Daily Archives: March 30, 2010

Tax Breaks – Part Two

Before Christmas I spoke about Britain’s position in the world of game development and how other countries were superseding us in the international standings. Generous tax breaks in Canada and France had seen our stock drop as a favourable location to run a studio, and industry bodies were worried that without Government intervention there would soon be a mass exodus of talent.

It seems as though the lobbying has succeeded and the warnings heeded. Last week, the Chancellor of the Exchequer, the Right Honourable Alistair Darling, presented his budget to the House of Commons and nestled in amongst everything else was the following statement:

“I will offer help to the computer games sector, similar to the steps which are helping restore the fortunes of the British film industry. This is a highly successful and growing industry, with half its sales coming from exports, and we need to keep British talent in this country.”

The finer points are yet to be worked out but in a further statement the Department for Culture, Media and Sport said that they would “consult the industry, the Treasury and the Department for Business” after the forthcoming general election. A possible change in Goverment is unlikely to affect the policy as the current Shadow Minister for Culture has already indicated his support.

Throughout the last few years, industry body TIGA have enthusiastically pushed this issue and were understandably delighted to hear of the Chancellor’s decision. Branding it “inspired” and a “decisive breakthrough”, their press release estimated that the measures could produce anything up to 3,550 graduate jobs over the next five years and increase or safeguard nearly half a billion pounds in development expenditure. Quite where they get their figures from is not for me to question, but if they are anywhere near accurate then many dev houses will be breathing a sigh of relief that in this economic climate they can claw back a proportion of their outgoings.

If the comparisons to the British film industry are anything to go by, developers will have to qualify as being British under one of a handful of requirements. Two of the three film qualifications are co-productions with countries that have either bi-lateral agreements or are within the European Union, but the third is a cultural test. Although initially sounding vague, a film is assessed on cultural content; where it is set, it’s native dialect and how many leads are British; cultural contribution, the portrayal of an aspect of British culture or history; cultural hubs, whether the production itself is carried out in this country; and cultural practitioners, whether the key people involved in the film – actors, directors, composers – are British or at least resident.

Similar tests would have possibly seen such titles as GTA IV and Burnout qualify for tax breaks thanks to their largely British development staff. The interesting test for me comes in the form of “cultural contribution” and the impact that may have. Having staff and resources primarily from this country is one thing, but will this signal the beginning of many more games being set at key points in British history, or taking in cultural elements of our society past and present? Nothing has been written in the statute books as of yet, but where would something like Fable II fall? Obviously set in a Britain of the past, would changing the name from Albion to West Bromwich have qualified it for a tax break? Even more interestingly, does this possibly open the way up for GTA: London?

Some may argue in the country’s financial situation that tax breaks are not conscionable at this juncture, but not only are these changes going to take many months if not years to find their way through the many levels of red tape (by which time we might be in a rosier position) but they will also create and secure jobs. In the last 18 months alone employment in the sector has fallen by 7% and 15% of studios have gone out of business, and as unemployment historically continues to rise for a period after economic resurgence stopping this decline can surely only be a positive. Contributing more than £1bn to the UK GDP it plays an important role in the success of the country; one that has hopefully been secured with these measures.