HIGH growth technology firms in Birmingham have criticised Chancellor George Osborne for withdrawing tax relief to the video games industry and for threatening the region with an exodus of young creative talent.
Simon Jenner, head of incubation at Birmingham Science Park Aston, said: “The lack of tax breaks for the games industry is a major blow to the industry across the West Midlands.
“The industry is already suffering from a brain drain to companies based in countries who do provide tax breaks.
“I don't think it will hit established businesses but will make new businesses think about where they set up and make the race for people talent very challenging as individuals are attracted abroad.”
He was supported in his stance by Dominic Cushnan, director of Mixed Reality Studio, a new start-up technology business based at the science park.
He said: “The games industry is a highly competitive industry. For any business to invest in the good developers in this country there needs to be an incentive to keep the industry in the UK.
“Therefore creating more job opportunities within the UK creative industry and digital industry is vital. It is where Britain should be leading the way.
“Instead, removing the proposed tax relief will only drive people and business to the likes of France or USA where there are incentives and relief.”
On a wider level, Mr Jenner said the Budget had neither helped nor hindered entrepreneurs.
“For start-up businesses it will continue to be difficult to raise finance. The only good news is the reduction in Corporation Tax for small businesses but this only benefits more established businesses.
“The National Insurance holiday for new businesses is really a non-benefit - how many businesses actually employ people in the first year of life, the answer very few. It typically takes them six months and above for establishing before they employ anyone. So I think the benefit of this will be negligible,” he said.
Mr Cushnan added: “Asking for private sector to lead the recovery is great, if only there were more measures to help entrepreneurs. The rise in Capital Gains Tax gives little incentive for investments and the 1% drop in Corporation Tax will make little difference.”
Lee Jamison, managing director of online football scouting firm, Scout7, said many entrepreneurs may have been pleasantly surprised by the Budget.
“Many feared that entrepreneurs and businesses would be hard hit in a Budget designed to cut government borrowing as far and as quickly as possible.
“They must have been pleasantly surprised to see lower Corporation Tax rates, increased entrepreneurs relief for Capital Gains - which will significantly benefit business owners and some review of Research and Development allowances,” he said.
Gary Blowers, director of strategy at VIVA ASPIRE, a digital marketing agency, said “I think the Budget is very well timed and also well structured. The cuts and tax increases (particularly VAT) are necessary measures to get our economy back on track and operating on fundamental grounds, rather than having a gaping hole in our economy.
“The drop in Corporation Tax is obviously a benefit to all businesses but it could be crucial to those smaller businesses who just hit the Corporation Tax boundary, as it could mean extra cash flow for them.”
“Despite the spending cuts, I think innovation and technology have to remain at the forefront of our economy, as well as pushing entrepreneurship,” he added.
He said that the Government’s main message, as he saw it, was that growth needed to take place but in a more prudent and responsible environment.
Steve Smith, sector development director - science & technology at Business Link, said the Budget had contained a number of indicators designed to help entrepreneurs and early stage businesses in terms of a more sympathetic tax regime.
There was also encouragement to take on employees, obtain finance support and the opportunity to tender for public sector contracts, he added.
