The CEO of UK trade body, TIGA (The Independent Game developer Association), has written an open letter to George Osborne, Britain’s Chancellor of the Exchequer – a title equivalent to Minister of Finance or Secretary of the Treasury in other countries.
Dr Richard Wilson has used the letter to express his concern over the heavily delayed game tax credits originally promised ion 2012 for implementation in 2013. While these tax credits were questioned due to a lack of “an obvious market failure”, they were subsequently upheld by the European Commission, but were not given an actual date we can expect to see them in the UK. While we have not had a market failure in the UK, the closure of Blitz Game Studios and uncertain future of Activision-owned studio, The Blast Furnace, does raise questions about the future of the British Game industry.
The letter, which you can read below, also states that Games Tax Relief would generate 4661 jobs and £188 million in investment expenditure. This will in turn raise UK GDP by £283 million, generating £172 million in tax over the next five years.
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.
Dr. Richard Wilson