the central belt or the north region, which are our two licence areas.
Q37 Mr Hepburn: If I can ask our friends from the STV a couple of questions, what proportion of STV original content is made in Scotland?
Bobby Hain: Nearly 100%. I think probably 100%, if not very close. We do acquire some content for our city channels, but as a Channel 3 broadcaster we create all of the content that we use ourselves that is commissioned. That is largely news and current affairs but there is a licence obligation for an hour and a half of non-news material, which is produced every week, and all of that is produced in Scotland.
Q38 Mr Hepburn: Does this count towards the Channel 3 out of London quotas?
Bobby Hain: It does not count towards the network quotas. Each licence has within its licence area a specific obligation that it must fulfil itself in region and that is what we do for both our licences. But there are network quotas that together the licences must reach and the two are mutually exclusive. The material we play ourselves counts to our regional quota; the material that is played by everybody counts towards the network quotas.
Q39 Chair: Is it not the case that out of London quotas are applied only to production spend, it does not cover things like HR? What, therefore, could you do to make sure that these sort of skills are going to be covered in terms of how you are looking at the out of London activities?
Bobby Hain: There is quite a detailed and specific set of criteria for out of London spend, which apply to the budget: whether production companies have a substantial base; how much of the budget is spent in the region. I think that there is a degree of protection as to where money is spent and how that is reflected in the commissioning of programmes. In terms of the Channel 3 definition, which is the Ofcom definition, I do think there is a fairly particular and detailed spec for what is called out of London production.
Q40 Chair: Nearly all of it applies to production. Forget about HR, what about training? Ken, for example, what do you do when it comes to beyond just production issues, like HR, training and the other range of things that are activities that are included in the spend of the broadcasters? I understand production, yes, but what of all the other activities that go on for the TV companies?
Ken MacQuarrie: We have certainly concentrated on production spend, Chairman. In terms of training, we have an extensive training programme within BBC Scotland and we also participate with training across the BBC. The BBC Academy will be moving to Birmingham and based there. Our approach to training has been a needs-based approach to try to analyse what the industry needs and then to try to fill these gaps but to also make sure that we are equipping young programme makers coming through with the digital skills that they require both to work in today’s marketplace and to equip them for the future. That has been pretty successful. We have worked with Creative Skillset on an executive producer programme for drama, which we identified there was a need for more executive producers in drama. It is very much through a needs-based approach and all of the programmes that we run we ensure are available to the freelance community as well and that when we have significant training opportunities that is shared across the wider industry, Chairman.
Q41 Mr Chope: This whole concept of quotas seems to be introducing a rather arbitrary criterion. Are you saying that without the quotas you would not be spending so much on production in Scotland and, if so, why not? Surely it would be better for you to be able to choose the best locations for any particular product—we have heard about “Antiques Roadshow” and “Location, Location, Location”—without the need for the regulator to interfere.
Ian MacKenzie: Perhaps from a Channel 4 perspective, I think what we can at least point to is the fact that in our engagement with Ofcom we stress the importance of it being a nations quota across Scotland, Wales and Northern Ireland to retain that competitive nature to the best possible ideas coming in the door. It is fair to say that one of the biggest challenges of having an editorial office based in Scotland is unfortunately you have to turn away a lot of great ideas that may be better suited, for example, to the opt-out audience, say, for BBC. It does not make that a bad idea but it may not work for the Channel 4 network. Absolutely, Channel 4, within the quotas, is still always looking for the best possible quality ideas, but the reason that we work so closely with the nations and regions-based companies is while quotas exist we want to help them attain and achieve and be judged among the country’s very best suppliers regardless of the geographical location.
Alan Clements: Could I just add to that, please, Mr Chairman? The great benefit of the quotas at Channel 4 and BBC has been it has concentrated the minds of the commissioners. Of course, you win work outside of the quotas. We are doing a big series for Sky just now, which has no quota at all. But if you follow the money, that tends to get the commissions. If you think about it, the vast majority of commissioners are based in a very small area of London and share often very similar life experiences and commission a lot off people they know, so breaking into that from a base 400 miles away is quite difficult and often time consuming and expensive.
Q42 Chair: One of the main issues, I suppose, about the quota is what is referred to as the lift and shift, where programmes are just somehow transported to Scotland. We have the example of “Question Time”, which has been shown as an example of this lift and shift phenomenon when it comes to quotas. Do you think that that is a fair criticism when it comes to the way that you have been trying to look at how you deal with some of the quota issues?
Ken MacQuarrie: I think, Chairman, that there has been a lot of criticism of the lift and shift philosophy. What it did from 2007 was to produce a fast track to moving spend, skills and production into Scotland. What it does not deliver is representation or portrayal of the audience in Scotland, but it is important to say it was not designed to do so. It was designed for an equitable sharing, if you like, of the BBC’s production capacity across—
Q43 Chair: Was it not just a convenient way to deal with some of these imposed quotas that you were given that you did not particularly like?
Ken MacQuarrie: I do not believe so, Chairman. If you take the “Question Time” example, we have Mentorn Scotland with a base in Scotland, which is a genuine base, with young Scots getting the opportunity to work there and also to make other programming, to create the critical mass to do that. This was about critical mass, critical mass for the skill base but also for the production base. It is not perfect and in some cases there may be lifts or shifts, if you like, that should not be within the spirit of what we are trying to achieve, but it is a genuine attempt to disperse the creative power of the BBC.
What I would say about the forcing mechanism, if you like, where we have targets is that since 2007 I think the percentages that were referred to earlier are proof that it has changed the landscape as far as production is concerned.
Q44 Chair: I am grateful that you do recognise the lift and shift phenomena are a feature of how some of these quotas are being dealt with. Are there any plans to try to address that totally and ensure that if we are talking about production quotas it is indigenous Scottish productions, that it is made and delivered in Scotland and it is going to be given to the network on that basis, not just simply moving the making of a programme to Scotland? Are you making progress about trying to deal with this and resolve it given you do recognise that there is such an issue?
Ken MacQuarrie: Over the last year we worked with 60 production companies across radio, TV and online in Scotland, Chairman, with a diversity about and from them. As far as the network strategy review is concerned, as part of the whole charter process we would wish to keep the targets that we have for the nations to deliver against them but also to be open to taking views and evidence from the industry, from the audience and stakeholders as to how we shape it in the future.
Q45 Chair: Another thing that is probably related to this and maybe is slightly different is something that has come through in the evidence from the producers about production companies, and it is the lack of access to the commissioners. In order to ensure that the regional quotas result in supporting regional and national production companies, is there a case that we need to see more commissioners outside of London?
Ken MacQuarrie: In Pacific Quay, we have had, for example, Jo Street, who is now the daytime commissioner. There is no doubt that it helped access for companies based in Scotland having a commissioner based in Pacific Quay. Similarly, in the areas of entertainment we had a similar arrangement there. On the production, we have the controller of factual production for the UK, Natalie Humphreys, also based in Pacific Quay. That begins to give you a critical mass, Chairman, where there is a better access without having to go to London.
Q46 Chair: What does that account for in terms of proportion to the total commissioning available and total personal commissioners? What percentage would that represent?
Ken MacQuarrie: In terms of the number of commissioners?
Chair: Yes.
Ken MacQuarrie: I could not give you a figure to that, Chairman, but we would be happy to come back to the Committee with that in a written note.
Chair: We have a couple of questions from Kirsty Blackman on content.
Q47 Kirsty Blackman: Specifically for BBC Scotland, in relation to the annual report, it asked people questions about how the BBC represents people’s lives in news and current affairs. It was noted in the report that 61% of those in Northern Ireland and 61% of those in England feel the BBC is good at that, but only 55% in Wales and only 48% in Scotland. Does your research show the reason for the lower level of satisfaction in Scotland with that specifically and what is the BBC doing to improve that?
Ken MacQuarrie: In terms of the satisfaction of the audience, obviously we are driven by serving our audience and clearly a figure that is less than the other nations is not something that we are comfortable with. We are in the process at the moment of understanding exactly what is driving that difference between ourselves and the other nations. It is a key objective for us to meet the needs of the audience with a news and current affairs service that is relevant to their lives but also appreciated by the audience. That is the work that is absolutely core and part of the charter, I think as the Director General set out in the proposals that he put before the DCMS in the BBC’s document.
Q48 Kirsty Blackman: Just another couple of questions on that, if you do not mind, Chair. The other thing that the evidence said was that 12% of BBC television and radio content consumed by viewers and listeners in Scotland was of dedicated Scottish services. Was that the amount that was served to Scottish people or was that the amount that was actually consumed? If the amount that was consumed was more than the amount that was given to us, are Scottish people specifically seeking out Scottish content?
Ken MacQuarrie: When we offer specifically Scottish content to the audience and in the range of programmes that we offer, programmes that are specific to Scotland—often I have to say these programmes will also be taken by the network on BBC Four or BBC Two—we find that the audience are appreciative but also consume that content in large numbers as a share of the audience.
Q49 Kirsty Blackman: I have been to visit BBC in Aberdeen and learned about some of the productions that they are making. Sorry, this is still for BBC; apologies to the rest of you. They are obviously making some really great and well-received programmes locally in Aberdeen. In terms of improving the percentage of those that feel that they are well represented in Scottish programming in terms of news and current affairs, would it help Scottish people and would they have more satisfaction if more of the news and current affairs content was made in Scotland?
Ken MacQuarrie: I am particularly proud of what we have achieved in Aberdeen. You know how busy Aberdeen is at the moment and that follows an investment that we made in Creative Leadership in Aberdeen, but we also have a superb newsroom there under the leadership of Sandy Bremner. In answer to your question, it is the area that we are consulting with the audience and looking at the submissions that have come in to the BBC Trust and to the DCMS in trying to answer that question.
Q50 Kirsty Blackman: Sorry, one more, Chair. Very lastly then, in terms of Scottish people and what we can do as the Scottish Affairs Committee and as MPs, would you be keen for us to encourage our constituents to respond to your consultation so that you are taking views from them and listening to them?
Ken MacQuarrie: I would imagine in your roles as democratic representatives you would encourage the participation of all your constituents in the democratic structures of the country, yes.
Q51 Chair: Ken, are you profoundly disappointed in the findings of your own survey that shows that just less than half of the Scottish people are unhappy about the way that the BBC is presenting Scottish life? That should really be having all sorts of alarm bells ringing, surely.
Ken MacQuarrie: It was within the ambit of news and current affairs, Chairman.
Chair: Yes.
Ken MacQuarrie: Yes. I am absolutely concerned by that figure. What I am determined is to understand the figure and change it and to produce a programme offer that meets the needs of the audience in Scotland. I take a very positive attitude towards addressing that audience need and making sure we do it well.
Q52 Chair: What are you doing then? What are you doing to address this? Presumably, you are unhappy about this and you are looking to put some sort of programme together to ensure this is addressed. What are you doing?
Ken MacQuarrie: At the moment, we are in the midst of, as I said, the charter process, Chairman, and we are looking at the audience data and constructing and, on the basis of that, understanding it and seeing what the needs of the audience are within the specific genre of news and current affairs.
Chair: I do not want to forget about the rest of you guys, so Maggie Throup has a question for you.
Q53 Maggie Throup: I am interested to hear what Channel 4 and STV do to provide for the Scottish viewer.
Ian MacKenzie: Speaking on behalf of Channel 4, it is written into Channel 4’s remit to be alternative, to be challenging, but also to represent life across the UK. Perhaps touching on some of our own research, we have had a very good response, for example, to our news and current affairs output and how well that has represented the lives of people in Scotland, specifically I suppose around such key events as last year’s referendum but also more recently the general election campaign and even more recently than that with some of my colleagues who were at the Scottish National Party’s conference in Aberdeen just last week.
More broadly, I think what we like to see within our content is that you will often find that within long-running, successful shows you will see a broad range of portrayal from across the UK. I referenced earlier “Location, Location, Location”, a hugely successful show. Not every property transaction takes place in Scotland, sadly, and so there is a need to try to find all forms of diversity from across the UK and reflect that within the programme. What you tend to find is in specific genre, if you take the example of documentary, it is not fair for me to go into too much detail at this time but there are two major documentary series that are looking very specifically at Scottish institutions, if you like, in 2016. Now, the reason for that is the uniqueness of Scottish institutions in certain other areas such as law. An example that I might refer to from history was a very well thought of and multi-award winning documentary, “The Murder Trial”, again a unique piece of access based around the fact that you could only make that programme in Scotland. You would not have been able to make that programme in England and Wales because of the rules around camera access to courtrooms. For us, it is about reflecting all of life across the UK and we encourage Scottish producers, but indeed producers from all across the country, to find unique stories that have a relevance to a UK audience.
Bobby Hain: In terms of STV’s approach, we have a very different one from other broadcasters. Particularly I think what marks us out is a very local and localised approach in recent years and that has been very successful for us. In terms of our news offering, for example, we produce different versions of the news programme at 6 o’clock, which come from Aberdeen, from Dundee, from Edinburgh, from Glasgow, and that has helped grow our news share and received very high levels of satisfaction with the news product as measured by Ofcom in their most recent communications and market report and the data that come through.
We have also put our current affairs resources behind “Scotland Tonight”, which has become the preeminent Scottish current affairs programme in the evenings at 10.30 where we have established a slot and a regularity of covering the day’s business, not just in politics but also in the wider world of Scottish affairs and taking it beyond Scotland where there are international stories of interest and of note that we will cover. Adding to that localness in news and current affairs, I think the services that we have now started providing in Glasgow and Edinburgh around our city services really complement the local nature of STV’s output. For example, we had a very successful run of three weeks live from the Edinburgh Festival, which was an hour’s programme every night covering what was going on at the festival, which is the kind of coverage that we have not found space on our own schedule for but is highly complementary. We have had flagship programming, the first live court proceedings to be televised in the UK recently from the Court of Session seen on STV Glasgow and STV Edinburgh. Alongside news and current affairs, there is a strand where we do find space in our mainstream schedule for non-news programming. I am thinking of programmes like—
Chair: I am conscious we only have about 17 minutes left. If we could have more concise answers it would be—
Bobby Hain: Let me send a note, Chair. I can follow up with the details of further programming by note.
Chair: Thank you.
Maggie Throup: Obviously, it is not just news and current affairs, which is really the easy aspect to cover. It is everything else, so I would be interested for a note.
Bobby Hain: I will be very happy to follow up, yes.
Chair: Thank you. We would just like to get through as much as we possibly can.
Q54 Chris Law: I would like to go back to news and current affairs. This 48%, quite frankly, that is less than half of the population have trust in news and current affairs programming. I wanted to touch specifically on one of the greatest events that happened in Scotland in the last few years, which, of course, was the referendum. Professor John Robertson, who you will probably be familiar with, is a media politics professor at the University of West Scotland and he produced a report called “Fairness in the First Year?” where he looked at a year-long content analysis between September 2012 and 2013 and over 700 hours of footage. What he came to conclude was that there was a ratio of 2:1 in favour of a No argument. In fact, it cited expert advice against independence to be more common, a tendency for a host to begin and end with statements favouring the No Campaign, and a very strong pattern of associating the Yes Campaign arguments and evidence with the personal wishes of the previous First Minister, Alex Salmond. Taken together, his overall conclusion was that the coverage was more favourable for the No Campaign. My question is: have you taken a detailed look at this analysis and is that a fair representation of how either the BBC or, indeed, the STV covered the referendum?
Ken MacQuarrie: We have taken a detailed look at the analysis and also at our output over the referendum period, and I think you and I have had some discussion about that previously in this Committee. Professor Robertson also gave evidence to the Education and Culture Committee of the Scottish Parliament and we have engaged with Professor Robertson’s research. We have some criticisms of, if you like, some of the methodology that Professor Robertson used, but I think the important thing is that we are going to listen and do listen very carefully to our audience in terms of any aspect of dissatisfaction.
We set up a 24-hour hotline between each of the campaigns in the referendum and, broadly, we had 10 complaints from one campaign and 11 from the other. They were almost equal. We took these very seriously in terms of our referendum coverage and the Trust also examined when there were complaints that were taken through them, one of which was found to have validity. We produced well over 200 hours of output outside news and current affairs for the referendum. It was a colossal undertaking and across that output we had some huge, innovative pieces of work where we had Generation 2014, young people voting for the first time and things like “The Big, Big Debate” at the Hydro where we had 7,500 young people taking part. In all of that we tried to look at the referendum coverage in the round, but to listen also carefully not only to the audience who had approached us in a traditional way but examine the social media comment as well.
Q55 Chris Law: I also want to add in Professor John Robertson’s report he describes how broadcasts began too often with bad news for Yes and featured heavy repetition of such messages over several hours, “In a manner conducive to unconscious absorption of warnings”. Would you agree with this statement?
Ken MacQuarrie: As far as unconscious bias is concerned, in terms of our providing a broad balance of an argument and particularly on a binary issue such as the referendum, we were absolutely conscious of the need in terms of our editorial standards to produce the broad balance of the argument. We addressed our teams on a weekly and monthly basis in this regard, so I do not accept the finding as you put it to me from Professor Robertson.
Q56 Chris Law: In March 2014, Professor John Robertson was giving evidence, as you know, to the Scottish Parliament’s Education and Culture Committee on broadcasting. The BBC remained silent, despite being present at the committee, when attempts by callers and audience members to raise this study were made. Why was that?
Ken MacQuarrie: It is not my recollection. We gave evidence immediately following Professor Robertson to that committee so I do not think we remained silent on it.
Chair: I think Christopher Chope has a question.
Q57 Mr Chope: Just a follow-up on that: how are you going to prevent the same thing from happening in the EU referendum where national opinion polls suggest it is a 50:50 split across the whole of the United Kingdom? How are you going to prevent that being biased in Scotland?
Ken MacQuarrie: First of all, what I am saying is that we were not biased in terms of the referendum, which is not to say that we did not make mistakes and that we got some of the output wrong. We have also been taking feedback from different stakeholders as to what they thought about our referendum coverage. I think the key thing is for the BBC to take all of that on board, all of the comments we have had about the Scottish referendum and ensure that that information is shared across the whole of the BBC. I am confident that we both have the communications and the structures to do that.
Chair: I think we will move on from this just now. Jim Cunningham has a question.
Q58 Mr Cunningham: The Scottish Parliament’s Economy, Energy and Tourism Committee’s report on the economic impact of the film, TV and video games industries found there was a lack of clear leadership for the TV industries from any public agency. Is that a problem that you are familiar with and, equally, are there different approaches in different countries and different regions?
Alan Clements: The answer is yes. It is a problem that is very familiar. I was privileged to give evidence to that committee and I think the broader context is that Scotland had a chance to be the second centre for TV production in the UK after London. It is now maybe fourth after Bristol/Cardiff as one hub and Salford/Manchester as another, and Belfast is coming up on the rails very fast. I think the problem is there is a split between the two agencies, Scottish Enterprise and Creative Scotland. Creative Scotland is not at all interested, by and large, in the TV industries and Scottish Enterprise does not see it as a significant sector. Because it is no one’s responsibility, no one takes responsibility for it at Government level. If you compare that to, say, Northern Ireland Screen, which is absolutely dedicated to bringing productions to Northern Ireland, supporting them and building an infrastructure that will bring international productions and co-productions to Northern Ireland, I would say that leadership is, yes, very, very lacking.
Mr Cunningham: Anybody else?
Ian MacKenzie: Yes, I would echo some of those points. I would point to the fact that we have worked in tandem very successfully with Creative Scotland in the past. One such example was a very successful talent shadowing scheme specifically focused on retaining a talented director or a specific production in Scotland. That has not been something Creative Scotland have been keen to follow up on and from a personal perspective engaging on behalf of Channel 4 with Creative Scotland it gives you some cause for concern that television is captured within a film and media department. Television is a hugely important part of the creative industries in Scotland. It generates a huge amount of revenue and, indeed, employs a lot of people. I think it is something that Channel 4 would welcome more focus on.
Chair: Christopher Chope has a question on the charter if you still want to ask it.
Q59 Mr Chope: Yes, it is just a quick one on the charter. We have established that there is quite a lot of dissatisfaction within Scotland about aspects of current affairs coverage, particularly on the part of the BBC. Would people on the panel think it would be a better idea to allow individuals in Scotland to decide for themselves whether or not they wanted to have a television tax or whether they wanted their public service broadcasting to be funded in a different way?
Ken MacQuarrie: Every 10 years the democratic bodies, on this occasion the Scottish Government and Parliament, as a formal role through the charter process are not—I think it is for the democratic bodies to decide what the arrangements are rather than the executive of the BBC.
Q60 Chair: Thank you for that. Perhaps one of the ways that we could look to resolve this is what was suggested by the First Minister when she spoke at the television conference and also picked up by the Culture Secretary. That was to have a distinct BBC practically operating on its own within the UK BBC family. Do you see any benefits of this? I think the First Minister talked to us about empowering BBC Scotland as never before. Is that something you would agree with?
Ken MacQuarrie: On behalf of the audience in Scotland—and it is my job to serve the audience in Scotland as best I can within the BBC family—I would welcome the maximum resource to do that but so would every other divisional director across the BBC. In terms of the structures and, if you like, the governance of the BBC, I think that is a matter for the bodies who are involved in discussing the charter to take on board rather than for the executive to comment on, Chairman.
Q61 Chris Law: I just want to ask, following on from Pete’s question, would any of you on the panel agree that perhaps now is the time to devolve broadcasting to Scotland rather than leave it as a reserved matter for the UK?
Ian MacKenzie: I can only speak on behalf of my colleagues who made their submission to the Smith Commission in direct response to that question. Channel 4’s feeling is that, broadly speaking, the structure as it currently is works as we are a pan-UK broadcaster. However, we do welcome the Scottish Government’s emphasis on the creative industries as a real growth centre and opportunity. Frankly, anything that is going to strengthen the independent production sector in Scotland can only benefit Channel 4.
Q62 Chair: Do none of you think there is something not quite working with the way that broadcasting in the main is reserved? We are way below on production targets. We have a creative, inventive, resourceful television sector, which does not seem to punch its weight. We seem to be losing out, as we have heard now, to Bristol/Cardiff; we are behind Salford. We are falling behind quite dramatically and drastically here. Is now not the time to start to think about a real creative solution to all this and see if we could perhaps manage that talent probably better here in Scotland?
Ian MacKenzie: Very quickly, just referring back to Alan’s comment—and I think it is an important one specifically because my role covers across all the nations and regions, if you like, across the UK—Belfast is an interesting case in point. It is a huge success story in terms of inward investment and many people refer to this nebulous thing of the “Game of Thrones” effect. I think the really important thing for us is we spend significantly more in Scotland on origination of content than we do in Northern Ireland, so however successful that story has been, a balance is really important. I would point to the fact that—if you want to call it—the ecology of production in Scotland is arguably stronger than it is in Manchester/Salford as well. We have a greater diversity of companies supplying to Channel 4 from Scotland than we do from that sector and, indeed, from Belfast and from Cardiff.
Chair: Anybody else want to pick that up?
Alan Clements: Yes. Referring back to the question of our channel, I guess I had the pleasure of producing the session at which the First Minister spoke at the television festival, a very interesting speech. My worry about a channel is it is an analogue answer for a digital age. If you took the money used to set up a channel—and people from the Scottish Broadcasting Commission talked about circa £75 million—and you invested that in Scottish-based IP, either as productions or co-productions, I think that would have a much more beneficial effect, as Ian suggests, on the production sector in Scotland than the creation of a channel that might be buried quite high up the EPG.
Chair: Margaret Ferrier, you had a question or has that been dealt with?
Margaret Ferrier: No, I think that has been dealt with.
Chair: Gentlemen, we have come to the end of the session. We have to get down to London, but we thank you greatly for coming along this afternoon and answering these questions. We are probably going to come back to particularly you, Ken, just about some of the issues to do with the BBC as we are looking at the charter renewal and as we go through the renewal inquiry. If there is anything else that you have observed or feel that you have not been able to contribute to these proceedings, please give us further information in the way of written evidence. We would very much appreciate that. Thank you ever so much for coming along this afternoon. It has been really good to have you. Thank you.
Oral evidence: Creative Industries in Scotland HC 332