After Hours

Tax on ebooks and an unloved games industry: Signs Osborne doesn't get IT

The government's approach to digital issues is consistently confusing...

...flat-footed. In France, for instance, homegrown video games development studios are given tax incentives to remain in the motherland. There are no such incentives in the UK - despite plans by the last Labour government to put tax breaks in place to support what has been a thriving UK digital industry.

Chancellor George Osborne

Chancellor George Osborne ditched tax breaks for the UK's video games industryCreative Commons: adrian_kenyon

Despite both the Tory and Lib Dem parties supporting tax breaks for the games industry before they got into government together, Osborne jettisoned the tax breaks plan in his 2010 post-election 'emergency budget', describing them as "poorly targeted".

Since then, a raft of UK games development studios have closed. Last month, Electronic Arts announced it would be closing another of its UK studios: EA Bright Lights, based in Guildford.

Other EA UK games studios that have bitten the dust in recent years include Bullfrog, EA Langley, Mindscape UK, Studio 33 and Warrington. And EA is just one of the games companies shuttering UK studios. In September, Codemasters indicated it plans to close its Guildford studio, while earlier this year Bizarre Creations shut in Liverpool and Black Rock closed its doors in Brighton, to name a few.

Canada, which does offer tax incentives to attract games developers, is more often than not getting investment that otherwise might have been coming to the UK.

Richard Wilson, CEO of UK games industry trade association Tiga, describes Osborne's decision to scrap the games tax break as a "massive mistake", telling "Clearly it's put the UK at a disadvantage."

What does Wilson think of the UK government's digital policy in general? "It's not clear, it's not transparent, it's not obvious what it's trying to achieve," he said - noting the inconsistency of the Tories and Lib Dems supporting games industry tax breaks prior to getting into government, yet ditching this support once elected.

Inconsistency seems to be a constant thread running through the government's relationship with the digital world. Consider the Tories describing Labour's Digital Economy Act as "a weak, dithering and incompetent attempt to breathe life into Britain's digital economy" when in opposition - yet Prime Minister David Cameron decided the rushed legislation should not be overturned once in power.

Cameron is keen to talk up the potential of creative and digital industries in the UK when giving speeches but doesn't follow this up with action, said Wilson.

"Just to sit on your hands and do nothing is lamentable."

When it comes to VAT and ebooks the government is sitting on its hands and doing nothing. In that sense, the government's attitude to ebook VAT can be seen as a microcosm of its entire approach to digital issues: inconsistent, anachronistic and all too often overtaken by events.

You can sign an e-petition to remove VAT on ebooks here.

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