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UK Video Games Industry: Contribution of Leamington Spa

Volume 690: debated on Tuesday 9 March 2021

I beg to move,

That this House has considered the contribution of Leamington Spa to the creation of the UK video games industry.

It is a pleasure to serve under your chairmanship this morning, Sir Christopher. If I were to say “Freddie Starr Ate My Hamster”, those of a particular vintage might recall that headline in a certain newspaper, but if I were to mention the title “Rock Star Ate My Hamster”, they might be forgiven for not knowing what I referred to. However, that was one of the first video games produced in the area of Leamington Spa. It is perhaps one of the least known games that emanated from a particular business that I want to talk about, along with the wider sector.

I do not know, Sir Christopher, if you are a seasoned video games player, but even if you are not, you may have heard of some of our global success stories, such as “Forza Horizon”, “Dirt Rally”, “Sonic Dash” or “The Division 2”. The UK games industry contributes a huge £2.8 billion to the UK economy. It comprises 50,000 full-time equivalent jobs, generating over £900 million in tax revenue. It comprises eight major hubs across the UK, as well as a huge number of cottage businesses around the country.

Those hubs include London, Birmingham, Manchester, Dundee, Slough and Leamington Spa—or should I say Leamington Spa, Slough, Dundee, Manchester, Birmingham and London? Because while the UK is one of the global centres for the video games industry, it is Leamington Spa—or should I say Silicon Spa?—that is the motor of the sector here in the UK. A simple glance at the gross valued added of the industry across those towns and cities, and a look at their relative populations, will show that it is Leamington Spa and its immediate environs where the per capita contribution is at its greatest and most intense.

Silicon Spa, as it is known, happened by happy chance, thanks to the vision of two young brothers, the Darling brothers, who started up a business back in the 1980s that would ultimately be called Codemasters, and who had the good sense to locate themselves just outside Leamington, rather than in Banbury, Oxford or London. They then had the foresight to hire the hugely talented Philip and Nicholas Oliver. From that silicon spring, some 40 years ago, would gush Silicon Spa.

That led naturally to other developers being attracted to the area, Leamington being an obvious choice due to its reputation for great bars and good nightlife, establishing a hotbed of talent. Today, the Silicon Spa cluster employs over 2,000 highly-skilled people in 32 studios, equating to over 10% of the UK total games development sector. Per capita, that is the highest in the country, which is some sector clout. The businesses and talent are well recognised by the big players, with Electronic Arts’ acquisition of Codemasters in recent weeks for £1 billion, making it the latest big name to invest in the Warwick and Leamington area.

Back in 2008, a long time before I became the Member of Parliament or indeed was drawn to politics, I was talking to the local council about putting Warwick and Leamington on the map, because I could see the diversity and richness of talent, the breadth and opportunity of business, and the phenomenal skills pool we had in the community. At the time, I was talking to Sir James Dyson’s foundation to try to get him to invest in our towns, but unfortunately the global financial crash put paid to that.

I have long held that we have the businesses, the people and the educational resource to lead the way. That is because we also have the traditional automotive industry based in the area, which allows a fusion of skills and talent from the likes of Jaguar Land Rover and Aston Martin, just down the road. The steady stream of engineers and specialists working at their Gaydon hubs has had a knock-on effect on the games industry, with talent-switching between the industries.

This is something we are seeing with the emergence of augmented reality and virtual reality technologies in particular, which were developed in the games industry, and how they can be applied to other sectors as well. We have talked about the automotive sector, but there are a great many others. We are starting to see the AR and VR genres spreading into all other aspects of audio-visual media. It will no doubt be at least a £100 billion industry very shortly, within the next few years. Those who were lucky enough to see the Royal Shakespeare Company’s production of “The Tempest” in Stratford will realise how these skills and emerging technologies can be used in theatrical production, as well as so many other areas.

What makes the area unique is that 75% of the digital media companies there are gaming companies, whereas the figure might more typically be 5% to 10%. With a turnover of £101 million, the Leamington area’s economic contribution is the largest outside of London, or the Slough-Heathrow area, as an aggregate figure. The area has the highest percentage of games employees in the working-age population, so you are more likely to meet someone in the Leamington Spa area who works in the games industry than perhaps anywhere else, Sir Christopher. The area benefits not just the cluster, but from soft-landing opportunities, the skills and talent, the crossover, and the fusion between different sectors. It also has a relatively low cost profile, with excellent networks across the industry and world-class research on its doorstep.

When it comes to skills and education, we have Warwickshire College Group, which offers a foundation degree in games art, with the opportunity to add a further year and receive a BA (Hons) through the University of Gloucestershire on its interactive games art programme. Across the west midlands higher education institutions, there are 2,045 on games courses, 12,800 in design studies and almost 17,000 on creative courses. A huge talent coming through, perpetually, to support this industry and many others.

In 2019, Coventry University was ranked the UK’s modern university for the 7th year running, and produces internationally recognised research. Some 2,000 students study the creative art and design courses that it offers, and 1,700 computer science students also attend. As well as that, the university offers its Q-interactive digital studio. Down the road, at the University if Warwick, there is a school of creative arts, performance and visual cultures, and it is home to the largest university art centre outside of London.

Elsewhere, it is clear that the entire creative sector of our area will benefit from the redevelopment of Leamington’s creative quarter through the regeneration of its old town. We can build upon and reinforce the importance of the creative and digital industries in the town and attract inward investment to the cultural and creative sectors. With costs so significantly lower than in London or the south-east, there are good, simple financial reasons for businesses to locate there. This is recognised by the Department for International Trade, which presents the area as a centre of high potential for video games both inside and outside the entertainment sector.

I can honestly say that Leamington is absolutely the place to be, and not just in terms of investment, but in terms of skills and opportunities, and also the support. It is also the happiest town in the UK.

I am nothing if not ambitious for our area, and slightly green with envy about the work being done by the games industry veteran Ian Livingston, who is spearheading a project to open a brand-new UK academy dedicated to science, technology and digital skills. This is something I very much want to see replicated in the towns of Warwick and Leamington, as it is something that I was envisioning back in 2008. I very much hope we can see that on the horizon.

In terms of challenges, it would be remiss of me not to talk about the economic, political and legal landscape, because it is so crucial to the future of the sector. The news the other day regarding a draft decision for a data adequacy agreement with the EU is of considerable importance to the sector, and clearly to Leamington as a result. It is positive that Brussels is set to allow data to continue to flow freely from the EU to the UK after all, although the arrangement will be reviewed every four years, underlining just how fluid the landscape is right now.

The UK is and remains a major international player, particularly when we consider the number of companies that we have here relative to our GDP and population. The US has twice as many businesses, but it has a domestic market far larger than the UK’s. It is only when we look at countries such as Japan and Germany that we can understand the scale of our sector here in relative terms, which helps explain why so many nations envy greatly the commercial success that we enjoy globally. Those countries are eager to grab market share, and many, such as Canada, Sweden and eastern European nations, are making a determined effort to attract UK companies and our talent to relocate to their shores through fiscal incentives and easy visas. These are themes among many that business sector representatives such as the Association for UK Interactive Entertainment and The Independent Game Developers’ Association are working very hard on. That is also why the sector-specific video games tax relief is so important.

In August last year the Government revealed that £355 million had been spent on making more than 150 video games in the previous year. In fact, since the relief’s introduction in 2014, just under £4 billion has been spent on making 1,400 games, which shows what can be done with support. We need not only to maintain that relief, but to deepen the UK games development fund with an increase in Government investment in intellectual property while providing greater support for trade and investment activity.

When it comes to skills, it would be good to see the Government match fund an industry-led skills programme as well as ensuring UK businesses can continue to attract the best of global talent through sensible business-friendly immigration policies. All this is good, but other nations are throwing serious money at the industry to lure our businesses away. It is vital not only that these businesses remain here, but we must ensure that they continue to invest here in Warwick and Leamington, in Silicon Spa and elsewhere across the country.

No speech these days would be complete without a review of the challenges we presently face. It is clear that for many businesses the pandemic has been incredibly hard, but for the games sector it has, I am glad to say, been relatively buoyant. Of course, many people have been turning to video games in this period to stay socially connected, to maintain their mental wellbeing and to keep entertained, especially given that so much traditional support has been closed down for long periods and has suffered so greatly. That is why I am particularly thankful for the initiative shown by the sector and by my local businesses during the crisis, and for the recognition of the sector’s responsibility by taking various actions to help support players, people and public health. The “Games for Carers” campaign donated tens of thousands of free games from across the games industry to frontline NHS heroes.

Elsewhere, there was the establishment of the partnership between leading games companies and the UK Government to place central public health messaging in games, which enabled millions to be reached. That was a very good initiative. Then there were local games companies such as Playground Games in Leamington partnering with local food providers to give away free lunches to children eligible for free school meals.

It is once in a generation that a few individuals step forward—inventors and innovators—and it is particularly rare when those innovators or inventors also have the enterprise to match. Of course, it is easy to think of those on the west coast of the US in Silicon Valley and the likes of Steve Jobs and Bill Gates and the sorts of businesses that they founded, but I would suggest that the Darling brothers and the Oliver twins were our equivalents in the establishment of Silicon Spa. Thanks to them, 40 years on, Leamington and the wider region boast our own Silicon Spa, which has become a world-renowned area and sector for a hugely successful global industry, and it is very much the motor of the UK games sector. If businesses out there across the UK, or indeed elsewhere in the world, are looking for the best location, the best talent, the best skills, and maybe the happiest town in which to locate themselves, could I suggest they look no further than Leamington Spa—Silicon Spa—and that they get in touch with me?

May I just say one final thing? When this pandemic eases and we are able to return to workplaces, I look forward to visiting many of these businesses, and I very much look forward to seeing David Darling—I just have to have a demonstration of “Rock Star Ate My Hamster.”

It is a great pleasure to serve under your stewardship, Sir Christopher. I thank the hon. Member for Warwick and Leamington (Matt Western) for bringing this debate to the House today, and I am so chuffed to have the opportunity to congratulate Leamington Spa and highlight its incredible contribution to the creation and development of the UK video games sector. That sector is such a key element of our world-leading creative industries.

Only a few weeks ago, I was lucky enough to speak about the importance of Leamington Spa as a games hub. I was very disappointed that, given covid, I was not able to be there in person, and had to do it virtually. I would very much rather have been there in person, but I am delighted that the hon. Gentleman has brought Leamington Spa to me today by bringing it to life in such a vibrant and exciting fashion. He is a great advert for the town, and I very much hope, one day, that I will be able to visit some of his local companies. I was delighted to be able to provide that keynote speech, because Leamington Spa is so vibrant and such an important part of our video games sector. Its very own “Interactive Futures” virtual event showcased the incredible careers and exciting career paths in the video games sector to younger generations and their parents. That is so important: what an exciting, vibrant and interesting career it would be to be in the video games industry!

Leamington Spa—or Silicon Spa, as I think we should now refer to it—and the whole surrounding area has played such a key part in the development and growth of our UK games industry. The games hub has its origins way back in the late 1980s—which, of course, I do not remember at all—with the emergence of Codemasters and then Blitz Games. Their founders, the Darling brothers and the Oliver twins, were pioneers of the British games industry, as the hon. Gentleman highlighted so eloquently. Over the years, we have seen Leamington Spa flourish as a games development cluster, experiencing superb growth and creating major economic value, not only in the west midlands but for the whole of the UK.

The games hub is now home to such a diverse mixture of games companies and smaller start-ups. Of course, Codemasters remains today one of our biggest and most successful games companies, but the area’s world-famous studios also include Playground Games, Ubisoft Leamington, and Sega’s HARDlight studio. Some of our most recognised game titles have been developed there, including internationally acclaimed racing games such as “Forza” and “F1” and—a particular favourite of mine—“Sonic the Hedgehog”. My parents always thought that I was wasting my time with all the years of my youth I spent playing video games, but it was clearly preparing me for life as the Minister responsible for video games, so it all worked out very well.

That blend of experienced games businesses and innovative start-ups has produced an organic system of inter-business mentoring and support, which has enabled the area to flourish so successfully. That mixture of business size and professional experience encourages an impressive rate of intellectual property development, and it is therefore no surprise at all that Leamington Spa has become one of the UK’s largest hubs for indie games studios. Of course, that is why the area is referred to as Silicon Spa, given its incredibly attractive mixture of innovation, artistic design, digital growth and skilled creative professionals.

Leamington Spa, though, is just one example of the UK’s many excellent games hubs. I do not know if you know this, Sir Christopher, but video games hubs have sprung up all across the UK, from Sheffield to Guildford, from Newcastle to Bristol, from Belfast to Cardiff, and from London to Edinburgh and, of course, Dundee—one of our oldest games clusters and the birthplace of the groundbreaking, iconic games that I am sure you are well aware of, “Lemmings” and “Grand Theft Auto”. Those are just some of the concentrations of games companies that are contributing to a huge drive in economic growth, innovation and creativity. Indeed, the industry is one that I am proud to say is truly British in its geographic representation.

According to recent figures from the trade association TIGA, 80% of games development jobs are located outside London, which is something many industries would, I think, aspire to. We recognise the benefits that that can bring to local economies, and, of course, the Government are committed to levelling up across the country. Is not the games industry a fine example of how that can be achieved? It plays such an important part in helping us to achieve shared prosperity across the UK.

As the hon. Member for Warwick and Leamington said, the industry is flourishing and promises more growth and success in the years to come. The sector contributed an estimated £2.9 billion to the UK economy in 2019. That is up £0.4 billion from 2010, which is huge growth. We understand that the sector has huge potential to continue to grow, and can make an enormous contribution to the UK’s future prosperity. That is why the Government are so committed to supporting its continued growth and why we introduced the video games tax relief in 2014. That growth has supported £3.7 billion of additional investment in UK games production, helping to strengthen the UK’s reputation as one of the leading destinations in the world for making video games.

I am also delighted to say that my Department will continue to fund the UK games fund into the next financial year, to support early-phase games development and talent. That includes the games fund Transfuzer programme, which has helped 400 graduates so far. I am thrilled that the 2021 competition is now open for applications, supporting another cohort of games talent, based in a range of regional hubs. Transfuzer helps graduates to go on to great jobs in games development, which is increasingly important as the industry has such demand for incredibly talented and ambitious individuals. That demand will only continue to grow.

The sector already employed some 27,000 people in 2019—a 42% increase on 2013. That is exactly why events such as the one at which I recently spoke, Leamington Spa’s “Interactive Futures”, and Games Careers Week, which will happen later this month, are vital. We must continue to inspire people to look for roles in our incredibly rewarding creative industries. In recent times another great success story has been the emergence of the UK’s e-sports industry, which presents another huge set of opportunities to explore, to drive growth and investment. We are excited to see how we can build on that, to see the UK established as a major e-sports destination.

However, while we can celebrate the games industry’s fantastic growth and opportunities, there are some challenges for the creative industries. The video games sector remained relatively resilient against covid-19 but, of course, the pandemic placed unprecedented pressure on some organisations and individuals across the economy, and some other sectors in DDCMS have been particularly badly hit. That is why the £65 billion three-point plan that the Chancellor set out last week, to provide support for jobs and businesses as we emerge out of the pandemic and forge a path to recovery, is vital.

The Budget announcement coincides with the publication of “Build Back Better: our plan for growth”, which sets out the Government’s plan to support economic growth through significant investment in infrastructure, skills and innovation. That highlights more than anything, I think, the digital and creative industry as a major success story in the UK’s potential future growth, and as a driver of innovation.

It is important to acknowledge some of the themes that the hon. Member for Warwick and Leamington brought out in his speech today. The industry really is an incubator for some high-end technology. He also highlighted the fantastic opportunities to gain really high-quality skills, well-paid jobs and exciting future careers.

However, we must also recognise that there is still a little bit of work to be done to ensure that video games are enjoyed safely by everybody. We know that our evolving digital technologies, such as video games, present some new responsibilities as well. There are social responsibilities to make sure that anybody using them is not exposed to harm. That is why we take seriously public concerns about loot boxes, for example, and why we launched a bespoke call for evidence last September. This sort of process will inform what we can do as a Government and as an industry to ensure that all consumers are well protected. We will announce the next steps in that process in the months ahead.

However, I want to end with a key positive message from the Government. We fully appreciate the amazing potential—indeed, the amazing achievement up to now—and the future growth potential of the video games industry. We want to exploit fully the UK games sector’s potential for growth and to cement its position as a world leader. We fully recognise the games industry’s importance and its future potential, and the contribution that the sector, which is exemplified in areas such as Leamington Spa, makes to British prosperity.

Finally, of course, something that I had forgotten to mention until now is the sheer joy and entertainment that video games bring to millions of players in the UK, not least a few in my own household. I am excited to see what opportunities the UK games sector will present in the future. It is an industry with an extremely bright future.

Question put and agreed to.

Sitting suspended.