The Treasury gave £197m in tax breaks to game studios last year – let’s use some for skills | Opinion
Into Games' Brandon Cole makes a case for a skills agenda the UK industry needs to commit to – financially
Let's be honest – business is booming. The largest industry in the entertainment sector continues to grow, and despite some post-pandemic turbulence and growing pains (read: abhorrent mass lay-offs) growth across games is very good indeed, and much higher than expected pre-pandemic.
The British games industry still faces innumerous challenges in the years ahead and that road is a long and uncertain one – though the biggest hurdle facing the sector today is unrelated to those of business as usual. It's a pervasive word on the tip of the tongue for many in games right now – skills.
When you ask any prominent voice in the British games industry what the biggest challenges currently facing the sector are, they will tell you the same things: widening skills shortages, ongoing recruitment challenges at mid-top level, and a lack of diverse talent and leadership. But you already know this. We're very good at talking about the challenges – but very rarely do we talk about the solutions. Why is that?
I think it's fair to say that VGTR may not be fully meeting its objectives in quite the way intended
Never shy to solve its financial challenges, the industry did come together to develop and lobby for The Video Game Tax Relief scheme – hugely successful in its own right and a testament to the power of collective industry action. Launched in 2014 to stimulate the sector through easing development costs – and currently going through a major review – the scheme has grown year-on-year since its inception and gave £197 million in tax breaks to game studios deemed "culturally British" enough to pass the BFI's test last year.
Though initially launched to support the 95% of British games companies that are SMEs so they can make additional hires and take bigger risks, 88% of 2021-22's £197 million bill was given to organisations making claims of over £500,000.
That's a lot of money, and when Rockstar Games (who boasted £483 million in revenue from Grand Theft Auto V alone in 2019) made a VGTR claim of £68.4 million in 2020, we can draw our own conclusions as to whether they needed that money to solve any particular financial challenges they had as an organisation, or if it tackled any of the wider challenges the sector was facing at the time.
Rockstar Games are not the only organisation winning big from VGTR – in the most recent data from August 2022, 20 companies made claims of over £2 million in the financial year 2021-22, making up almost 75% of all the money distributed in that year. I think it's fair to say that VGTR may not be fully meeting its objectives in quite the way intended.
The Video Game Tax Relief scheme has no specific agenda beyond "stimulate growth for British games development" and was developed to ensure large economic contributors remain operating in Britain as opposed to other nations with generous tax relief schemes. With the ongoing challenges of Brexit affecting everything from trading to recruitment, it has never been more crucial to develop a sustainable pipeline of British talent into the industry, and to ensure that British businesses benefiting from VGTR are re-investing in their own regional and national economies.
If growth is no longer the challenge for the British games industry that it once was, and the vast majority of money claimed is going towards the largest and most profitable organisations – many of which are multinational corporations – to what end is that £197 million being spent, and what sector-wide, Britain-specific challenges is it attempting to solve?
We already know the major challenges affecting the sustainability of the British games industry today and the vast majority of them relate to skills shortages and talent development – compounded particularly for individuals from groups underrepresented in the industry. Can you hazard a guess as to how much funding both government and the sector contribute towards those challenges specifically for games? The answer, perhaps unsurprisingly to some, is zero – absolutely nothing.
There is no national program or initiative in existence that directly supports the skills challenges of the British games industry. Now if only there were a national, government-run mechanism through which the industry could easily contribute towards tackling sector-specific challenges on a sliding scale relative to the size of their business…
If we were to take just a 2% levy on all games companies that claimed over £2 million in VGTR during the most recent financial year available and put it towards solving the collective skills challenges of the British games sector, it would raise just shy of £3 million. £3 million from major British businesses – deemed so by a cultural test they've already passed to receive the tax break – who should have a vested interest in the future of British skills shortages, British talent, and the sustainable future of the British games sector – right?
£3 million may not seem like a huge amount of money, but to put it into perspective that would fund Into Games' work nationally almost ten times over. According to the data from Into Games' upcoming report on delivering the Kickstart program for games, that money could fund the creation of hundreds of fully-funded internship positions every year – including intern salaries, training costs and management of the program – for unemployed talent as part of a similar workplace scheme.
There is no national program or initiative in existence that directly supports the skills challenges of the British games industry
Imagine what impact that money could have across education, skills shortages, diverse leadership development and much more, if that money was divided among organisations and initiatives working towards a shared future skills agenda. A skills agenda developed and agreed on by industry, educators, and the third sector to tackle the long-term challenges facing the British games industry.
This is nothing new – both UK film and high-end television have "skills funds" accumulated through a levy on the budgets of major productions respectively, and fund major skills programs set against a national skills agenda. A skills agenda developed by industry leaders, the BFI, and third sector organisations together.
The Film Skills Fund alone has been in operation since 1999 and has been funded to the tune of £15 million since its creation. Though I would argue that this sort of funding should be allocated by a transparent, apolitical third party and divided among multiple organisations and initiatives in the space rather than held and used by a single multi-faceted national skills organisation, it nonetheless proves that schemes like this work and are being adopted widely.
Since the release of the Next Gen Skills Report over ten years ago there has been no agreed-upon skills agenda for the games industry to establish a roadmap for solving the myriad challenges the sector currently faces. Anyone working in industry today will be able to tell you that a ten year old skills agenda will hold little relevance to the challenges of today – and with no sustainable way to fund that work, how are third sector organisations like ours and many others ever going to achieve those goals?
The UK games industry needs a new, shared future skills agenda that we can all work towards, and the sector needs to commit – financially – to making that happen.
The UK games industry needs a new, shared future skills agenda that we can all work towards, and the sector needs to commit – financially – to making that happen
The UK games industry is dynamic, creative, collaborative, and generous with its time – just not when it comes to working with each other. There are innumerable initiatives and programs created by well-meaning organisations to bridge the skills gap in some way, but these are existing in silos, often set to corporate agendas, and can be excruciatingly combative when it comes to collaboration.
Organisations like Into Games and the many others like us doing tireless work to solve these challenges are poorly funded, resource-strapped, and the first thing to get cut when studio budgets are tightened.
At a time of heightened inequality, growing skills shortages, and a golden opportunity to channel the booming growth of the sector into resources for future talent development and diverse leadership, we should be funded better, working closer together, and have the support of the wider sector to make good on the promises of a collective agenda.
We know that there's no silver bullet to solving the innumerable challenges the sector faces around skills and talent, but we need to start thinking about solutions – together – rather than parroting the same old rhetoric about the problems we're facing with no clear route to tackling them.
The House of Lords are calling on the Government and the sector to rally around solutions to national skills shortages. We're answering that call, and over the next year we'll begin a consultation on the creation of a Games Future Skills Agenda, and a complementary and apolitical Games Skills Fund, to ensure that we work collectively, collaboratively, and transparently on solving the long-term, growing challenges facing the UK games industry today and into the future.
We don't know yet what shape that Agenda and Fund will take yet – we'll work alongside every stakeholder and passionate voice to build something that works for everyone, with everyone. That consultation will begin soon, and we invite everyone to have their say on the biggest challenges facing our industry, and the ways we can go about solving them.
The answer may not be a 2% levy on the biggest recipients of VGTR; but damn it feels good to start thinking about the solutions, right?
Brandon Cole is the head of partnerships & development at Into Games, the UK's non-profit dedicated to tackling the big skills and talent challenges of the games industry. You can reach out about his work or anything else at firstname.lastname@example.org
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