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Budget Tiga Creative England

Budget Reaction: TIGA, Oddbins, Creative England, Aardman, RSJ Films, Scottish Government


By The Drum Team, Editorial

March 21, 2012 | 10 min read

Today, chancellor George Osbourne announced his latest budget including tax relief for the video games, animation and high-end television production sectors, a 2% rise above inflation on alcohol duty but made no change to fuel duty.

Some organisations and companies have offer their reaction to some of the announcements affecting the media marketing and creative sector, as well as high street brands.

Caroline Norbury, chief executive for Creative England

“Supporting and developing the creative industries is central to the remit of Creative England. They contribute over £36 billion in GVA to the UK and also play a vital role in contributing to our cultural identity.

“Britain has an international reputation for creativity, innovation and quality in the realms of television, animation and computer games. These three industries alone employ almost 150,000 people and have produced some of the best know and best loved entertainment of recent years. Grand Theft Auto IV, the fastest selling entertainment product of all time, Oscar-winning Wallace & Gromit and Downton Abbey have all been created by British talent and illustrate the ambition and diversity of our creative industries.

“Maintaining a leading edge and attracting audiences in this internationally competitive environment takes a huge amount of investment to attract talent and maintain innovation. The tax breaks announced today will give our creative companies more freedom to concentrate on what they do best. It will help them compete at an international level, preserving the UK’s place as a world leader in animation, video games and high quality television.”

Dr Richard Wilson CEO of TIGA

“This is a brilliant decision by the Government and terrific news for the UK video games industry. It is also a decisive victory won by TIGA through audacity, determination and endurance. Like a boxer knocked down by his opponent, we refused to accept defeat and kept getting back in the ring. This victory will benefit not just the UK games development and digital publishing sector but also the wider UK economy.

“Tax relief for the video games sector will increase employment, innovation and investment in the UK video games industry. Our research shows that Games Tax Relief should generate and safeguard: 4,661 direct and indirect jobs; £188 million in investment expenditure by studios; increase the games development sector’s contribution to UK GDP by £283 million; generate £172 million in new and protected tax receipts to HM Treasury, and could cost just £96 million over five years. Tax breaks for games production will ensure that the UK remains at the forefront of video game development. It will also help to rebalance the UK economy away from an over-reliance on financial services towards a high skill, R&D intensive and export focused industry.

“For Games Tax Relief to be announced in the Budget is the culmination of a four year campaign waged by TIGA. Government Ministers are to be warmly congratulated for this brilliant decision. The All Party Computer and Video Games Industry Group in the Westminster Parliament, the Labour Party and the Scottish National Party also deserve full recognition for supporting this critical measure. TIGA now looks forward to working with the Coalition Government, the Labour Party and the SNP and other interested parties on the implementation of Games Tax Relief.”

Miles Bullough, head of Broadcast for Aardman Animations

“We believe that the tax credit for UK animation will be transformational for our industry. We have seen a dramatic decline on UK television of home produced animation and we now have a shot a reversing that trend. The credit will create thousands of UK jobs and our research shows that there will be a long term financial gain the for the UK.”

Paul Gouge, CEO of Social Games company Playdemic

“Highly advantageous tax breaks are already being offered in places such as Canada, so similar actions within the UK would help level the playing field somewhat . This would allow the UK to both retain and attract talent and encourage international inward investment into games.

“Secondly, our industry is in the midst of a paradigm shift in both its method of content distribution and its business model, moving from physical to digital, and from one-off purchase to service based charging. These transformative forces are causing significant disruption and pain to many games businesses who have the talent to prosper in the new world but may lack the capital to fund the costs of transitioning their business. In the US this funding gap is being largely addressed by VCs. In the UK tax breaks may both help in themselves and also improve the prospect of winning additional third party funding.”

Simon Hailey, production executive at RSJ Films

“RSJ Films welcomes the Chancellor's proposal, which would clearly give a boost to home-made television drama and it's large business periphery.

“Using foreign tax breaks isn't about production companies increasing profit margins, sometimes it's simply a case of not being able to afford to make a production the way it is envisaged, in the UK.

If we can stop the need for productions to be made in countries offering similar tax breaks, we will create new jobs and keep the talent pool of Britain's television production industry alive for the future.”

Ayo Akintola, managing director of Oddbins

“The Budget saw a 7.2% increase in excise duty on wines, spirits and beers as the Chancellor proceeded with the tax escalator which automatically increases tax on alcohol by 2% above inflation. It means that in just three years in the UK tax on wine has increased by around a third, such that it now represents 56% of the cost of an average priced bottle of wine.

“This is simply a continuation of a lazy cash grab on consumers who are hammered for enjoying a glass of wine. The drink industry is being singled out in a manner that will do nothing to reduce binge drinking. This continued tax raid will hurt the “squeezed middle” and have a disproportionate impact on independent wine merchants that are trying to compete with supermarkets that continue to use alcoholic beverages as a loss leader.”

Phil Orford, chief executive for the Forum of Private Business

“We saw nothing on reducing the mounting burden of business rates or fuel duty via cuts and a real stabiliser to regulate prices at the pump. These were omissions – and while the Government is working to improve access to funding and bring down banks lending costs by implementing ‘credit easing’ the National Loan Guarantee Scheme, there are concerns that the smallest firms in most need of affordable finance will miss out.

“Further, we called for tax incentives to pave the way for alternative lenders to compete more effectively in finance markets dominated by the big banks, but there was nothing on this in the Budget.

“Reducing the top income tax rate to stimulate entrepreneurship and continuing to cut corporation tax are much-needed measures and we also welcome the concept of merging income tax and National Insurance as a first step in what looks to be long overdue reforms to the tax system for small firms, but the Chancellor could have gone further to give businesses and the economy a bigger boost.”

As to the Government’s plans to invest in further roll-out of high-speed broadband, Matt Hawkins, founder and managing director of data storage company C4L,

“The Government’s confirmation today that it plans to roll out high-speed broadband in all parts of the UK is a huge step forward in eliminating the perception of a two-tier system that views urban areas as a ‘nexus of connectivity’ and rural areas as those that are left behind. It’s great to see that the Government is also looking to increase broadband investment into smaller cities, which are usually forgotten about when such investments are made. When it comes to rural areas in the UK, the trouble is that it’s just not profitable enough for most large providers to expand from their established customer base in urban areas to more remote communities. As a result, it’s down to local Government and initiatives such as the rural community broadband fund to reach out to the roughly 25% of the country who aren’t currently covered.

“In order to do this, they need to explore all available technologies for connecting communities, whether fibre connections, wireless transmission or even satellite broadband. These Government initiatives are key in not only ensuring that households and businesses in the area are connected, but it also opens windows of opportunity for future business investment into those areas. But these initiatives can’t help local authorities fund the entire project, and so local authorities should be looking for further investment from suppliers or other businesses that can provide the services and financial support they need. Most importantly, any connection needs to be both fast and reliable: there’s no point in connecting remote areas if that connection can be just as easily severed.”

Martin Sime, chief executive of the Scottish Council for Voluntary Organisations

“There is nothing in the budget that addresses the real problems facing people today – unemployment, poverty and inequality.

“The UK Government is investing to give tax benefits to the rich when it should be investing in other priorities such as tackling youth unemployment that could help to boost the economy and make a real difference to people.”

Culture secretary Fiona Hyslop, Scottish Government

“The Scottish Government has repeatedly urged the Chancellor to reconsider his earlier decision not to proceed with tax relief for the games industry.

“Just last week, Finance Secretary John Swinney again wrote to George Osborne to highlight the compelling case for tax relief and I am pleased to see that our call for action has, in this Budget, been taken seriously.

“Scotland’s computer games industry is one of our global success stories - supporting around 1,500 jobs and contributing #30 million to our economy while enhancing our worldwide reputation for creativity and innovation.

“Scotland, and Dundee in particular, has the creative skills and capacity to become an international powerhouse of computer games production. Today’s Budget announcement will go some way towards helping to level what for too long has been an uneven global playing field for the sector. It will help the industry to enhance its competitive edge on the international stage and will support the Scottish Government’s work to retain skills and attract talent to Scotland.

“While we welcome tax relief for the games sector, the UK Budget does not go far enough to create the conditions we need for recovery, to support growth and strengthen the economy.

“The Scottish Government is doing everything in its power to support recovery, but we are hindered by the current devolution arrangements and the financial and economic constraints that this places on Scotland.

“Independence will give Scotland full control over tax powers and the opportunity to offer our own tax incentives to enhance the competitive edge of our creative industries on the international stage.”

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