Scottish MPs gathered in‭ ‬Edinburgh this Wednesday to debate the issue of game taxation.‭ ‬Highlights can be found here. Below you can find a full transcript of the debate,‭ ‬taken verbatim from‭ ‬Hansard.‭

 


The Deputy Presiding Officer‭ (‬Trish Godman‭)‬:‭ ‬
The final item of business is a members‭' ‬business debate on motion S3M-3311,‭ ‬in the name of Joe FitzPatrick,‭ ‬on support for computer games development.

Motion debated,

That the Parliament notes with concern the comments of Colin Macdonald,‭ ‬Studio Manager for Dundee-based computer games developer Realtime Worlds,‭ ‬who recently expressed concern for the future of the industry‭; ‬recognises that despite the current economic situation the computer games industry is continuing to grow,‭ ‬however that in terms of games development the United Kingdom is falling behind‭; ‬notes that UK firms must pay tax on research and development,‭ ‬while in countries such as Canada and France rebates are given‭; ‬further notes the importance to the economy of Dundee and Scotland of computer games developers who have produced award-winning titles such as Crackdown,‭ ‬which recently sold over‭ ‬1.5‭ ‬million units,‭ ‬and believes that games development in Scotland will suffer under the current tax regime.


Joe FitzPatrick‭ (‬Dundee West‭) (‬SNP‭)‬:‭ ‬I am pleased to introduce this debate on support for the computer games industry in‭ ‬Scotland.‭ ‬Members will be used to hearing me extol the virtues of‭ ‬Dundee whatever the topic of debate,‭ ‬and today will be no different.‭ ‬However,‭ ‬in the case of the computer games industry,‭ ‬there is no need for me to embellish Dundee's role at the centre of the‭ ‬United Kingdom market.‭ ‬Dundee is a world player when it comes to the computer games industry.

From the first days of computer game technology,‭ ‬Dundee has been at the forefront.‭ ‬In‭ ‬1983,‭ ‬Timex produced the Sinclair ZX Spectrum home computer in Dundee,‭ ‬and a generation in the city grew up learning the skills that would make‭ ‬Dundee a global leader.‭ ‬One of the early successes of the‭ ‬Dundee computer game scene was the worldwide hit Lemmings.‭ ‬There were also million-plus selling titles such as Earthworm Jim and Rollercoaster Tycoon and,‭ ‬of course,‭ ‬the huge hit Grand Theft Auto,‭ ‬which was created in‭ ‬Dundee by Rockstar North.‭ ‬Unfortunately,‭ ‬the company is now based in‭ ‬Edinburgh,‭ ‬although it is still successfully working for the Scottish computer games industry.

Dundee still produces world-class games.‭ ‬Last year,‭ ‬we had the award-winning Crackdown,‭ ‬which was developed by Realtime Worlds and sold more than‭ ‬1.5‭ ‬million copies globally.‭ ‬The games industry in the‭ ‬UK employs‭ ‬30,000‭ ‬people and contributes‭ ‬£1‭ ‬billion to gross domestic product.‭ ‬Dundee is home to‭ ‬10‭ ‬per cent of the‭ ‬UK's computer games companies.‭ ‬It is estimated that about‭ ‬3,500‭ ‬people are employed in computer games development and related industries in the‭ ‬Dundee area.

Dundee also leads the way on education and training.‭ ‬The‭ ‬University of‭ ‬Abertay Dundee has been instrumental in supporting the growth of computer games technology,‭ ‬and its graduates have set up companies in the city,‭ ‬throughout the‭ ‬UK and in other parts of the globe.‭ ‬Abertay had the‭ ‬UK's first undergraduate degree in computer games technology and‭ ‬Scotland has three quarters of the undergraduate courses that are currently available in the‭ ‬UK.

Despite the economic downturn,‭ ‬the worldwide industry is booming,‭ ‬with computer games sales last year overtaking DVD sales for the first time,‭ ‬with‭ ‬£22‭ ‬billion of global sales.‭ ‬However,‭ ‬this is not a time to rest on our laurels.‭ ‬Yes,‭ ‬Dundee and‭ ‬Scotland are doing well in a booming computer games market,‭ ‬but we must ensure that,‭ ‬in the years to come,‭ ‬the companies still exist and that the news broadcasts stories about the latest great game launch and awards,‭ ‬rather than the latest company closures.‭ ‬Timex has long since closed its doors,‭ ‬and last week the loss of another‭ ‬250‭ ‬jobs at NCR in‭ ‬Dundee was a stark lesson that a once-successful business can quickly become less viable in changing market conditions.

We are seeing the first signs that problems might lie ahead for the computer games industry.‭ ‬The‭ ‬UK is falling behind on games development,‭ ‬and the countries that are overtaking us are those that have given tax breaks for games development.‭ ‬Scottish and‭ ‬UK firms must pay tax on research and development,‭ ‬whereas countries such as‭ ‬Canada and‭ ‬France give rebates,‭ ‬which gives their companies a competitive advantage over our companies.‭ ‬Although in some cases it might be possible to claim tax credits here,‭ ‬that applies only at the end of the development process.‭ ‬If our computer games industry is to compete on an equal footing with companies in other countries,‭ ‬it needs support during the development process,‭ ‬which can be lengthy.

Colin Macdonald,‭ ‬the studio manager for Dundee-based computer games developer Realtime Worlds,‭ ‬recently expressed concern that,‭ ‬unless the playing field is levelled and UK-based companies receive a similar tax break,‭ ‬such as a VAT exemption for games research and development,‭ ‬the industry will suffer.‭ ‬Realtime Worlds is not alone in that view.‭ ‬The‭ ‬University of‭ ‬Abertay Dundee,‭ ‬the Scottish Chambers of Commerce and the computer games trade body Tiga all say the same thing:‭ ‬unless the playing field is levelled,‭ ‬we could lose out in‭ ‬Scotland.

Top games such as Crackdown take about five years to develop.‭ ‬When tax breaks of up‭ ‬25‭ ‬per cent are available in other countries,‭ ‬Scotland and the UK are simply not as competitive,‭ ‬which is why‭ ‬the UK is falling behind in the development of new games.‭ ‬The industry is calling for a change to the tax regime,‭ ‬as there is firm evidence that easing the tax burden on games development creates jobs and grows the industry.‭ ‬In‭ ‬Canada,‭ ‬the introduction of a‭ ‬25‭ ‬per cent tax break on development has resulted in a flurry of development and increased the number of people who are employed in the games industry by‭ ‬40‭ ‬per cent.‭ ‬It has also led to extra investment of‭ ‬$1.5‭ ‬billion in the Canadian economy.‭ ‬French companies were granted a‭ ‬20‭ ‬per cent tax break in‭ ‬2007,‭ ‬which has proven an aggressive stimulant for the country's computer games industry.‭ ‬That competitive advantage has given new-found confidence to French game developers.‭ ‬The Scottish Chambers of Commerce and Tiga have stated that if we received a similar tax break to bring us back into line with our main competitors,‭ ‬it could create an extra‭ ‬11,500‭ ‬jobs throughout the‭ ‬UK and safeguard thousands more jobs in the industry.

At the end of the day,‭ ‬companies will go where prices are cheaper,‭ ‬even if development in the‭ ‬UK is of a higher quality.‭ ‬We are already hearing of Canadian headhunters targeting the wealth of talent in the Scottish computer games industry.‭ ‬Dundee generates‭ ‬15‭ ‬per cent of the‭ ‬UK's total computer games turnover—some‭ ‬£150‭ ‬million annually—and would therefore feel more acutely any downturn caused by a loss of competitiveness.

Holyrood does not yet have tax powers to support the industry directly,‭ ‬but there is much that we can do in the chamber.‭ ‬I welcome the steps that the Scottish Government has taken to support the industry,‭ ‬most notably through the funding of the‭ ‬University of‭ ‬Abertay Dundee Skillset media academy,‭ ‬which will specialise in computer games education and expand the university's expertise.‭ ‬That new academy recognises Dundee's importance as a centre for computer games development and will provide a skilled workforce to ensure that‭ ‬Dundee continues to lead the field.

Dundee used to make Spectrum computers and NCR used to employ thousands in the city.‭ ‬With cross-party support in the chamber and at‭ ‬Westminster,‭ ‬we can ensure that it will never be the case that we have to say that we used to have a computer games industry.