INTERVIEW: ED VAIZEY, MP MINISTER FOR CULTURE, COMMUNICATIONS AND CREATIVE INDUSTRIES
Government’s Mr Games
Tax breaks for games made in the UK are back on the agenda. So Michael French spoke to Ed Vaizey, minister for the department of culture, media and sport, to find out why Westminster u-turned on subsidies for developers – and what happens next
“ 28
The industry was getting tax in 2010. Then the coalition government cancelled Labour’s plan. How did the Government come back to it? People were very disappointed when the video games tax break didn’t go through in the coalition government’s first budget. But as I told many people at the time we were not going to give up making the case for it. The Chancellor has to look at the economy in the round – he has to look at what he can afford. We also made the point to the industry that a games tax break is not a panacea. There are other ways to make the games industry successful including creating ways for anyone who runs a business to do business, as well as the skills issue which has moved on immensely for computer science.
Some big businesses made it quite clear they would seriously consider investing heavily in the UK if there was a tax break. Ed Vaizey, MP
But we didn’t give up on tax breaks and the case grew in strength over recent years. Not just for games themselves, but from the point of view of other companies. Some big businesses made it quite clear they would seriously consider investing heavily in the UK if there was a tax break. Big TV companies on the West Coast of the US said they would be interested, too, as did the animation companies. So it’s been a coalition of the willing, really, that put together a convincing case to the Treasury.
March 30th 2012 But we are not out of the woods
yet. We now have a consultation period ahead and need to get approval on it from the European Commission. While the Budget day was a great day it doesn’t happen overnight, it takes 12 months to implement.
So what can the industry do to help that process along? They have to put a realistic case to Government and have to show how the tax credit can work in practical ways. The Treasury will be concerned about tax avoidance, so that must be addressed.
But the current film tax credit in place works extremely well, so the industry should look to how that works. The latest version of that is four or five years old and works incredibly well. It includes prior approval from the Treasury and also avoids those tax avoidance schemes. This means all projects that would benefit need approval from the Treasury, and there are cultural tests which stipulate production in the UK. It’s important people understand there is a cultural test element and that they can start making games with a British flavour.
That cultural element has been quite contentious, though. Do we just have to lump it? Yes, it’s a requirement to get a tax break in Europe. The European Commission has tough rules on state aid. Governments can’t just hand money to companies they like, so you need to show that games have a cultural element promoting your domestic industry and culture. It’s been easy with film because you can easily argue that ‘a British Film’ or ‘a French Film’ clearly contributes to a cultural identity.
And within the cultural test it is important to stress that part of it is