Nearly a quarter of all jobs in Dundee’s computer games sector could be lost if the government refuses to introduce tax breaks for the industry, it has been warned.
Dundee East MP Stewart Hosie described the prospect of such a huge number of job losses as “frightening and massively disappointing” given the potential of the industry, which is seen as key not just to Dundee’s economy but that of the UK as a whole.
Although a campaign led by trade organisation TIGA convinced the former Labour government of the worth of introducing tax breaks, the new coalition government abandoned those plans shortly after taking office.
However, a new report published by TIGA today says the consequences of failing to introduce some tax relief system for the industry could be devastating.
According to their research, games tax relief would create and safeguard more than 1300 new jobs over the next five years and lead to £138 million of new investment in studios.
And, as public spending is cut to reduce the deficit, they claim that tax revenues from the games industry fell by £55 million over the past two years but that games tax would lead to an increase in revenues of £128 million.
But TIGA warns that without games tax relief, the industry will continue to decline and that nearly a quarter of all jobs (24%) could be lost by 2015.
In total, TIGA says games tax relief would cost £194 million but this would create or safeguard 9519 direct and indirect jobs, lead to £431 million investment in development expenditure and bring in £394 million in tax receipts to HM Treasury over the next five years.
TIGA also claims that British companies are falling behind international rivals who already benefit from similar schemes.IncentivesIn the US, 20 states now offer incentives to games firms.
Chief executive Dr Richard Wilson said, “The UK video games industry is an industry of the future high tech, highly skilled and export oriented.
“If the coalition government is serious about its intention of rebalancing the economy then it should invest in the UK video games industry by introducing a tax break for games production.
“Games tax relief would create jobs, boost investment and generate much-needed tax revenue for the government.
“The coalition government recognises the effectiveness of tax breaks because it already supports the UK film industry with a tax credit.
“It should adopt the same successful policy for the video games industry to enable our sector to make a powerful contribution to UK economic growth.”InvestChairman Jason Kingsley added, “The global video games market is expected to grow from $52.5 billion in 2009 to $86.8 billion in 2014.
“However this growth will happen overseas if we do not invest today.
“The UK is exceptionally good at developing video games, but we are not competing on a level playing field.”
He continued, “Of course the government must tackle the deficit, but it must also have a strategy for growth.
“TIGA’s games tax relief will support economic growth and tax revenues.
“We urge the government to review our evidence and reopen the discussions on games tax relief.”
Mr Hosie said, “We are only a few short months from the Budget that gives the coalition government the chance to think again about targeted games tax relief and it is something I will be raising in the lead up to it.”
Photo used under a Creative Commons licence courtesy of Flickr user artwork_rebel.