UK Tax Relief For Game Developers Scrapped

By John Walker on June 22nd, 2010 at 2:40 pm.

Osborne also announces puppies to get more cancer.

Anyone remember March? Ah, those halcyon days of innocence, back when we considered the possibility of good news for the British games industry. Then UK Chancellor of the Exchequer, Alistair Darling, announced in what would be his final budget a pledge for a tax credit system that would aid creative industries, including game development. Of course, as we said at the time, this was dependent upon whoever won the election not overturning the decision. However, pre-election both the Conservatives and Liberal Democrats pledged support for the move. But new Chancellor of the Coalition Government, George Osborne, has scrapped the plans in today’s budget. And many in the games industry have already reported their horror.

It is a terrible shame, and potentially a mindlessly short-sighted decision. The British gaming industry brings in £1bn per year to the UK economy, as well as providing 27,000 jobs. With similar tax cuts in many other countries around the world it will only become harder for UK developers to be competitive and profitable without similar support. And support both parties now in the coalition had pledged to provide.

There are other bits and pieces in the budget may help small businesses, as points out GI.biz’s Alex Mere. Corporation tax for small business will be brought down to 20%, and those starting businesses outside of That London will escape £5000 of National Insurance contributions for each of their first ten employees. Larger companies will have a drop of 1% in corporation tax, every year for four years. (So, er, that’s tax cuts for big business, while VAT rises to 20%. Who could ever have guessed?)

Despite those tweaks, this is still dreadful news for British developers. “This is a blow to the UK games industry and could reduce the chance of international investment and new jobs in the UK,” says Rupert Clark, video games expert at business advisory firm Deloitte. He continues,

“With lower average salaries than the US, a wide range of established and experienced studios and great talent across the industry, the UK is now a great investment opportunity for major international games companies. Without a tax break, game development in the UK could appear risky when compared with countries such as France and Canada where tax breaks are available.

UK games companies will now have to compete in a global market without the support provided to many of their competitors. Although the UK industry continues to be strong performer, it has dropped from third in the world to fourth in the last two years and the scale of games produced in the UK could follow. The government has an opportunity in the next budget to support a growing employer and driver of export revenues.”

ELSPA is similarly horrified. Director General Michael Rawlinson gave a statement saying,

“Bearing in mind the pre election commitment towards tax breaks made by the Conservatives and the Liberal Democrats we are extremely disappointed by the outcome of today’s Budget. Our industry will be rightly puzzled as to how tax breaks can be lauded before an election, only to be seen as ‘poorly targeted’ and scrapped just 6 weeks later. We understand that this decision has been made in the context of the current economic climate. Yet the Chancellor today spoke of the need for a more balanced economy. If this is to be attained the government must acknowledge that the creative industries are of vital importance. Therefore in the absence of tax breaks it is the essential that the government work with our industry to ensure that the policies which we have outlined – such as addressing the skills gap and better access to R&D initiatives – are implemented.”

And TIGA, the trade association representing the UK video games industry, were also shocked. Yesterday they attempted to ensure such a reversal of positions did not take place by delivering a petition to Number 10. It clearly made no difference. They have issued a statement condemning the Coalition Government’s overturning of this innovation. Their CEO, Dr Richard Wilson, said,

“The Coalition Government has broken pre-election pledges made by the Conservative Party and by the Liberal Democrats to support and introduce Games Tax Relief. Unless the Coalition Government introduces Games Tax Relief or a similar fiscal measure then the UK will forfeit millions of pounds in inward investment, jobs will be lost and we will cease to be a leading developer of video games. The UK video games industry is export oriented, high tech, highly skilled and low carbon in output. This is an industry of the future which the Government should be supporting with action, not words.”

Rebellion’s CEO, Jason Kingsley, added to the comments saying,

“It is hugely disappointing that the Coalition Government has decided not to introduce this tax measure, especially given the existence of tax relief for other sectors of the economy. However, TIGA will continue to lead the campaign for Games Tax Relief in the months ahead. Games Tax Relief or a similar fiscal measure is the industry’s top priority. Other policy issues are entirely secondary. We need a tax environment which allows UK games businesses to compete on a level footing with our overseas competitors.”

It’s a peculiar and peculiarly backward decision. It is of course blamed upon the current economic climate. However, this climate hasn’t changed in any particularly significant way in the last six weeks, when both Tories and Lib Dems were vocally in favour of the cuts. We are sure more comment from the industry will follow. There’s no word in the budget about whether Darling’s plan to provide tax relief for offshore oil drilling has also been overturned.

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134 Comments »

  1. westyfield says:

    … what a shame?

    • Samuel Bigos says:

      Is that meant to be sarcastic? Yes, it is a shame. It’s more than a shame. Especially if you’re going to be looking for a job in the games industry in 2-3 years.

    • westyfield says:

      I agree, of course it’s a shame.
      The ‘…’ and the ‘?’ were because I was cautious about making such an obvious joke. Think of it as you would a bad pun followed by ‘I’ll get my coat’ or ‘I’ll close the door on my way out’.

    • Beanbee says:

      When in doubt, deadpan it.

    • Stephen says:

      That joke is, uh, not obvious at all. I don’t even think that’s a joke.

    • kwyjibo says:

      Good news. Clearly, the money saved can be used on a tax break for Game Journalists.

    • Thants says:

      Stephen: I’m guessing you didn’t read any of the three previous threads.

  2. CMaster says:

    Out of curisoty, who’s no.3 in the world for games these days?
    1.US
    2.Japan
    3. ???
    4. UK
    is how I assume it goes. I just can’t guess at number 3. Korea? Canada? France? Russia?

    • westyfield says:

      I suspect Canada – they have Bioware (Edmonton) and Ubisoft (Montreal), and I’m sure many more studios as well.

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      Sagan says:

      Not sure what they consider in that, but in terms of market I think I once heard that Germany had become larger than the UK.

    • Beanbee says:

      Both Germany and Sweden are big developers.

    • Flyspeck :. says:

      Yea, I think it might be Canada. We’ve got 3 Ubisoft studios, and 3 EA studios, Bioware in Edmonton, Relic, Rockstar Toronto and Vancouver and a bunch more.

    • bob_d says:

      It depends in part on how that list is defined: game developer jobs? game studios? money spent on games?
      All the game development jobs in the U.S. seem to be moving to Canada at the moment, so Canada has to be at least number three on that list.
      On the other hand, a fair amount of the *work* is moving from the U.S. to Asia. Korea and China, increasingly, do a fair amount of development work, even if they aren’t spending much money making games. Korea is strange… they use a large workforce of borderline-slave-labor to produce a quite large number of games, many of which aren’t ever seen outside Korea. China is joining Korea and Russia as a destination for outsourcing work, but right now China has relatively few studios that make actual games rather than just assets.

    • We Fly Spitfires says:

      I’d bet it’s China.

  3. Meat Circus says:

    Structural deficit in the UK is £155bn. The entire Eurozone is collapsing under the weight of its combined debt crisis.

    I think the government has more important things to be doing than bailing out Generic Manshoot #325567

    • Rinox says:

      The Eurozone has (much) less debt than the US or Japan. All the talk about the collapse of the Eurozone is just panicmongering.

      Well, not just maybe. But still very exaggerated.

    • Beanbee says:

      The Government wishes to drive export in non-financial services sectors. Boosting up Games development would aid profit but (clearly) it doesn’t employ that many people. You ain’t going to take people off the dole to make computer games.

    • Stephen says:

      You aren’t going to take people off the dole and making most things. What’s your point?

      You can’t drop unskilled people into the semi conductor, aviation, shipbuilding, composites, textiles etc markets that make up the majority of the UK’s manufacturing sector. If you need to train them first why can’t they train in game design?

    • TotalBiscuit says:

      I am truly shocked to see Meat Circus posting yet another inane comment

  4. Andreas says:

    I still don’t understand why people are making such a fuss about this – so the main game dev studios won’t be in the UK, but in Canada or France. People will move, companies will relocate, it happens. We don’t give tax-breaks for vineyards, the French do, and we give financial companies a wide range of benefits they don’t get anywhere else in continental Europe.

    • Gorgeras says:

      No, they won’t. I’ll stick my neck out here but I’m certain of this: Britain is culturally different from many other countries in regards to mobile labour. It’s why we don’t benefit so much from the right to work in other EU countries: we are a nation of entrenched, stable and grounded communities. There are many people that won’t travel more than 10 miles to get to work and won’t move home more than 20 miles to a new job. Mobility benefits only contractor companies that go somewhere temporarily to do a job and move on.

      In America long trips are culturally branded into the psyche. My dad has lived and worked in eight different states in 25 years as well as Japan and regularly drives for two days between his home in Indiana and family in Oklahoma. Canada has some of the fastest growing cities in the world, all such cities are fuelled by immigration by skilled workers and of those that are British, they’re usually going to be very well-travelled middle-class folk, not slobs like us.

      Jobs for slobs I say. Peter Molyneux would actually deliver something closer to his ambitions if he put on a bit of a gut. We have entrenched and immobile talent and they need developers hiring them here.

    • Rinox says:

      Good points. And there’s also the language barrier that figures when talking about international mobility.

    • qrter says:

      Yes, that’s right – the world needs to stop fiddling about and come to your doorstep, and learn your language.

      It’s as if that whole end-of-the-British-Empire thing never happened.. ;)

  5. KikiJiki says:

    From the article: “However, this climate hasn’t changed in any particularly significant way in the last six weeks, when both Tories and Lib Dems were vocally in favour of the cuts”

    I disagree totally John. 6 weeks ago the government was starting to take office, and had not yet begun the review of the finances left to them by the outgoing government. Having had a chance to actually look at the books over those 6 weeks I would guess as an uninformed outsider that they decided that the tax break specifically for the gaming industry was not affordable in the current climate, so they opted to introduce small measures to try to help more small businesses of all types.

    Saying the climate hasn’t changed is misleading at best I think, given the apparent scale of the deficit that the previous incumbents were hiding.

    • Durns says:

      @Kiki – I agree with you here. To be honest, whilst I love John’s writing, and lap up every new Rum Doings podcast, I usually have to fast-forward whenever he starts talking about politics as I find the discussion rather naive and short-sighted.

    • Baboonanza says:

      But the idea of the tax breaks is that it should be self-funding. Less tax = more development in the UK = more tax reciepts.

      I appreciate that cuts have to be made, and perhaps a more widespread tax cut for small business is a better (and in some ways fairer) move. OTOH as the quote above put it, the games industry is export-driven, high-tech and relatively green. It’s EXACTLY the sort of business that the UK needs to encourage if we are to prosper in the 21st century, and we already have a world-class industry that is just asking for some additional support. It just seems a bit short-sighted.

    • KikiJiki says:

      @Baboonanza I think that’s what the changes for small businesses are trying to achieve though in this climate. I don’t really think many development houses will up sticks and move to the UK from abroad right now since it’s a gamble and an unnecessary expense, even if they would get a theoretical tax break (which as Cliffski has pointed out is by no means a certain thing under the rules for the proposed one).

      It makes more sense to try to encourage domestic enterprise by giving breaks to small businesses in particular imo.

    • Daniel Rivas says:

      How odd it is, that the government found the finances to be in much worse shape than they thought, yet deficit projections have barely changed and borrowing has dropped.

      Very strange.

    • Stephen says:

      Is it just me who sees something wrong with promising something before an election and then cancelling it when you’ve been elected and had a chance to look at your finances?

    • qrter says:

      It’s not very complicated, though – the government that made that promise isn’t the same government that’s now in power.

      It wasn’t so much a promise from Darling, you could say, more wishful thinking or actually an empty gesture, depending on how you want to look at it.

  6. Jeeva says:

    Blimey, at all the quotes especially.

  7. didlydoo says:

    so whats going on with the DEB? that still happening?

  8. Samuel Bigos says:

    Before election:

    “Yes, we’re giving tax breaks to the creative industries.”

    After election:

    “Sorry, we lied. F**k you.

    • KikiJiki says:

      More like:

      Before Election:

      “Yes we think we will be able to afford these tax breaks”

      After Election:

      “Sorry we don’t have the money to support a niche business sector, but we’ve got some other changes for all small businesses that will hopefully help you too”

    • DrGonzo says:

      ‘Niche’? What are you on about?

    • Gorgeras says:

      “Niche business sector” = fastest growing media of fastest growing industry.

      So will they be cutting the tax breaks for the UK film industry or ones that have actually lost us money? Doubt it.

    • Bhazor says:

      Niche industry = £1,000,000,000 profit in the UK alone?

      This is why “Other countries are doing it” is a good excuse.
      http://arstechnica.com/gaming/news/2008/05/game-developers-flee-uk-for-canada-tax-breaks.ars

    • Josh W says:

      That’s exactly it! Every reason that you’d want to support film now applies to games as well, appart from “film people get in newspapers more and might shout at us”

  9. PatrickSwayze says:

    This is indeed a shame, and I would love for the government to help Britain get back on top as one of the worlds premier developers; but the fact is there are more important things to be dealing with.

    Everyone talks about the money Development brings in, but if we’re honest… UK dev scene isn’t as hot as it used to be.

    I think UK dev studios need to be making better games and thus generating more tax before they deserve any cuts.

    There’s only Criterion and Lionhead making AAA stuff if I’m correct and generally for console.

    Prove me wrong RPS’ers

    • westyfield says:

      In the Golden Joystick category for best UK developer, it lists:
      Codemasters, EA Bright Light, Jagex, Lionhead, Media Molecule, Rare, Rockstar North, Rocksteady, Sony Computer Entertainment London Studio and Team 17.

      Codemasters, Lionhead, Rockstar North and Rocksteady are ones that I would class as AAA, but there could be others.

    • PatrickSwayze says:

      EA is a publisher, and doesn’t do that much in the UK.

      Last big game from Codemasters was the average OpFlash2 developed far far away.

      GTA is developed in Scotland, I missed them, but again Rockstar is mainly an american thing now.

      I still don’t feel there’s too much hot stuff coming out of the UK…

    • BigJonno says:

      Jagex, last time I checked, was raking in the dough. SCE London are a very profitable studio. Media Molecule totally justified their existence with Little Big Planet, it’s an amazing game and also did well on the sales front.

    • Springy says:

      I’d say Bizarre Creations and Black Rock Studio, along with the already-mentioned Criterion and Codemasters, make a strong argument for UK development as the current home of top-class racers.

    • Moni says:

      There are plenty of profitable developers in the UK.

      Creative Assembly – The Total War series is a consistent best seller.
      Realtime Worlds – APB seems to be getting a good number of pre-orders.
      Ruffian Games – Crackdown 2 looks like it’s getting a big push from Microsoft.

      I think quality isn’t a problem. It’s sort of a side-effect of not having the tax-breaks, because developers have to be more conservative with who they hire, they pick and choose just the best of the few.
      The problem is that there’s a lot of kids coming out of University wanting to make games, but there aren’t too many opportunities for them.

    • Moni says:

      Oops, missed out Sports Interactive.

    • DrGonzo says:

      Just thought I would say that Traveller’s Tales are British, they are also the biggest developer in the UK but no one mentions them. I don’t particularly like their games but they deserve a mention as my mate works there.

    • Dan Lawrence says:

      Having worked at Codemasters on Op Flash 2 I can assure that it was not made ‘far far away’ the dev team (around 60-80 people) was based at Codies HQ in the Warwickshire countryside with support from the Birmingham studio (now at work on the official F1 game), a new studio in Guildford (now working on Bodycount) the only thing that was outsourced abroad was some of the base art assets prior to them being made ‘game ready’. I’ve long since left the company before anyone complains about the quality of OFP2.

      I can also exclusively reveal that noone I met at the coalface of the games industry was overpaid. As a programmer I was on about 60-75% of the salary of people working at a similar level in a field like web programming and there was also copious required overtime. Noone should ever go into the games industry for money, easy work or good working conditions only for a pathological need to make games.

      The main reason this tax break would have been useful is that nearly every other major player in the games industry has one while the UK doesn’t. This is causing a slow brain drain (several people left Codemasters to take better paying jobs in Canada) and resource drain as people and new projects leave the UK. The UKwas a fairly big player in games development but it is getting less so as the years go by mostly because of the tax incentives elsewhere. Its not ‘required’ that the UK have a games industry but it’ll be sad to see it decline for no particular reason other than a lack of political will to compete with those abroad (probably for Daily Mail style moralistic reasons or just plain ignorance of new industries).

    • Xercies says:

      You also forget that some big games are also outsourced to some companies in the UK creating jobs, a lot of smaller jobs are going to some UK companies this happens with all media actually film and CGI especially and its happenning with games and the UK is seeing the benefits of it. but of course without a tax break a lot of companies will find studios elsewhere because all the studios in the UK are goen because no Tax break. a similar thing is happenning i believe in the Animation world right now because again that doesn’t have a tax break while most other countries do.

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      Stijn says:

      Rare?

  10. Tom says:

    @Andreas – the problem with giving the finance sector such benefits is that unlike computer games firms, they’re liable to abuse them and by doing so, bring down the entire economy.

    If you look at the real cash generated compared with the risk incurred, finance is a pretty silly thing to bother with at all. The UK would be better off investing in scientific laboratories – the physics industry in the UK generates nearly as much money as the finance sector, but receives much fewer benefits and attention from government.

    Besides, inanities like “People will move, companies will relocate, it happens,” completely ignore the fact that just because ‘it happens’, doesn’t make it right. When you see your job outsourced to another country, thousands of miles away, you learn not to be so flippant about such things.

  11. nine says:

    Surprise! In an economy still going downhill planned “blue sky” industry creation schemes get scrapped.

  12. Durns says:

    Its not the quantity of debt that is the issue, its the ability to keep servicing that debt. The Eurozone has a much bigger problem there than either the US or Japan

    • Durns says:

      A reply to Rinox (sigh)

    • bill says:

      Japan’s about to double it’s VAT too. But I have no idea if they have tax breaks for games. I somehow doubt it.

    • Rinox says:

      True, but the US is being kept alive by China (et al) and Japan is keeping its growth stable by dipping into its pension funds. We’re pretty much all f*cked, but no one seems to be panicking over the dollar just yet when there’s at least as much reason to do so as for the Euro.

    • Rinox says:

      And with “growth” I meant, well, non-growth. (re: Japan)

  13. Ginger Yellow says:

    “I think UK dev studios need to be making better games and thus generating more tax before they deserve any cuts.”

    Of the 10 highest rated PC games in 2009 (Metacritic), four were developed in the UK.

    Of the 10 highest rated Xbox games in 2009 (Metacritic), four were developed in the UK.

    PS3 and Wii, not so much, but you can’t exactly slam Little Big Planet or Lost Winds or WipeoutHD.

    • PatrickSwayze says:

      Those games are media darlings but they aren’t exactly hot cakes in the retail sector.

      Oh well, Art for Art’s sake I suppose.

      Could at least post the list though…

    • westyfield says:

      http://www.metacritic.com/games/bests/2009.shtml

      This only shows the top 5 for each platform though, can’t find a top 10 list.

    • Bhazor says:

      “Those games are media darlings but they aren’t exactly hot cakes in the retail sector.”

      A selection of games taken from Metacritic’s top games of 2009 feature. Now these are all pretty rough estimates as game companies are never great at keeping track of sales. But still.

      Arkham Asylum (Rocksteady Studios- London)
      2 million units sold in 3 weeks not including PC
      Grand Theft Auto 4 (Co developed by Rockstar North – Edinburgh)
      6 million units sold in the first week
      Burnout Paradise (Criterion Games- Guilford)
      1 million+ leading to total series sales of over 15 million
      Dirt 2 (Codemasters – Warwickshire)
      1.5million+ units
      Fable 2 (Lionhead – Guilford)
      3.5million + units meaning it has outsold Mass Effect 2′s 1.6 million
      Empire Total War (The Creative Assembly- Horsham)
      Broke British sales records and topped the all formats charts.

      So… yeah.

    • TeeJay says:

      Guildford (inc. “d”) … although it is pronounced “gill”-ford with the d silent.

      (Sorry, I’m just being pedantic semi-local resident)

  14. Schyz says:

    If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

  15. The Great Skratsby says:

    My chances of finding work go further down the drain. Lovely.

  16. cliffski says:

    I have to totally disagree with the ‘industry consensus’ on this one.
    I am overjoyed that the chancellor has decided to cut the small companies corporation rate tax, instead of this video game industry subsidy. And I say that as someone running a video game company in the UK.

    The propsoed tax benefit was for companeis that passed a ‘cultural test’. Do you think that Rockstar North making their games set in New York would qualify? Nope. Explain to me how Fable III is culturally british. Explain to me how ANY game is culturally british.
    Plus, it would have been an admin and bureaucratic nightmare. I recently applied to do a game for schools based on a government grant, and got immediately disregraded by the bureaucrats based on a single form (filled out by a family member who makes such proposals for a living, so done properly..), despite having masses of experience doign exactly what they were after. The bureaucrats do not want to supprot small indie companies, they care only for huge companies that will invite them to plush offices and take them to lunch on expenses.

    I don’t have a whole department of accountants and lawyers to fill out forms to claim government subsidies and the chances of me or any other indie getting any is zero.

    But…

    The reduction in corporation tax rates benefits me easily, simply, without lifting a finger. And it applies to ALL UK games companies, not just ones good with paperwork and schmoozing. Plus not an additional tax penny will be wasted on administration.

    By far the better choice imho.

    • cliffski says:

      Oh and correction for the article. the reduction in corporation tax is for ALL companies. Including small ones. Even me.
      This is not a ‘big business’ cut. It’s a business cut.

    • Baboonanza says:

      @cliffski
      I can’t think of anyway you could argue that ‘Ben There and Dan That’ and ‘Time Gentlemen Please’ aren’t culturally British, so clearly such a thing can exists.

      Otherwise I can see your point. It’s a much fairer way of helping everybody.

    • DrGonzo says:

      No, I would say the better choice is to change the rules and take out the ‘culturally British’ part.

    • BigJonno says:

      I reckon that Fable is possibly the most culturally British game series out there. It’s set in a fairytale fantasy world called “Albion” which is populated by characters sporting a wide variety of British regional accents. It’s noted for its very British sense of humour and Fable 3 features Jonathan Ross, John Cleese and Stephen Fry and will allow you to run around in Napoleonic War uniforms. It’s so British that if you hold the DVD case up to your ear, you can here “God Save the Queen” faintly playing in the background.

    • Meat Circus says:

      Thanks, Cliffski, for a viewpoint from somebody who knows what he’s talking about.

    • DrGonzo says:

      Except his comment on Fable not being British makes him sound a bit dim.

    • Griddle Octopus says:

      Cliffski’s right – the tax credit would have been an arse to administrate, isn’t necessary as Britain’s games development community is still highly competitive, and our developers have been served well in this budget by the National Insurance incentives and corporation tax / SME tax cuts.

      I’ve been getting pissed off all afternoon with industry mouthpieces with a tiny grasp of economics and slightly more of business finances indulging in the old British habit of whingeing for handouts. Why doesn’t someone go and ask an accountant first? 4% off corporation tax is a HUGE change.

    • DrGonzo says:

      You could well be right about it being the right decision. But I don’t see how you could be angry at companies being frustrated that they were promised a tax break and then had it taken away. They just lost some money after all.

    • Bhazor says:

      Or it might have something to do with you being a one man company, who may have missed deadlines (can’t check but I’m sure Democracy 2 was moved back some months, apologies if not), has announced he was already working on a new game, has made public his distaste for working under a publisher (from the Positech website, which shows you holding a combat knife BTW)

      “Positech games has 2 shares and I own them both ;) We make all our games 100% up front, self-funded, THEN we look for a publisher. Nobody vets our design ideas, nobody tells us how to make our games. This is a big contrast to the BIG games companies, where design is done in a boardroom by a bunch of accountants.”

      Theres also factors like though you definitely have experience, how much of that is in-browser flash.

      But yeah, a 1% drop in business tax is great.
      Just a shame about the 2.5% rise in VAT.

    • Kieron Gillen says:

      Cliffski: I haven’t a dog in this race, but I’d say your Kudos games were as culturally British as it’s possible for it to get.

      KG

    • cliffski says:

      They used to be, but americans emailed me telling me I couldn’t spell and asking what £ meant, so I had to change it all to be american for the casual games portals anyway.

      In terms of the government contract I was talking about, they didn’t look at my website. they flatly stated that they would not consider anything whatsoever from anyone that was not entered into their form.
      Apparently if it doesn’t fit in box 17b, then it clearly isn’t relevant… Yay for government!

      They wanted a political strategy game to teach kids how politics works.
      I’m sure I have some experience in this area, what with Democracy 2 being in a number of schools as a teaching aid, but what would I know :(

    • iainl says:

      Actually, I’d have said that the GTA series is indeed fundamentally British. It’s certainly a fundamentally Not American series; you can see that just by looking at how all the really-American rip-offs miss the point.

      GTA isn’t a game about being a Gangster in New York. It’s a game about being a fictional gangster, in the distorted Bizarro-World version of New York that a bunch of foreigners whose experience of the place is entirely informed by watching too many videos when they were teenagers / students. From the satirical radio stations to the puerile joke-name corporations that operate in the city, it’s definitely a British vision of America.

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      Flimgoblin says:

      By the terms surrounding the grant it’d be very hard to get it past – especially given the amount of non-british voice talent.

    • TeeJay says:

      “Culturally British”
      http://www.ukfilmcouncil.org.uk/culturaltestpoints

      A Cultural Content
      A1 Film set in the UK 4
      A2 Lead characters British citizens or residents 4
      A3 Film based on British subject matter or underlying material 4
      A4 Original dialogue recorded mainly in English language 4
      Total Section A 16

      B Cultural Contribution
      Film represents/reflects a diverse British culture, British heritage or British creativity 4
      Total Section B 4

      C Cultural Hubs
      C1 Studio and/or location shooting/ Visual Effects/ Special Effects 2
      C2 Music Recording/Audio Post Production/Picture Post Production 1
      Total Section C 3

      D Cultural Practitioners
      D1 Director 1
      D2 Scriptwriter 1
      D3 Producer 1
      D4 Composer 1
      D5 Lead Actors 1
      D6 Majority of Cast 1
      D7 Key Staff (lead cinematographer, lead production designer, lead costume designer, lead editor, lead sound designer, lead visual effects supervisor, lead hair and makeup supervisor) 1
      D8 Majority of Crew 1
      Total Section D 8

      TOTAL ALL SECTIONS (pass mark 16) 31

    • TeeJay says:

      Also films made as official co-productions are not required to pass the Cultural Test for British film. The UK has co-production treaties with Australia, Canada, France, India, Jamaica, New Zealand, South Africa and is signed up to an EU convention. Negotiations are underway with China and Morocco.

    • TeeJay says:

      Cultural Test guidance notes:
      http://www.ukfilmcouncil.org.uk/media/pdf/i/a/Cultural_Test_Guidance-June2010.pdf

      (includes definitions etc.)

  17. Zetetic says:

    I’d be interested in, say, Introversion’s reaction to the budget. (And not only because I want to see Subversion reach release.)

    • jeremypeel says:

      Exactly what I was thinking :( We already know they’re financially canny, but Subversion is nowhere near release!

    • Premium User Badge

      Dan Milburn says:

      Introversion might want to consider making a game that people want to buy rather than worrying about tax breaks. First month sales for Darwinia+ on XBLA were around 5000, which is.. not many.

      As I said last time this came up, I absolutely cannot see what’s so special about the games industry that it deserves state support. ‘But other countries are doing it!’ is not a good argument.

    • Josh W says:

      Exactly, make subversion!

  18. Rick says:

    The economy is in pieces. This sort of stuff is needed, if not necessarily welcomed. People will say that sacrifices and cuts need to be made in poor economic conditions, they just never want it to happen to _their_ industry or interests.

    • Matt W says:

      Agree. This is exactly the kind of special-interest special-casing that should be (dis)appearing in the first round of cuts. It sucks for the UK games industry, and for UK gamers by proxy, but it’s entirely sensible. The country needs to get its finances back on track and this means cutting lots of good things now in order to be in a better position later. Carry on.

  19. Jad says:

    So if I start an escalator manufacturing company that employs 300 people and makes X millions of pounds a year, I have to pay the standard corporate tax.

    But if I start a game development company that employs 300 people and makes X millions of pounds a year, I deserve a tax break for my company?

    Why is the game industry so special? And why game software specifically? If I want to start a business software company, do I get this tax break too? Where and why do you draw a line around some industries and say “these guys we like”?

    • jalf says:

      Why is the game industry so special? And why game software specifically? If I want to start a business software company, do I get this tax break too? Where and why do you draw a line around some industries and say “these guys we like”?

      I haven’t followed the UK proposal specifically, but there are two reasons why such a tax break for game developers might be meaningful:

      - it attracts more game developers = more people paying tax = overall beneficial effect on the economy. Canada has had a lot of success with this. They’ve attracted a *huge* number of big studios, generating quite a lot of income. The games industry is *huge*, but it’s also tough to get started. Offering a tax break to developers might allow them to survive long enough to get their blockbuster MW2 killer released.
      - it might be thought of as an initiative to preserve/promote the local culture. Make some good healthy British games to counter the influence of braindead American action games.

      It’s actually fairly common to offer tax breaks to specific industries for one or both of the above reasons.

      So to answer your specific question, would a tax break for escalator companies promote a significant growth in the sector? Would the UK become the Silicon Valley of escalators? If not, it makes little economic sense to offer escalator companies a tax break.
      Or does it have cultural significance? Is it important that kids grow up with exposure to British escalators? Is the country’s cultural inheritance tied to escalators?

  20. Meat Circus says:

    Interesting that John can’t not let his idiot socialism get in the way of writing an article that makes sense.

    • DrGonzo says:

      Well your idiocy gets in the way of your sentences making sense.

    • jalf says:

      Socialism? Wouldn’t a socialist be fine with high taxes on everything?

      Whereas I know quite a few high-profile capitalists who think it’s a brilliant idea to lower taxes for their businesses.

    • disperse says:

      Why can’t we not stop using double-negatives? ;-p

    • Nick says:

      He’d be better off wearing a mask and punching people, eh?

    • le poo poo says:

      n..no…not socialism!

      (it is you who is the idiot)

    • Tim Ward says:

      In what universe is cutting taxes socialism?

    • John Walker says:

      Martin – you may want to have a quick brush up on what socialism is before you throw in your insults.

    • TeeJay says:

      It is true however that generally speaking since the 1970s sector-based, interventionist, industrial policy has been favoured by more ‘left-leaning’ thinkers and opposed by free-market neo-liberals on the ‘right’.

      The fact that various rich countries (US/UK/Japan etc) have done this in the past and that various wealthy business and bureaucratic elites have benefitted from it enormously does obscure some the left-right nature of things. Other obvious examples of “corporate welfare” are sectors that are deemed ‘strategic’ such as defense, aerospace, large scale infrastructure and transport and sectors that bid for massive public sector contracts, and which therefore have a very direct interest in high levels of government spending.

  21. AbyssUK says:

    Games companies are so selfish, honestly.. quit bitching and sort out your overpaid programmers (yeah that’s right you heard me), overpaid designers (yeah that’s right you heard me), highly overpaid exec’s and over paid media/advertising peoples, maybe then you won’t be so screwed.

    • jalf says:

      You mean the ones who are paid significantly less than people doing the same thing in other industries?

      Trust me, you don’t become a game programmer for the money.

    • Vitamin Powered says:

      Have you any idea what programmers in other fields are paid? Especially considering the crossover from shader programming into GPGPU programming, and from there into the financial sector?

    • Weylund says:

      I made about twice as much before I went over to game development. As several people have said, you’re not in it for the money.

  22. Edgar the Peaceful says:

    I realise this is a gaming blog, but compared with a 25% cut in the Education budget this means fuck all.

    • ReV_VAdAUL says:

      Yeah you’re right. An increase in VAT that as a regressive tax will hit the poor hardest, a 25% cut to all government department budgets outside health and international development that will lead to public sector cuts that will again hit the poor hardest and a shaky reaction from the markets is all a bit more important than whether British makers of our favourite leisure activity get a tax break.

    • Alexander Norris says:

      This.

      Given the current Tory/ersatz-Tory coalition, the games industry not getting a tax cut is the very, very least of the UK’s worries.

    • BigJonno says:

      I’m currently a mature student studying games and education (with a view to working in games-related academia.) I’m also a carer for my wife who is on disability benefits and we also get child benefit for our son. I got fucked so hard on this budget that I’m officially out of orifices.

    • John Walker says:

      But like you say, this is a gaming site. And while I would agree with you, it’s really not appropriate for me to get angry about that here.

    • Edgar the Peaceful says:

      Fair dos John. I wasn’t meaning to be catty towards RPS; I’m just majorly depressed at the whole sorry episode.

      Banks take risks in search of profit. Banks bankrupt. Country bankrupted propping up banks. Markets ‘demand’ huge cuts in public spending / public sector jobs/ public services. Banks pay massive bonuses. Ever feel you’ve been cheated?

    • TeeJay says:

      Re. education – they could start by opening up the teaching “profession” – making it easier to hire, easier to fire, bringing pay-per-hour and benefits into line with the rest of the economy and integrating schools and their facilities into local communties (for example using facilties in the evenings and holidays, which would also generate income, making more use of community, voluntary and parent input).

  23. Roadrunner says:

    This is what you get people, for voting in the two crap choices of the three crap parties!

    ….Although, irony strikes at lovely times. I remember when RPG declared their love for the lib dems because of the digital economy bill (which has done absolutely nothing, If I may point out.)

    • cliffski says:

      well it could be worse. spending £5 when you take in £4 doesn’t work. Not when you end up with an interest bill of £72 billion a year.
      If we didn’t have that huge government debt, we could scrap all corporation tax, with the money that would be saved. Imagine the effect that would have for boosting UK business competitiveness, and creating jobs.
      I don’t get how the opposition can criticise the new government for cutting spending. What was their plan? to keep on printing money?
      We went through years of economic boom, and not only didn’t pay down debt, we made it tons worse. And they had the gall to waffle on about ‘prudence’ as they did it…

    • Daniel Rivas says:

      The gamble is whether these cuts will pull us right back into recession.

      My questions to the deficit hawks – looking at you, Meat Circus – are these:

      The government is slashing budgets, shrinking the state in the hope that private services take up the slack. Where is the evidence that this will work, given that businesses are generally looking to save, rather than expand. Is this anything more than an ideological stab in the dark?

      The government is hoping that in cutting now, the deficit will be reduced faster than with slower cuts and greater economic growth. Where is the evidence for this?

      David Cameron and George Osborne continue to describe state economics in terms of household budgets. This is wrong, as Government spending can spur on economic growth. So are Cameron et al economically naive, or politically disingenuous?

      Where do the Eurozone countries expect to export their goods to when they are all slashing deficits, cutting growth?

      In what way is the Canadian example of deficit reduction and austerity measures relevant, when it took place with a booming neighbouring economy in the shape of the United States?

      How can the public finances be “far worse than we thought” when the OBR report showed deficit projections to be only slightly higher and borrowing predictions to be significantly lower than Alistair Darling expected? What justification, therefore, do the Liberal Democrats have for raising VAT – an extremely regressive move* – after they campaigned against such a “Tory Bombshell”?

    • Daniel Rivas says:

      Well, this is not what I meant to reply to. Darn it, WordPress!

      Ah well.

    • TeeJay says:

      @ Daniel Rivas

      I’d like to believe in the “fiscal doves” but I get highly suspicious when it comes from the mouths of politicians who have suddenly and opportunistically changed their tune or when it comes from people with a specific financial interest / sector to protect.

      You are right to ask for evidence – so where is the evidence that “cutting later” will produce more economic growth and reduce the deficit faster?

      Also we should ask for some examples of genuine economic growth coming from pumping money into public services? (where ‘genuine’ = growth in economically productive sections of the economy not a spending splurge bubble based on massive debts and which offer no longer-term returns).

      At least the argument for supporting the games sector is based on business logic. However I’m not sure why the Conservatives “right-fenced” the NHS, which has seen spending jump from £60 bn in 2003 to around £120 bn now – why exactly? – and within which doctors managed to get a ridiculously over-generous settlement out of Labour (eg UK doctors make over double than doctors in Spain and Italy).

      The public sector is not “the engine of the economy” and it actually wastes a lot of money paying idiotic jobsworths and contractors who milk it for all it’s worth. At least cash welfare payments have the advantage of going (mostly) directly into poorest people’s pockets and then going back into the economy via things people actually want and judge to be good value.

      I’d introduce a basic citizen’s income that would replace unemployment and housing benefits for everyone regardless of income or employment status and get rid of 90% the DWP, recoup the benefits going to the wealthy by adjusting tax rates and let people find their own accomodation at a price and location of their own choosing (instead of unequal housing benefit payments and instead of ‘social housing’). I’d add on extra benefits for those who needed them (eg children, disabilities).

      I’d also turn a vast range of public services (eg all schools) over to user-run, charity-run or privately-owned organisations and let them hire and fire whomever they wanted.

  24. Dean says:

    It’s easy to say that there are bigger fish to fry here, and that Games Tax Relief is a minor frivolity in the grand scheme of things. That’s entirely correct. We need to sort out the defict, and even though Games Tax Relief would be profitable in the long-term, we’re in a short-term pinch at the moment, so I can see why it has to go.

    Except.

    There are a whole bunch of other ‘frivolous’ projects that aren’t being cut. I mean, we’re spending billions on the Olympics, in what, in essence, is a vanity project. Why not cut that? It might have some long-term benefits (though I hardly think it’s cost effective) but again, we’re in a short-term pinch.

    • Lacero says:

      An austerity olympics? where the athletes village is a bunch of cardboard boxes or like a third world refugee camp? And the velodrome is full of broken glass and dog mess?

      They wouldn’t have to spend any money on east london at all!

    • dadioflex says:

      The Olympics will cost us billions. There will be no positive outcome.

      Talk about an Olympic dividend? Imaginary.

      Best case, we trap a bunch of foreigners here and use necro-vampirism to suck them dry for the next few years.

      Best case.

  25. Jimbo says:

    They’d probably have introduced it if Labour hadn’t announced it.

  26. pakoito says:

    Come to spain, not only we’re not relieved from taxes but there are few to no ways of getting any kind of public money to start any decent project.

  27. icheyne says:

    Anyone who doubts the seriousness of the deficit should check out this excellent infographic. Tax breaks for games developers is hard to justify in this context.

    http://www.guardian.co.uk/news/datablog/interactive/2010/jun/22/budget-2010-information-beautiful-blog

  28. FiddleSticks says:

    suck it UK (sorry, from Toronto)

  29. dadioflex says:

    “Despite those tweaks, this is still dreadful news for British developers.”

    Not really. The taxes will make a marginal difference to the ones that turn a profit and, yes, a massive difference to the ones that don’t.

    So… dreadful news for companies that don’t make a (big) profit?

    Shocking.

    RPS – more ACTUAL business reporting please, and less imaginary crap from fairies and unicorns that this usually descends into. Business is real, profits matter and just being cool isn’t actually enough to save a development house from closing. Ta!

  30. SpinalJack says:

    Sad times as I’m about to start a new game company in London :(

  31. InVinoVeritas says:

    I find it important to add that this quote was Reagan describing how the typical government views the economy; he was not stating his position on the matter. Just want to be sure the context is there.

    • InVinoVeritas says:

      Arghh, reply fail. That was supposed to be directed towards Schyz and le poo poo way up top. Also wanted to add that it felt a little silly typing le poo poo.

  32. merc says:

    Well good. Frivolous subsidies are a waste of money even when they happen to be subsidizing your favorite hobby.

  33. Nick says:

    Basically, they need to found a few more citie and just cottage spam.

  34. Mudface says:

    “How odd it is, that the government found the finances to be in much worse shape than they thought, yet deficit projections have barely changed and borrowing has dropped.”

    Indeed- the deficit for last year came in around £20 billion lower than first forecast and for next year is already £6 billion lower. Amazing what you can do when you keep people in work, paying taxes and buying goods. This is just another short-sighted decision from a government that wants to cut for ideological reasons rather than any necessity.

  35. planet xxx says:

    Yes Mudface is right; there is nothing necessary about this – it’s part of the government’s ‘shock therapy’ – note the repeated references to Greece (“we’re not in Greece’s situation yet”) and then read Naomi Klein’s book ‘Shock Doctrine’.