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Gauke on tax relief: "We do not accept validity of TIGA's analysis"

Thu 18 Nov 2010 11:16am GMT / 6:16am EST / 3:16am PST
Politics

Treasury secretary finally explains government position - "a question of economic efficiency"

TIGA

TIGA is the trade association representing the UKs games industry. The majority of our members are...

tiga.org

Exchequer secretary to the Treasury David Gauke has finally clarified the government's refusal to bring about planned tax relief for the UK games industry.

Previously, official explanations have not gone far beyond calling the plans "poorly-targeted," leaving many in the industry unsure as to quite why the Treasury had decided against them.

In a parliamentary debate concerning a revision of games tax credit proposals earlier this month, Gauke stated that "We have heard the figures quoted by TIGA, but we do not accept the validity of that analysis because we feel that some of the assumptions underpinning those estimates are erroneous."

Industry association TIGA claimed in its proposal that games tax relief could create or protect 3550 graduate jobs and almost 500m of development expenditure.

Claimed Gauke, one of Chancellor George Osborne's right-hand men, "The research commissioned by the industry implicitly assumes that the investment incentivised by the subsidy is entirely additional to the UK economy.

"In reality, it is likely that the relief will displace investment from elsewhere in the economy, so the net impact on total UK investment could be limited.

"For example, it is possible that such a tax subsidy would divert investment from more productive sectors to the detriment of the productivity of the UK economy as a whole."

When pressed further on his argument, Gauke added that "[TIGA's analysis] does not appear to recognise that... highly skilled graduates would not remain unemployed if they did not find work in the video games industry."

Gauke claimed that, rather than deciding against helping the games industry in particular, the government was interested in supporting all UK businesses.

"I do believe... that the strongest economic case can be made for lower tax rates as a whole, across a broader base, as opposed to targeting some sectors, unless there is a strong case that there is some kind of market failure.

"We have not yet heard such a case being expressed in a way that we find persuasive, and that is why we decided not to proceed with video games tax relief.

The loss of 900 UK development staff over the last two years was not mentioned, nor was the closure of studios such as Real Time Worlds, while the discussion pre-dated Activision's apparent plans to dispense with Bizarre Creations.

Closing his argument, Gauke requested that the new proposal be withdrawn, stating that "We do not think that such an intervention would represent good value for money for the Exchequer or be conducive to providing a simple and competitive tax system.

However, the secretary claimed that the decision had nothing to do with a negative preconception about the industry amongst government ministers.

"There is no sense in which the Government are in any way anti-video games or think it is an antisocial issue or anything like that.

"It is question of economic efficiency."

Despite Gauke's comments, David Cameron yesterday reaffirmed the government's commitment to sector-specific tax relief for the film industry.

Commented TIGA boss Richard Wilson on Cameron's pledge, made during Prime Minister's Questions, "Whilst we are pleased that our friends in the film industry will continue to receive sector specific support, we find it extraordinary that the Government continues to oppose introducing games tax relief.

"Richard Harrington MP made clear in his question that a key contributing factor to Warner Brothers' decision to continue to invest in the UK, and create 600 more jobs in Watford, was the film tax credit.

"If the shoe fits for the film industry why does the Government continue to argue it does not for the video games industry?"

45 Comments

Lawrence Makin
Audio

41 11 0.3
More government spin. Instead of rubbishing Tiga's claims, they should just come out with the truth: they simply don't have the money to offer tax breaks for the industry at the moment.

Trouble is if they admitted that, there'd be an exodus instead of the current false hope.

Posted:3 years ago

#1

Alex Wright-Manning
Talent Acquisition Manager

172 2 0.0
Hmmph. Economic efficiency? Tell that to all those affected at Monumental Manchester & Nottingham, Realtime Worlds, Bizarre Creations, Juice, Rebellion Derby, Sony Liverpool and Cohort in the last year.

As for graduates finding new jobs, well yes the development grads probably will, but what about all the artists, animators and producers? And what about those who are already firmly ensconced within the industry, who find themselves out of work following yet another redundancy, where do they go? That's right, out of the UK, so taking their hard won skills and taxes to other territories.

Are the figures not stacking up? 900 games developers lost from the UK in the last two years, who knows how many next year? By my reckoning 750+ jobs lost in the last year due to studio closures. The value of these people cannot be underestimated, for the enormous size and revenue created by the games industry, there are still very few actual members of the industry worldwide - as opposed to the traditional IT development sector. What sort of monetary value can be attributed to each head?

Edited 2 times. Last edit by Alex Wright-Manning on 18th November 2010 4:04pm

Posted:3 years ago

#2

Russell Watson
Senior Designer

86 34 0.4
Mr Gauke , can you hear that?

...

It's the Canadians laughing.

Posted:3 years ago

#3
"In reality, it is likely that the relief will displace investment from elsewhere in the economy, so the net impact on total UK investment could be limited. For example, it is possible that such a tax subsidy would divert investment from more productive sectors to the detriment of the productivity of the UK economy as a whole."

I'm not quite sure what this means. When he talks about investment in the first half, is he talking about tax payer investment (ie, the tax breaks) or private investment? If the latter, I can't imagine many of the big players would invest in anything other than the video games industry. If he's talking about the former, how about we reduce the foreign aid budget to pay for it?

As for tax relief diverting investment from more productive areas of society, I'm not quite sure what areas these would be - I'm sure there ARE industries that provide more foreign income, but I'd have thought there can't be too many.

All in all though, it looks like it won't happen, at least with the current government. Personally, I'd be in favour of an immediate decrease in corporation tax on those elements of profits earned from export across the WHOLE economy - that would benefit everyone as it would then become more attractive to base export orientated businesses here. Decreasing corporation tax by 1% each year just doesn't cut it.

ASDA creating 4000 new jobs is all well and good, but they're jobs that are aimed at swishing around money already IN the economy. What we need to be doing is encouraging new money to flow into the country through boosting exports. Games, among other industries, is absolutely ripe for that.

Posted:3 years ago

#4
Unfortunately the government in Britain are doing what governments here ALWAYS do. Bluster and chase successful people and industries overseas. Ask My Dyson why he had to go abroad to get support. Yes I wholeheartedly agree a tax credit should not be there to prop up an unsustainable business BUT it is now a worldwide fact whether the UK government likes it or not. Remove them worldwide and we all compete on an even keel but currently the bluster will just make another Bizarre go away. RTW clearly was not sustainable anyway, BUT would Bizarre be on the chopping block if their costs were 35% lower as they would be in Canada. If nothing else it would buy them time to have a further chance at a hit.

Posted:3 years ago

#5

Saehoon Lee
Lead technical artist

50 3 0.1
in short word, "NO"

Posted:3 years ago

#6

Aleksi Ranta
Product Manager - Hardware

273 127 0.5
"Hmmph. Economic efficiency? Tell that to all those affected at Monumental Manchester & Nottingham, Realtime Worlds......"

So the closure of Realtime Worlds has nothing to do with them spending millions on game that failed? I would call that a total opposite of Economic Efficiency...something along the lines of Spending Orgy.

Posted:3 years ago

#7

Alex Wright-Manning
Talent Acquisition Manager

172 2 0.0
@Aleksi

I totally agree that RTW was horrendously managed and the project was pretty much doomed to failure. However 200+ people still lost their jobs. Not because they didn't code properly, or produce environmental assets incorrectly, but they still lost their jobs. Many families were affected, and many of these guys are still struggling to find work. With all the other studio closures there are even less places for these professionals to ply their trade.

Too often the human aspect of this is all forgotten in the whirlwind about tax breaks, foreign investment and the UK losing their place on the global market. People make these games, pure and simple, and without them the industry wouldn't be worth a tuppenny toss.

Posted:3 years ago

#8
The problem is, Alex, that the human story you're talking about is being repeated on a daily basis for thousands of people up and down the country - the first question the government will ask is "what makes games so special"? A lead programmer sent me a link on Facebook the day before yesterday:

[link url=http://www.insurancetimes.co.uk/story.asp?sectioncode=13&storycode=387943&c=1
]http://www.insurancetimes.co.uk/story.as...[/link]

The games industry isn't the only one struggling and, as much as we'd hate to admit it, relative to the overall size of the economy we're small fry. And I guess the government will feel that if other economic sectors are struggling, why should they single out the games industry for special treatment?

Also, you're quoting pure numbers and, whilst they make for good headlines, they just don't add up. Yes, 200-odd people lost their jobs at RTW, and yes, a number are still looking. But a number have also been absorbed into other studios, and a number will move into related industries such as movies. Likewise with the other studios going under, most of their people will eventually find work in games, and most of the rest will end up doing other things.

You could say 900 jobs have been lost in the last year (and, incidentally, I think it is that amount over the last 2/3 years, but that's besides the point) - or you could say that far fewer jobs have been lost as other vacancies have been filled and so jobs created. I suspect the real number of actual jobs lost is closer to 200-300. Which obviously isn't enough for the government to feel help is needed, especially when you bear in mind job losses like those in the link above.

Posted:3 years ago

#9
"In reality, it is likely that the relief will displace investment from elsewhere in the economy, so the net impact on total UK investment could be limited.

"For example, it is possible that such a tax subsidy would divert investment from more productive sectors to the detriment of the productivity of the UK economy as a whole."

I'm confused by this. He cant possibly be talking about tax payer investment becuase then it would basically be saying "If we spend X on games then we cant spend X elsewhere." Well no shit.

So I have to assume he's talking about private investment. This is only slightly more retarded. I seriously doubt EA or Activision are going to say "Oh, games aren't very cost effective in the UK. Lets make washing machines in the UK instead". No, they'll go make games elsewhere you numpty.

Posted:3 years ago

#10

Alex Loffstadt
Community Manager

84 0 0.0
Having followed this a bit I'm sorry but looking at one of TIGA's recent claims regarding that tax breaks would have prevent recent losses in the industry the maths didn't add up.

Yes, I'm fully in favour of the tax breaks for games companies, but equally I think we could be putting our case far better.

Now while Alex makes a nice long list of lots of people who are out of work, many of the studios listed wouldn't have been saved by Tax Breaks. RTW died as they squandered the better part of 100 mill and released a product that wasn't ready. Monumental lost a key project and have stripped back to the core team. Tax breaks would not have helped in these cases.

Government funding is being waved round like some sort of panacea for the industry, it's not.
There are fundamental issues to be looked into with regard to how projects get funded, business models, management and what happens to the money being made? But that's a LONG conversation.

Skills shortages and brain drains? Look at the bigger picture. Most Uni games courses have a poor reputation (hopefully with TIGA on the case this should be getting better), and the skilled coders, artists, animators etc. aren't heading oversees, they're heading into commercial jobs in other sectors where they get better pay, better conditions and better job security.

Posted:3 years ago

#11

Alex Wright-Manning
Talent Acquisition Manager

172 2 0.0
I'm fully aware of the state of unemployment in the UK Fran. However the link that you've supplied details jobs lost in the construction industry, an industry already beyond redemption in the UK. Also, seeing as this is a games related site, I thought that we were talking games?

Relative to the size of the economy we aren't actually small fry. The 'dollar value' of each games industry worker is far in excess of many other industries in the UK. Speaking of industry in the UK, what have we actually got left? Not very many thanks to the Thatcher years. Games is a low carbon, high skill, exportable industry - exactly the sort that the government should be supporting. Canada are thriving because of it - sure there's a higher standard of living etc (personally I think it's one of the most sterile and boring countries on the planet) - but their government, unsullied by the old boys Etonian network have taken a leap, and have profited because of it. How sad is it that this once great country, home of innovation and inventors, is now being shackled on the world stage because of it's 'leaders'.

What else am I supposed to use but pure numbers? Yes, some of those that lost their jobs at RTW will be absorbed into other studios; but when there aren't any studios left in 5-10 years where are they going to go?! Certainly not the film industry. I work heavily within that sector and every role is just as oversubscribed as the games industry.

"Likewise with the other studios going under, most of their people will eventually find work in games, and most of the rest will end up doing other things". Well, isn't that a wonderful sentiment? All you guys who sweat blood to get into and stay in the industry you love, well sorry guys there's no place for you anymore. So if you have families or aren't in a position to move outside of the UK, best you get yourself down to ASDA.

900 games industry professionals left the UK in 2009/10 for other shores. In an industry of under 10,000, that's bloody nigh on catastrophic. I'm having to go outside of the UK to fill roles that should be employing British professionals. We all agree that tax breaks are a neccessity for the UK to compete on an even keel with other territories, and make use of the best talent in the world.

Edited 1 times. Last edit by Alex Wright-Manning on 18th November 2010 3:10pm

Posted:3 years ago

#12

Paul Ripley
Founder

10 0 0.0
"Gauke claimed that, rather than deciding against helping the games industry in particular, the government was interested in supporting all UK businesses."

How? By hiking VAT and moving funding decisions previously made by RDAs to Whitehall?

Posted:3 years ago

#13
"I'm fully aware of the state of unemployment in the UK Fran. However the link that you've supplied details jobs lost in the construction industry, an industry already beyond redemption in the UK. Also, seeing as this is a games related site, I thought that we were talking games?"

Because you need to look at any request for government assistance in the overall context of the economy. The video games industry doesn't exist in a bubble when it comes to asking for help. This relates to your next point:

"Relative to the size of the economy we aren't actually small fry. The 'dollar value' of each games industry worker is far in excess of many other industries in the UK. "

And that is EXACTLY the problem. If the games industry makes so much money per head compared to other industries, why does it need the help? That's EXACTLY what you'll be asked if you say what you just said to a member of the government. As much as I hate to admit it, the government wasn't elected to save the games industry. 10,000 people in a population of 60 million. Again, that's what they'll say. Or how about "we can't afford to defend ourselves and you want us to do what?"

"the link that you've supplied details jobs lost in the construction industry, an industry already beyond redemption in the UK"

See, who are you to say what is and isn't beyond redemption, and then complain when the government doesn't respond as you'd like to YOUR industry? Again, that's a rhetorical question, but it's exactly what they'd ask you. They'd probably also point out that the construction industry is one absolutely vital for the future of this country's housing needs and infrastructure.

"900 games industry professionals left the UK in 2009/10 for other shores."

Really? Almost 3 industry professionals left every single day? Where do you get these figures?

"Canada are thriving because of it"

Again, you're wrong. Canada is thriving because of MANY issues, one of which is the abundance of natural resources there. The video games industry is a success story, sure - but only one of many.

"I'm having to go outside of the UK to fill roles that should be employing British professionals."

The games industry has been doing this for years.

Posted:3 years ago

#14

Alex Wright-Manning
Talent Acquisition Manager

172 2 0.0
I tell you what Fran, you waste your time digging out those who are trying to make things better for the sake of trying to make yourself look clever, and I'll continue to assist the industry I love. How about that? I've been working in the games industry since you were still a fresher mate, and I neither agree with or welcome your comments. How about you take all that negative energy and time that you seem to have to constantly subject everyone to your opinion, and do something more useful instead? ;)

Posted:3 years ago

#15

Klaus Preisinger
Freelance Writing

1,092 1,048 1.0
Quote: For example, it is possible that such a tax subsidy would divert investment from more productive sectors to the detriment of the productivity of the UK economy as a whole.

What a nice way to say video games are good for nothing and don't make any money.

Posted:3 years ago

#16
Put the handbags away ladies :)

Having said that, I'd have to agree with Fran on most of his points. Though it pains me to say that.

As sad a job losses are, we cant really expect the government to care about our jobs any more than other industries. The only valid argument we have as to why games should be given special treatment is becuase we would make the governments money back. Simple as.

Posted:3 years ago

#17
I only have my handbag out on weekends Simon:)

Alex, these boards are about opinions. There's no need to get so defensive. We could have had a really interesting discussion about what you said (I'm still keen to know where you got your 900 developers leaving the UK this year from), but now you've gone and turned it into a "I was working in the games industry when you were still in university" debate. I was playing headers and volleys when Theo Walcott was still in nappies, but so what?

Anyway, let's just leave it there then.

Posted:3 years ago

#18

Eliot Lloyd
Studying Computer Games Design and Production

23 0 0.0
"And that is EXACTLY the problem. If the games industry makes so much money per head compared to other industries, why does it need the help?"

Doesn't it need the help because you need to put all your money up front?
I mean every industry runs a risk of wasting all their money on a product that doesn't sell, but the games industry eats up innovation.
A washing machine company just has to make washing machines up to standard.
A games company is taking a huge risk every time they make a game. The tax relief would allow more games to get out of the door and hopefully make more profit, as businesses would be able to survive after a game flops.

But I know barely anything about economy so meh.

Posted:3 years ago

#19

Dave Cook
Staff Writer

5 0 0.0
Ludicrous. That is not a reasonable or descriptive enough reason to disallow these credits. It's utterly baffling that this saga must continue because of the reluctance to support the sector. It's hard to believe that the Government can't see the good that these credits would bring.

The UK is slipping further behind the rest of the world. If this keeps up we will find it incredible difficult to compete in years to come. It's troubling stuff.

Edited 1 times. Last edit by Dave Cook on 18th November 2010 4:55pm

Posted:3 years ago

#20

Ben Cadwallader
Animator

2 0 0.0


The Tories in particular blither on about "Localism", yet they see fit to hinder games developers & related studios across the country with actions like this- the games industry (as far as I can tell) is one of the few 'media' sectors that still has a good regional spread, certainly compared to my principal area of work, animation, & TV, video & film industries. The one supposed bit of good news is that Cameron & co announced is some initiative to generate a new hub for digital industry in east London- how is this meant to help the regions (hit worse by the recession than the capital) & games studios outside of the south-east??

The situation going on with Canada (& elsewhere) has been going on for a while in the animation industry (especially in childrens TV series production), with even a lot of the stuff that still gets made in the UK being co-productions with Canadian studios & companies either in Europe or elsewhere. I think the way the government is behaving towards the games industry is rather short-sighted- & let's put it this way, the tax incentives being given to Film are scraps for the actual British Film industry as most of it is designed just to tempt Hollywood studios over to do bits of productions etc in the UK.

Posted:3 years ago

#21

John Blackburne
Programmers

41 0 0.0
I'm afraid I too, as a taxpayer and voter, agree with the government on this one. The short reason is if the games industry is a significant contributor to the UK economy (and it is) it doesn't need taxpayer support. If it's struggling to survive then throwing good money at it makes even less sense.

The longer reason is it's rarely a good idea for a government to pick favourites within or among industries. Pretty much every industry can make the case that it's special. What about our manufacturing sector? Our world-leading motorsports companies? Publishing? But many of these are international with only part of their business here. It ends up with multiple different initiatives and subsidies, all with different rules and exceptions, creating work for accountants and lawyers as they try and gain the maximum subsidy for the minimum change in their business practice. Better to have a lower taxes for all with simple, consistent rules so the most efficient companies, which will contribute most to the economy, do well by just doing what they're good at.

The film industry mentioned in the article is a good example of how not to do it. What started as a cultural initiative ended up a a tax loophole for rich people and a subsidy for big US studios savvy enough to make films with just enough Britishness to qualify.

Posted:3 years ago

#22
I still think they should push through a sizeable reduction in corporation tax on that element of profit that has come from exports. Nothing encourages business like the opportunity to keep more of their profits, and I really do think that would be a winner, across many industries. If the UK is a family, we really need to start bring in money from other families, not just moving money around within our own.

Posted:3 years ago

#23

Ben Furneaux
Lead Designer

115 48 0.4
I used to have some faith in Ed Vaizey as a representative for the industry, but given his recent comments on net neutrality I'm starting to give up on him entirely.

Posted:3 years ago

#24

Phil Elliott
Project Leader, Collective; Head of Community (Live Team)

163 29 0.2
While I realise this is an emotive subject, please can we keep the discussions constructive? I'd expect people to take differing points of view, and welcome the debate, but please don't cross the line.

Posted:3 years ago

#25

Terence Gage
Freelance writer

1,288 120 0.1
I think comment #9 by Fran hit the nail on the head as far as the Government's attitude probably goes. We all know about and care about videogaming because it is our jobs and/or our interest, but relative to other industries and economic sectors suffering, it's minimal by comparison.

Posted:3 years ago

#26
Regarding Mark Greenshields comment:

"Yes I wholeheartedly agree a tax credit should not be there to prop up an unsustainable business"

If it's just not surviving due to it's tax liabilities then it should be "propped up". Isn't it better to keep those people in jobs paying taxes and not getting benefits? Even if the company itself doesn't pay quite as much tax as those in other industries.

On one hand I see the ideological sense with the right's oppionion that government shouldn't intefere and treat all companies the same however I think that's a little simplistic. I think it's been seen that some industries such as banking and airlines should pay higher taxes due to their environmental, social or simply because if they fail the government is exposed to a much greater hit or their intangible/tangible costs to society are higher. Plus some industries such as science research and creative sectors should be given breaks because of benifits they provide to society as opposed to costs.

Otherwise we'll have all the smart kids going into banking as opposed to science research and society will suffer as a result. Oh wait a min.

How you view this just depends on your idelogical view. I would guess if politically they could they would remove the film industry's tax break because Osborne/Cameron are very economically libertarian, the right of the right wing.

I do think though anything should be industry wide, I personally don't like the idea of goverment civil servants picking winners and lossers.

Posted:3 years ago

#27
@ Terence. That's exactly my point:)

Re Ed Vaizey, I've spoken to him a number of times now - it was through me talking to Ed, for example, that Matthew Jeffery from EA got his invite to join the round table discussions a while back at Westminster and it was me who suggested to Ed what will hopefully be a forthcoming visit to Eurogamer in Jan/Feb (I hope Phil or Rupert don't mind me mentioning that). And while I'm really sceptical of politicians generally, I actually really like Ed - net neutrality aside. He genuinely does care, but he's between a rock and a hard place. At the end of the day, he's a junior minister - and we need to remember that before we judge him on the tax breaks issue. I'm not sure we could have a more pro-industry voice in government at this point.

Now, net neutrality, that's a whole other issue:)

Posted:3 years ago

#28

Ben Furneaux
Lead Designer

115 48 0.4
@Fran Agreed, it is a totally different issue. I apologise, I'm not trying to troll, but I really feel like the net neutrality and the tax issues highlight exactly how the government feels about the future digital economy. It makes me feel very uneasy.

Posted:3 years ago

#29
Ben, you might find this an interesting read:

[link url=http://www.nesta.org.uk/publications/reports/assets/features/raise_the_game
]http://www.nesta.org.uk/publications/rep...[/link]

Read from page 33 onwards if you're in a hurry.

Posted:3 years ago

#30

Tameem Antoniades
Creative Director & Co-founder

196 164 0.8
Sure, help the banking sector instead - they really need our taxpayer's money to create money out of thin air.

Posted:3 years ago

#31

Tameem Antoniades
Creative Director & Co-founder

196 164 0.8
And while you're at it, keep propping up the housing market and erode our savings, that too is very productive.

Posted:3 years ago

#32
On top of it all, they want to save more banking ass via bailing out the irish with a immediate 10bn injection. C'mon. lets stop this nonsense of foreign aid and sort out folks at home first.

Posted:3 years ago

#33

robert troughton
Managing Director

220 93 0.4
Yeah - we'll be bailing out the Canadian/French banks and government next after all the money that they've put into stealing our games industry...

Posted:3 years ago

#34

Finlay Thewlis
Studying Game Design & Production Management

26 0 0.0
I can understand why the UK government isn't going to give us a tax breaks, its basically because the little money they have they want to spend keeping desperate industries (whichever ones they are) going.

Fine, but my issue is if the UK politicians run the country well in previous years then we might be here discussing today how great it is that they have introduced tax breaks!
The way I see this response from government is "we've mismanaged and because of that we can't help you", so if the UK games industry continues the way it is we might be one of those industries that are 'desperate' and only then might we get financial help, lets hope its not too late by then...

Posted:3 years ago

#35

Alfonso Sexto
Lead Tester

806 635 0.8
It's a poor scuse for not giving that relief if you ask me, a very "politician-like" scuse.

"Some of those stimates are erroneous". Well, a lot of studios have already fled to Canada, do they really need any proof about who is really making a mistake regarding this issue?

The industry is going to grow in short term, the British government is going to regret this soon when they noticed they have miss the chance to have more earnings.

Posted:3 years ago

#36
At the risk of dragging this on, I thought it might be worth posting an email I got overnight. Comes from an employee at a large UK studio - bear in mind this is someone who should have a vested interest in tax breaks. He'd been following this thread but didn't want to post publicly because of who he is and where he works:

"If a studio in the UK does well, brings out good games and makes a decent profit, they won't go under and they won't be in "need" of tax breaks.

The studios (and people) crying loudly for tax breaks are the ones that churn out unsuccessful titles.

The likes of EA, Ubisoft, Eidos and Activision have massive factories in Canada with 1000s of people in one complex - they are not just going to move all that capacity to the UK if the government here passes a tax credit. Nor are they going to create new super studios here - why would they need to? It's too late for trying the Canada thing here in the UK - that should have been done 10 years ago.

Tax credits now will only be a drop of water in the dessert. Studios need to learn to operate profitable. Look at the likes of Relentless for example."

Anyway, I thought what he said was pretty interesting and worth sharing (with his consent). Cheers.

Posted:3 years ago

#37

Barrie Tingle
Live Producer

374 147 0.4
"Gauke claimed that, rather than deciding against helping the games industry in particular, the government was interested in supporting all UK businesses."

He was able to say that with a straight face after they just renewed the tax incentives for the British movie industry? Not saying the movie industry shouldn't have its tax breaks but come on, don't tell us one thing to suit your arguments about not giving the games industry tax breaks and then do another for a different creative industry.

Posted:3 years ago

#38
Theres been a few mentions of propping up the games industry...

I have two oppinions to put forward on this

1. The games industry will never and should never be propped up. There are only a few reasons why an industry should be propped up if its failing. E.g
- Nationally significant job losses (We dont employ enough people)
- critical to other areas of the economy (We're not. As opposed to say construction)
- vital for future prosperity of the nation (We're not. We're just an entertainment medium)
- Cultural significance (I dont think games will ever reach a level of cultural significance to warrant this. I dont think films will either).

2. Tax breaks wouldn't be to prop up a failing games industry. It would be to level the playing field with other countries that are offering tax breaks. It would stop the industry moving abroad. And as long as the industry still bring in a net profit to the economy then it is valid. It is somewhat analogous to a price war between two companies. If one can afford to have prices so low for long enough to put the other out of bussiness then they can raise prices again afterwards and have gained that share of the industry.

Posted:3 years ago

#39
"ax breaks wouldn't be to prop up a failing games industry. It would be to level the playing field with other countries that are offering tax breaks."

Spot on. That is the main proponent of why a tax INCENTIVE is required, to continue to make UK a attractive place to invest in.

Posted:3 years ago

#40
@ Chee. Very true. The only problem is it becomes a Dutch auction (no offence to the Dutch:)). And right now, whether we like it or not the Canadians have deeper pockets than us. Plus, what happens when the money runs out? Studios will just bugger off elsewhere.

It's a bit like a premiership footballer with the stereotypical footballer's wife, who's just with him for the money, isn't it?

Like I said above, I don't want to come across - as Alex seems to think - as being all negative. It's just that I know that these are the responses the government will come up with - and when we remove ourselves from the industry and try to look at the issue as Joe Public - we can see what they say makes sense. We can scream all we want, and bash our toys against the pram and throw them out when our arguments are countered, but we need to accept that there's a world out there beyond our studios, and they have their own worries and concerns.

Maybe it IS just time to forget tax breaks, start talking ourselves up, and focus on other things the government can do to help?

Edited 1 times. Last edit by Fran Mulhern on 19th November 2010 11:48am

Posted:3 years ago

#41
The other arm I've been looking into (not related to tax breaks) is a simple, help yourself help each other initiative.

Uk companies really just need

1/ Additional exposure
2/ Awareness of local services/ partners and providers
3/ Form regional hubs of activity/skill transference/workshops and intergration
4/ Increase dominance of digital distribution within a group of companies eg. Foundation 9 and thus become known as a centre of digital distribution excellence
5/ Clone successful models of training and R&D nationwide. Arbetay seem to have a good thing going on and the Yorkshire region, however the South East, London and such are totally void of such integration from higher education into the Entertainment sector
6/ Look beyond gaming. The Entertainment sector has such increasingly blurred boundaries, it seemed almost crazy we dont have further cross-pollination between games, animation, film and social media.

end rant

Posted:3 years ago

#42

Tony Johns

520 12 0.0
UK govenment not wanting to help games industry in their local area.

They only see the big names like nintendo, sony and Microsoft and wonder why does the games industry need help....

On the other side of the Atlantic, Canadian govenment help their games industry and even SOME US states help their local game studios (with some hidden requests like not making M rated games of course) for tax breaks....

Australia on the other hand does not realise that they have allot of smaller game developers but can't see past the publisher name that comes from overseas....therefore Australian gov don't care....

Japanese game development is in another castle....

So in my mind, unless if I can learn Japanese, I would perfer to work in Canada looking at all these siturations....

Perhaps I might need to work on my French first before I go to Canada.



Posted:3 years ago

#43

Brian Williamson
Director

2 0 0.0
I am sure I read a report recently that said 29% of games companies had taken advantage of the current R&D tax credit scheme which is amazing because that means 71% have not. Currently games companies have an average R&D intensity of 45%. This is a very high figure in comparison to say Engineering which has an R&D intensity of between 3% and 5%. The quick way for you to work out how much your company could recover is to assume you will get around 5% of the sales revenue in cash back each year. If the company is loss making it will be even more and you are guranteed to get it quicker. These are averages but gathered over 1500 different claims. Interestingly Canada have had this scheme the longest out of the 42 countries that have it and they make excellent use of it.
If anyone wnts free advice on this then send an information request to helpinghand@jumpstartuk.co.uk
Brian

Posted:3 years ago

#44
Louisiana is currently offering the best incentive program in the US. We have higher incentives than Montreal and Investment Quebec. Our incentives can be sold to a secondary market and can be traded.

Please contact me at jeff@ldgi.biz or [link url=http://www.ldgi.biz
]http://www.ldgi.biz
[/link]

Regards,

Jeff

Posted:3 years ago

#45

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