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TIGA's Open Letter to the Chancellor, George Osborne

Delay in tax relief will cost jobs unless rectified soon, says Richard Wilson

TIGA's continuing pursuit of cultural tax relief for the UK games sector has taken on a new urgency today, with the publication of a letter issued to chancellor George Osborne by TIGA CEO Dr Richard Wilson.

In his letter, Wilson draws attention to the plight of Leeds studio The Blast Furnace, the future of which Activision said was under consideration earlier this week. The plight of the 47 staff employed there, currently wondering whether they'll still have their jobs next month, could have been avoided had the tax relief plans already been approved by the EU, suggests Wilson.

TIGA's concerns were echoed this week in parliament by Dundee West MP Jim McGovern, who asked the prime minister about the progress of the European Commission's decision making process. Mr Cameron was keen to express his frustrations over the slowness of that process and reiterated his support of the UK's games industry, adding that he was "hopeful" of imminent good news.

TIGA says it is confident that the government is pursuing the issue with the EU to the best of its ability, but Wilson's letter to Mr Osborne highlights the time-sensitive nature of the programme, especially for those on the sharp end of the experience. The letter, delivered to Mr Osborne this morning, is reproduced in full below.

Dear Chancellor of the Exchequer,

I am writing to you in my capacity as CEO of TIGA, the trade association representing the UK video game development and digital publishing sector, to express the industry's concern about the slow progress being made towards the implementation of Games Tax Relief in the UK.

The decision to introduce a Games Tax Relief in the March 2012 Budget was a significant and highly welcome measure for the UK video game industry and for the wider economy. The UK video game industry has been competing on an un-level playing field. Game developers in many countries receive tax breaks for games production. No such tax breaks exist in the UK and so the industry has declined. Research from TIGA shows that between 2008 and 2011, employment in the sector fell by over 10 per cent and investment by £48 million. The introduction of Games Tax Relief will reverse this decline.

However, the decision by the EU Commission in April 2013 to launch a formal investigation into the case for Games Tax Relief has prevented the UK video game industry and the UK economy from benefiting from this vital tax relief. TIGA has provided important data and information both to the UK Government (HM Treasury) and directly to the EU Commission, justifying the case for Games Tax Relief. TIGA's evidence shows that the UK's Games Tax Relief supports cultural products, is necessary and proportionate in design, and it achieves these results without distorting trade and competition within the EU. Despite the submission of this evidence, the EU Commission has still not indicated when Games Tax Relief will come into effect.

TIGA's research showed that the introduction of Games Tax Relief should generate and safeguard: 4,661 direct and indirect jobs; £188 million in investment expenditure by studios; increase the video game development sector's contribution to UK GDP by £283 million and generate £172 million in new and protected tax receipts to HM Treasury over five years. Tax breaks for games production will ensure that the UK remains at the forefront of video game development. Games Tax Relief will also help to rebalance the UK economy away from an over-reliance on financial services, towards a highly skilled, R&D intensive and export focused industry (many UK studios generate over 80 per cent of their turnover via exports).

This additional investment, new jobs and new projects risk being jeopardised by the on-going delay. Studios continue to close in the absence of Games Tax Relief. To give just two examples, the closure of Blitz Games Studio in 2013 which resulted in the loss of over 200 jobs and the recent decision by Activision Blizzard to engage in a consultation exercise with their staff at The Blast Furnace over the future of the studio, are to an important extent due to the lack of Games Tax Relief. Investment projects also hang in the balance. To give one example, Eden Films has plans to build a new games studio, Codec Studios, and to develop a new £30 million video game. Based in central London, Codec will employ over 100 highly skilled development staff for a minimum of three years. However, this investment and others like it will not take place until the uncertainty surrounding Games Tax Relief is ended and the measure comes into effect.

Therefore, I would be very grateful if you could clarify what concrete action the Government is taking to ensure that the European Commission will give the green light for the introduction of Games Tax Relief at the earliest possible opportunity.

Given the importance of this issue to the health and future of the UK games industry, I will be making the contents of this letter public.

Yours sincerely,

Dr. Richard Wilson TIGA CEO

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Dan Pearson