Chancellor Rishi Sunak delivered the first Budget of the current government yesterday, announcing levels of investment spending not usually expected of a Conservative government and a £30bn package to protect the economy and businesses from the ongoing COVID19 outbreak. As expected, regional development was placed at the heart of the Budget, with ambitious commitments made from investing in infrastructure, to changing the very operations of the Treasury in order to benefit regions outside of London more.
Naturally, the Government’s fiscal response to the coronavirus took centre stage. Some of the £30bn package will be particularly pertinent for games businesses, including:
• For employees: Statutory sick pay from day 1 (rather than day 4) for all those who are advised to self-isolate and unable to work, even if they have no displayed symptoms. Sick notes can be obtained via 111 rather than from the doctor.
• For employers: Small- and medium-sized businesses (less than 250 employees) will be able to reclaim Statutory Sick Pay paid for sickness absence due to COVID-19 for up to 14 days. This is particularly important for the UK games industry – 99.5% of which are SMEs.
• Temporary loans for SMEs delivered through the British Business Bank; the Coronavirus Business Interruption Loan Scheme will offer loans of up to £1.2million. This new guarantee will initially support up to £1billion of lending.
Other than the coronavirus relief measures, the Budget also included the following which will be of interest for the interactive entertainment industry:
- Start Up Loans scheme extended with £130m of further funding. This is a loan from the government of up to £25k to support new businesses & 12 months mentoring.
- Plastic Packaging Tax will be introduced for April 2022: will charge £200 per tonne if packaging is made from less than 30% recycled plastic.
- The Employment Allowance will go up from £3,000 to £4,000, raising the amount businesses can pay employees before they incur National Insurance contributions
- The Corporation Tax rate will remain the lowest in the G7 and G20 at 19%.
- Entrepreneurs relief will be significantly scaled back, with the lifetime limit reducing from £10m to £1m.
- £200m was announced for the British Business Bank to invest in scale ups.
The Governments intentions to “level up” the whole of the UK were emphasised further through the Budget with plans to open a new economic decision-making unit in the north of England, move 22,000 civil servants outside of London, and publish a National Infrastructure Strategy.
Of course, the regional spread of the UK games industry is one of its strengths, with our recent Think Global, Create Local report revealing that 55% of games development jobs are outside of London in vibrant hubs from Dundee, to Bristol.
CEO of Ukie, Dr Jo Twist OBE, said in response “With 99.5% of the games and interactive and entertainment industry consisting of small- to medium sized enterprises, we welcome the measures taken in the Budget to support them during the COVID19 outbreak.
We also welcome plans to support growth right across the UK. The UK games industry’s strength in regional clusters makes the sector such an important part of the UK's creative economy and a valuable means of driving regional economic growth. As a magnet for talent, a driver of cutting edge innovation, a global and export led industry, the regional presence of the sector has the potential to lead the charge in helping to rebalance the UK economy if the opportunities are taken advantage of.”
The full Budget document can be found here