What would a "No-Deal Brexit" look like for the creative industries?

These words caveat nearly every agreement reached in Brexit negotiations to date. With political posturing on both sides of the Channel, the threat of a “No-Deal Brexit” is nowbecoming an actual possibility, rather than simply a worst-case scenario intended to scare allsides into behaving. Put simply, a “No-Deal Brexit” means that the UK and the EU have failed to agree either formalwithdrawal terms or an extension of the Brexit negotiations.  In either case, the UK willautomatically cease to be a Member State of the EU from midnight on 30 March 2019.   This means that we will automatically lose all of the existing benefits of being a Member State.Most crucial for the creative industries are the free movement of people, goods, and services andaccess to EU funding. UK creative enterprises,  organisations and freelancers need to be prepared for an environmentin which they will: 

Face significant restrictions and costs when bringing in EU talent, as well as far less flexibilityto bring in freelancers quickly to work on projects. Furthermore, EU workers may take thedecision to leave the UK if they no longer have an automatic right to remain and accessservices. Face far higher costs and delays when trading goods and services in Europe as we revert to anantiquated system of licences, customs checks, and tariffs.  According to Mark Pemberton(Association of British Orchestras), "in the event of a 'No-Deal Brexit', orchestras will have toincrease their fees by 30% as a contingency against the extra costs they will face when theyorganise tours in Europe." Lose access to important sources of EU funding and private sources of finance as the UKbecomes a less attractive destination for investors. As the BFI illustrate, the UK screen sectorbenefited from £298.4m in EU funding over the last decade, whilst COBA highlight that £1bnin annual British TV investment would be under threat if UK broadcasters can no longeraccess EU markets.

In a recent survey of 131 creative businesses by the Creative Industries Federation, 21% ofrespondents said they would consider moving part or all of their businesses abroad in the eventof a “No-Deal Brexit” and 40% said Brexit would harm their ability to export. In a separateFederation survey of 250 creative enterprises, 74% said restricting immigration would limit theircapacity to do business. There are a few simple steps you can take to prepare for a "No-Deal" eventuality.

_____________________________________________________________________________________________________________________________________ 1 SQW & British Film Institute. March 2018. “Mappy Study of EU Funding of the UK Screen Sectors 2007-2017: A Reportfor the British Film Institute.” P. 2 2 Matthew Moore. 15 February 2018. “Brexit a £1bn drama for foreign channels.” The Times Creative Industries Federation. 15 August 2018. “New Federation Survey: UK creative industries employ high numbers ofEU workers Brits cannot replace” 3 Eliza Easton, Samuel Young, and Evy Cauldwell-French. January 2018. “Global Trade Report: How to maximise the UK’sglobal ambition and potential through its creative industries.” Creative Industries Federation 4  Creative Industries Federation. 15 August 2018 

With thanks to Bates Wells Braithwaite

“Nothing is agreed until everything is agreed”  

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AUDIT

First, carry out an audit of your direct dependency upon the EU, in particular:

_____________________________________________________________________________________________________________________________________ 5 Royal Institute of British Architects. February 2017. “Global by design: how the government can open up newopportunities for UK architects.” . 6  UK Screen Alliance. January 2017. “The impact of Brexit on the vfx industry and its ability to access the global talentpool.” 7 Jack Powell, Eliza Easton, and Evy Cauldwell-French. October 2017. “Global Talent Report: Why the UK’s world-leadingcreative industries need international workers and how to attract them.” Creative Industries Federation 

How many employees/staff are EU citizens? Do they have a right to remain in the UK? How regularly do you access EU talent for projects (on a performer or consultancy basis)? Do you base projects in European locations, and how many are coming up which will extendpast March 2019? Do you rely upon European products? For example, do you source your sound equipment froma German supplier? Do you receive EU funding? Do your partners/collaborators receive EU funding?  

If the above audit reveals a heavy reliance on Europe, in particular European funding and talent,one option is to consider establishing a presence in the EU.  This could take any number of forms,from an associated organisation to a subsidiary to a branch. The point of a presence in the EU isthat it maintains access to the EU market for your organisation. However, this is unlikely to be an option for the majority of organisations and freelancers whichmake up the creative industries. If you do not take this big step to move your operations toEurope, below are some recommendations to consider. We have focused on people (employees,talent, etc) because not only is this concern paramount to many creative businesses andfreelancers, this is one area where preparations will help provide certainty even if a negotiatedBrexit occurs. People The UK’s creative industries employ a significant number of EU workers. 25% of architects arenon-UK EU citizens as were 30% of people working in visual effects (vfx) in 2016. A workforcesurvey conducted by the Federation found that 75% of 250 business respondents employed EUnationals. Two thirds said they could not fill those jobs with British workers. Furthermore, thereis significant movement from the UK to the rest of the EU. British workers and freelancers moveto perform, collaborate, and speak at cultural events. EU citizens’ rights were one of the first areas negotiated by the UK and EU after Article 50 wastriggered and, in March 2018, an agreement was reached ‘in principle’ on some key issues. Thisagreement has formed the basis of the Home Office’s new EU Settlement Scheme which isintended to replace the current ‘qualifying person’ and ‘permanent residence’ statuses postBrexit. The scheme is intended to open fully in March 2019, just in time for Brexit. According to thegovernment’s releases, EU nationals and their family members will need to apply before 30 June2021 in order to continue living and working in the UK after that date. The March 2018 agreement included a ‘transitional period’ from 29 March 2019 to the end ofDecember 2020. This would mean that creative workers such as architects, craftspeople andtechnicians entering during the transition period would be afforded the same rights andguarantees as those arriving before 29 March 2019. 

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The position of EU nationals entering the UK after December 2020 is less clear. Although freemovement will end, Theresa May has refused to rule out preferential immigration treatment forEU migrants in the future. What about a “No-Deal Brexit”? This could well mean no transitional period and no future preferential treatment. The EUSettlement Scheme is likely to remain in some form in order to ‘register’ those EU nationals in theUK before 29 March 2018 as it is unlikely for there to be a more practical alternative. However,government has not provided EU nationals living in the UK with a guarantee that they will retaintheir right to remain in the event of a "No-Deal Brexit". The free movement of EU creatives into the UK would stop after 29 March 2019. Creativebusinesses would need to look at the options available to non-EEA nationals to consideralternative immigration routes which may be available for EU talent coming to the UK after thatdate.   Although none offer the same freedom and flexibility as EU nationals enjoy now, there are arange of UK visas available to non-EEA artists and entertainers who wish to visit or work forcreative industries in the UK:

Visit (Standard) allows entertainers, artists and musicians to give performances, talks, take part in

competitions, auditions, promotional activities and appear at cultural events or festivals on thelist of permit free festivals. Visit (Permitted Paid Engagement) allows professional artists and entertainers to carry out a

short-series of paid engagements relating to their profession for up to 1 month following aninvitation from a UK organisation. Tier 1 (Exceptional Talent) is for exceptionally talented individuals who are already internationally

recognised as world leaders, or show the potential to become future world leaders, in, amongstothers, the arts (which has now been extended to include fashion designers). Tier 2 (General) is for skilled nationals who are employed to fill particular jobs which cannot be

filled by settled workers. This also includes jobs in shortage occupations, which include some forartists and entertainers. Tier 5 (Temporary Worker - Creative) for paid, temporary work for initially up to 12 months (with a

sponsor in the UK), and people coming to the UK for short-term contracts or engagements suchas actors or musicians on tour. However, both the Tier 2 and 5 options would require the UK prospective employer to obtain asponsor licence if they do not already hold one. Moreover, the UK’s current non-EU immigrationsystem is highly restrictive, and employers may be faced with significant challenges accessing theskills they need. Furthermore, UK workers and freelancers moving to Europe will be dependent upon the non-EUimmigration systems applied by each EU member state. This will be more restrictive than what iscurrently enjoyed by UK citizens under freedom of movement.

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What you can do now

Assess how many of your employees are in the UK based upon their EU citizen’s rights.Consider how you can provide support to these employees, should they decide to apply underthe Schemes. All EU nationals should be keeping evidence of their residence in the UK beforeBrexit and those who have been here long enough should consider obtaining a documentconfirming their right to permanent residence from the Home Office. Review the talent you work with regularly under freelance arrangements.  If freelancers arebased in the EU, consider the best way to continue working with them in the future (forexample, visit visas for short-term engagements and Tier 5 for longer-term arrangements(though under 12 months).  If you are a freelancer based in the UK and you work regularly in the EU, reach out to yourEuropean contacts to see how they propose to continue working together (as this will vary ona country to country basis).  If you are a freelancer based in the EU and you work regularly in the UK, reach out to your UKcontacts to discuss the above options. 

Trade (information included by the Creative Industries Federation)

UK creative exports of goods and services are worth £40.2bn. 45% of UK creative industriesservice exports and 40% of creative industries goods go to the EU. Trade in the EU Single Markethas been greatly facilitated by zero tariffs and a reduction in non-tariff barriers. For example, UKbroadcasters are able to offer their services across the EU with only one Ofcom licence whilst thefashion industry can sell goods to EU consumers without duties and delays at border crossings. However, a “No-Deal Brexit” would likely mean the EU applies duties and border checks that itreserves for third countries and vice versa, with significant delays. Furthermore, the UK will nolonger be part of the Digital Single Market which could undermine digital services' access to theEU. Another point to note is that the automatic recognition of professional qualifications betweenthe EU and the UK will fall away without further agreement, as this is based primarily in EU law(and so will cease to apply to the UK). Furthermore, those wishing to transport samples and equipment temporarily to the EU such ascraftspeople, orchestras and production companies may need to apply for carnets. Thesedocuments are time consuming to complete and often come with considerable costs andadministration.

_____________________________________________________________________________________________________________________________________ 8 Employers may be interested in the Home Office’s recently published toolkit for the EU Settlement Scheme whichprovides information to support EU employees applying under the Scheme:https://www.gov.uk/government/publications/eu-settlement-scheme-employer-toolkit 9  Department for Digital, Culture, Media and Sport. 6 August 2018. “DCMS Sectors Economic Estimates 2016: Trade”Official Statistics 

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What you can do now

Assess your imports from and exports to the EU in order to identify which goods and servicesare vulnerable should costs rise and should you face delays at borders. Consider whether your staff need to obtain a professional qualification in other EU memberstates.

Funding In December 2017, the UK and the EU reached a preliminary agreement which ensured that

access to EU funding for the UK such as Creative Europe and Horizon 2020 would continue until

at least 2020.  However, this agreement is dependent upon two key factors:

The commitments being agreed and set out in detail in a Withdrawal Bill. The UK continuing its funding commitments.

If your funding for current projects extends beyond 29 March 2019, then there is a potential riskin the event of a “No-Deal Brexit”. Furthermore, you will no longer be able to access EU fundingfor future projects you have in the pipeline.

Now is the time to dig out and read the fine print of your European funding agreements forcurrent projects. Consider in particular:                                                                                                                         -Do you need to be based in an EU Member State to qualify for funding?                                                 -What are the circumstances in which the EU agency can cease providing funding?                           -Is there a possibility that the EU agency could claw back funding already provided?  Assess where you can find alternative sources of funding if you can no longer rely on EUfunding for future projects.

As with the other areas discussed, the Withdrawal Agreement included tentative arrangementsfor European-wide intellectual property protections, including community trade marks andcommunity registered designs.  This included automatic recognition of a comparable right in theUK, post-Brexit. The Withdrawal Agreement also addressed the uncertain position of databaserights, which currently exist primarily in EU law.  Without the Withdrawal Agreement, the position on the above rights is uncertain, at best.  Inresponse, a number of organisations are looking to shore up their protections by ensuringregistrations in both the EU and the UK specifically, prior to Brexit. You may have noticed that copyright protection is not frequently discussed in relation to Brexit.This is because copyright, while reflecting EU law, has been historically based in domestic law andso its treatment is unlikely to change immediately upon a “No-Deal Brexit”. However, as the EUpushes through its Digital Economy programme, there are points where the two legal regimesmay diverge. 

Intellectual Property

What you can do now

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What you can do now

Review your intellectual property protections.  Does it make sense to obtain furtherregistrations? Review your agreements to understand how intellectual property is dealt with and whetherthere is any risk.  For example, does a licence refer to Europe (as defined by the EU)?

The UK’s data privacy laws are likely to remain substantially similar to those in the EU post-Brexit, and the UK has actively participated in the recent implementation of the General DataProtection Regulation (GDPR).  One of the key areas of focus in the GDPR is ensuring thattransfers of personal data outside the European Economic Area are subject to appropriatesafeguards, and that individuals may still enforce their rights.  This can be through a finding ofadequacy, where the EU determines that the country’s regime affords adequate safeguards, or itcan be done through a number of additional measures, including a set of standard contractualclauses, drafted and approved under the previous data protection law. It is fairly accepted that the EU will find the UK’s data privacy laws post-Brexit to be adequate. Indeed, this is a key part of any Withdrawal Agreement.  However, a “No-Deal Brexit” wouldlikely delay the finding of adequacy by the EU by months (at least), which will leave organisationsbased in Europe scrambling to ensure they have the ability to transfer personal data to the UK.Much like in the run-up to GDPR, you can expect to see a number of updated contractsincorporating the standard contractual clauses. 

What you can do now

Review the personal data you hold and use to check your compliance with GDPR (this shouldbe done in any event!). Clearly set out your data security measures (both technological and organisational) in adocument which can be shared with other parties. Check to make sure you have GDPR-compliant agreements in place where necessary (forexample, with data processors based in Europe). Familiarise yourself with the standard contractual clauses, so that if you see them post-Brexit,there is minimal disruption to the flow of personal data.

In summary…

Despite the claims from certain media outlets and the Government recommendations tostockpile food supplies, the chances of a “No-Deal Brexit” are still relatively remote. Most, savethe most ardent of Brexit supporters, agree that a split without a divorce bill would be disastrous. 

Data Transfers

www.creativeindustriesfederation.com | @Creative_Fed

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