UK games developers have just been dealt a financial blow by Chancellor George Osborne in his first budget, which sees the coalition Government scrapping the video games tax relief plans promised by Labour.
In his speech today, Osborne simply said the "planned tax relief for the video games industry will be cancelled." According to the Government's budget report, the cancellation of video games tax relief will save the government £40 million in the 2011-2012 financial year, and a further £50 million in each subsequent year.
This will not only come as a shock to the video games industry, but perhaps also to some members of the Conservative party. Just this morning, the organisers of the Develop games conference confirmed that Conservative Minister for Culture, Ed Vaizey would be speaking at the conference.
The organisers claimed Vaizey "has promised that both the Conservatives and the new Chancellor of the Exchequer, George Osborne, back his pledge to breathe new life into the UK game industry with tax relief." We're sure he'll be met with a welcome reception by the UK games industry when he speaks at the Develop conference on 14 July.
UK games industry trade association TIGA has already condemned the decision. TIGA CEO 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."
Wilson warned that, without video games tax relief, or a similar fiscal measure, "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."
Although games developers could benefit from Osborne's reduction in corporation tax, along with every other business, Wilson says this "does not address the specific needs of the video games sector."
Meanwhile, co-founder and creative director of Rebellion Studios, Jason Kingsley (opens in new tab), described the decision as "hugely disappointing... especially given the existence of tax relief for other sectors of the economy."
Labour chancellor Alistair Darling first announced the video games tax (opens in new tab) break in March, and both the Liberal Democrats and Conservatives (opens in new tab) chimed in with their support at the time.