The high technology and creative industries, including the video games sector, can surge ahead in a post-Brexit world – provided that Government ministers remember their ‘T's: tax, trade and talent.
High technology and creative businesses need a favourable tax environment in order to compete successfully. Corporation tax should be cut to 17% in 2017. Creative sector tax reliefs, including those for film, games and animation, and R&D tax credits, have allowed the creative and high technology industries to compete on a more level playing field against the UK’s international competitors, many of whom benefit from generous tax incentives.
We should enhance our own tax reliefs to attract inward investment like a magnet attracts metal.
We need to boost exports and improve our balance of trade. The UK has a current account deficit equivalent to 7% of GDP. If the UK remains out of the European Economic Area then the Government should secure a trade deal with the EU that to the greatest possible extent avoids quotas, tariffs and other barriers to trade.
After leaving the EU, the UK will be free to negotiate trade deals with growing economies. Only one in five UK SMEs export compared to an EU average of one in four. The Government should therefore examine the potential for incentivising more businesses to export through the tax system. It should also make sure that the existing system of business support, including the provision of grants, information and advice, effectively supports exporters.
The UK’s high technology and creative sectors rely on a talented workforce to compete. Until now, our sectors have had access to a substantial pool of skilled EU workers who can work in the UK.
EU workers already present in the UK should be granted a right to remain.
Additionally, the Government must clarify the status of EU workers who enter the UK following the referendum and prior to the UK’s exit from the EU.
Any new immigration rules that may be put in place (whether an expanded version of the points based immigration system or some alternative work permit system) must take account of the recruitment needs of the technology and creative industries. The new migration system and visa arrangements must not take the wind out of the sails of our high technology and creative sectors.
In these industries, speed is essential.
The advent of Brexit increases the importance of developing a highly skilled and talented workforce. This means government investment in schools, colleges and universities and business investment in the skills of their workforce. The Government should also allow the proceeds of the Apprenticeship Levy to be available to fund a variety of good quality courses and not solely apprenticeships. Employers will then be able to choose the right training programmes for their employees.
The UK has many strengths: the rule of law and stable property rights; world leading industries and a first class higher education; the English language and a convenient time zone for business; a floating exchange rate that softens economic shocks and the Government’s ability to borrow cheaply for investment. Above all, we are a capable, competent and creative people.
Brexit is a shock. The uncertainty is palpable. But if we remember our three ‘Ts’ we can still succeed.