UK video gaming under threat

At the so called Oscars of the computer games world, the brains behind the games were celebrating their part in a global industry now worth over £15bn a year.

But is there a plan to keep our £2.5bn a year industry here in Britain?

In the world league, the UK has dropped to number four, behind Canada which seems to be a magnet for computer wizards. That's because they offer tax breaks for games production, the UK does not.

Canada has national funding for games development paying up to 40 per cent of wages unlike Britain. They have high value tax credits to encourage investment, Britain's are ranked as low.

Looking at the scorecard - in terms of incentives it could be game over for Britain.

Margaret Hodge, Minister for Culture, Media & Sport, told Channel 4 News that she was concerned that the Canadian subsidies could be in breach of World Trade Organisation Rules:

"We're looking into what they've done, and the French are looking at it as well. We're not sure that actually what they've done sticks by what is known as the WTO rules on competition.

"We will have to think about challenging what they're doing if they are in our lawyers views breaching those rules."

The Canadian High Commission says it takes its WTO obligations seriously and will take up the issue with the British government.

But Sci/Eidos - the creators of Tomb Raider - have already started moving to Canada. By 2010, 45 per cent of its staff will be based in Montreal.

Our competitors in France follow a similar model to Canada by offering incentives - a practice which is now being investigated by the European Commission.

But Channel 4 News has learnt that if the EC approves the French system - the UK could follow suit. Although incentives for developers would be restricted to games which have a cultural significance in Britain.

The industry's trade body - Tiga have warned that if the government doesn't adopt the French model - the UK will risk losing more of its developers, its place in the world rankings - and not to mention the loss of tax revenue from such a growth industry.

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