Below is a little article I wrote as part of a job application to show off my writing ability (stop sniggering). I'm posting it here for its relevance to Tom Watson's column today on comment is free...
In 2008 the UK was the third largest games development territory in the world, with a turnover of £4.02bn. Ed Vaisey, Shadow minister for Culture has described the UK games industry as an "unsung success," which in the same year contributed £1bn to the Treasury and had an export balance of £100m. To such a positive background, it may seem surprising that two groups (TIGA and NESTA) currently are lobbying hard for assistance for UK based developers in the form of tax breaks.
Surprising, that is, until you look at more recent numbers. 44 UK based development studios have gone out of business in the last 12 months, there has been an 8% fall in the number of development staff, with a 5% fall in the size of the sector expected over each of the next 5 years. So why has the birthplace of Elite, Speedball 2, Tomb Raider, Driver and GTA suddenly hit such rocky times? The main issue, and the one that the question hopes to resolve, is international competition.
Currently Canada, France, a number of US states and other nations in the world provide tax breaks for their video games sectors. This enables games to be produced more cheaply in those territories and more importantly for studios to offer far better terms to their developers. Stories abound of top developers being poached (particularly to Canada) with the offer of a large increase in salary as well as very generous relocation packages. With this backdrop it is easy to imagine why it is so hard for our own studios to retain top staff.
It is of course all well and good banging on about tax breaks, but the UK is currently in recession. The government surely cannot just throw money around to anyone who comes to the door with a begging bowl. The question that has to be asked to any industry that wants a handout is will it be sustainable? In this regard TIGA have quite promising answers to the question based on the results of the similar policies that have launched in France and Canada. Ubisoft have grown their French development team by 20% since the introduction of a 'cultural tax break' to that amount and over in Canada reports suggest that the revenues gained from the growth of the industry have paid for themselves twice over. Gareth Edmonson, vice-chairman of TIGA is equally positive about projections for the impact on the UK industry stating that "Over five years the tax measure would cost £192 million but would deliver £415 million in tax receipts."
So why the resistance? Well a primary and very simple reason is the ingrained ignorance of UK politicians towards the games industry. The current culture secretary, Ben Bradshaw manages to at least mention Video Gaming in a statement on the recent 'Digital Britain report,' but only to state "we will also implement a new, more robust system of content classification for the video games industry... ensuring protection of children now and in the future." This stunning oversight only helps to perpetuate the myth that videogames culture has nothing useful to contribute.
Politics quite simply hasn't caught up. The video games industry is often compared to film when it comes to classification and the desperate rush to protect the young. Where the comparision isn't often made by those with the power to make a difference is the enhancement in culture and skills that both provide. Much is made of the fact that science and mathematics is shrinking in the UK, yet support for an industry in which these skills are highly valuable is being allowed to shrink astonishingly rapidly.
So to the future and how likely it is for attitudes to change. Thankfully TIGA have already done a great job in promoting the industry for more than just it's negative headlines. MP's should be invited into games studios to look at just what goes into developing a game. They should be shown both the talent that is widespread in the UK but also the rate at which it is venturing overseas. There are very few industries in the UK where the balance of exports is positive and with a little political will that balance could grow.
So to return to the question of whether the treasury should offer the UK games industry tax relief. As far as I can tell, it can little afford not to.
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