Talk of Scottish-only games trade body may be unfounded

The Scottish National Party may not be seeking a Scottish-only games trade body after all, GamesIndustry.biz has learned.

This clarification followed comments from the House of Commons' Scottish Affairs Committee that it saw "an argument for a trade body representing companies in Scotland, with the UK Government, trade associations and games companies all involved in its creation."

This was one of 20 detailed suggestions made by the SAC as to how the government could assist the domestic games industry.

"We invite the Government to set out its action plan for such a body in its response to our Report." The UK has two national games trade bodies at present, the developer-orientated TIGA and the more publisher-aligned UKIE. Rumours of a possible merger between the pair are currently rife.

Since publication of the report, some confusion on the matter appears to have arisen however, with both SNP and TIGA representatives claiming to GamesIndustry.biz that this did not refer to a new or replacement trade association.

A spokesperson for Dundee West MSP Joe FiztPatrick, who had endorsed the suggestion, claimed that the reference was in fact to a body promoting all Scottish industry business and stressed that there was no intention to replace TIGA in Scotland. TIGA representatives, meanwhile, believed that the proposed organisation was in fact intended to help Scottish developers export their products.

The SAC's recommendation came following observations about declining employment levels in the Scottish games industry, noting that headcounts had shrunk by 18 per cent last year - compared to 4.4 per cent for the UK at large. Scotland's higher figure was partially due to the shock closure of Realtime Worlds.

The report found that, at present, Scotland boasted 651 developers across 46 companies, amounting to some 25 per cent of all UK game firms.

"Formal representation at regional level could provide stronger support for companies," the Committee felt, also claiming that "games companies face significant challenges in accessing finance.

"More needs to be done to increase the understanding of the financial cycle for video games companies amongst banks and private equity funders. The Government has an important role to play in providing support to businesses in attracting finance."

This perhaps inevitably entailed further discussion of the issue of tax relief for the UK games industry, which was denied in the last budget.

The Committee seemed unhappy with the current status of government discussions on the matter, complaining that "We are surprised and disappointed that [culture minister Ed Vaizey] was only able to lobby the Treasury indirectly on the games tax relief. We expect the industry to be better represented in future within Government."

Vaizey had previously been elusive on the government's reasons for abandoning planned tax relief, and while apparently a public advocate of the gaming industry has repeatedly hinted that he may not have the Treasury's ear.

"I didn't get a chance to lobby the Treasury directly on the video games tax break," Vaizey admitted last year. "I lobbied indirectly and made my views known, but I wasn't aware the Treasury regarded the tax break as poorly targeted."

Added the report, "We invite the Government to explain in its response to this Report how it will ensure that the voice of the industry is properly represented in future and give an undertaking that this experience will not be repeated."

The Committee claimed in response to chancellor George Osborne's notorious "poorly targeted" dismissal of videogame tax breaks that "games tax relief would cost less than the tax credit currently awarded to the film industry.

"The Government has tried to explain away the existence of a film tax credit in contrast to the resistance to a games tax credit as a matter of politics and history.

This is a poor argument for seemingly favouring a mature industry over an emerging one. Inertia is a poor justification for the status quo... a cost benefit analysis should be done of the video games industry and the film industry to see which gives the better value for money."

However, the Committee admitted that the German, Nordic and Australian games industries were thriving without government support and observed that current plans where perhaps weighted too heavily in favour of "large, multi-national companies," agreeing that "there are concerns over the benefit of such a relief for smaller, indigenous companies, and how it would impact on intellectual property creation and the skills shortage."

"A tax relief is not the sole factor for investors; other cost factors and skills are also crucial elements in deciding where to locate a business. We accept that it is impossible to guarantee the impact that a tax relief would have in the UK.

Commented Dundee West MSP Joe FitzPatrick on the SAC's findings, "Any tax relief granted would be extremely small in comparison to the return on the investment, and would pay for itself. The UK Film Industry already receives tax relief of £110m per year although it is estimated that the Computer Games Industry would only require £192m over five years.

"The Report rightly draws attention to this anomaly. Tax relief for games development would create more money for the taxpayer than it would cost.

Also a "matter of real concern" for the SAC was a shortage of graduates "adequately qualified to sustain the games industry in the UK", with the Committee's report echoing calls from the Livingstone-Hope report that "there needs to be more focus on the hard skills needed for the industry, such as mathematics and computer science."

"The unsuitability of many self-proclaimed video games courses" was also remarked upon.

The Scottish Affairs Committee's 20 recommendations on the steps it believes must be taken to support and improve the games industry in the UK and Scotland may be read here.