Fears over tax break freeze in hung parliament

Fears over tax break freeze in hung parliament

By Rob Crossley

March 15th 2010 at 3:54PM

Coalition government could stifle possible plans for game industry reform

Concerns are growing that the UK may be facing a hung parliament in a matter of months – a situation which could damage plans to give the game industry the development tax relief it craves.

Opinion polls suggest that support for Labour and the Conservative party is so close that neither may win the majority vote necessary to form a Government, resulting in a hung parliament.

If a hung parliament is established, then usually it’s the party with the most seats that has the prerogative to try to form a ‘minority government’.

This is usually structured with the most popular party forging an alliance with a smaller group in a bid to create a coalition government, though both groups would have to concede some of their own policies to reach a government consensus.

That may have implications on the UK game development sector, as there appears to be little consensus between each party on how to deal with the industry’s tumbling workforce.

Labour has flirted with the idea of cultural tax break reform, while the Conservative party says alternative measures should be introduced, and the Liberal Democrats remain quiet on the issue.

David Kett, a government expert who has been teaching on the issue for several decades, tells Develop that a coalition government could lead to complications.

“If there’s no consensus between elected parties on how to handle the game industry, that could make tax breaks for the industry even more difficult,” he said.

“A deal would need to be struck between parties.”

There are also growing suggestions that a coalition government would spark a second election within a matter of months. The fear is that, if rumours of a quick re-election begin to emerge, then the coalition party would be less inclined to strike policy deals in favour of drawing re-election battle lines.

The last time the UK faced a hung parliament was in February 1974 – eight months before a second general election took place.

But even if the UK manages to avoid a hung parliament, Kett has reservations over whether the industry will be supported.

“In this economic climate, finding tax breaks is going to be as hard as it can be,” he said.

“Whoever wins, taxes are going to go up. So the question remains; no matter what kind of government we have, is there money there to give away when they have to get more?”

[TIMELINE: UK TAX BREAKS]