No; I'm giving a reason why the politicians see it that way.

The only incentive should be the fact that the resulting business is viable and profit-making. At least if you believe a free market produces optimal use of resources.

Classically, it isn't the function of governments to compete to offer the most tax breaks in order to get investment. Companies should choose the location because it has the lowest costs, hence reducing end prices (and in terms of goods, lowest costs mean it is optimal for the company to be sited there, hence using the Earth's resources most efficiently). Government involving themselves mean companies choose places with suboptimal cprofit potential and hence resources are used suboptimally.

So you're saying that if companies see the UK as a suboptimal environment, then they should leave the UK as a place of business?

Cheeky, yeah, but it's a legitimate bargaining tool on their part.

What costs the UK more money: these studios paying lower taxes, or these studios leaving and paying no taxes on top of producing no income for the UK populace?

Lower taxes, but boosting their government income in the long term with more UK investement

Man how is that a close call? Does Media Molecule pay its own taxes for operating in the UK? What I'm saying is that if Media Molecule up and left, it would remove part of the active work force, take away all the taxes they were paying, and remove a source of exported income for the UK(!).

Media Molecule being relocated to Vancouver would cost the UK a lot more money than MM paying lower taxes, and that's a pretty strong bargaining chip.

I don't think the government will give in either, but that doesn't mean it's not legitimate on Sony and Activision's ends.

Well Sony have shown their desire to do business in the UK, and it is not just these companies, but also the only remaining British publisher (I think) Codemasters

The real question is, why does the film industry get subsidies, but the games industry does not?

Technically a game like Little Big Planet is a Japanese export, not a U.K. export because it was produced by people employed by a Japanese company. The profits and therefore taxes in a majority sense are already Japanese, and their going overseas is only a loss in the sense of losing some moderately to high paying jobs. Its definately not the same as Rockstar for instance who AFAICR are locally owned and operated and therefore pay taxes on the entirety of their taxable profits.

Oh, yes. That's why I hate the way news items of 'X company is moving manufacturing to Poland' are presented as if that was a terrible thing; a slight to British people; and something the government should interfere in to stop.

The real issue is that 1hr of unskilled labour costs tens of times more in the UK than abroad. Due to historical reasons, better workers' rights/protections here, and the high cost of goods. I'd like to see that equalise as the rest of the world adopts (roughly) our laws and rights.

Income tax, we do want people employed dont we