Game tax break plans â??on hold for nowâ??

Game tax break plans â??on hold for nowâ??

By Rob Crossley

May 18th 2010 at 2:15PM

Too early for new government to explore policy, says Whitehall source, though signs remain encouraging

Britain’s new coalition government will prioritise key policy plans and “look to find its feet” before beginning discussions on game development tax breaks, a Whitehall source has said.

The Liberal-Conservative administration, itself an unprecedented arrangement of two ideologically polar political parties, is aiming to quickly cement working practices for its ministers and offices.

Though it is hoped that the new government will ultimately back game development tax breaks – as both the Lib Dems and Tories had pledged in the run up to election – the biggest question for the game industry now is when such a policy might emerge.

”We’re not really sure what the future holds,” said a Whitehall source. “It’s very early days and we have to hold discussions and set in train how this is going to work.”

The first clear chance for the government to mention game development tax breaks – a policy that the UK game industry has vehemently fought for during the last twelve months – will be during the emergency budget, set for June 22.

Yet it is unlikely that tax breaks will be introduced as part of the report, with new Chancellor George Osborne certain to outline plans of cutting £6 billion out of Britain’s fiscal deficit that towers at £163 billion.

Veteran political adviser David Kett, said it was “difficult to say” whether Osborne will hand out a tax break policy while announcing such a range of cuts.

”The situation with the coalition government is new grounds for all of us,” he said. “Osborne’s major aim in the emergency budget is to make sweeping cuts and, I suspect, tax increases. That makes a tax break proposal unlikely, but might be used as a counterweight to all the cuts he is going to announce.”

The new administration is, at this early stage, not fully cemented on what it wants to do for different UK industries.

New Prime Minister David Cameron said one of his priorities is to show that Britain “is open for business”, yet new Culture secretary Jeremy Hunt is said will contribute around £60 million to the new administration’s cost-cutting operation – a situation that would make a game tax break plan (something which the last Labour government set aside £90 million for) far more unlikely.

The silver-lining, however, comes with the news that Ed Vaizey has been appointed new culture minister.

Vaizey, now overlooking policy for Britain’s art sectors, has previously said he would “shout about the game industry from the rooftops.”

Meanwhile, a Treasury source told Develop that, though Labour’s tax break bill wasn’t enacted before the election, the wheels were set in motion and the new administration would “have to act to stop the plan.”