Chancellor George Osborne has scrapped Labour's proposals to give tax relief to games publishers, calling the idea "poorly targeted".

Labour's former Chancellor Alistair Darling had said: "creative industries, including the video games industry, make a valuable economic and cultural contribution to the UK," and added that a tax credit system, like the one offered to the British film industry would be on offer.

Osborne stated, however, that the scheme would not come into place and instead went for he went for wider cuts like the cut to corporations tax and also National Insurance cuts. He also raised the VAT rate to 20 per cent.

We were contacted by ELSPA, the UK's Interactive Entertainment Association who issued a statement made by Director General Michael Rawlinson:

"Bearing in mind the pre election commitment towards tax breaks made by the Conservatives and the Liberal Democrats we are extremely disappointed by the outcome of today’s Budget. Our industry will be rightly puzzled as to how tax breaks can be lauded before an election, only to be seen as ‘poorly targeted’ and scrapped just six weeks later.       

"We understand that this decision has been made in the context of the current economic climate. Yet the Chancellor today spoke of the need for a more balanced economy. If this is to be attained the government must acknowledge that the creative industries are of vital importance. Therefore in the absence of tax breaks it is the essential that the government work with our industry to ensure that the policies which we have outlined - such as addressing the skills gap and better access to R&D initiatives - are implemented."

Not much fun for the games industry then. Do you work in this field? Let us know what you think about Osborne's cuts using the comments below.