Vaizey: I wasn't necessarily behind tax breaks

Vaizey: I wasn't necessarily behind tax breaks

By Rob Crossley

February 7th 2011 at 1:37PM

Scottish Affairs Committee says industry needs to be 'properly represented in future'

Ed Vaizey, the culture minister who pledged to introduce games tax breaks in the Conservatives’ first budget, did not fully support the initiative, a new report has revealed.

The Scottish Affairs Committee today said it was “surprised and disappointed” that Vaizey had not directly lobbied for games tax relief prior to the Coalition Government’s first budget. It called for the industry to be “properly represented in future”.

The Chancellor, George Osborne, abolished a bill for game tax breaks in an Emergency Budget made weeks after the new government formed.

In the run-up to last year’s General Election, Vaizey insisted that the party is “fully behind game tax breaks”.

“This is my unequivocal statement,” he told Develop.

Vaizey went on to insist that such a policy had “been approved by Osborne” – in response to a Develop report claiming the party had reigned on its pre-election pledge.

Now new information published by the Scottish Affairs Committee reveals Vaizey had not himself been in full support of the tax break measures, and claimed he had not corresponded with the Treasury directly on the matter.

He told the Committee: “Do I, as a matter of principle, think that tax credits are a good thing? Not necessarily. Did I, as shadow Minister take a view that we were effectively in tax competition with other jurisdictions? Yes quite possibly.”

The Culture minister’s views have nevertheless been echoed by other UK games studios, in that the ideology of sector-specific state-support can be unnecessary and unfair on other industries.

A recent debate on the issue heard Ninja Theory co-founder Nina Kristensen state that “by and large I don’t really approve of tax breaks but, as with everything, there are always exceptions and annoyingly, I think the games industry has become one of them.”

Kristensen said that generous tax break initiatives in other nations, such as Canada, had put the UK on an uneven playing field. She concluded that these external factors meant that British game dev tax breaks should be considered, despite not ordinarily deserving them.

This appears to be in line with Vaizey’s statement on “not necessarily” supporting tax breaks despite an understanding of international “tax competition”.

Yet the Scottish Affairs Committee said it was disappointed and surprised by Vaizey’s position due to his contradictory assurances in the past.

Vaizey also said “not everyone in the video games industry necessarily thought the tax credit was a good idea.”

'Expect better'

The Committee found that Vaizey had not lobbied formally for games tax breaks in the lead-up to the Emergency Budget.

“We expect the industry to be better represented in future within Government,” the Committee said.

Vaizey is backed by a large and possibly growing number of industry individuals, partly because of his commitment to the sector. He attends numerous games industry-related events, and continues to, despite walking into routine criticisms of the Tory-led Coalition.

In explaining the Coalition’s u-turn on game development tax breaks, Vaizey said:

“To put it completely bluntly, as far as I am concerned, after the election all bets were off in terms of the financial situation and in terms of how the Chancellor wanted to approach his budget.”

The revelations come as part of the Scottish Affairs Committee’s full report on the nation’s games industry.

“The Minister responsible for the video games industry should make representations at the heart of Government on behalf of this economically and culturally important industry,” the Committee concluded.

“We invite the Government to explain in its response to this Report how it will ensure that the voice of the industry is properly represented in future and give an undertaking that this experience will not be repeated.”