Chancellor George Osborne’s decision to abandon plans for tax relief for video game developers has been met with dismay in Dundee.
The move was branded disastrous by the UK’s video games trade organisation and condemned by politicians in Dundee, Scotland’s leading centre for video game development.
The previous government introduced plans for the tax breaks last March in their pre-election budget.
Colin MacDonald, studio manager of Dundee’s biggest games company Realtime Worlds, said Mr Osborne’s decision was “hugely frustrating.”
“We understand that times are difficult, but this is a missed opportunity — there are lots of figures showing how they would get a massive return from this.”
Mr MacDonald added that video games are a growing sector but one that will continue to be handicapped when it comes to competing with overseas firms.
“Some of the world’s most successful video game properties came out of Dundee and this (decision) encourages companies to go to places like Canada rather than here.”
Dr Richard Wilson, chief executive of games trade body TIGA, said, “I feel pretty betrayed — certainly the Liberal Democrats went into the General Election saying they supported it.”
Dr Wilson said cuts in corporation tax announced by the Chancellor will not help games firms.
“Obviously, the reductions in corporation tax are good news and we have argue for these, but by itself it won’t allow the UK games industry to compete on a level playing field,” he said.
Mr Osborne described the tax as “poorly targeted,” but Dr Wilson denied this was the case.
“We don’t believe it was poorly targeted. Our figures, which weren’t disputed by the Treasury, showed that it would pay for itself,” he said.
He added that the campaign for the Scottish Parliament to be given more tax-raising powers should be stepped up so Holyrood can take action to protect the games industry if the Westminster government is unwilling to do so.
Dundee West MP Jim McGovern also accused the coalition of breaking their pre-election pledges.DisappointedHe said, “Obviously, I am very disappointed as several Tories had supported a tax break for the games industry during the election campaign. Now that it comes to this budget, they seem to have forgotten those promises.
He continued, “I have been lobbying in parliament for the games industry in Dundee. I have written to several ministers, including George Osborne…straight after the election, but did not receive any responses from this government.
“I will be speaking with the games industry and seeing how I can support them and their base in Dundee over the coming months and years.”
Dundee East MP and SNP treasury spokesman Stewart Hosie said, “This is a Budget bombshell for the computer games industry. It is a cruel blow coming just months after we secured a commitment by the last government to deliver a competitive tax incentive.”
Dundee West MSP Joe FitzPatrick has said he will write to the Chancellor asking him to rethink his plans.
“I am really concerned about this. It took the industry a long time to convince the previous government and progress had been made,” he said.
“This is clearly a step in the wrong direction. It will cost them more and the proposal would have generated more cash than it cost.”
Mr FitzPatrick also backed TIGA’s claim that the Scottish Parliament needs greater tax powers.
“There is no question the games industry is more important to Scotland, and particularly Dundee, compared to the rest of the UK,” he said.
“I’m certain any Scottish Government would see it as important to protect the industry.”
Dundee City Council’s city development convener Will Dawson said the move was “extremely disappointing.”
“The city council had fully supported Dundee computer games companies that had lobbied consistently and had put up a very strong case that they should be given a level playing field with competitors who currently receive tax breaks from their governments,” he said.
“Now that the decision to support our industry has been scrapped, there is a very real danger that we could see computer games jobs disappearing from the city as companies relocate to take advantage of tax breaks elsewhere — for example in Ireland.
“The computer games sector and its potential for growth and job creation is important not only to our local Dundee economy, but the whole of Scotland and this is a serious blow.”
A Scottish Government spokesman said the decision threatens the economy.
He said, “Scotland’s games developers are telling us what the industry needs and this government is listening — it is disappointing that the UK government has not.
“Until Scottish and UK-based games developers are allowed to compete on a level playing field, we run the risk of losing existing businesses to other countries, and failing to attract new companies and highly-skilled jobs to this country.Fiscal responsibility”This situation underlines exactly why full fiscal responsibility for the Scottish Government and Parliament would benefit Scottish business and Scotland’s economy.”
Alan Mitchell, chief executive of the Dundee and Angus Chamber of Commerce, said he believes there is still the possibility of convincing the coalition to introduce some measure to help the games industry.
“Obviously, this is disappointing and it does take the shine off what otherwise does appear to be a relatively good budget for business,” he said.
“Mr Osborne talked about the ‘poorly targeted’ nature of the previous government’s measure, which does suggest he is open to other ideas about how the industry might be supported.”
Scottish Labour leader Iain Gray said Mr Osborne’s decision would particularly harm Dundee.
“This is an attack on Dundee and the thousands of people whose jobs depend on the industry,” he said.
“The Tories and Liberals have snubbed one of Scotland’s flagship world industries.
“The message from George Osborne to the industry is ‘go abroad, we don’t want you.’
“This tax break would have put the UK on a level playing field with other countries. Ireland, France and Canada all support their games industry, keeping high-value jobs in local economies.
“Alistair Darling agreed to support the computer games industry because Labour had a plan for growth.
“This government has no plan for growth — they seem to think that jobs just spontaneously appear in the private sector without thinking about the support employers need.
“This is a Tory budget which will throw people in Scotland out of work and if the Scottish Liberal Democrats have an ounce of decency left they will vote it down.”
Photo used under the Creative Commons licence courtesy of Flickr user Mykl Roventine.