TIGA Responds to Government’s Growth Review
December 20, 2010 | 14:07
TIGA, the trade association representing the UK games industry, today urged the Government to introduce a package of measures to drive economic growth, including Games Tax Relief, enhanced R&D tax credits, a lottery financed prototype fund for game development, more investment in higher education, incentives to study STEM subjects at university, tax relief on training, a flexible migration policy, an expansion of Knowledge Transfer Partnerships and the provision of high speed broadband comparable in speeds to our main competitors. TIGA made the comments in response to the Government’s Growth Review.
Dr. Richard Wilson, TIGA CEO stated:
'For too long the Coalition Government has acted like a one club golfer: it has had a strategy for reducing the deficit but little to say about growth. The Government’s Growth Review is long overdue – not least because strong economic growth is crucial to reducing the deficit.
'The video game sector offers opportunities for growth and high value, high technology job creation for the UK. Estimates from PWC suggest that the global market for video games will grow from $52.5 billion in 2009 to $86.8 billion in 2014. However, our video games industry will not fulfil its potential and the UK economy will not fully benefit from this growing market if the Government neglects the sector.
'If the Government is serious about enabling the UK video games sector to play a part in driving economic growth, then it should introduce TIGA’s Games Tax Relief. This is the most effective way to power growth in the sector. 76 per cent of investment in UK games development is derived from global companies. At present, video game developers in the UK are at a competitive disadvantage in the struggle to secure finance from overseas publishers. Our key competitors provide tax breaks for games production or other significant financial incentives. The UK does not. Investment and jobs are drifting away to other countries that offer tax breaks for games production. Over the last two years there has been a 9 per cent fall in employment and annual investment has fallen from £458 million to £417 million.
'The UK Coalition Government should look again at the case for TIGA’s Games Tax Relief. TIGA’s research shows that over a five year period Games Tax Relief would protect or create 3,550 graduate level jobs, secure £457 million in investment and enhance innovation in the sector. Games Tax Relief would more than pay for itself, generating £415 million in tax receipts for HM Treasury. If Games Tax Relief is not introduced, the economic prize of increased investment and new jobs in the games sector will be jeopardised.'
TIGA’s programme for economic growth includes the following:
Access to finance
• Games Tax Relief should be introduced at the earliest opportunity.
• The existing R&D Tax credit for large firms should be retained. With respect to the R&D tax credit for small firms, the categories of qualifying expenditure should be widened, the level of relief raised, the value of the relief for loss making companies increased, and the claim process simplified.
• The Government should increase the size of investments that are permitted in Venture Capital Trusts and the Enterprise Investment Scheme; raise the employee limit under EIS to at least 100; reform both schemes to promote investment on a project basis.
• A prototype fund should be established, financed from the lottery, to invest in the UK video games industry.
• Greater choice and competition in the banking market should be promoted to improve access to debt finance.
Encouraging exports and inward investment.
• The Government should introduce Games Tax Relief to enable UK owned and controlled businesses to expand their operations and export more content and to encourage overseas publishers to invest in the UK.
• The Government should expand UKT&I’s Tradeshow Access Programme (TAP) to enable more developers to attend overseas trade shows and so export more.
Improving skills and access to skilled workers.
• Tuition fees for students studying mathematics and computer science degrees should be competitively priced in comparison to other degrees to incentivise the study of these subjects.
• The proportion of GDP devoted to higher education in the UK should be increased from the current 1.3 per cent. Some of our key competitors invest more in higher education than the UK.
• The Government needs to provide strong financial incentives to attract the best graduates to teach in schools.
• Schools should have the freedom and resources to teach alternative academic qualifications to GCSEs and A Levels, which are acceptable entry qualifications for universities.
• SMEs should be able to offset expenditure on training, Continuous Professional Development (CPD) for staff and education outreach activities against corporation tax.
• The UK should operate a flexible migration policy. TIGA strongly opposes the proposed permanent limits on highly skilled migrants (Tier 1) and especially highly skilled workers with a job offer (Tier 2 visas). The Government should review these limits.
Structures to exploit developments in technology
• The Government should promote knowledge transfer between universities and games businesses by: encouraging the TSB to continue investing in collaborative developer-university R&D projects; and by fostering more Knowledge Transfer Partnerships.
• Industrial secondments should be promoted.
• The Government must be more ambitious in its aims for the provision of superfast broadband in the UK. Akamai’s State of the Internet report notes that: the average South Korean speed is 12 mbps and the average maximum is 33 mpbs, yet it is possible to buy an up to 100 mpbs package; the average speed in Japan is 7.8mbps; and the UK average was 3.8 mbps and we were ranked 27th in the world. The provision of superfast broadband should make possible the provision of more services over the internet.