Dundee’s computer games sector has been left “swimming against the tide” after the coalition government again refused the industry’s pleas to introduce tax breaks.
Games trade association TIGA has been campaigning for tax relief for developers for more than a year and claims British firms are struggling to keep up with companies in countries where similar incentives are already on offer.
Although firms will be able to take advantage of improved research and development tax credits, TIGA chief executive Dr Richard Wilson said refusing to introduce tax breaks will lead to the decline of the UK games industry.
Chancellor George Osborne scrapped plans to introduce tax breaks last year claiming they were “badly targeted” by the previous administration but it was hoped that he would provide more help for the industry in his Budget on Wednesday.
Dr Wilson said, “The government’s failure to deliver TIGA’s games tax relief is a dismal decision that displays a complete lack of imagination and one which will leave the UK video games industry swimming against the tide internationally.
“Our key competitors have tax breaks for games production. The UK does not. Competitor countries, including Canada, are surging ahead while the UK is struggling between 2008 and 2010 the Canadian games industry grew by 33% while the UK sector declined by 9%.
“TIGA’s games tax relief would increase employment, investment and innovation in the UK video games sector. Over a five-year period games tax relief would create or protect 9519 direct and indirect jobs, including 3366 jobs in the games industry, £431 million investment in development expenditure and £394 million in tax receipts to the Treasury.”CreditsHowever, Dr Wilson said the improved research and development tax credits system would offer some succour to British developers.
“This could be worth around £7 million to the UK video games industry. This will enable studios to invest more in research and development, generate and retain new intellectual properties, and hire more development staff. Reforming the research and development tax credits along the lines proposed by TIGA will help power our high-technology industry forwards.”
He added that the campaign to introduce tax relief, which has the support of the Scottish Government and the Labour Party, would continue.
Alan Mitchell, chief executive of the Dundee and Angus Chamber of Commerce, said the omission of games tax relief was hugely disappointing for a sector seen as key to the country’s future economic health.
“This was supposed to be a Budget for growth and promoting the private sector,” he said. “We heard a number of mentions of the creative industries that will drive economic growth but we have not seen any specific measures to help them.
“Perhaps he could have kept the cut in corporation tax to 1% and used the additional income to provide some targeted support to these vital sectors.’Missed opportunity'”It’s hard to see how the improvements that have been put forward will satisfy the industry. In terms of the support they need it is a missed opportunity.”
Dundee West MP Jim McGovern added, “It’s clear that, for all the calls that have been made to this Conservative-led government, they still don’t get it. What we need is specific policies for the specific challenges Dundee faces; this Budget did not offer those.
“Creating jobs must be our number one priority rather the government have accepted it will get worse, and they haven’t offered an alternative plan to change that.
“Dundee and cities like it across the country need real solutions, a real plan for growth and to create real jobs. What we heard today was more of the same, more of a failed plan.
“I will continue to press hard to make sure that this government listens and the huge potential Dundee has is given the full support of the UK Government.”
Photo by Flickr user cmcgphotography.