The concept of the knowledge economy is no intellectual fancy but is increasingly central to the UK’s financial performance, according to a leading think tank.

Creative industries, from film production to software development, represent 7.3 per cent of GDP and employ one million people, said Work Foundation chief executive Will Hutton in advance of the government strategy published last week.

“The knowledge economy is not metrosexual intellectualising, this is serious,” Hutton told a Westminster Media Forum conference.

Consumers with income above a certain level spend a greater proportion of their money on services than on basic living requirements, said Hutton. The knowledge economy is a supply-side response to those changing demands, and software is a crucial enabler.

“Meeting consumer demands needs investment in brand, skills, innovation and software to manage the complexity of what is required,” said Hutton.

“That growth is what sits behind the knowledge economy, and the creative industries are its dynamic component, including health, education, IT, high-
tech manufacturing and financial services.”

But the sector faces major hurdles. The government is right to include measures in its strategy aimed at addressing intellectual property issues, said Hutton.

“The question is how we make the business side work, and one thing is copyright,” he said. “The digital world is awash with piracy and laws are hard to reproduce in the digital world.”

As technological convergence becomes a reality, there also needs to be a sector-wide review of the changing industry, according to Labour peer and former film producer Lord Puttnam.

“There is a complete ignorance of cross-media ownership power and cross-platform promotion,” said Puttnam.

“Until we have that we won’t be making right decisions about future mergers, acquisitions and so on.”