MP Vaizey speaks to Edge following reports that the UK Government has failed to limit Canada's generous subsidy policies for game companies.
Back in March, the Department for Culture spoke on the ‘unfair’ level of tax breaks which Canadian developers currently enjoy. The Department stated that such attractive benefits overseas are drawing developers and publishers out of Britain, and promised to consult the World Trade Organisation (WTO) in an attempt to limit foreign subsidies.
“The Government pretended that this was a viable option,” says Vaizey, “but really, it was an excuse not to take action. There was never any chance of the Government getting anywhere with this referral. The WTO does not have the power to intervene on subsidies.”
On Tuesday Richard Wilson, CEO of UK games industry group Tiga, made a similar assessment, adding that the Labour Government needs to think about improving its own nation’s subsidy policies rather than seeking to limiting those elsewhere.
Vaizey agrees. When asked by Edge if tax breaks would be a more practical step in rejuvenating the UK games industry, he said: “Quite possibly. We have a film tax credit, and R&D tax credits. If we were to, say, extend the film tax credit to video games, we would probably need EU approval, but the Government should have been exploring this. France already has its system in place.”
“It need not have an impact on public spending,” he adds. “I understand the film tax credit has cost less than half the amount budgeted.”
The Government’s failure to restrict ‘anticompetitive’ foreign subsidies couldn’t have come at a more telling time. The UK has just become the second biggest videogame market in the world, following an annual software sales surge of? ?26? ?percent in? ?2008.
But though the money is flowing at the retailers, Britain’s game development sector is at risk of dropping to fifth in the global rankings.
“It’s clear that action is needed,” says Vaizey. “We already know games companies are relocating to Canada; the evidence is there for all to see. This is a 21st century industry, where Britain is a world leader, and where there is the prospect for huge growth in the jobs market, especially as the game market grows. Canada recognises this, Britain does not.”