Lords want tax breaks for UK games makers

The House of Lords has recommended that the UK's video games industry should get tax breaks in order to compete fairly on the international stage.

A report published today by the House of Lord's Communications Committee, which mainly looks at the home-grown film and television industries, looks at the difficulties faced by Britian's burgeoning games industry.

Calls for Government support fell on deaf ears when they were proposed in the Commons late last year but increased lobbying from industry insiders has led to the proposal being championed by the powerful upper house.

The report from the House of Lords says that the video games industry is growing and that it draws upon similar skills to the film industry - particularly in post-production - and has a degree of overlap in content.

The latest available figures from 2008 showed that 155 UK video game companies employed nearly 9,000 people and had a turnover of £625 million. The market for games in the UK, which has grown rapidly though eratically over the last 30 years, was worth £2.1 billion last year.

But industry insiders say that the UK industry is under fire from overseas developers who receive huge government subsidies.

Richard Wilson from gaming trade association Tiga told the Lords: "The UK games industry has grown in terms of employees by about eight per cent over the last two years. In Quebec the workforce has grown by about 52 per cent because of the very generous tax breaks. At a federal level, there is a tax break for going into production that amounts to about 37 per cent. In Quebec itself the government, incredibly, will pay the salaries of game developers to the tune of 37.5 per cent of their wage costs."

Wilson went on to say: "It would be fantastic to have the very generous tax breaks for going into production that our compatriots overseas receive, but at a bare minimum we would like the UK Government to adopt a tax break of 20 per cent for going into production"

Ian Livingstone, Creative Director of gaming giant Eidos pointed out that, while the film industry benefited from tax credits, the games industry did not.

A Pre-Budget Report from the Commons said that it was not persuaded that the evidence was "sufficiently compelling" to introduce such a tax incentive. The Government did, however, announce plans to invest £3.5m to establish two centres of excellence for the games industry in Dundee and Manchester.

A statement from the House of Lords committee recognised the claims of the videogames industry for support in the face of foreign government-subsidised competition, and recommend that the Government consider providing tax incentives for video game production.