The UK government will review the axing of plans to introduce a games industry tax relief.

Chancellor George Osborne ruled out the French and Canadian-style tax relief for the UK in May - despite leading Tories previously speaking out in favour of the move.

But Dundee West MSP Joe FitzPatrick has received a letter from the Chancellor announcing that the UK government will consult with the games industry this autumn to review its plans.

In his letter, the Chancellor states that he "recognises, that, as outlines in your letter, there has been a relative decline in the tax competitiveness of the UK."

Osborne adds: "To ensure the continued effectiveness of the schemes, the Government will consult with business in autumn 2010 to review the taxation of intellectual property, the support R&D tax credits provide for innovation and the proposals of the Dyson review. We would welcome any representations on the schemes as part of this process."

The news will be welcomed by the UK games industry, which has already been outraged by moves from Canadian government agencies to take advantage of the scrapping.

MSP Joe FitzPatrick said he welcomed the Chancellor's announcement. "Although he did not introduce tax relief in the emergency Budget, he is willing to review that decision.

"I will be contacting leading industry figures and major stakeholders such as TIGA to ensure the strongest possible representations can be made to this review," he said.

"Reports by the Computer games industry show that Dundee could lose 200 jobs over the next 5 years as a result of a failure to implement tax breaks, whereas introducing tax incentives would create 350 Graduate level Jobs and £45 million of extra investment in Dundee."

Following the decision to axe the tax plans, Labour's shadow culture secretary, Ben Bradshaw has told CVG he was "astonished" over the Coalition Government's decision, which could potentially hurt our developers in the long run.

I seriously doubt whether this will hurt our games design industry at all. 200 jobs over 5 years for how much tax relief? Not worth it. Also if these firms want to behave like multinationals maybe they should have a multinational tax imposed on their products?

In the end if people are here then the industry will come here.

Yes but if you consider the costs to subsidise those jobs it does make it very high. In a period of austerity these job subsidies are too much. Also the company will not move its staff to Canada. They will move a couple of key people and the rest will be sacked. This is a tax dodge by a company that can threaten to move elsewhere. We should not give in to black mail for the sake of a few jobs. From memory it was supposed to add up to £45 million a year, but that equates to a job subsidy of £225 000 a job. That would buy a really plush office outright and pay the wages for a year or more for the staff. I have known people set up a software company for a lot less, and employ a lot more for the same money.