No Relief

The business case is, after all, pretty solid. The UK industry isn't seeking tax relief to maximise profits, or to shore up a failing sector - it's asking the government to provide a level playing field on which it can compete effectively against regions like Canada, Singapore, France and Florida, all of whom have instituted games-friendly tax regimes.

Moreover, the calculations on the tax relief plans demonstrated fairly clearly that they would actually leave the Treasury in the black within a short space of time, with tax relief for development being more than compensated for in revenues from the sales of the resulting products, not to mention the income tax earned from the large number of development staff employed in their creation.

This is, as some commentators have pointed out, an argument the Treasury has heard before. "Prop up our industry and you'll make back a ton of cash when we grow" is a common cry from industries who are in crisis, and whose chances of growth are pretty minimal to begin with. Given the ease with which this argument has sprung to the lips of pretty senior commentators in the media, I suspect that this sense of financial deja vu wasn't far from the minds of those at the Treasury, either.

This is a perception which the industry's lobbyists will have to fight, and fight hard. Despite the incredible challenge of competing with rivals in vastly more supportive nations, game development is the British creative industries' most glowing success story. It's a sector which punches far above its weight and places the United Kingdom high on the export leaderboard in a global market which grows by double-digit percentages year on year. Moreover, it's a sector which, unlike most other creative sectors, can actually make a positive contribution to the country's balance of trade.

The danger is not that the games business will collapse, or shrink - pretty much nobody is worried about that prospect. Games will continue to grow, and British consumers will continue to buy lots and lots of them. The danger, instead, is that Britain's place in this global industry will decline. Contracts will go abroad, followed closely by development firms and their staff - primarily young, relatively affluent, well-educated and thus fairly footloose people. Remaining firms will find it increasingly hard to recruit from a pool of staff sapped by this brain drain, increasing the pressure to move abroad.

Gamers won't notice much - there'll still be lots of games on the shelves, although the uniquely British flavour of titles such as Fable or Grand Theft Auto (which may be set in a fictional version of America, but is thoroughly British in its spirit and humour) may be hard to replicate abroad. Britain, however, will have lost tens of thousands of jobs, many of them skilled roles for top graduates, a vast amount of tax revenue, and - for those who believe in the importance of Soft Power in international relations - its most successful source of cultural exports.

This is, of course, the most extreme scenario - but in a nation which has lost many of its major industries in the past 30 years, we would be foolish to imagine that the most extreme scenario could not play itself out.

Games have many strengths which lobbyists can seize upon when approaching the next round of this battle. By the next election, after all, an even larger percentage of voters will also be gamers, making the "it's an unpopular industry" argument invalid. It's a low-carbon, high-tech, knowledge-based industry in a rapidly growing market, with spin-off applications in areas such as medicine, education and defence. It's a sector which, unusually for the UK, actually makes things and then exports them to sell abroad. Politicians should, by all rights, absolutely love the games industry. After this week's setback, the UK industry must work harder than ever to spark that romance.