UK Software Industry

Mike Weir Excerpts

Wednesday 10th November 2010 Westminster Hall

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Does the hon. Gentleman agree that we should introduce some kind of domestic tax incentives and support not only to boost the industry, but so that we can compete on an equal playing field? Other countries across the world that produce software and video games have additional incentives for the industry, in both research and development and in the wages of people who come from abroad. Because we do not, we have dropped from sixth to fourth place in the world in video games production. We have so many people leaving the UK to go to other countries, such as Canada, the United States—

[Mr Mike Weir (in the Chair)]

Order. I remind the hon. Lady that interventions should be brief.

[Dr Pugh]

I am not sure that the causal chain is as emphatic and clear-cut as the hon. Lady represents it, but later I shall come to the business of a level playing field.

It could be argued, could it not, that the indicators for what the industry offers and its potential are so good that the case for state investment is almost being undermined? If it is that good and there is that much potential, why would the Government be needed? Why should venture capital not be there; why would it not be there? I suppose there are some answers to those questions. It could be argued that this country’s financial sector is notoriously short term, which indeed it is. It is somewhat tax averse, and we have seen plenty evidence of companies preferring to go to places where the tax burden is less. The companies are certainly not patriotic and if they have scope elsewhere in places such as Canada, they might well decide that they want to place their funds there.

There are other strong arguments against the state getting too heavily involved in managing the industry. One is that the IT industry is notoriously volatile and unpredictable. One only has to look at the giants of the past that have crashed in the night—the IBMs, the Lotus Notes and the strange fall and rise of the Mac. One need only consider what would have happened had they put their money into floppy disc manufacture a few years ago, or into CD-ROM manufacture in the past five years. When someone puts money into the software industry or the IT industry more generally, they do so at an appreciable risk.

It cannot be in the long-term interest of the nation—of all nations—to base national taxation, for any sector, on the lowest common denominator of international taxation. Although the video games industry has said a lot about Canada, I would like to see what is happening in other areas where the software industry is also thriving and is competitive with Canada. I shall not rehearse the arguments that we could have about state aid and protectionism. I do not understand, however—the Minister can help me here—the argument presented by the Chancellor for not giving tax relief to the video games industry. He said that it could not be well targeted. I do not grasp that, and some evidence in the notes that have been provided makes it less than clear what is being said, meant or agreed by the Treasury.

--- Later in debate ---

[Ian Lucas]

On a point of order, Mr Weir. Is it in order for a Minister to misrepresent the stated policy of Her Majesty’s Opposition and not to allow an intervention so that he can be corrected about that?

[Mr Mike Weir (in the Chair)]

It seems to me that that is a matter for debate, not for the Chair.

[Mr Vaizey]

Thank you, Mr Weir, for reminding the hon. Gentleman that he has plenty of opportunities to make his point. It is a bit rich for a Labour politician to talk about the misrepresentation of other parties’ policies, given what we have seen in the news this week, after the first election court for almost a century was called on the basis of Labour party leaflets in the general election. Sheer brass neck does not even begin to describe it.

This is a debate in which I have an opportunity to set out our policy on broadband in response to the comments of the hon. Member for Houghton and Sunderland South about its importance. That is what I intend to do.

As I said, we want the best superfast broadband in Europe by 2015. We have secured the funding for it—£530 million to the end of the spending review, and a further £300 million after that. We have launched four super-fast broadband pilot projects, in the highlands and islands, Herefordshire, Cumbria and North Yorkshire, so that we can identify early lessons and work out how to proceed in the most cost-effective way. We shall also launch in more detail at the end of the year our policy on broadband, setting out some of the nuts and bolts issues. We have made huge progress on regulatory issues, such as duct access for competitors to BT and the opportunity to roll out broadband on telegraph poles.