When Hodge met ELSPA

The video games industry has grown in significance both in terms of popular culture and economically. This is demonstrated by the size of the industry, both in the UK and the role the UK Games sector holds worldwide.

It is the worldwide competition that brings me to your current challenge – globalisation of the industry. From my perspective, the one word that I hear the most from the industry is ‘Canada’, but as you all know the issues are bigger than one country as while Canada may be the current challenge to the UK industry, it could just as easily move to somewhere else in the next couple of months.

And actually the bigger picture about the costs of doing business in the UK weighed against the significant benefits of locating here, because of the talent and other issues such as London being a ‘creative hub’ is one that we need to constantly reflect on.

Games have been a great success story in this country. We were there at the start and our businesses grew. But in an increasingly global market, we do need to see what we can to stay ahead.

The difficulty we in government have is that while the problem seems to be easily summed up – it is more difficult to find the solution that works. And I want to spend some time outlining the complexities within which a solution needs to be found.

Firstly does the UK government care about the video games industry? – Yes, absolutely certainly we do. Is the UK therefore willing to offer tax incentives to the extent that the Canadian Government does? Now even if we had the money and the issue is questioning priorities in a tight fiscal environment, could we do it?

Whilst being a member of the EU gives great opportunities to industry. It also means there are certain restrictions on State Aid, and I know many of you are aware of these. As I understand it, these restrictions rule out the type of support being given by Canada.

You will be aware of the lead taken recently by the French Government to introduce a tax relief system for video games. They plan to use a cultural test to support video games that are culturally French. This is currently being considered by the European Commission, although I understand, ELSPA, as a member of ISFE signed up to a rejection of this approach.

Even if we supported such an approach – it would be restricted to games that can pass that rigid cultural test. And this will put your industry in a box which some of you don’t seem to want to be in. However other parts of the industry do want this and that is a contradiction which we in Government are having to wrestle with.

One of the current forms of support available to the video games industry is R&D tax credits. And again I know that there are criticisms of the way the tax credits impact on the industry. But we want to work further with you to make sure that these systems are being used as effectively as possible. Is it about the process being simplified or is it about changing what you qualify for, we are up for a conversation about that and want to take it further.

What we want to achieve is making the UK a better environment for making games so that large and small companies alike expand their operations. So let us hear from you what the constraints are and let us tackle and work together on these.

In that vein of thought there is more to industry support than tax relief. The way the creative industries are supported is an area you know we have been looking at under the Creative Economy Programme for a couple of years. Before the end of this year, we will publish the Creative Economy Green Paper which will be our response to The Work Foundation’s report, Staying Ahead.

This green paper which wont be the end of the story, this is an iterative process which will set out our direction of travel on some of the issues I’ve already mentioned. But it is not the end of the story.

The Green Paper will also look at other issues which are vital to your success – how we support innovation, how we do better on skills, education and training to ensure we maintain our nation’s advantage in talent, how we can better do to police IP rights in the new media environment whether this is with extra support to emerging business models as we see more and more convergence.

I can’t today say this is it, I don’t think you want a cast iron assurance on the nature of government support for the games industry in the future. I can’t tell you because with such a dynamic industry it wouldn’t be possible to do so. What I can do is tell you that we want to continue working with you to see how best to support you.

The dynamism and the global growth of this industry demonstrates the increasing impact it is having on society. Which brings me to my second message – the Byron Review.

It is my job to champion you and make sure that the UK is best placed to address those challenges. And to make everyone else recognise the need to do so and keep the Games Industry at the heart of our economy.

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