Calls for government intervention as study predicts a 24% workforce reduction
Britain’s game development workforce is in danger of contracting by 24 per cent over the next four years, trade association Tiga has said.
The alarming prediction is Tiga’s latest warning to the Treasury, urging for a government intervention to revive a thirty-year UK industry that is now at risk of losing ground on the world stage.
A workforce decline of 24 per cent would, if realised, represent around 2,200 job losses across the UK.
In November last year Develop revealed the findings of an independent study which found that the UK sector had contracted by nine per cent since 2008. The reduction represented around 900 job losses, bringing the total UK dev headcount to about 9,000.
Tiga now fears the workforce total could dip under 7,000 by 2015 unless the Coalition Government intervenes.
And, in what could prove to be a more contentious addition to its claim, Tiga believes that the significant job loss could be stopped if game development tax relief initiatives were introduced in time.
“Without a tax relief, current rates of decline would persist, leading to a further 24 per cent contraction in headcount between 2010 and 2015,” Tiga said in a new 85-page report.
Tax relief, which Tiga has long campaigned for, could provide UK studios a significant discount on game production costs. In some regions of Canada, where tax breaks are in place, the production cost discount is as high as 35 per cent.
Numerous entertainment companies – such as Warner Bros, Ubisoft and THQ – have poured huge sums of money into those regions, with decade-long strategies in place to take advantage of the tax breaks on offer.
Tiga’s mission for game tax breaks had, though briefly, reached a watershed moment when the last Labour Government introduced the measure into its final finance bill. The Coalition Government removed the measure despite pre-election promises to enact them.
Now just days after Tiga passed its own personal milestone – celebrating its ten-year anniversary – the trade association is submitting to Downing Street its renewed argument for Games Tax Relief.
As well as the alarming prediction of a 24 per cent workforce reduction, Tiga said it has found new evidence to bring to the table.
In the space of five years, tax breaks would save about 2,000 jobs directly involved with game development, Tiga said.
The trade association also spoke of knock-on effects to other industries that work closely with the sector, and said that game tax breaks could save 3,726 ‘indirect’ jobs.
Tiga said tax breaks would cost £293 million in development expenditure, though save £267m “in direct and indirect annual tax revenues”, as well as provide £649m in GDP contributions.
“In total, tax breaks is projected to create and safeguard over 9,520 direct and indirect jobs, costing over £20,000 per head over 5 years,” Tiga said.
“Tax breaks over 5 years would create a net 1,328 new jobs in the studio sector, increasing investment by games studios by £138 million. 2,427 indirect jobs would also be created with direct and indirect annual tax revenues rising by £126 million and GDP contribution by £307 million.”
The report, written by Tiga along with law firm Osborne Clarke and industry research group Games Investor Consulting, has already been endorsed by opposition MPs.
Liverpool Wavetree MP Luciana Berger, whose constituency inhabits several game development studios, said “the truth is this tax relief supports British industry, pays for itself, and could create over 3,000 jobs.”
The Labour MP said it is “David Cameron’s duty to back winners in our economy and adopt a strategy for growth”.
Referring to the fall of Liverpool studio Bizarre Creations, Berger said “we have recently lost 200 industry jobs in Liverpool – how many more must we lose before the Government realises it is not in the country’s economic interest to withhold support from our most successful businesses, and a creative industry which last year generated £1.3bn for Britain?”
Labour MP Tom Watson said “the case for Government support has never been more compelling”.