Getting a return for your creativity

Gerri Peev interviews Margaret Hodge about tax breaks for gaming companies and being a good shot

If talk of imminent war in the government is true, internal enemies of Margaret Hodge, Minister for Culture, Media and Sport should beware.

The minister is at her best when behind a weapon of mass destruction. Her first attempt at Destroyer Command is testimony to that.

"First shot I killed the chap," she says with ill-disguised pride. "I played tennis on Wii and I missed the ball although I am a good tennis player."

She is more puzzled about that one - indeed she is equally puzzled about the lack of games aimed at women in the market. This is a missed opportunity for the industry, she says, but Hodge acknowledges the product will evolve to reflect wider society.

Indeed the pace of change is so fast that, in between organising the interview and publication, two key industry players have merged to form the biggest games company in the world: Activision Blizzard. Meanwhile, Microsoft has unveiled a film download service for Xbox users, turning the console into a multi-entertainment platform.

UK slipping behind

Amid all this market hype and development, the UK, which is the leading consumer of games, is slipping behind on the production side. The Canadians have been propelled ahead of Britain thanks to tax breaks offered by their government.

So just what is Westminster going to do in the face of such aggressive competition? Hodge is careful not to make big promises: "What government needs to do is provide the conditions in which the creativity and the ideas can flourish. That's our job. I think that goes far, far wider than tax credits. We are all really concerned about what the Canadians are doing and we are looking at whether it's legal under the World Trade Organisation convention."

She gives her strongest indication yet to the New Statesman that tax breaks are not on the menu for the games industry here, despite a clamour from some industry voices. "You will get into a terrible ping pong on that is my view. Canadians put a bit more, we put a bit more.

"We will want to respond to that but I have always thought that having a competition between nations on who can give the biggest tax relief is a real short-term palliative, not a long-term solution.

"If we can tackle all the other issues that are important to the games industry, we will create a much more sustainable set of conditions through which the industry can flourish."

One of Hodge's solutions is to wrest away some of the £380m offered almost exclusively to the science and technology industries, such as pharmaceuticals, through the technology strategy board.

"There is a technology strategy board that spends almost £400m a year on innovation. It will spend zillions on pharmaceuticals research and development of nanotechnology. It doesn't spend anything on the creative area that leads to copyright.

"If you are launching a new game.it is a new product that needs development, research and innovation and it can lead to fantastic growth.

Technology strategy fund

"On the technology strategy fund, we want them to fund innovation in the creative sector and that is very much in games."

Hodge also knows the industry's fears over intellectual property (IP) and how the small developers are being outpaced by massive competition from abroad.

"We are looking at this in two ways: how can you protect copyright? ...That will be really important for the games world. The second is that you find new ways of getting a return for your creativity, a monetarised value for your creativity."

She cites Radiohead's recent decision to allow fans to download their music for a fee of their choice rather than dictating the price. While it was initially a loss leader, it allowed the band to promote their brand and concerts.

Green paper

A government green paper on the creative industries economy, due to be released in January, will now become a firmer strategy document, with harder resolutions.

Hodge confides that one of its offerings will be an attempt to coax students into maths and science subjects by setting out a clear link to a future in games development. This will be a welcome move by the industry, which is crying out for skilled workers.

And what are ministers planning to do about the covert state aid the French are trying to inject into their softening games sector? The French government is trying to argue the case for tax breaks for games that promote French culture.

"They are trying but they have not got it yet," she says. "They are doing what we did for films. We introduced the cultural test for films. They are trying to do it for games. They have lost their entire games industry to Montreal; it's all gone. But we shall wait and see and we shall know before Christmas whether Europeans will see that as non-state aid, and we are very sceptical."

Watch this space: if the French are successful, maybe the British government could fund games producers to promote that elusive sense of "Britishness" that Gordon Brown is so desperate to channel.

Battling bad headlines

Aside from killer competition from abroad, the industry is battling bad headlines. In recent weeks alone, computer and video games have been blamed for everything from British school children slipping down the OECD league table for reading, to making youngsters so bad at football that England failed to qualify for the Euro championships.

The government has already announced the Byron Review into video games, led by the BBC's child psychologist Tanya Byron, which is due to report back in March.

This is a subject close to Hodge's heart, as a former children's minister. She makes it clear that responsibility for children's use of games should not be entirely in the hands of the industry; parents need to make sure consoles and computers are not always tucked away in children's bedrooms but played openly in family areas.

"Of course we want to ensure our children are protected from inappropriate material, of course that's important - although making the link between criminality and inappropriate material, that's never been a proven link.

"I think the answer is three things: you have to work with the manufacturers to make sure you have mechanisms that you can filter out all the harmful stuff. Two, you do really need much, much better education with kids in school, so they also become aware of the sort of material that they should avoid. Three, parents have a role to play. One of the most dangerous things we have in our society, if you want my view, is that the kids all have this in the bedroom unsupervised."

Streamlined classification

She favours streamlining the classification system. At present, the UK is subjected to two: one by the British Board of Film Classification (BBFC), which also classifies films, and another, Pan European Game Information (PEGI), an EU-wide system. Hodge expresses a preference for the BBFC as it carries some legal weight.

Where does she stand on censorship? She mentions Manhunt 2, which has failed to get classification for the second time, meaning it is effectively banned from Britain. "A lot of people get very sensitive about it. It is very, very violent. I have not seen it so I don't know what the content is but I imagine it was the right thing not to let it have classification," she says.

Of course, she still has a soft spot for other action-packed games such as Destroyer Command. Subsidy junkies such as Canada and France had better watch out for Hodge complaining to the World Trade Organisation and Europe respectively. She is a good shot.

Gerri Peev is political correspondent for the Scotsman

Video gamers make faster and better surgeons

Surgeons who regularly play video games are faster and make few errors, according to a study published by the Beth Israel Medical Center in New York City.

The study, led by Dr James Rosser, tested 303 surgeons on their performance at the "cobra rope" drill, a laparoscopic training exercise, described as "trying to tie your shoe laces with three-foot-long chopsticks while watching on a TV screen".

Surgeons who did a 20-minute video-game warm-up before the training exercise surgery were found to be 11 seconds faster, and to make fewer errors, than surgeons who did not.

The study also found that young surgeons who spent at least three hours a week playing video games in the past made 37 per cent fewer errors, were 27 per cent faster, and scored 42 per cent better overall than surgeons who had never played a video game at all.

Of those taking part, 42 per cent had never played a video game but 30 per cent had played almost every day at one time. Those in the top third of video-gaming skill made 47 per cent fewer errors, performed 39 per cent faster and scored 41 per cent better overall than those in the bottom third.

The findings have led the authors to suggest that video games may be a practical teaching tool to help train surgeons.

This article first appeared in the 17 December 2007 issue of the New Statesman, Christmas and New Year special 2007

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 17 December 2007 issue of the New Statesman, Christmas and New Year special 2007