MPs revisit video game tax breaks By Daniel Emery

Technology reporter, BBC News Published duration 13 September 2010

image caption Dundee as viewed through Project: My Worlds, a 3D social media network by Real Time Worlds.

MPs are to examine how a lack of tax breaks has affected video games development in Scotland.

The coalition government refused to award games developers the same tax advantages enjoyed by film-makers.

Members of the Scottish Affairs Committee are in Dundee, which saw the loss of 157 jobs in August when games developer Real Time Worlds collapsed.

The committee chair, Ian Davidson MP, told BBC News that the group was on a "fact finding" mission.

"This is a preliminary visit to scope out what is going on; we will subsequently have hearings in the House of Commons to discuss the details of what we find out today," he said.

No break

In June, the games industry said it was "let down" by the government, following its decision not to award tax breaks.

The premise of giving the sector 20% tax relief had been floated by the Labour government before the last election.

But the Culture Minister, Ed Vaizey, told delegates at the video game Develop conference in Brighton that the case "had not been made".

In early September, the video games industry trade body, Tiga, said Scotland had lost nearly a fifth of jobs in the sector - due to the collapse of Dundee-based developer Real Time Worlds - and it has been lobbying hard for tax breaks in games production.

But Mr Davidson said he was not convinced tax breaks would have saved Real Time Worlds, saying it could have had "a bad business model".

"During this time of public spending cuts, we need to make sure that anywhere we are spending money - or losing revenue - that this is justified," he said.

"If there is to be a subsidy, we need to be clear on what this is and what it is designed to achieve," he added.

The group is also visiting Abertay University to discuss its new £5m project, which could create 30 new companies and 400 new jobs in the game sector.

Professor Bernard King, principal and vice-chancellor of the university, said he had high hopes for the project.

"We're developing this unique industry-focused approach, which is aimed specifically at creating new businesses and jobs.

"We believe that direct support like this can spark off fantastic new creative ventures, and we look forward to discussing these alternative financing models with the committee," he added.