The UK's creative and cultural industries face a looming global challenge that could threaten their future, according to a new report by Charles Leadbeater, an adviser on the government's strategy on creative industries.

In the report, 'Britain's Creativity Challenge', Mr Leadbeater warns that complacency about the UK's strengths could lead to under-investment as a time when competition is rising. Leadbeater warns that just as Britain lost its early lead in other industries such as textiles and shipbuilding, so the same could happen to creative industries.

"Britain is facing a looming creativity challenge as our established industries face new sources of competition," the report states. "In the past we took for granted our strengths in industries such as textiles, shipbuilding and car manufacturing and failed to act soon enough. We must not make the same mistake with our creative and cultural industries."

Commissioned by Creative & Cultural Skills to mark the launch of its bid to establish the dedicated Sector Skills Council for the industry, the report calls for a greater investment in creativity, skills and management to beat the global challenge.

"Our ambition must be for Britain to be a leading and innovative force in these industries globally," Leadbeater said. "That means creating a stronger platform for creative industry growth in the UK. Entrepreneurships and teamwork, opportunity-seeking and problem solving will all become more important skills to acquire."

Leadbeater warned that many other countries, among them India, Korea and Taiwan are investing massive sums in creative industries.

The lack of a proper infrastructure for mobilising talent and building on existing skills is also highlighted in the report - as is the under-representation of minority groups amongst those working in the industry.

The report coincided with the launch of a bid to establish the new Sector Skills Council.

Tom Bewick, chief executive of the proposed Sector Skills Council, outlined his vision of a new infrastructure for skills and workforce development for the creative and cultural industries - with major input from employers.

Addressing ministers and leading industry employers and representatives at The Royal Opera House on Thursday evening (09/12/04) he said: "The sector is growing at twice the rate of the economy as a whole and offers an exciting range of jobs and opportunities that are delivering real prosperity to every corner of the UK. But the stark fact is we need to do more. In particular, we must put leading employers in the driving seat so that what they get out of the education and training system matches their industry requirements."

Mr Bewick also announced that, once operational, the Sector Skills Council would lead by example to tackle diversity in the creative and cultural industries by setting targets to recruit at least 50% of its management positions from black and ethnic minorities, women, disabled and other under-represented groups.