TIGA, the trade association representing the video games industry, is writing to the Chancellor of the Exchequer to set out the industry’s priorities for weathering the coronavirus storm. The letter is based on feedback from games developers, publishers and service providers in the video games industry.
- Staff costs: in creative industries like the video games industry the biggest business cost is employment. Many small games studios are not cash rich and/or depend on work for hire projects which are now drying up. The Government should consider providing grant funding to cover the cost (or contribute towards the cost) of paying salaries and contractors’ payments for 3-6 months. This would enable games businesses to retain employees and contractors and avoid making redundancies. The Government could also consider NIC, VAT and PAYE holidays to provide businesses with more time and runway to stay in operation.
Alternatively, the Government could provide loans to cover employment costs and salaries. However, loans, even on competitive terms, are not ideal because they saddle businesses with more debt. Additionally, creative and technology businesses are often unable to access business loans because they lack collateral.
- Contractors and self-employed workers: approximately one sixth of the UK workforce is self-employed, freelance or working on zero hour contracts. 17.5 per cent of the UK games development workforce are contractors. The self-employed and contractors need a safety net during the current crisis. The Government could provide all contractors with a monthly income based on their average earnings over previous years. The Government could also consider making Statutory Sick Pay applicable for workers on temporary or zero hours contracts.
- Video Games Tax Relief (VGTR) and R&D Tax Relief: VGTR is our industry’s most important Government tax measure. The Government should consider increasing the rate of VGTR and fast tracking claims for both VGTR and R&D Tax Relief.
- Encouraging Venture Capitalists (VC) to keep investing: financial market turmoil has resulted in promised VC investments evaporating. The Government should examine ways to incentivise VCs to invest in promising companies.
- Rent and business rates: many businesses, including games firms, face having empty premises for the foreseeable future. The Government should consider ways of relieving the cost of rent for businesses while the emergency lasts. This would reduce business costs and avoid the danger that thousands of businesses will close rather than waste money on rent. The Government should also extend the business rates holiday to other sectors to relieve pressures for at least 6 months.
- Quality information: the Government has announced rate freezes, loans and grants for businesses, but businesses need information on if and how they can rapidly access these schemes.
- Digital infrastructure: As a digital industry, many video games firms have been able to switch to remote working relatively quickly. However, it is not an ideal working arrangement, partly because of logistical and technical challenges, partly because game development is a highly collaborative process and partly because of productivity challenges. It will be vital to keep the digital infrastructure operating and to enhance home broadband speeds. The nature of development means that high speed broadband is essential. Some studios have been struggling with remote working because of slow broadband speeds.
- Testing: more testing for the coronavirus so that our employees, contractors and their families can regularly check if they are infected and need to self-isolate or whether they are clear.
- Clarity: individuals, businesses and the country need clarity. Clarity on the Government’s plans for individual sectors (e.g. schools and public examinations; further and higher education; creative industries; aviation; hospitality; retail; leisure; etc). Clarity on the plans for more restrictive social distancing measures.
- Surmount the shocks: our economy has suffered a simultaneous supply and demand shock. The UK Government needs to underpin employment and deploy public spending to minimise the depth of the shock. Following the relaxation of coronavirus measures, the Government should also support economic recovery with significant investment.. Public spending on health, medical production, transport, logistics, infrastructure, promoting employment and incomes.
Dr Richard Wilson OBE, TIGA CEO, said:
“Although the digital nature of the video games industry means that the sector is comparatively better placed to operate during the coronavirus crisis than some other sectors, many games businesses have experienced a significant economic shock. Two thirds of UK games studios employ are micro businesses employing four or fewer people with limited financial resources. As such, they are highly vulnerable to a fall in demand, orders and projects.
“TIGA has recommended 10 points for the Government to consider in order to enable our high skilled, high technology and export focused industry to survive, revive and thrive. Our industry’s top priority is for Government assistance with payroll costs. If the Government can temporarily contribute towards or cover the costs of employees’ salaries and contractors’ costs, the quicker our industry will be able to get back on its feet and create jobs, content and businesses once the crisis is over.”