Oct 4 2013

Ukie: Tax Credits, Arts Education & Crowdfunding Good for UK’s Games industry

Jo_Twist_200There was more in the House of Commons’ Culture, Media and Sport Committee’s report on the Creative Economy than just the headline grabbing recommendations about copyright enforcement, as Jo Twist, CEO of Ukie points out. In her response to the report, she finds the report’s recommendations on tax credits, financing options and education to be good for growth in games and interactive entertainment.

The Culture, Media and Sport Committee’s recent report ‘Supporting the Creative Economy’ has received a lot of attention for its strong statements on intellectual property issues, particularly around enforcement and any future changes to UK copyright law.

As Chief Executive of Ukie, the trade body representing the UK’s games and interactive entertainment industry, there is plenty I could say about this issue. Having a strong and stable copyright framework is vital for the long-term success of all creative industries.

I will focus on a few other issues that are in the Committee’s report, but haven’t had quite as much attention. These are all about the two most important things for any business – finding the right people to make your business a success, and being able to get money to invest in the future.

Tax credits for game developers

The most headline-grabbing issue in the last year has of course been the introduction of production tax credit for games, and the delay that the European Commission have put on it. This would be a huge boost for the UK industry, giving us a level playing field to compete with other countries like Canada and Australia that have been heavily incentivising developers. All of our members, from global publishers like EA and Activision Blizzard to independent UK developers like Mediatonic and Four Door Lemon, have been strongly behind our call for tax credits in the UK.

It matters where a game is made and who makes it: they are not created in some sort of cultural vacuum and your own stories and personalities influence what you create, the choices you make, whether you realise it or not. Games are important to our cultural heritage in the UK: they were 30 years ago, and they are now. But people need to be able to take the financial risk on new ideas. The tax credit supported strongly by the Committee in the report will help them do that.

Helping companies get more money and investment is absolutely crucial, particularly for the new generation of smaller companies that have seen the potential in the diversifying and growing audience for different kind of games on different platforms. But there are other things that can be done as well as tax credits to ease this flow.

Opening crowdfunding potential

When I appeared before the Committee alongside Ian Livingstone CBE, Ukie’s Vice Chair, I highlighted the potential that crowdfunding offers for creative industries. We’ve already seen the huge success of some games on Kickstarter, starting with the $3 million that Double Fine raised in February 2012. But as I told the Committee, there are other types of crowdfunding that could be even more beneficial for UK companies. In particular, equity crowdfunding, where hundreds of investors can take a small share in the company itself, has the potential to unlock real, stable long-term growth for innovative companies, whilst allowing them to retain control of their own intellectual property.

A few companies, in particular Seedrs, have already begun to operate this model of crowdfunding in the UK, but it is still a slow and difficult process to get approval from the Financial Conduct Authority (formerly the FSA).

We helped bring this nascent sector together to form the UK Crowdfunding Association and we’re continuing to work closely with them to help provide solutions to government to make all forms of crowdfunding work as easily, effectively and safely as possible in the UK.

There are already many government schemes in place to help companies with access to finance, of course, and work always continues to find anything more that can be done. Ian Livingstone and Andy Payne OBE, Ukie’s Chair, sit on the Creative Industries Council, and Ian chaired a working group for the council on this issue of Access to Finance, making six important recommendations. The Committee echoed several of these, including on helping investors understand the sector, boosting crowdfunding, and improving existing business support schemes.  I now sit on one of the CIC’s working group to make sure those recommendations happen, and the Committee’s show of support will be a great help in keeping momentum up.

Two important interventions have been the Enterprise Investment Scheme and Seed Enterprise Investment Scheme. These are extremely generous schemes that have the potential to unlock lots of investment in small, creative companies. But as we warned the Committee, the bureaucracy around the scheme is still difficult for smaller companies, and not enough has been done to raise awareness about its benefits. The Creative Industries Minister himself recognised the need to better promote these schemes, and the Committee called for this to happen.

Skilled people for development

As well as money, the other thing that all businesses need is the right people. An idea doesn’t come from air: it comes from humans. It’s crucial that the government is doing all it can to make sure future generations have the right balance of skills. There was a massive step in the right direction last year with the decision to put Computer Science back at the heart of the school curriculum. The Next Gen Skills campaign, funded by Ukie members, did a fantastic job in convincing the Department for Education to make this crucial change, which is absolutely necessary if we are to re-ignite the spirit that saw an explosion of young computer programmers in the 1980s.

But we now need to move from alpha to beta with this: we need to marry this return to rigorous computer science with creativity in art and design. It was great to see the Committee support our call for art and design to be given just as high a priority in the curriculum as science and maths. The jobs of the future are about ideas, creation and innovation, and schools will only be doing their job preparing children if they focus on STEAM subjects, not just STEM, as the Committee point out. And let’s not forget the potential of those who have fallen out the school system.

There is always more that can be done to make it easier for creative businesses to take root and grow in the UK. Based on a very thorough inquiry, the Culture, Media and Sport Committee have pointed out some important steps that the Government should take as quickly as possible if we are to fulfil our true potential as an economic and creative powerhouse.

This article gives the views of the author, and does not represent the position of the LSE Media Policy Project blog, nor of the London School of Economics. 

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