Chancellor Vows Support for UK Games Industry: Too Little Too Late?

Alistair Darling's delivery of the budget for the coming year was greeted with a triumphant cheer from the UK's games industry today. Few could believe it when Mr Darling announced that he was introducing long awaited and hard lobbied tax breaks for the industry, and not only that, but that he was also going to do this in line with TIGA's previously announced tax relief plan.

To this effect, developers that create profitable games will now be able to use the relief to pay less tax on profits, while unsuccessful games will be awarded a cash tax credit to reduce losses. This should free up cash to spend on other projects or creating jobs for the increasing numbers of stellar graduates that British and overseas Universities are producing year on year.

Scottish developers are delighted and are basking in the warm glow of victory. Colin Anderson, Managing Director at Denki, said, "Games Tax Relief will stimulate much needed investment and innovation in one of the UK's leading knowledge based industries. The leadership TIGA has demonstrated throughout this debate has played a decisive role in getting Games Tax Relief on the political agenda and in to today's Budget."

And Colin MacDonald, Studio Manager at Scottish industry giant Realtime Worlds said, “The UK video games industry is one of the most creative and innovative in the world. This decision will mean we can continue to invest in UK talent and prevent brain drain to our overseas competitors. This is a great day for Scottish and UK-wide developers. It is also a major achievement by TIGA.”

The news of the tax breaks, and the form they are taking, was welcomed by TIGA. CEO Richard Wilson said "The Government's decision to introduce Games Tax Relief in today's Budget is an inspired decision. It is good for the UK games industry, good for consumers of British video games and good for the wider UK economy.

TIGA's research indicates that over 5 years Games Tax Relief would create or save 3,550 graduate level jobs; increase and safeguard £457 million in new development expenditure and ‘saved' development expenditure that would be lost without the relief; and generate £415 million in tax receipts for the Treasury, comfortably exceeding the cost of Games Tax Relief. Games Tax Relief would also encourage game developers to adopt new online, more sustainable business models and sell directly to the consumer."

For Scotland's games industry this is big news, as two major titles, Crackdown 2 and APB, are expected to emerge by quarter 3 of 2010. Provided these games are profitable, their developers, Ruffian Games and Realtime Worlds respectively, could stand to reap the rewards and this should have a knock on effect on a large scale with other local companies and Scotland's Universities.

Potentially this also will bring a sigh of relief to those companies whose commercial successes have, so far, been few and far between as they will be bolstered by the incoming cash tax credit, and overall this might lead to fewer British games companies going bust. Again, this stands to encourage ongoing employment and give these companies more breathing room to grow.

However, this may come as too little too late. With a general election expected to be called within the next six weeks, the Conservatives, currently tipped to win an upcoming election, have vowed they will enact an "emergency budget" within 50 days of coming to power, obliterating many of the more controversial and surprising of Darling's moves. As the Conservatives have not, at any point, indicated support for UK games industry tax breaks, we can't be sure that this would remain as part of a Conservative budget.

Though this shouldn't quell your enthusiasm or celebrations and in all actuality there's no real indication that the tax breaks would be at risk of removal under a Conservative government, we must bear in mind that much of what was in today's budget will have been included on the basis that it will encourage votes for the Labour government.

Let's not count our lemmings before they're out the door...