What does Brexit mean for the games industry?

The UK has left the European Union. And like it or not, we’re all in the same boat now. Whatever benefits Brexit may or may not bring in the longer term, it’s certain that the ongoing uncertainty around the UK’s final relationship with Europe is bound to result in some choppy waters – at least from now until the end of the transitional period on the 31st of December, and most likely beyond that as well.

Broader business advice for how the industry should prepare for Brexit is available, but the ongoing trade deal negotiations means that there’s a lot of uncertainty in some areas. And that can only be combated by keeping up with current events, says Ukie’s head of communications George Osborn: “The UK officially leaving the European Union has provided some clarity for businesses on where we are going. But our advice is to keep a close eye on the news to see what emerges from the next stage of the process.

“The priorities for the UK industry in the negotiation of a trade deal with the European Union remain similar to those outlined in Ukie’s 2017 State of Play report. Maintaining the free flow of data, limiting barriers to hiring the best and the brightest from around the world and preventing the emergence of burdensome travel restrictions is important for the good health of the games industry.

“We will continue to advance these arguments in the coming year. However, we won’t likely have clarity on the shape of a future trade deal for a number of months. We recommend in the meantime that businesses prepare themselves for the coming months by watching the advice guides we prepared in case of a no-deal scenario last year.

“These videos provide a lot of common sense tips for companies in regards to the process – such as the importance of using standard contractual clauses – that should provide a solid foundation for the future.”

One area that Osborn made clear to us was that the pan-European PEGI rating system would continue to be used in the UK, so no worries there.

“We also recommend that if you do need help in the coming year that you should get in contact with us. Our policy team is staying on top of developments to give detailed advice as the year progresses, while our membership team can help put you in contact with companies who can help you over any hurdles you may encounter.”

In short, this is an evolving situation and we all need to pay attention.

THE HUMAN LEAGUE

The first piece of the industry’s personal puzzle came into focus recently when the government outlined its immigration policy post-Brexit – a key piece of forthcoming legislation once freedom of movement with the EU comes to an end on December 31st.

Recruitment specialist Liz Prince, head of Amiqus, starts by noting that the new system will apply to everyone, not just EU immigrants:

“The new system will now treat EU and non EU citizens equally and will include a route for skilled workers who have a job offer from an approved employer sponsor and the job will need to be at a required skill level to qualify (A level qualified or above).” That should mean that the majority of industry roles will qualify, Prince notes, though we’re concerned that jobs with softer skills, such as business development roles, might be harder to argue for.

“The applicant will also need to be able to speak English,” she adds, though no testing regime for this has been set yet. “The minimum general salary threshold will be £25,600, although if the salary was less than this (but more than £20,480) points can still be earned on other specific characteristics, for instance having a job offer in a shortage occupation or having a PhD relevant to the job.”

Ticking the basic boxes isn’t going to be the key issue here for those recruiting talent, though. But instead it’s the nitty-gritty of the new bureaucracy that’s the key, especially as it will now apply to everyone coming to the UK to work, adding a huge workload to recruiters of EU citizens who would have previously come over to the UK hassle-free.

“It’s imperative that the government simplifies the sponsorship and immigration process to ensure that employers and candidates enjoy a smooth and inexpensive route into UK employment,” Prince tells us. “Although the points based system may be sufficient to support the UK games industry’s access to skilled talent from around the world, we still need to be able to attract people to work in the UK and to our businesses, and that takes more than just a system. Attitudes are being noticed overseas.”

And that pointed note has statistical backing, Prince explains. “Recent reporting finds that the UK has fallen from 9th to 12th place globally in terms of the country’s ability to attract, retain and develop talent. Key factors to the modest drop down the league table include political instability coupled with poor tolerance of minorities.”

Such perceptions are, concerningly for many developers, not equally distributed across the country: “It’s interesting to see that there are key regional differences to the overall positioning for the UK –London has improved its position, rising from number 14 to become the world’s second most talent-competitive city. However, the sting in the tail is that Britain’s regions are not doing nearly so well.” And it’s in those regions that much of our development output is based.

“The report finds that Britain as a whole has what it describes as a ‘relatively low degree of internal openness’. Put more bluntly, the country has become less tolerant of minority groups. Viewed through this prism, it is this which is making it harder to attract talent,” Prince states.

So what then can games businesses do to push back against what is a national problem?

“Brexit is definitely an opportunity for companies to improve their value propositions, to focus on their culture and diversity to enable them to heighten their ability to attract global talent. In addition, to fill gaps in talent capabilities, employers will have to understand the full range of levers available to them, including changing operating models.

“For example, the wider use of agile teams, which are more flexible than traditional units, means that certain employees would no longer need to be co-located, so some roles could be virtualized. Companies can unlock internal talent by upskilling or cross-skilling existing staff, rethinking job descriptions and hiring from unconventional talent pools. In addition, taking steps to develop staff of all ages by introducing training and upskilling opportunities goes hand in hand with the creation of learning cultures within organisations.”

In short: “The key messages are – shore up your value proposition to be the most attractive you can be, and nurture talent now.”

GETTING SETTLED

Plenty of advice there for those looking to recruit, but what should be your first steps if you’re an EU citizen working in the UK or an employer of EU citizens, who wants to do their best to support their employees through this difficult time?

For this we turned to Csaba Berenyi, an EU citizen hailing from Hungary, who after stints at Codemasters and FreeStyleGames, is now MD of Sponge Hammer in Leamington Spa.

“What should you do as an EU/EEA citizen? First, make sure to start your EU Settlement Scheme application. It is a relatively painless process of scanning your passport or national ID using your phone or tablet. In the past, the app was only available on Android, but they have added support for iOS now as well. You can find more information on the government’s website: https://www.gov.uk/eusettledstatus.

“It’s important to know that submitting your details will not automatically grant you Settled Status. There’s a non-transparent approval process that can take anything from days to months. What can make it stressful is that you have no way to see what’s happening to your application during this time.

But when you do, eventually, receive your status confirmation document, there’s a few useful things to know, Berenyi explains: “It will clearly state that it is not evidence of your newly granted status. Landlords and employers may need to use a different method to verify your right to stay. And if you change your mobile phone number, email address, name, identity document or UK address you will need to update your new details on the website.”

That’s hardly reassuring news, so how can employers assist their employees?

“Companies can do a few things to help. Although the process may be simple for some, offering help could be beneficial. Employees, depending on their circumstances, may need access to legal support, so allowing time off and/or access to a lawyer would be welcome.”

SUPER STATE AID

Of course, it’s not just people and businesses that have complex relationships with our European partners. The UK itself has many ongoing agreements with the EU and with its governmental bodies. Meanwhile, our own government may also look at the way it currently supports the games industry once the EU’s rules on state aid no longer apply.

We turned to Anna Mansi, head of certification at the BFI, which manages the cultural test for Video Games Tax Relief (VGTR) for her take on possible changes in this area.

“The UK’s Creative Sector Tax Reliefs will not be affected by Brexit – this includes those available for video games. In the BFI’s Screen Business report (2018), the previous Chancellor restated Government’s commitment “to supporting [the UK’s] highly-skilled and innovative creative industries through creative sector tax reliefs.”

Content will still qualify for VGTR if it passes the UK’s video games cultural test. The cultural test will also continue to recognise EEA content and personnel. Under the Withdrawal Agreement, UK personnel have EEA status – and thus will be able to qualify for other Member States’ cultural tests – until the end of the transition period.

“The state aid regime helps regulate how public authorities provide advantages, such as VGTR to organisations that could potentially distort competition. No material changes are expected to the UK’s state aid regime before the end of the transition period in December 2020.

And beyond that? “The Political Declaration sets out an intention to ‘ensure open and fair competition’ by upholding the common high standards for state aid applicable in the Union and the United Kingdom at the end of the transition period, and to maintain a robust framework thereafter.” But of course: “This is subject to further negotiation with the EU.”

“Under the terms of the Withdrawal Agreement, the UK will continue to participate in the current Creative Europe programme until it ends in December 2020. UK projects are able to apply for funding up until this point, with successful applications receiving funding as normal, even where their funded activity is set to take place after December 2020.

“The UK’s participation in the next Creative Europe programme, running 2021-2027, is subject to negotiation with the EU. The BFI continues to make the case for the UK’s participation. There is further information relating to freedom of movement; IP and Data transfers on the BFI Brexit Q&A page.”

So if you get your employees onside, improve your offering as an employer to those coming from afar, retain your VGTR and keep a beady eye on the news for any further changes, then maybe we’ll all get through this?

Maybe, but let’s not forget the impact that Brexit has already had, and will continue to have on those most affected, EU citizens in the UK. And so to finish we return to Berenyi:

“I know for many in the industry Brexit seems like an absolute evil, it is getting sorted one way or the other. The hardest part of it was uncertainty. There are a few challenges ahead and as negotiations progress throughout the year, and various options disappear we’ll get to see the final shape and act accordingly.

“That said, the anti-immigrant rhetoric of the past years left a scar. I know people who left the country because of it. To retain staff, making sure they feel appreciated and showing support and interest will
make a big difference.”