TIGA, the trade association representing the video games industry, said today that the UK should take the opportunity afforded by the introduction of a new subsidy control system to address market failures and give a boost to high technology industries, including the video games sector. TIGA recommended that the Government should introduce a Video Games Investment Fund to improve studios’ access to finance. TIGA made the comments in response to the Government’s consultation document, Subsidy control: designing a new approach for the UK.
TIGA advanced the following arguments:
Subsidy control objectives: The UK needs a future subsidy control regime that enables interventions to deliver the UK’s strategic interests; maintains a competitive and dynamic economy; protects the UK’s internal market; and ensures that the UK acts as a responsible trade partner. The new system should also permit subsidies that:
- Promote productivity: for example, subsidies should incentivise investment in physical and digital capital and training.
- Address market failure: for example, to close the finance gap that many small and medium-sized creative and high technology businesses face when trying to raise capital.
- Promote social goods: for example, to support job creation as part of the levelling up agenda; to incentivise the adoption of low carbon technologies; and to address any undersupply of culturally British audio-visual products and services.
- Address market distortions: for example, to assist UK sectors that cannot compete on a level playing field because overseas competitors are heavily subsidised by their Governments.
- Enable support for industries crucial to UK security: for example, aerospace, defence and space.
- Enable support for high skill industries with high growth potential and technologies that support innovation.
Sector provisions: There should be scope in the new system to support particular economic sectors. For example, difficulty accessing capital has consistently been one of the top factors holding back many games developers in the UK. The UK’s new subsidy control system should therefore be designed to enable the introduction of a Video Games Investment Fund to address this funding gap by providing pound for pound match funding of up to £500,000.
Subsidies should be transparent: The Government should launch a new publicly accessible transparency database for public authorities to record subsidies in 2021.
Oversight and enforcement: The UK’s new subsidy system should be designed to enable subsidy providers to act expeditiously, whilst ensuring their accountability.
An independent body such as the Competition and Markets Authority should focus on: providing information about the new regulatory framework and answering enquiries; reviewing and evaluating the performance and effectiveness of the entire subsidy control system; and providing subsidy development advice on awards before they are granted.
The UK’s courts should provide an effective route to challenge unlawful subsidies via the judicial review process.
Dr Richard Wilson OBE, TIGA CEO, said:
“The UK needs a system that enables subsidy providers to move expeditiously to achieve strategic objectives, provide sector specific support and act with transparency, whilst ensuring effective accountability.
“The UK devoted comparatively little on state aid before the pandemic. In 2018, the UK spent just 0.38 per cent of GDP on state aid (excluding railways, and agriculture and fisheries), while Germany spent 1.45 per cent.[1]
“We should take the opportunity afforded by the establishment of a new subsidy control system to enable subsidy providers to move nimbly, address market failures and remove obstacles that inhibit the growth of our high technology industries. Access to capital has consistently been one of the top factors holding back many games developers in the UK. The UK’s new subsidy control system should be structured to enable the introduction of a Video Games Investment Fund to address this funding gap by providing pound for pound match funding of up to £500,000. This would improve studios’ access to finance, boost investment and create approximately 1,200 highly skilled jobs by 2025.”
Notes to editors
Subsidies include: a cash payment, a loan with interest below the market rate, a loan guarantee.
[1] https://commonslibrary.parliament.uk/research-briefings/sn06775/