Tax break climbdown a blow for UK games sector

Industry is seen as too risky for investment, says Deloitte

Now the government has scrapped plans for videogame tax breaks in the UK, the region could be seen as risky compared to locations such as France and Canada which provide healthy environments for games companies to thrive.

That's according to Rupert Clark, video games expert at business advisory firm Deloitte, who was commenting after George Osbourne cancelled plans to help the UK industry in his budget today.

"This is a blow to the UK games industry and could reduce the chance of international investment and new jobs in the UK," offered Clark. "With lower average salaries than the US, a wide range of established and experienced studios and great talent across the industry, the UK is now a great investment opportunity for major international games companies.

"Without a tax break, game development in the UK could appear risky when compared with countries such as France and Canada where tax breaks are available. UK games companies will now have to compete in a global market without the support provided to many of their competitors.

"Although the UK industry continues to be strong performer, it has dropped from third in the world to fourth in the last two years and the scale of games produced in the UK could follow. The government has an opportunity in the next budget to support a growing employer and driver of export revenues."

Tax breaks had been promised before the new coalition government formed, but soon after the Liberal Democrat and Conservative coalition went silent on the matter, with industry sources suggesting any assistance would not be forthcoming.

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Latest comments (11)

Dan Griliopoulos Dreams 7 years ago
So Rupert lists the many things that make the UK hugely attractive, then says we still need a tax break? Surely these are reasons why this industry *doesn't* need a tax break? Bloody hell, from the rhetoric flying around you'd think this was the end of the world.
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I think it was a disappointing result but not calamitous.
Perhaps something rather than just TAX breaks and alternate methods can help UK games generate long term growth and investment.

I personally favour a movement forward that helps incentives for the promotion of game development talent (companies agreeing to collaborate to train/hire X no graduates/apprenticeships - can get lowered NI/rates), lower business rates (i.e slightly lowered overheads for the entertainment industry including movies, games, animation, audio, creative and service related industries) .

Something that really helps the small -medium sized game related business and individuals involved, to create real improvement in network of talent.

Much like the BBC situation which was embroiled in a bidding war for top talent, one can grow, nuture talent with some industry/governmental support on a national level.
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Kingman Cheng Illustrator and Animator 7 years ago
Stage 1: Vaizey again insisted that the Conservatives are "emphatically, 100 per cent in support for game tax breaks. No ifs, no buts."

Stage 2: Osbourne, "No"
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Show all comments (11)
James Finlan Studying Information Systems, University of Manchester7 years ago
Stage 3 : U.K. tilts towards a double dip recession because a short sighted government cannot see the benefit of over-investment for a short period of time to stimulate further growth instead of curtailing it.
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Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd7 years ago
The pound is going down the toilet thanks to this goverments policy of printing money, proping up the counter-productive house price sector, bailing out companies that should have gone to the wall with our money and raiding our pensions and savings.

Which at least could attract foreign investment since UK investement into the sector is rare indeed.
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Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd7 years ago
James - as we are over ONE TRILLION quid in debt, the mere idea that you can avoid a long-term recession is ridiculous. Most of this is locked up in mortgages, when interest rates go up - as they will have to, house price valuations will drop.

Problem is the banks are only solvent against this perceived value locked up in housing. When that drops, the banks start going insolvent. Since the govt aren't willing to bite the bullet and go for a sharp, quick recession, we can expect years if not decades of misery where each one of us pays for their mistakes. Double dip? Try Decuple-dip.

Mortgage is a french word meaning "Death Pledge" btw.
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Andy Payne Chair/founder, AppyNation7 years ago
Who is this expert? Works for Deloittes. Do they make games then?
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I think they do all sorts in terms of financial assessment, tax maximization but are more reknown ofr making loads of profit breaking up companies.
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James Finlan Studying Information Systems, University of Manchester7 years ago
Tameem I fully understand where you are coming from and of course the levels of debt are incredible, yes we are in for hard times ahead but another 12 months of government overspend will make little difference to the long term debt. What it may well do is stimulate enough growth to bring in significant amounts of extra tax revenue thereby lessening the need for so many public service job losses.

Yes of the course public sector staffing levels are far too large at the moment but it is a significant part of our economy and if the floated 10% cuts across the board happen then I really fear for our chances of emerging from this recession for at least a generation if not longer. All those redundancies will have a big impact, right through retail and beyond. You cannot dump 200,000 people on the dole, lose the tax revenue they generated whilst they were employed and expect the economy to trundle along as if nothing has happened. I am aware they have said most of it will be through natural wastage but that is absolute cobblers, jobs are going to go and it will effect us all in the long run because most of those people will not have new jobs to go to.

They should have been brave, taken another 40 billion hit this year on the defecit and used it to stimulate a proper recovery which may well have taken a decade anyway but would have been less devastating for huge swathes of the country. Holding off on the cuts for 12 months would not have sunk the country any further down the hole but it may well have bought us the tools to dig ourselves out.

Edited 1 times. Last edit by James Finlan on 22nd June 2010 11:07pm

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which brings us nicely into a japanese prolonged recession..
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Kingman Cheng Illustrator and Animator 7 years ago
Hate to say it but it's looking that way Dr. Wong.
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