Who Should Games Developers Vote For?

An industry calling for tax breaks in a recession may seem like an industry disconnected from reality, but the case for supporting Britain’s considerable videogames industry is becoming increasingly more urgent.

The growing digital sector was recognised by the UK Government’s landmark Digital Britain report, with games development being specifically earmarked as a key creative industry in need of acknowledgment. And with ‘industries of the future’ becoming part of the discourse running up to the general election, developers will be keeping an eye on the disparity between politicians talking up, and actually acting to support video games development.

The games industry’s calls for tax relief come as Britain, home to big developers like Eidos, Rockstar and Traveller’s Tales, slides down the global ranking of games development nations. Extensive tax credit schemes for the digital media industries in South Korea and Canada have seen both countries leapfrog the UK in the global pecking order, prompting UK games industry lobby groups TIGA and ELSPA to challenge the major political parties to create policies that will help attract foreign investment. With the indigenous film industry continuing to receive tax breaks to keep it competitive, overlooking an industry which is larger than film in revenue, if not in influence, seems snobbish at best.

While the Digital Britain report stated that the government remained ‘committed’ to reviewing the feasibility of tax breaks, December’s pre-Budget report failed to bring any actual relief, raising the hackles of many UK developers. However, with frontline services increasingly under threat, the possibility of tax relief for a single specific sector was inconceivable, and it seems the games industry might have been overly hopeful in its expectations of special treatment in a massive recession. Raising National Insurance while simultaneously granting tax cuts for the makers of Grand Theft Auto would have been beyond the power of spin, irrespective of how big or important the games industry actually is.

Disgruntled barbs were nevertheless thrown at the government for this oversight, but the opposition is still struggling to offer any solid alternatives. As the Conservatives’ primary spokesperson on the games industry, Shadow Culture Minister Ed Vaizey MP has repeatedly criticised the Government for it’s failure to recognise a ‘critically important economic growth area’. Yet the criticisms come without concrete alternatives, and beyond kind words the only promise of reform the Tories have proposed is to extend the UK Film Council’s remit to include the videogames industry.

This proposal unfortunately neglects  the recent budget cuts at the UK Film Council, which have already forced the body into drastic reform. Work by the funding body Games Republic, that supports gaming development in the North under the wing of Film Council-funded Screen Yorkshire, has demonstrated how the games industry could effectively receive the same support as film, but the nationwide extension of this support would place greater demand on the already shrinking budget of the Film Council and regional development agencies. With both sides of the political divide admitting that a discreet tax break is out the question, the likelihood of a cash injection for a rollout is slim.

Current difficulties aside, the fact remains that presently little support is forthcoming. While Canadian provinces offer tax breaks which increase relative to how remote a region is, Britain instead has to sell itself on its past reputation as Europe’s gaming centre, and claim that this has an inherent value above, say, a 40% Ontario tax credit for companies who produce original games.

Labour MP Tom Watson has echoed Vaizey’s suggestions for institutional recognition, but instead of Film Council support, Watson has suggested that lobby groups TIGA and ELSPA collaborate to establish an independent UK Games Council that might present a unified front to any future government.

While he readily admits that this idea is nothing more than a ‘sketched’ notion at present, an industry-led body could act as a ‘proof of concept’ for any future government and might argue more successfully for greater institutional and financial recognition. Tax relief might be out of the question now, but it could become possible once the cultural budget is settled after the grand Olympic blow-out in 2012.

Posted by Peter Walsh in Creative Economy | January 20, 2010 1:42PM |