Videogame trade body TIGA has long campaigned for tax relief for the industry.
It once achieved its aim when then Labour chancellor Alistair Darling announced plans for tax relief in March 2010.
But Conservative chancellor George Osborne said the original plans had been “poorly targeted” and scrapped it, a move Labour MP Tom Watson called “a reprehensible decision based on ignorance”
With tomorrow's budget comes expectation that a tax break will be forthcoming.
TIGA CEO Dr Richard Wilson tells us why he thinks tax breaks are important.
The Independent: You've been pushing for tax breaks for a while. Why is this so important to TIGA?
Dr Richard Wilson: The UK games development sector has been competing on an uneven playing field. Our key competitors in Canada, the USA, France, Singapore and elsewhere have tax credits for games production. We do not. This has given our competitors a cost advantage and allowed them to develop games more cheaply. As a result, investment and jobs have drifted from the UK to other more tax friendly jurisdictions.
The Independent: What effect has this had?
Dr Richard Wilson: We have lost 10 per cent of the UK games development workforce over the last four years and 41 per cent of the jobs lost have relocated overseas, mainly to North America, as the UK games industry suffers from a brain drain. The UK games development sector has also had difficulty accessing finance with 76 per cent of the investment in the UK video games sector coming from global publishers and they are being incentivised to invest elsewhere. A tax relief will leave developers with more resources to invest in their own businesses and it will also encourage external investment into the sector.
The Independent: But how would tax relief change this?
Dr Richard Wilson: It will stimulate growth within the sector, creating jobs, boosting investment and the development of more IP and will ultimately support the wider economic recovery. Tax breaks are good for the games industry, good for the taxpayer and good for the UK economy. It will enhance the UK as an attractive place to invest in games development. It will lower the cost of games production and enable our industry to compete on a level playing field internationally.
The Independent: But Britain is still a viable country for games development, isn't it?
Dr Richard Wilson: The UK is a superb place to develop video games. We have a highly skilled workforce, experienced management teams, some world leading universities supplying graduates to the industry - for example, Abertay and Bournemouth - and we have a track record in developing original and commercial IP which sells all over the world. With the introduction of a tax credit for games production the UK video games sector will power ahead, attracting investment, creating jobs and developing new and exciting games.
The Independent: How confident are you that there will be tax relief?
Dr Richard Wilson: I am absolutely confident that TIGA will persuade policy makers to introduce a tax credit for games production in a Budget – the only question is when. TIGA, the trade association representing the UK videogames industry has demonstrated that a tax credit will create jobs, boost investment and slow the brain of talented staff to overseas jurisdictions. We have shown that a tax credit will create a positive return for the Treasury. We have shown that a tax credit would be good for the games industry, good for the economy and good for the UK.
The Independent: Labour pushed tax breaks through on its last budget. Were you disappointed that the Conservatives overturned that?
Dr Richard Wilson: I was thrilled that before the last election Labour introduced a tax break in its last Budget and I was equally thrilled that TIGA managed to persuade the Scottish National Party, the Conservatives and the Liberal Democrats to support Games Tax Relief before the last General Election. This was a major achievement for TIGA and reflected well on all four political parties.
Naturally I was disappointed that the tax break for games production was dropped in the June 2010 Budget. But TIGA never gives up. Never, never, never. We have simply dusted ourselves down, refined our argument and built a stronger coalition in favour of a tax credit for the video games industry. I am delighted to say that today the Scottish Government in Edinburgh and most of the political parties in Scotland support our games tax relief proposal. In Westminster, the Labour Party and the SNP support our proposal and the All Party Group on the Computer and Video Games Industry, which includes Conservative and Liberal Democrat MPs as well as MPs from other political parties, backs TIGA’s Games Tax Relief measure. We are winning the argument and will eventually succeed.
The Independent: What about the recent ruling that potentially makes tax breaks for certain industries unlawful?
Dr Richard Wilson: I think this is a red herring. It is highly unlikely that governments throughout the EU will drop tax credits for their film industries and nor is it likely that the French tax credit for video games development will be decreed illegal.
The Independent: What if there is no movement in this Budget?
Dr Richard Wilson: Then we enhance our arguments further, strengthen our political coalition and get back in the ring to fight for the interests of UK developers and digital publishers.
The Independent: Where could games development in the UK be in five years time?
Dr Richard Wilson: If a games tax credit is introduced in the Budget tomorrow then the UK videogames industry will go from strength to strength. Tax breaks for games production will ensure that the UK remains at the forefront of video game development. We will remain a global leader in games development and our industry will make a vital contribution to the UK economy. Indeed, a victory on Wednesday will help to rebalance the UK economy away from an over-reliance on financial services towards a high skill, R&D intensive and export focused industry.