Government should rethink axed support for video games industry

This morning I’ve been in Dundee where computer games company Realtime Worlds has this week gone into administration, putting hundreds of jobs at risk.

This follows the scrapping of a tax relief in George Osborne’s Budget without industry consultation or discussion, despite it being vital to keeping thousands of jobs in Dundee and surrounding areas. Ministers should listen to the industry and understand the importance of the scheme in protecting jobs.

The Tory-Lib Dem government is putting the future of the computer games industry in Scotland at risk. The terrible news this week about Realtime Worlds could be just the start unless the coalition government rethinks its decisions which are costing jobs and risking the recovery.

While Labour set out plans to support the industry in March, the new government axed it in June and the result is job losses in Dundee in August. These are the stark consequences of a government which cuts at any cost and seems to think that unemployment is a price worth paying.

As I have heard today this industry sustains thousands of high-skilled jobs that we simply cannot risk losing if we are to secure economic recovery and protect jobs in places like Dundee which were scarred for years by the Tory recessions of the 1980s and 1990s.

The industry, which contributed to £1bn to the UK economy last year, is competing with significant incentives provided by countries like Canada who are seeking to entice companies to relocate jobs there.

It is economic madness to be cutting support for industry and high-skilled jobs at this time. That’s why I am calling on the Tory-Lib Dem government to urgently rethink this decision.

There is an alternative, which is to cut the deficit at a more sensible pace and invest in jobs and growth here in Dundee and across Scotland so we can secure our future prosperity. That is the best way to secure our economic future and to get the deficit down in the long term.

There is a clear lack of strong leadership on this issue at both Westminster and Holyrood – neither government have listened to Labour on what support they can extend to the industry and so protect thousands of jobs.

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Posted August 20th, 2010 by Ed

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14 Responses to “Government should rethink axed support for video games industry”

  1. Smith says:

    You clearly have no idea about what happened at Real Time Worlds, or the Games Industry in general. It’s disgusting that you’re using something such as this for your own gain.

  2. Scott D Purdie says:

    Mr Balls why I am glad you are taking an interest in events in Dundee, the proposed tax relief wouldn’t of helped any in this case. Instead those who are without jobs now should be given all the help they can to start up their own studio. Tax relief is only one of many things that can be done to help the video games industry in the UK.

    The road to recovery will be driven by the engines of start ups and new IP created and owned within the UK. I would very much like to hear your ideas on this.

    Thank you for your time.

  3. G.Keenan says:

    Frankly Mr Balls, your opinion is missing the mark – Realtime worlds was already a Highly successful business that went into administration after a poor product was created (APB). They managed to raise £100Million to fund the project and were, and this is key; independent. The UK is losing out in the games industry because of the lack of tax breaks because the major publishers who own game development studios look to make games as cheaply as possible – so they relocate to where the tax breaks are. Tax breaks would also enable more start-up firms to occur.

  4. Triakins says:

    While tax incentives as a policy is itself worth discussing, the majority opinion among industry analysts seems to be that developer Realtime Worlds over-reached with their latest product (an ambitious online subscription-based game called “APB”) and failed to deliver the quantity as well as quality of content required to be successful in such a fiercely competitive niche of the computer entertainment industry. Sometimes it isn’t all the government’s fault – a sentiment that I’m sure Ed Balls can sympathize with…

  5. admin says:

    This is an interesting debate – the case of RW clearly shows the importance of the industry in terms of jobs and investment and, as G.Keenan says, the UK is losing out to those countries where there are tax breaks… While RW may have gone under whether or not the new govt had axed plans for tax breaks, we should be taking action to ensure others do not go the same way. Lots of others agree on this too: http://www.thecourier.co.uk/Living/Digital/article/3999/realtime-worlds-tiga-says-coalition-asleep-at-the-wheel.html

  6. Sam says:

    Realtime Worlds collapse wasn’t an issue of tax breaks. It was an issue of them creating a sub-standard product that they spent millions on and got poor reviews and subscriber numbers. Tax breaks wouldn’t have save them. Their problems were of their own making. Nice to see you being supportive of the industry while in opposition shame you couldn’t have been when you were in power.

  7. Dave says:

    You’re quoting the only other outlet that agrees with the point of view that RTW (not RW) went to the wall because of lack of support through tax breaks. Lots of others do not agree. This was a dysfunctional company driven by greed.

    And that’s the risk of tax break system akin to the movie one, seriously poor companies of this type will be able to drain tax payer money for no real return to anyone.

    I do think there’s a case for tax breaks for our industry, particularly to put us on a level playing field with other countries however using a tragedy like this for ill thought through political point scoring displays a really unpleasant opportunism.

  8. nonny mouse says:

    RTW failed because it made a product that nobody wanted to buy. Taking tax from everybody, including the low paid, and giving it to a failed company is not the way to create wealth in the UK. That approach was used in the 1970’s in the car industry and today there are no British owned mass market car makers.

    The real problem facing the UK games industry is the poor quality of graduates. Who was in charge of education under Labour? The one and only Mr. Ed Balls! If you really want to help you might try supporting Michael Gove’s expansion of the academy program and his free school initiative which will lead to better education for our children. You could also support the government policy of giving a National Insurance holiday for startups which will allow more UK based game studios to be created. Instead, Labour planned to increase National Insurance which would have made it harder to employ game developers in the UK.

  9. admin says:

    er, but Labour announced the tax breaks when in Govt

  10. Baws says:

    Realtime worlds shovelled $104 of invested cash into a failure furnace. Succesful companies do not operate at that level of competence – losing money is the easiest and craziest business going: it’s the opposite of the sustainable growth that any govenment should be supporting. The govenment should not support continued loss through blanket tax breaks and it should especially not support companies incapable of demonstrating sound and viable business plans. The gamesindustry would welcome assistance at a foundation level but it should be done with a better understanding of what success in the industry actually is. Surely it is simple to understand that supporting companies that are failing strategically, finanically and creatively is a waste of money and only perpetuates more bad performace.

    Mr Balls, you appear to have only been listening to the last gasps of a failing and greedy company and now see fit to use this situation for political gain. Before you invest in anything you should understand the market and where its potential actually lies. Suggesting realtime worlds could have fared better through tax breaks shows a shortcoming in your financial comprehension of the situation.

    G.Keenan, “Highly succesful business” and “into adminstration” are two phrases that make no sense together in the same sentence. If the company was indeed highly succesful it could have foreseen and been able to absorb or strategise around the loss caused by a failed product.

  11. Sam says:

    Labour announced tax breaks in their dying days in office. They stalled for quite a long time on the issue. Whilst it is a bit of a pain that the Lib-con coalition have killed them off, Ed Balls should have informed himself off Realtime Worlds problems before speaking about them. If Rockstar North leave and set up shop in Canada or Siblings then yes, blame lack of tax breaks and other government incentives. But this is rubbish opportunism.

  12. Tom Nealon says:

    Sorry Ed, like everyone else here I think you need someone who knows about the UK games industry to brief you on Realtime Worlds and their current problems. RTW received a large amount of financial backing; they were not a small struggling company that a tax break would have helped. Simple mismanagement of their resources led them to expand too quickly, release a game that probably holds the industry record for development cost and was not worth the price they were asking for it. Tax breaks that allow important new industries to establish themselves are all well and good but this is a very bad example. As a Labour Party member and someone who follows the gaming industry my advice to you is investigate before making a comment like this.

  13. frank says:

    yes i agree with comments you clearly have not grasped the actual problem with real time worlds and it was not a financial one! real time worlds raised around 104 million pounds in finance to make this game. do you know of any other Scottish, or dare i say say English computer game financed that highly. I don’t think so. Tax breaks could have saved them you make me laugh.

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