The UK Government has ruled out tax breaks for the games industry, although commended the industry on its progress.

An MCV article reports Minister for Culture Media and Sports Margaret Hodge let the industry know that the government sees them as leading the creative industries pack financially but that they would not be seeing and development assistance in the way of tax concessions.

The Minister’s comments illustrate the reluctance of governments to give funding to an industry that may be perceived negatively by certain interest groups, and in particular, vocal voters.

Games in the UK arguably face the same issues that the games industry in Australia faces (see previous posts ‘could triple‘ and ‘Aus govt turns down games‘). There is no ‘threat’. Games lack the unique ‘cultural’ identity, and as they are a fast growing industry, they do not display any ‘infant industry’ characteristics.

The obvious critique of such a policy stance is that it is conservative and reactive. Shouldn’t governments be looking for new, high growth, high skills industries to develop rather than propping up old and inefficient ones?

While the answer would seem a clear “yes”, one question in response could be “should governments promote any industries at all?”

Industries that can anchor themselves in a rhetoric of culture and national identity arm themselves with an effective shield, based on the premise that economics (and ‘globalisation’) does not discriminate between qualitative differences in cultural goods. (This is not necessarily the case of course). There are still (if I remember correctly) exceptions in WTO articles for cultural goods, which eases international pressure on states from protecting them.

A second question, is whether governments intent on supporting industries should be looking to unlock the institutional barriers to investment by clarifying IP, tax, and inward foreign investment legislation, and aim their spending efforts at capacity building by investing in human capital formation and infrastructure development rather that giving financial incentives to any one industry.