Today’s Budget was the first from the Chancellor of a majority Conservative government since 1996, and announcing a significant change in economic strategy with cuts to taxes and welfare and the introduction of a National Living Wage. You can read the full Budget speech and documents here.
With the Budget in March this year already having announced a £4 million Prototype Fund for the games industry, as well as further funding for the Skills Investment Fund, it is perhaps not surprising that today did not see any more direct announcements of support for games. However today’s announcements will still have an impact on all games companies.
Of most direct interest were the announcement on digital clusters. Ukie CEO Dr Jo Twist said in response: “We welcome the new support for regional digital economy clusters outside of London. Ukie will submit ambitious proposals to government supported by a major piece of research to influence the long-term Spending Round expected in November this year to support growth right across UK.”
Innovation across the country
In our letter to the Chancellor, Ukie called for investment in games hubs across the country. The government has taken steps toward this by announcing that they will work with existing clusters to find and support strengths in science and innovation. The Budget announced that “the government will invite universities, LEPs, businesses and cities to work with central government to map strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits”. Proposals generated from these discussions will be funded through announcements in the Comprehensive Spending Review that will be held in the autumn.
As a first step, the Budget also announced that the government will invest £23m in 6 “Next Generation Digital Economy Centres” over 6 sites – London, Swansea, Newcastle, Nottingham, York and Bath. These will attract match funding from the private sector to “exploit opportunities across sectors of the digital economy including the creative industries, finance, healthcare and education.”
We will be working closely with government to make sure these announcements have the best possible outcome for the games industry, especially in the clusters identified in the NESTA report.
Changes to Enterprise Investment Schemes
The March Budget proposed changes to ‘tax-advantaged venture capital schemes’ including SEIS, EIS and VCTs, which many games companies make use of. Following a consultation, which they have today published the government response to, they have confirmed several changes including:
A new £20 million cap on the total risk finance that can be raised by a company under EIS or VCTs
An increase in the employee limit for ‘knowledge intensive’ companies to 500 employees
A new digital process for companies and investors using SEIS, EIS and the Social Investment Tax Relief (SITR) by the end of 2016
The Chancellor announced some major changes which will have an impact on all businesses in the UK, including:
Corporation Tax will be reduced to 19% in 2017 then 18% in 2020 – keeping it the lowest in the G7, and a reduction from the 28% rate that the coalition government inherited in 2010.
A new mandatory National Living Wage will be introduced. It will apply to the over-25s from April 2016, rising from £7.20 an hour then to over £9 an hour by 2020.
The Employment Allowance will go up from £2,000 to £3,000, raising the amount businesses can pay employees before they incur National Insurance contributions
Three million new apprenticeships will be created, partially funded by a new ‘Apprenticeships Levy’ on all large employers. This levy can be recovered by companies that spend money on training.
From September 2017, families with 3 and 4 year old children will receive 30 hours of free childcare – twice the current amount.