Brexit and the creative industries: the legal situation

Theresa May, the new Prime Minister, has stated “Brexit means Brexit”, but it is not yet known what Brexit means for the UK. There is much speculation as to whether the UK will adopt a Norwegian, Swiss or Canadian model for trading with EU, or something else entirely. In reality, it is impossible to know what is going to happen and how the UK will be affected.

As recently as 4 July 2016, the then Secretary of State for the Department of Culture, Media and Sport (DCMS), John Whittingdale (now replaced by Karen Bradley), proclaimed in an upbeat press release that he saw no reason for the UK’s decision to leave the EU to have an impact on the successes of the creative industries. Most people will fervently hope that optimism will be borne out, not least because the creative industries are important to the UK’s economy.

Musician, busker, guitar

Research carried out by the Centre for Economics and Buisness Research for Arts Council England (ACE) estimates that an aggregate turnover of £12.4bn was generated in the UK in 2011, with an additional £856m of inbound tourism-related expenditures.

However, the creative industries, in common with many others, will inevitably face a number of challenges in light of Brexit which give could give rise to legal disputes, three of which are briefly set out below.

Funding

Organisations benefiting from ACE grants (ACE being funded by the DCMS) have guaranteed funding only up to 2018. In addition, the film industry has benefitted from EU funding for many years.

With the prospect of losing access to funding such as Creative Europe (the European Commission’s framework for supporting the culture and audiovisual sectors – to a tune of EUR 1.46bn), there is considerable financial uncertainty about the future, particularly if the loss of funding is coupled with the loss of other income streams, for example, through box office receipts.

Free movement

Live performances are the bread and butter of many of the creative industries. Performers and technical crews from both the UK and mainland Europe are now able to travel freely within the Schengen area, meaning that touring in Europe can be carried out with relative ease.

Changes in immigration law could introduce a visa/work permit system (as, for example, for touring to the USA), for anyone wishing to tour in Europe (and vice versa). This will inevitably increase the time and effort involved in organising a tour and will obviously increase costs. It is not hard to imagine that artistic decisions to employ/engage a person for a particular piece of work (for example, an actor, musician or dancer) being affected by the additional work load involved.

Tax laws could also have an impact on touring (for example if performers and crew have to file tax returns in the countries in which they tour) and merchandise could be subject to VAT and excise duty.

Copyright

The UK’s copyright legislation is based on EU law and it will remain in force unless it is repealed by Parliament. The EU has been working towards harmonising copyright laws throughout the EU and member states have been discussing how copyright legislation may be amended to adapt to digital technologies and to facilitate the Digital Single Market. Proposed amendments to EU copyright laws include enabling access to online content (for example, e-books, music, films) in all member states, regardless of where that content was obtained.

The UK may now find itself excluded from discussions which would determine the rules setting out distribution of royalties for rights holders and the harmonisation of “moral rights” (including the rights to be identified as author or to object to derogatory treatment of a work) at EU level.

Conclusion

The world of Donald Rumsfeld’s “unknown unknowns” seems to have become the reality in recent weeks, with the news full of stories of political turmoil, economic uncertainty and speculation as to what the future may hold. With this backdrop in mind, the creative industries will be lobbying to obtain the best possible outcome for their continued survival.

In light of the challenges ahead, particularly in respect of free movement, access to the EU’s single market as a member of the European Economic Area is likely to be of significant importance to the creative industries. Rights owners will also be keen to ensure that their interests are represented in any discussions relating to the Digital Single Market.

In the meantime, and as Benjamin Franklin said, the only things certain in life are death and taxes.

Ellen Gallagher is a senior solicitor at Goodman Derrick.