Tax, finance and skills top UK list of concerns

The UK is likely to slip into fifth place in the global videogames business rankings this year thanks to an increasingly slanted playing-field brought about by the additional support given by overseas governments to their respective industries.

That's according to a new report from Tiga, which outlines the UK government's tax regime, the skills shortage and financing issues as the top concerns for business leaders in the country's videogames sector.

"The UK games development sector is an industry of the future," said Tiga CEO Richard Wilson. "It is a highly skilled, knowledge based industry that has huge potential.

"However, the significant support overseas governments give to their games industries puts the UK games industry at a severe competitive disadvantage. This factor, coupled with difficulties in sourcing finance and skill shortages, are currently barriers to growth and must be addressed."

On the subject of barriers to growth the survey found that 41 per cent of the 100 respondents - who were all at CEO or MD level at UK development companies - cited foreign government investment in competing companies, while 31 per cent agreed that the tax landscape was a problem.

"The UK games development industry is competing with one hand tied behind its back," continued Wilson. "Competitor countries from Canada and the USA to France and South Korea are benefiting from government support, most notably tax breaks. This puts the UK at an immediate disadvantage."

Skills in the work place was also high on the agenda, with 63 per cent of those surveyed admitting they'd experienced problems from a skills shortage in the past 12 months, while programming posts were the hardest to fill.

Tellingly, 88 per cent of people felt the problem was down to a lack of skills, experience or qualifications.

"Ultimately, the skill shortages that are holding back the games industry will only be surmounted by improving standards in mathematics and sciences in schools, thereby increasing the potential supply of skilled people available for work in the games industry.

"Stronger financial incentives to attract the best graduates to teach in schools are part of the solution. The national curriculum should also be made more flexible to give schools the freedom to teach subjects such as computer science.

"A career in the videogames industry should be promoted in school, not least to encourage more young people to stick with science, technology, engineering and mathematics subjects.

Wilson also advocated a cut in tuition fees for maths and computer science students, as well as the setting up of a Games Education Fund, managed by Tiga, which would administer "industrial secondments, research fellowships, and education outreach and knowledge transfer programmes."

Finance in the current economic climate was also thought to be a problem for the industry, with 60 per cent of developers keen for a wider variety of financing options to be made available.

The comparison was once again drawn between games and films, with Slumdog Millionaire director Danny Boyle previously on record noting that the film's success was partly down to the funding model - with Channel 4, Celador and the UK government all involved.

"Even before the current economic malaise, it was difficult for developers to raise independent finance," said Paul Gardner, head of computer games at report sponsor Osborne Clarke. "Where finance has been raised, the majority of arrangements involve a publisher guaranteeing repayment of the development costs.

"For most, a deal with a publisher is the only option. Developers therefore fund increasing amounts of work themselves to secure publishing deals. Understandably, few publishers finance projects outside of established genres and, equally understandably, those that do expect to own the intellectual property rights."

Without Film Tax Relief in place it is estimated that the UK film industry would be 75 per cent smaller than it is today.