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UK govt: Case for games tax relief is "coming together"

Minister for Digital Britain points to Budget "update", sees industry as major "contributor" to UK's post-recession economy

Stephen Timms MP, Minister for Digital Britain, has offered renewed hope to the UK games sector, revealing the argument for tax breaks is "getting stronger", with an "update" likely in this month's Budget.

The Minister argued, in an exclusive interview with GamesIndustry.biz, that "things have changed over the past couple of years", with the industry now viewed by the government as well placed to help drive economic recovery.

With the UK "emerging" from the economic downturn, Timms insisted fellow ministers were clear on the "need to support those parts of UK commerce with the best prospects for growth in the future".

He said: "What has been lacking in my mind up until now is some really strong factual evidence [for tax relief]. I think we are now starting to see that coming together."

Timms, who also serves as financial secretary to the Treasury, added: "I think there's no doubt - the government is in no doubt - that the computer games sector is one part of the economy where we can see very good prospects for growth in the future. So we're looking at the industry in a new way as we're looking at the economy in a new way – as one of the contributors to what we need to see in the UK as we come out of this very deep and difficult economic worldwide problem."

The call for tax credits - to bring gaming in line with benefits already enjoyed by the film industry and stem the flow of talent to other territories - was dealt an apparent blow in last December's Pre-Budget Report, which claimed evidence presented by the industry was not "sufficiently compelling". It later emerged that the Treasury had been unconvinced by supplied data on job-loss forecasts.

"There is, quite rightly, a reluctance on the part of government, in the absence of really compelling evidence, to make the kind of change that's being asked for," said Timms. "But the industry is building its case.

"As you know, we've got a Budget between now and a general election on March 24, so that'll be the point we'll be able to provide an update of where we've got to."

Pressed on whether this would mean good news for the games industry, the MP for East Ham said: "I think that will become clear when the Chancellor has made his announcement on Budget day." Asked for his personal view, he added: "I completely understand the pressure people in the industry feel under over this. I think they need to understand the need for a pretty compelling argument. I think [the evidence is] getting stronger."

Timms dismissed suggestions that a lack of government support was harming the UK's global competitiveness in gaming, citing the recent investment of £2.5m in Scotland's University of Abertay as evidence that this "is an industry the government wants to support and put resources behind."

"I was very encouraged by what I saw there, the links between that university and local games developers," he explained, referring to a recent visit. "And I welcome the announcement that Microsoft has made with the investment of games in Rare Birmingham, so we're seeing some positive developments as well as some pretty big challenges that people in this industry are having to face."

Gordon Brown, the British Prime Minister, last month name-checked the games industry while claiming the UK was "leading the way in creative industries".

Timms insisted this was not mere lip-service. "He's seen the numbers; as a Scottish MP he's very well aware of what's happening in Dundee. So comments like that reflect a wider enthusiasm in government and an admiration, frankly, for what this industry has achieved, and a recognition of its very big future potential."

The Conservatives, whose lead over Labour in opinion polls has narrowed in recent months, have also been vocal in their support of the games sector, with Shadow Arts Minister Ed Vaizey claiming it would be his "number one priority" to ensure a "level playing field" for the industry were the Tories elected.

Last month, Labour MP and Gamers' Voice founder Tom Watson put forward an Early Day Motion with cross-party support, calling on the government to include a tax break for the industry in the next Budget.

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Latest comments (27)

Terence Gage Freelance writer 11 years ago
Well, it's all very well talking about it, but at the moment it all feels a bit hollow in order to gain more votes. Make it happen, Mr. Timms, then we'll talk some more.
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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
Righto boys and girls, lets mark March 24th in our diaries. If they've got the moxy to push this through, it could be the equivalent of Christmas, Kwanza and Hannukah rolled into one for the UK industry. If it had happened last year, do you think that Juice would have closed, or Sony Liverpool shipped 50% of their staff? I guess we'll never know.
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Leon Green Political lobbyist & Gamers Voice Director 11 years ago
Some things people can do:
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Show all comments (27)
Leon Green Political lobbyist & Gamers Voice Director 11 years ago
Some things people can do: email your MP asking them to support Tom Watsons EDM, join the Gamers Voice group on Facebook, if you have a blog write about this linking to this article!
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My worry is all brown's cronies are grasping at straws to try and get support from people who have only heard them talk bullshit and waste our country's resources and talent. How about Mr Brown actually doing something useful for the economy rather than increasing all public service costs, MP's salaries, increasing bureaucracy and inefficiency etc etc? Britain used to lead the world, all I see is Labour encouraging people to lead the exodus. Prove me wrong Mr Brown. Pro business MEANS pro jobs. Your pro plans are promoting the OTHER countries to the detriment of the UK. We don't need more government, more quangos, more taxes, more 'elf and safety rules that actually dont keep anyone more safe, poorer education, more benefits for the workshy etc etc. We need a true vision of how to compete before in 20 years WE are the third world country. Strength comes from confidence and good, intelligent government aligned properly with the education systems and wealth creators. Not an over bloated bureaucracy, run by people who clearly never passed their basic arithmetic exams and think more employment 'protection' actually helps BOTH the workers and the people paying for them. Ask Greece why they are in this state - eventually if you spend more than you earn, you go bust. Rant over, but let's see if it is all talk and posturing or reality. Oh and if the MPs had not had their well deserved (cough) pay rise, perhaps we could have tax some tax credit...
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Gregory Keenan11 years ago
"there is no such thing as an honest man in parliment". I have just witnessed a 'defence' MP give a lecture on defence, and got almost all of his 'facts' wrong....My self and several others had to correct him!

back on topic: I hope this happens, but am pesimistic as to if it will or not. It may be put into the budget and never implemented, even if labour retain power. It may just been seen as a fringe issue due to lack of public understanding, ergo votes, on the matter.

Edited 1 times. Last edit by Gregory Keenan on 12th March 2010 12:00am

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Sandy Lobban Founder, Noise Me Up11 years ago
Itís easy for people to side with the industry they work within getting tax breaks. However, every other industry has competition abroad too. Not just games. More importantly, developers donít move abroad simply because there is more money to be had. I think thatís a bit of a myth personally. They move for everything the country in question has to offer outside of work as much and I would say more so than the employment prospects themselves. If you got offered £100k to work in a development studio in Iraq or you got offered 60k to work in Hawaii, which would you pick? Itís more a reflection of society and lifestyle in general, as opposed to the financial incentives on offer, as a result of industry tax breaks.

Should the tax breaks happen, I'd be interested to see how much of it actually goes into education and development of the industry, as opposed to lining the pockets of shareholders. Personally, I would like to see conditions on any benefits given to the industry in order to prevent greed alone prevailing.

See you in Hawaii :)
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"There is, quite rightly, a reluctance on the part of government, in the absence of really compelling evidence, to make the kind of change that's being asked for," said Timms. "But the industry is building its case. "

As Mark of Firebrand pointed out, a true PRO BUSINESS approach is the crux of the issue here. Ultimately, I suspect game tax credits/no - which ever form of government (our new incoming masters may be - god forbid a hung parliament). Let have less red tax, quangos, simplified corporation and legal taxation, regulation and support the recent under development of the entertainment sector; that will truly say - UK is open for business, and allow for the capitalization of the true creative hotbed of innate talent, and originality that has brought and developed truly innovative games & entertainment titles.

Support for the British Upcoming & Indie studios is especially crucial, for it is these raw new talents that help establish and further redefine the games sector globally.

Case in point - Rocksteady: Arkham Asylum won 3 AIAA awards, GDC Awards - best game design, Media Molecule became an established house title & international franchise for Sony with Little Big Planet

UK Games - FTW!

Edited 1 times. Last edit by Dr. Chee Ming Wong on 12th March 2010 9:33am

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Terence Gage Freelance writer 11 years ago
@ Sandy Lobban

You're right of course; the games industry is not the only UK sector that has stern competition abroad, but unlike most industries, the UK is one of the leaders in games development - a position that has been on the slide for some years now (we used to be third after Japan & America, and now Canada has overtaken us). There are also increasingly few major independent studios and if I'm not mistaken no major British publishers left save Codemasters (are they still British-owned?). The point is, that the government should be cultivating the world-leading talent here, not blithly ignoring it as they have been for years.

Regarding the 'myth' about people moving abroad to join new studios (which I would largely agree with), the point is more that with tax breaks and governmental support, indie startups and publishers would be more likely to open new studios in this country, like has been happening in Canada for the last few years.
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Michael Abraham game designer 11 years ago
well, this sounds promising, as not only does it mean possible tax breaks for the industry, but it also shows that the politicians are starting to wake up and realise that Great Britain ISN'T all that great anymore. the whole world has been for a long time looking at britain through tinted glasses that show what it used to be. We don't have a british empire anymore, we don't have a strong manufacturing industry, we don't have strong exports, we don't even have strong basic production (coal, oil, food, etc). what we DO have though is our history, traditions and our culture. strengthening things like the games industry, R&D, films, tourism, etc is necessary if we wish to survive in the future.
so i'm glad to hear this news, as it sounds like a step in the right direction - if it goes through - to making Britain "great" once more.
(ok, that sounded a lil bit too patriotic than i had intended :P )

Edited 4 times. Last edit by Michael Abraham on 12th March 2010 10:31am

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Kingman Cheng Illustrator and Animator 11 years ago
In a nutshell I will believe it when I see it.
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Sandy Lobban Founder, Noise Me Up11 years ago
@ Terence Gage

I agree with most of what you have said, and better investment in start up's from home grown talent is my preferred option, over simply saying tax relief for all. There are a lot of companies out there with bad ideas, for which tax relief simply means prolonging the inevitable. Iíd like to see individuals and small indie's getting more government support in order to give their ideas a go.

We are obviously seeing the empowerment of such people with devices like the I phone and its free software development kit. A free SDK, like the apple one, is effectively a start up offer from Apple. Itís a toolset for achieving your goals. Thereís no reason the government canít replicate the same royalty based business model. I.e.: They invest in what you need to get going through research and development costs and they get a cut once you are making money. Itís not been a bad move for Apple, and thereís not a tax break in sight.

I just donít see an industry wide tax relief getting put too much use in the UK. We have great ideas anyway, and there is no evidence at all to suggest that countries with tax relief come up with better ideas, make better products than developers in the UK, or keep staff purely on a financial basis. Good ideas and new intellectual property usually come from talented individuals who understand this form of entertainment from a wide range of technical and creative backgrounds. Itís them and their ideas we should be supporting.

The Canadian industry has a lot of foreign investment, but that could easily change should the government change its ideas on tax relief or other locations start offering even greater tax relief. Do we really want to be in the corporate cat and mouse game where companies jump around for cheaper development or do we want steady long term growth supporting good ideas.
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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
As someone at the forefront of this area of the industry - i.e. talent acquisition, I can honestly see tax breaks doing nothing but good for the industry in the UK.

It's not a talent issue, the UK produces - in my opinion - the best and brightest in the world. All you have to do is look at the sheer amount of workers being lured abroad to see that we are pumping out fantastic people who are in high demand. The issue is now that the industry in the UK is neither large enough nor strong enough to sustain all of this talent.

Do you not think that within five years of tax breaks coming into play there would be twenty to thirty new studios established by global developers looking to take advantage of the lower operating costs and so higher profit margins? With these new studios here it would create new jobs for the current and future crop of talent to make their brilliant ideas reality.

I agree that small start ups are an amazing thing to compliment the industry here, but if there's no big boys, there's no industry. If new generations of developers, designers, artists, animators, producers and QA's careers are stillborn, who's going to start these start ups? At one point we were number three in the world for games development. Number three! What an amazing achievement for Great Britain and it's people that was, that a tiny country should be up there with the might of numbers and financial clout of the USA and the technological prowess and platform ownership of the Japanese. But where are we now? Number six, and slipping.

People worldwide want UK games professionals, look at the revitalisation of the FIFA brand at EA, mainly due to the large influx of UK staff they brought in to make it. Where is this centre of excellence for the foremost video game depiction of the UK's national game? Vancouver. Do you not think that if EA could get the same level of taxation relief here they'd be here like a shot? You bet your sweet arse they would.

Look at the strength of the UK film industry in modern times. Sure it was always strong in the 30's-60's, with Ealing and Pinewood studios etc a major force, but there were forty years of decline until the tax breaks. Now the film industry here accounts for 15% of all box office takings globally and contributes billions to the UK economy. With the increase in UK/US co-productions looking to take advantage of the benefits here that figure will only increase.

The simple fact is that the games industry is a proven, established and high turnover global industry that's only going to get larger. If the government wants to ignore that, it won't just be to the detriment of the games industry, it'll be the entire country that suffers.
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Caspar Field Consultant, Talk Management11 years ago
These tax breaks cannot happen soon enough.

For example, does anyone think that when Eidos was deciding where to open the studio that is now making Deus Ex 3, it wasn't influenced by the massive tax breaks available in Montreal? That studio of 100+ developers working on Triple-A IP might have been opened in the UK, had the right incentives been on the table.

If the government does help the industry with serious financial support, we will all owe TIGA a big debt of gratitude for having pushed this issue for so long.
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Fran Mulhern , Recruit3D11 years ago
"Where is this centre of excellence for the foremost video game depiction of the UK's national game? Vancouver. Do you not think that if EA could get the same level of taxation relief here they'd be here like a shot? You bet your sweet arse they would. "

Erm, I don't think so. I believe all of their sports titles are done in Canada. Plus, even with tax breaks, it'll still be cheaper to produce stuff in Canada due to the lower cost of living - it's just that here won't be so much more expensive. And then you have to tempt the people back, which will be far from easy. There is practically zero chance of EA moving FIFA development to the UK because of tax breaks, even at the same level.

Plus, ya'll are forgetting one thing. When the budget comes, there will be six weeks until the general elections. That's six weeks during which the parties will be focusing on campaigning. In other words, six weeks during which nothing of substance will get done. And EU approval will almost certainly still be needed, unless the government decides to go ahead with the scheme and let the EU complain about it afterwards - that's not something the British government is fond of doing.

There's going to be a sterling crisis after the election - unless something unforseen happens, neither party is going to have a huge majority. Tax breaks for the games industry is going to fall even further down the list of priorities than it is now.

This is electioneering, pure and simple.

Edit - Just to say I appreciate I might sound pessimistic. I think I'm just being a realist:) I'd like it to happen as much as anyone, but I don't think this is it, and I don't think (if this IS the start of it) that it'll happen as quickly as people think.

Edited 1 times. Last edit by Fran Mulhern on 12th March 2010 3:25pm

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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
I'm not talking about them transferring anything Fran. If we had tax breaks on par with Canada, there would be a good excuse for EA to sustain long term development centres here. If they've had to ship an entire staff over to Canada to produce a title that's as British as they come would it not have made sense for them to employ these people at source? Oh, and no not all of their sports titles are produced in Canada, EA Tiburon in Florida produce the big ones like Madden and Tiger Woods. Lovely studio by the way.

As for tempting people back, who cares? If that's what they've decided to do, then good luck to them. I'm talking the next ten generations of talent barrelling out of the University courses, which incidentally would get better and more numerous because of the needs of the industry in the UK.

We all know it smacks of cheap empty promises prior to an election, and there are few more vociferous critics of the government than I. However, there needs to be debate on why it should happen, not why it won't. *snip*

Edited 1 times. Last edit by a moderator on 12th March 2010 10:59pm

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Anuj Malhotra Studying Business Management, Imperial College London11 years ago
@ The notion that developers won't simply move elsewhere, I would probably agree that with the sunk costs and all the other things can root a creative house and its associated talent to one place, that is true... but the policy makers are forgetting that for an industry to survive they need to secure upcoming talent and new ideas.

In that respect, speaking as a student looking to enter the industry, there's nothing stopping me from looking at Canada and all the opportunity there, and seriously considering it.
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Fran Mulhern , Recruit3D11 years ago
Alex, the debate on why it *should* happen is looooong over. Everyone knows why it should happen. That debate was over a very very long time ago.

My comments are realistic. *snip*

Edited 1 times. Last edit by a moderator on 12th March 2010 10:58pm

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Jeff Wilson11 years ago
Canada has the foresight to provide tax breaks for the games industry as have other countries.
I have worked in the US before, and I am quite happy to move overseas again. While Brown's government are just talking, other countries actually invest in their economy and are taking the initiative.
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Fran Mulhern , Recruit3D11 years ago
@ Sandy

"The Canadian industry has a lot of foreign investment, but that could easily change should the government change its ideas on tax relief or other locations start offering even greater tax relief. Do we really want to be in the corporate cat and mouse game where companies jump around for cheaper development or do we want steady long term growth supporting good ideas. "

You've hit the nail on the head here. Part of the problem now for the Quebec government is that they're between a rock and a hard place. As the industry in Montreal and Quebec City gets bigger, the studios will, collectively, be able to force a bigger bargain on the government - give us what we want, or you'll end up with thousands of unemployed games developers. And it becomes a bit of a competition between the various provincial governments to try to offer the most generous terms to lure studios there.

It's all well and good for the developers there, but ultimately it's all the taxpayers who stump up the bill. And what happens? The profits, and the IP, just flow back to Paris etc. Meanwhile, smaller indigenous developers have been pushed out.

With the decline of the pound, in the short to medium term it will be cheaper to do business here anyway. Tax breaks might help, but they need to be thought out and we need to make sure they don't just follow the Quebec model of throwing money at anyone to set up, because that'll come back to bite them in the ass over the next few years when they look to phase them out.
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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
If the debate is long over then why are we sitting at 19 comments debating this subject already. In your mind it's long over, but many others it's not. *snip*

I'm certainly not agreeing with you; "We all know it smacks of cheap empty promises prior to an election", isn't stating that it is, merely saying that's what it seems to be. *snip*

Edited 1 times. Last edit by a moderator on 12th March 2010 11:01pm

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Fran Mulhern , Recruit3D11 years ago
*snip*

And yes, the debate IS over. Pretty much the entire games industry agrees that tax breaks would be a big help here. I'm not even sure the government disagrees - it's a question of (a) whether we have the money to do it and (b) whether it's politically acceptable or, in the framework of the single market, achievable.

Edited 2 times. Last edit by a moderator on 12th March 2010 11:02pm

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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
Not because you happen to disagree with me at all. To quote Voltaire "I disagree with what you say, but I'll defend to the death your right to say it".

*snip*

Edited 1 times. Last edit by a moderator on 12th March 2010 11:03pm

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Phil Elliott Project Lead, Collective; Head of Community (London), Square Enix11 years ago
Please keep this on topic - anything that descends into personal arguments will be deleted. There are plenty of other places on the internet for that sort of thing, but this isn't one of them.

Thanks.
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Incidentally, at GDC San Fran, the Canadian Trade Investment has thrown a massive business, advertising, awareness and marketing support deal for all the Canadian 30 strong game developers that turned out for Games Connection, GDC San Fran, and booked out 2 days of 4 workrooms and plush meeting business meet areas at the W hotel and GDC canada.

In comparison, only 6-15 UK game companies are out here at GC/GDC with representation of TIGA/UKTI...
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Phil Elliott Project Lead, Collective; Head of Community (London), Square Enix11 years ago
Yep - they also sponsored the IGF and Choice Awards last night, with a big video message from a trade commissioner (or equivalent) at the beginning. The message? "Come to Canada."
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Perhaps we can band together at a non governmental and grass roots level - Come to Little Big UK 2011 and reclaim our 3rd place spot. At least its a nice aspiration to aim for :)
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