UKIE boss Dr Jo Twist talks about the uncertainty that Brexit presents UK games businesses, the questions that need answering, and what we can do in the mean time
The uncertainty that the referendum result has created is palpable. Brexit poses many questions for which as yet there are no clear and definitive answers.
My message at this time is that the UK games sector is a highly dynamic, global success story. The games industry blends the best of British technology, creating successful games exported around the world. Policy makers must share our vision to make Britain the best place to make and sell games and work with us to maintain our ambitions for the industry.
During the campaign in the run up to the Referendum, in line with many other organisations representing individual businesses, UKIE decided not to take a position itself.
But we committed to supporting members with as much information as they needed. We did two anonymous sentiment surveys of our membership in the run up, both of which returned identical results. From those who responded, the signal was clear: remain meant less uncertainty and Brexit most definitely meant more uncertainty.
It also told us that recruiting highly skilled and diverse talent was of crucial importance in the short to mid-term. This talent is needed to fuel our innovative and creative sector at a critical time.
We knew that more than half of those respondents felt strongly that the free movement of people within Europe was vital. Only 24 per cent believed we currently have the volume of home grown talent we need.
I have received a lot of questions from businesses since Friday that I have done my best to reassure and answer.
"We need frictionless access to a market in Europe of 500m consumers."
Dr Jo Twist, UKIE
From our perspective, the crucial question for the next government is what its position towards the single market will be and how world-leading industries like ours will be consulted.
If the government decides to ‘go it alone’ we should be much clearer than during the Referendum campaign about what the benefits and consequences are. If we can design attractive new incentives and rules for UK based-firms previously unavailable to us because of EU rules, then what extra measures do we want as an industry to maintain competitiveness? And will those measures be permitted when we try to enter the single market?
Alternatively, will a Brexit government pragmatically align itself more closely with the EU, even without the powerful negotiating rights we once had, in order to secure access to this huge and important market? We need to understand what our new relationship with lawmakers in Europe will be, given that we now have no formal voice to the Commission or Parliament.
In the immediate aftermath, I went to a Creative Industries Council meeting, which was also attended by Secretary of State for Business Sajid Javid MP and the Secretary of State for Culture John Whittingdale MP, and I also had a personal conversation with London Mayor Sadiq Khan. They are all keen to reassure businesses – especially those in the middle of international deals and those who have non UK residents in their employ – and to temper immediate concerns.
Aside from talent, our foreign direct investment story, regional growth and funding, other funding streams (such as Creative Europe and Horizon 2020) and projects already in the works which have received these benefits, are all key concerns for many in the industry.
Perhaps the most interesting question is around the status and future of the Video Games Tax Relief [VGTR], which was hard fought for, had cross party support, and has reaped huge benefits financially for businesses across the UK. It has also unlocked further financing routes and has been a critical element in our attractiveness for overseas companies.
The VGTR was granted by the UK government in 2014, but we had to wait a year before it was implemented because State Aid rules compliant with EU regulations meant we needed to make a case and seek permission from Europe.
Being outside of Europe means that lifting State Aid rules could be a benefit to businesses should government adopt a more activist approach to industrial policy. However, this also risks more difficult negotiations aroundtrade agreements with other trading blocks.
We know there is clear precedent from EU agreements with 12 Mediterranean countries and South Africa that the EU will insist on its State Aid rules being respected in any free trade agreement. Any trade agreement the UK seeks post-Brexit, including joining the European Economic Area, would require keeping to the existing rules under which Video Games Tax Relief has been secured.
Another complex set of issues is around access to the Digital Single Market. We need frictionless access to a market in Europe of 500m consumers.
The fact is the government is unable to answer these questions that we, and a good deal of others, have – at least not yet.
For now, we can continue to provide insight and information, as well as evidence, for members and for the sector at large in our conversations with parliamentarians and civil servants. We can continue to provide confidence that we are a hotbed of creativity, a games powerhouse, a sector and a country worth investing in. We can continue the dialogue with our sister trade association in Europe (ISFE) which was set up by the trade associations of UK, France and Germany to be our voice in Europe.
"We can continue to provide confidence that we are a hotbed of creativity, a games powerhouse, a sector and a country worth investing in."
Dr Jo Twist, UKIE
We can redouble our efforts to develop talent in the medium and long term by ensuring STEAM (science, technology, engineering, art and maths) is driven through the school system so that our home-grown talent is nurtured. We must also continue that support right through further education, higher education, and for people in jobs already.
We can act together as a sector which has, to use the oft-used phrase, punched above its weight for many years without the benefits that other markets receive. We can continue to articulate and advocate a clear blueprint for growth, which works at a local and global level. We will prevail if we act together as a powerful single voice.
Now more than ever, we need to rally together as a sector which is overwhelmingly exporting into digital markets, and ensure no hasty decisions based on inaccurate information are made that could damage our sector and businesses unnecessarily.