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8th July 2021

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Ed Balls urges rethink on industry tax breaks

Labour leadership hopeful visits Dundee in the wake of Realtime Worlds' collapse

Labour leadership candidate Ed Balls has visited Dundee following Realtime World's administration announcement, citing the cancelled tax breaks for the UK games industry as the cause of the company's failure and offering almost unequivocal support for their reintroduction.

In a post on his personal blog, the shadow education secretary was keen to point out that the previous Labour government had recommended the tax breaks before they were axed by the Tory and Liberal Democrat coalition. The minister also highlighted the competition which the UK industry faces from countries such as Canada, where games development receives considerable government support.

"The Tory-Lib Dem government is putting the future of the computer games industry in Scotland at risk. The terrible news this week about Realtime Worlds could be just the start unless the coalition government rethinks its decisions which are costing jobs and risking the recovery," wrote Balls.

"While Labour set out plans to support the industry in March, the new government axed it in June and the result is job losses in Dundee in August. These are the stark consequences of a government which cuts at any cost and seems to think that unemployment is a price worth paying. "

The Prime Minister had previously been evasive on the subject of the tax breaks for the UK's billion pound games industry, whilst some industry figures have claimed that the breaks were lobbied against by foreign-owned publishers looking to protect their own interests.

Celebrating employer excellence in the video games industry

8th July 2021

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Latest comments (22)

Nicholas Lovell Founder, Gamesbrief10 years ago
So let me get this straight. The best funded games company in the UK, which raised over $104 million in private investment AND benefited from R&D tax credits AND generated nearly £20 million in revenue from the development of Crackdown and publisher advances for APB went bust in the face of universal criticism of its unfinished product.

And tax credits would have saved them.

No, no, no. Calls like this from ill-informed and opportunistic MPs only make me even more convinced that tax breaks only exist to prop failing dinosaurs of games companies and have no place in Britain's dynamic future as a games development powerhouse.
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Nick McCrea Gentleman, Pocket Starship10 years ago
Much as I'd love to say RTW failed due to a lack of tax breaks, it patently didn't.
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James Battersby Studying MSc Games Software Development, Sheffield Hallam University10 years ago
I agree that tax credits would not have saved RTW but I don't agree that they shouldn't be a part of the UK's gaming industry future.
I for one am hoping that should tax credits be introduced more (probably smaller) studios will appear thus generating a lot more job opportunities and perhaps innovation.
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Show all comments (22)
Rob Fahey Columnist, GamesIndustry.biz10 years ago
Absolute nonsense from Ed Balls. Much as I agree with the idea of tax regime changes to encourage industry startups and investment in the UK, the failure of RTW had absolutely nothing to do with this. No amount of tax breaks could have saved a company that ploughed $100 million into a failed game - more importantly, no amount of tax breaks SHOULD have saved the company. Tax schemes should exist to encourage successful businesses to be founded, to expand - not to rescue disastrous businesses from the verge of failure.
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Its probably more political rhetoric/ point scoring for Labour camp.

I doubt if any of the parties would have followed through on the tax breaks.
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Fran Mulhern , Recruit3D10 years ago
Holy. Crap. Nicholas, you were spot on, right up until that rant of a last paragraph. What a fantastic way to sum up the arguments for and against tax breaks in a few lines. Not.

If the issues were that simple, everyone in the industry would agree with you - which, obviously, they don't.
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Russell Watson Senior Designer, Born Ready Games10 years ago
No one should be taking this man seriously. This was an expected move from the Labour camp. Tax relief for games will remain to be a cheap shot for each side to fire at one another in political debates. This is just an early (cheap) rallying call for Balls to attack LibCon with, hoping to ride it to leadership. 'You didn't follow through with our (Labour) policy and now jobs are being lost'. Labour lies and misdirection as usual :)
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Scott Purdie Designer/Artist 10 years ago
I agree that tax credits would not have saved RTW. The lack of tax breaks won't help to setup new start-ups in games development and it won’t help existing studios get the funds to make prototypes based on their own IP. The Chancellor abolished the plans of the last government to bring in some vague idea of subsidies for UK game developers working on ‘culturally British’ games. What he did do was reduced the rate of company tax by 1% from next year.

At the Develop Conference in Brighton this year culture minister Ed Vaizey detailed a £5 million fund designed to aid UK developers. £2m has all ready been allocated to Abertay University to help new starts and existing studios. I think with 150+ developers looking for work that this is more effective that tax credits. The road to recovery will be driven by the engines of start ups and new IP created and owned within the UK.
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Finlay Thewlis Studying Game Design & Production Management, University of Abertay Dundee10 years ago
What scott said "£2m has all ready been allocated to Abertay University to help new starts and existing studios. I think with 150+ developers looking for work that this is more effective that tax credits. The road to recovery will be driven by the engines of start ups and new IP created and owned within the UK. "
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robert troughton Managing Director, Coconut Lizard10 years ago
Tax Breaks, as proposed so far, won't help the industry - they will line the pockets of the executives of large studios.

The bigger problem for the UK right now is that we're losing out to Canada. Canadian companies are able to do deals that UK studios simply can't - because the Canadian government is putting additional money into the pockets of those who emigrate there. They're putting the money into the pockets of the employees, not the employers. It's a fantastic way to make sure that the money goes to the people that can actually save the industry.

The upshot of this is that Canadian companies can entice the best British talent over there, starving UK studios of these people. Publishers look to setup studios over there rather than here for that exact reason.

It would be interesting to see how many of the RTW employees end up staying in the UK and how many go to Canada... if there's no work in Dundee following the collapse, and the employees are faced with having to move anyway, I reckon quite a few will look to move out of the UK, not just out of Scotland.

TIGA really need to revise their proposals to better suit the industry - putting money into the employee's pockets rather than the employer's will stop people leaving the country, it will encourage students to take up games dev places and, ultimately, it could help make the UK Games Industry what it was years ago.
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Paul Bray COO, Team 1710 years ago
Easy talk now he is in the shadows..............
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Saehoon Lee Lead technical artist, Kuno Interactive10 years ago
I don't trust Labour would have kept their promise anyway... playing politics with game industry as usual. For both parties. Ya de ya de ...
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How does the money in Canada go to the employees? The subsidies are paid TO the companies and reduce their cost. It does allow companies to afford to bring people over because its cheaper to have decent people in Canada than the UK. Tax credits would have done nothing to save RTW. Typical politician. He is talking his last name...
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Andy Payne Chair/founder, AppyNation10 years ago
As an aside Canada was an official sponsor of Gamescom. Says it all.
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Sandy Lobban Founder, Noise Me Up10 years ago
In my own personal opinion.....

Tax breaks would do both. They would allow bad ideas to last a bit longer. They would also allow well managed companies to persuade some staff to remain in the UK if the cost savings were passed on. Regardless of both arguments however, Canada is a nice place, and the visa entry process is quite simple for UK citizens with these skills. People forget this part of the argument. Developers dont ever consider going abroad just for the money (unless it was Dubai and tax free). Has anyone considered that maybe its just a better place to live? The best snowboarding in the world and good summer weather, on your doorstep, doesnt sound too painful.
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Andrew Crystall Designer 10 years ago
It's absolutely lovely to hear the contempt levied against the industry by some of it's members, really.

Because putting us on the same grounds, tax wise, as Britain's other - and extremely profitable - artistic industries is such a radical idea. Or maybe not, maybe it's just one of the key signs of being taken seriously as an industry by the government and in the wider world.

Of course, THIS government has axed it, and is working against other artistic industries too. Films Council's going, and who's going to pick up their tasks? Certainly not the drastically diminished culture department - they don't have the skills or the personnel. (It won't be picked up, will go elsewhere)

Edited 1 times. Last edit by Andrew Crystall on 20th August 2010 6:20pm

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Jonatan Crafoord Indie Developer, Really Interactive AB10 years ago
While Robert is probably right that the employees are the important part of the puzzle, I have to agree with Sandy that the issues can hardly be purely monetary. Before Realtime Worlds went bust I got the impression that there wasn't enough talent for British studios to fill all their business opportunities with. Still, low salaries isn't exactly the reason I'm moving back to Sweden, and probably not the only reason people move elsewhere either. Game dev employees are generally international types, and if there is a job somewhere else where they don't put carpet in the bathrooms or run out of grit in the winter you're gonna need a hefty bonus from that tax break so people can stay home and import their own grit and interior design talent. :-p
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With you 100% Nicholas. Tax subsidies are to help newer, leaner, more dynamic games companies compete in the global arena. Companies who will bring future tax revenue back to the UK. Canada is investing in attracting a 21st century, knowledge based games workforce. Shame that the U.K. government and others around the industry appear too dim witted to see that longer term gain.

Canada is really, really, really only interested in attracting the big, fat, dumb and happy dinosaurs ( to their future regret and our gain ). The opportunity has existed for entrepreneurial U.K. studios to compete with Canada for a long time. Why don't you incredibly intelligent business people do it ?

I have an idea why but you won't like it.

Folks, the entrepreneurial spirit in this country is being blinkered with our fixation of tax handouts. Get over it and move on. Rant ends.
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Fran Mulhern , Recruit3D10 years ago
What's your idea why, Prem?
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Jordan Woodward Level Designer, Rebellion Developments10 years ago
I really doubt tax breaks would have saved RTW. I am worried that by not putting tax breaks in place that the UK industry is falling behind when compared to Canada for example where they offer much more support for such a strong industry. British politicians really do need to realise quite quickly just how fast the games industry is growing.
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Daniel Parker Senior Engineer, Proper Games Ltd10 years ago
I think we are maybe focussing on Canada a little too much.

The Film Council has done a great job of allowing small independent british films to be made, become successful and bring revenue into the country whilst funding the creative industries during development. I think that is where the future of our games industry lies. Smaller studios doing more creative work. The big studios will continue to rise and fall, but the creative developers in the background keep our quality of output high and profitable. In my opinion they need a little bit of government help and infrastructure to maintain this and to try and help us shine as the place to be for creative development.

Without this, without the film council, and with other reductions in funding and infrastructure, I can see our creative industries declining. Empty promises from MPs do little to persuade me otherwise.

Edited 1 times. Last edit by Daniel Parker on 23rd August 2010 2:18pm

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If politicians would think in the real world rather than sound bites to slag off their opposition (which is really par for the course if you are to be a politician), perhaps the world would be a better place. Tax credits would not have saved RTW. A company in trouble is a company in trouble, period. Tax credits just delay it. BUT given that most of the rest of the world are putting government support in place, without it people will leave. It's just reality. Britain has crap weather and (other than the weak pound) is not a cheap place to do business. It has a lot of great things about it too, but it's not alone. Canada is a nice place to live as is the USA and both have summer pretty much every year!!! So the choice is join them (and get tax credits) or don't). Companies will still exist without them, but I feel they will be less and less each year because with more and more staff leaving the UK because of credits, people rarely come back once they and their families settle down. Canada has proven this by the number of people STILL there and paying taxes. Ask most Brits who moved to the USA why they stay too.
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