The UK’s Autumn Budget 2024 promulgated government’s fiscal policies and plans aimed at establishing economic foundations for its mission of ‘national renewal’ over the next five years. Many suggestions and proposals have been made in recent months for government’s consideration, understandably focusing on Treasury income and expenditure, including the future of the nation’s arts and culture. However, one proposal has been robustly advanced that would not require government expenditure, but which would significantly benefit all UK creators, including visual artists, only requiring legislation: the creation of a national Smart Fund.
Smart Fund schemes are not new, variations having been enacted in many countries overseas for decades. The recent proposal for the UK has been made by the policy thinktank that has influenced the Labour Party continually for over a century: the Fabian Society, which was founded in 1884 as a socialist organisation ‘whose purpose is to advance the principles of social democracy and democratic socialism via gradualist and reformist effort in democracies, rather than by revolutionary overthrow’. Notably, in 1885 the Society was instrumental in founding the London School of Economics and, in 1900, the Labour Party to which it is still constitutionally affiliated.
The Society’s proposal is one of many contained in its recent report, Arts For Us All: putting culture and creativity at the heart of national renewal. The report asserts that arts and culture and heritage must be placed at the heart of the new government’s project of national renewal, noting that the UK’s creative industries currently contribute 6%, £125bn, to the national economy. In its final section, ‘Paying for the Arts’, the report contends that arts funding ‘does not need to involve vast increases in government spending, but smarter approaches from both government and the sector’; here it makes the case for creating a ‘mechanism to pay creators and performers’ – a Smart Fund. Government is urged to exercise its large parliamentary majority to enact a new artists’ legal right: a levy that would compensate those ‘whose original work is copied, stored and shared through electronic and technical devices’.
The Society credits the UK’s Design and Artists Copyright Society (DACS), together with a wider coalition of other UK creators’ and performers’ organisations, for pursuing a persuasive Smart Fund campaign since 2021. DACS’s advocacy was also embraced by the cross-party House of Commons Culture, Media and Sport Committee in its March 2024 report on ‘Creator Remuneration’. The Committee recommended implementation of a ‘private copying scheme … within the next twelve months’ to support UK creators and performers.
UK creators have no statutory rights to remuneration for certain uses of their works, which creators enjoy in foreign jurisdictions: private copying, whereby individuals use digital devices to download, store, copy and share content for personal use. As DACS explains: ‘At the moment, we get a lot of royalties for relatively analogue uses for creative work – photocopying, reprography and educational broadcasting – but we have not followed the way people actually access, copy and download creative content … there has been a huge hunger for content and the way people use it. Our policy framework and our copyright framework has not kept up to date’.
Forty-five countries have already implemented mechanisms remunerating creators fairly for private storing and copying of their creative works (including Canada, France, Germany, Italy, Japan, Spain, Sweden and the US). Typically, a small levy on retail prices of blank media and/or electronic devices is collected and paid to creators’ collecting rights organisations, ranging from 0.1% in Spain to 1.3% in France. In 2018, for example, private copying mechanisms generated for creators over £286m in Germany, £239m in France and £110m in Italy. (To put these numbers into perspective, ACE’s flagship open-access fund, its National Lottery Project Grants scheme, currently spends £117m per year.)
Introducing a statutory private copying scheme as an amendment to the UK’s copyright framework would have two significant benefits for UK creators: first, it could provide a new additional domestic revenue stream, generating an estimated £250-300m annually; second, it could generate further payments for UK creators from other countries operating private copying schemes by virtue of reciprocal arrangements being made between the UK and those countries. Put another way, the current lack of such a scheme in the UK prevents British creators from receiving payments from abroad.
A UK scheme would be based on the principle established by creators’ rights management organisations ‘that service providers pay rightsholders so that the users don’t have to’. This would mean in practice that ‘technology manufacturers would pay a small fraction of the value of each device they sell into a fund that can be paid out to creators, with a portion flowing to local community projects’. For example, in France and Germany 10% to 15% of the levy collected goes towards national arts and culture funding.
During its enquiry, the Committee examined whether the cost of such a levy would be passed by manufacturers on to consumers, and considered a wide-ranging study on ‘consumer impact’ conducted by one of Europe’s largest independent economic consultancies. This study explored the inflationary impact on devices over a ten year period, and found no empirical evidence that device prices were higher in countries that had higher per device levies; and that changes in levy tariffs did not result in equivalent changes in device prices. This trend was observed, for example, for Apple products across France, the Netherlands and Spain, where the price remained the same across all countries despite a tariff levied at 1.5%, 0.8% and 0.12% respectively and consumer demand and price were chiefly influenced by Apple branding and reputation.
The Fabian Society not only supports the Committee’s Smart Fund recommendation, but also specifies that a UK levy should be ‘1 to 3 percent of the sales value of each individual electronic device that enables the consumption of such creators’ content’; and that the levy should be ‘targeted at manufacturers, and would generate a central fund of £250m to £300m per year … distributed to creative practitioners, to provide them with a sustainable livelihood as a result of their content creation, and would also fund sector grassroots initiatives’. Moreover, the Society agrees with the Committee that such a levy would not have negative economic impact in the UK, especially given that many technology companies selling in the UK are already subject to private copying levies in other countries.
Perhaps historical links between the Society and the Labour Party presage imminent innovative artists’ legislation.
© Henry Lydiate 2024