Stoke-on-Trent: Video Games Enterprise Zone

Wednesday 25th May 2022 Westminster Hall

11:00

[Dame Angela Eagle (in the Chair)]

I will call Jonathan Gullis to move the motion, and I will then call the Minister to respond. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

I beg to move,

That this House has considered the potential merits of a video games enterprise zone in Stoke-on-Trent.

It is a pleasure to serve under your chairship, Dame Angela. I am delighted to be joined by my fellow Stoke-on-Trent Members of Parliament for the debate, as well as by the Minister—although she may feel that she has drawn the short straw in dealing with the combined might of the Stoke mafia.

In 2019, during the historic general election campaign, I first raised the idea of Silicon Stoke—a bright new future for our great city, which was once the heart of this country’s industrial revolution. I believe we have a huge opportunity in Stoke-on-Trent to be at the forefront of the new revolution, which will be digital. Having set out a vision for what Silicon Stoke could mean for the Potteries, I am incredibly grateful to Councillor Abi Brown and her city director, John Rouse, for buying into the idea. Since then, we have been united in promoting our vision for a Silicon Stoke, and we have taken it forward by setting up the Silicon Stoke board to create and drive progress. We have published our Silicon Stoke prospectus, setting out how Silicon Stoke could transform our city and local economy. Our prospectus sets out a vision in which Stoke-on-Trent can stand alongside the most hi-tech smart cities of the world.

In the same vein as Leamington Spa, which has its Silicon Spa down the road, we believe that Stoke-on-Trent has a massive opportunity to become a hub for the UK video games industry, as well as for digital and creative jobs more broadly. There is a huge prize waiting for us if we can make this a reality.

[Jack Brereton (Stoke-on-Trent South) (Con)]

I congratulate my hon. Friend on securing this excellent debate. We in Stoke-on-Trent know that we are the best connected for gigabit fibre broadband in the whole UK. We now have absolutely fantastic connectivity—better than any city in the country—and are putting massive investment into skills, including gaming skills. We also have much cheaper office space than almost any other city in the country. Does my hon. Friend agree that our city is the perfect location for these industries to move to and create the jobs we need to level up places such as Stoke-on-Trent?

[Jonathan Gullis]

I could not agree more with my hon. Friend, who is Stoke-on-Trent-born and bred. He is doing his city proud in representing it. There are so many fantastic reasons why Stoke-on-Trent is the right location for these industries, and I will discuss the gigabit installation that was provided by VX Fiber and Stoke-on-Trent City Council, with funding from the Department for Digital, Culture, Media and Sport that came under budget. We sent £600,000 back to DCMS because we are that efficient in Stoke-on-Trent—I look forward to boasting about that later.

The gaming industry is one of the most exciting sectors of the worldwide economy and it is growing year on year. It is far from the niche hobby that it used to be, and it now dwarfs the value of other entertainment media. The global market for video games is huge: approximately 3 billion people play games, and the market is worth around $180 billion. In the UK alone, there are more than 32 million players, and the domestic market for video games reached a record £7 billion in 2020.

Unlike other sectors, video games have been pandemic-proof. Last year, UK games revenue was up by 32% compared with 2019. Research by the international game developers’ association, TIGA, shows that between April 2020 and December 2021, the game development sector’s annual contribution to UK gross domestic product increased from £2.2 billion to £2.9 billion.

We should be proud that the UK is already a world leader in this area, with well-known developers such as Rockstar North in Scotland and Codemasters in Leamington Spa putting out some of the best known games, such as the Grand Theft Auto series. The industry is immensely valuable, and offers fantastic opportunities that are well paid, satisfying and future-proofed. About 80% of the games development workforce is qualified to degree level or above, and Rockstar alone has more than 650 staff in its headquarters in Barclay House in Edinburgh. TIGA has revealed that between April 2020 and December 2021, the number of creative staff in studios surged by almost 25%, and by an annualised rate of 14.7%, from 16,836 to 20,975 full-time and full-time equivalent staff. Additionally, the number of jobs indirectly supported by studios rose from 30,781 to 38,348.

The video games industry is also very much in line with the levelling-up agenda. The industry supports economic growth in clusters throughout the UK, with approximately 80% of the workforce based outside London. The UK has the largest games development workforce in Europe. In the era of global Britain, games development also offers us a fantastic chance to showcase the UK to the world. Games development is hugely export focused. with around 95% of games studios exporting at least some of their content.

Not only is the market for video games huge and ever growing, but there is a raft of media produced using the same techniques and technology. For example, Disney’s recent smash hit series, “The Mandalorian”, was produced using Epic’s Unreal Engine, which is one of the platforms that developers use to make games. Silicon Stoke is not just about games development; we very much hope it will propel Stoke-on-Trent to the forefront of other digital and creative sectors as well.

[Jo Gideon (Stoke-on-Trent Central) (Con)]

My hon. Friend makes a strong case for the video games enterprise zone. Our city is looking to attract the best creative businesses as part of Silicon Stoke. Already the pathways for future employment have been created through the work of the university, and the new digital and creative hub at Stoke-on-Trent College, with courses in virtual reality, 3D printing and drone technology. Creative company Carse & Waterman, which specialises in animated content using green screen and computer-generated imagery, reaches out to schools in our city to enthuse the next generation. Does my hon. Friend agree that we now need to incentivise more employers to develop our Silicon Stoke ambitions?

[Jonathan Gullis]

My hon. Friend is a doughty champion for the people and businesses of Stoke-on-Trent Central. I have had the pleasure of meeting the award-winning animators of Carse & Waterman, who have even worked on “Ant and Dec’s Saturday Night Takeaway.”

I know that my hon. Friend took the Chief Secretary to the Treasury to see the new technological hub at the Cauldon campus of Stoke-on-Trent College in her constituency. She is absolutely right that it is about incentivisation. As my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) said, we have the office space, the digital fibre connectivity, and the college and university-level education. All the infrastructure is there. What we need is for the Government to send a big message to the sector that Stoke-on-Trent should be its home, because there is no reason why it should not. With the exciting e-sports potential of the indoor arena—the only one that would be in existence outside London—I cannot think of a more exciting place than Stoke for the games industry to thrive.

The plan is for Stoke-on-Trent, which fired the flames of the industrial revolution and is famed for its coalmining and ceramics heritage, to be at the heart of the new digital revolution. What does Silicon Stoke mean in reality? As we set out in our Silicon Stoke prospectus, it means making Stoke-on-Trent the most digitally advanced city in the UK, achieving once again the renown it already enjoys for ceramics—a small but mighty city, punching way above its weight in the national economy. That will be achieved through a mixture of digital infrastructure, skills and securing opportunities for our home-grown talent to stay in Stoke-on-Trent and establish the Potteries as the best place in the UK to work in video games.

Harnessing the power of our city-wide full-fibre network and 5G data, we will: expand the provision of digital skills with the establishment of a full-fibre academy and by ensuring that every school is connected to the full-fibre network; grow the small and medium-sized enterprises digital sector, with support from Stoke-on-Trent City Council and the UK’s leading video games university, Staffordshire University; maximise the opportunity to deploy internet of things technology in our existing manufacturing sector; transform health and social care through improved digital connectivity; integrate smart technology into our city’s energy and transport infrastructure; and expand our reach as a leading hub of video games development and digital production, cementing our status as a leader in the sector with the construction of a specialist e-sports arena in our city centre.

Let me set out just one example of how we are going to realise this ambition and make Stoke-on-Trent the main character in the UK’s digital story. Since December 2021, the Potteries Educational Trust has been running a digital schoolhouse across the city. UK Interactive Entertainment’s digital schoolhouse is a national not-for-profit programme that provides primary schools with an opportunity to experience free creative computing workshops. The programme is supported by large gaming companies such as Nintendo, PlayStation and Sega. The trust has been offering primary schools across the city a free day of programming workshops: 17 primary schools have taken up the offer, with 1,694 pupils benefitting from 16,311 hours of digital enrichment. Staff are also benefiting, with 93 hours of staff continuing professional development delivered.

To further our ambition to establish a new digital cluster, Stoke-on-Trent City Council has commissioned a gaming report from TIGA—the network for games developers and digital publishers, and the trade association representing the video games industry—with Staffordshire University. Overseen by Dr Richard Wilson, who was kind enough to share his thoughts on Silicon Stoke in advance of today’s debate, the report will set out how we can grow the video games industry in Stoke-on-Trent. I look forward to presenting the report, with my hon. Friend the Member for Stoke-on-Trent South, to the Minister in the near future.

Having spoken to Dr Wilson, I suggest that we can grow a video games cluster in Stoke-in-Trent in the following ways. The Minister might want to take notes, because this is where our asks come in. First, building on the success of the video games tax relief, which was first introduced in 2014 and has led to average growth in industry headcount of almost 10% a year, the Government should raise the rate of that relief to match Ireland’s planned 32% rate. TIGA research shows that increasing the rate of video games tax relief from 25% to 32% would yield nearly 1,500 additional skilled development jobs, more than 2,700 indirect jobs and almost £200 million in additional GDP contribution per annum by 2025. Increasing the rate of video games tax relief would enhance the environment for making games in the UK and therefore indirectly support a games cluster in Stoke-on-Trent.

Secondly, the Government should introduce a video games investment fund. Difficulty accessing capital has consistently been one of the top factors holding back many games developers in the UK. The UK Government should introduce a video games investment fund to provide pound-for-pound match funding, up to a maximum of £500,000, for original intellectual property game projects. A video games investment fund would be able to support start-up studios and small studios, including in Stoke-on-Trent. Currently, no dedicated seed funding schemes are available to support start-ups in the games industry in the area, although the UK games fund, based in Dundee, does provide prototype funding of £25,000 for small studios. Research from TIGA and Games Investor Consulting has estimated that introducing a video games investment fund would, between 2021 and 2025, add £72 million in additional tax receipts for Her Majesty’s Revenue and Customs, while costing £26.5 million. In terms of yield, that is a 170% return on investment.

Lastly, we must enable Staffordshire University to support start-up studios. Other successful games clusters have that link already. For example, Abertay University in Dundee has a strong connection with local industry and operates the InGAME programme, which provides research and development funding to games businesses. In a similar manner, we must enhance the links between industry, higher education and local government locally in the Potteries. One way to do that would be through a new video games enterprise zone for Stoke-on-Trent. Since their introduction in 2012, enterprise zones have been a major success across the country, and there are now 48 nationwide. In 2015 the Government reported that the enterprise zones had created 19,000 new jobs and attracted £2.2 billion of private investment and more than 500 new businesses.

Locally, we have our own hugely successful enterprise zone: the Ceramic Valley enterprise zone. Located along the strategic A500 corridor and launched in 2016, Ceramic Valley has attracted thousands of new jobs, from JCB, Jaguar Land Rover and Amazon, all creating jobs locally. Backed by £3.4 million of investment by Stoke-on-Trent City Council and the benefits that come with enterprise zone status—including a business rates discount worth up to £275,000 over five years for businesses that move to one—Ceramic Valley has been a huge success for our city.

By setting up a new enterprise zone focused on games and interactive content, we could create a unique opportunity to put Silicon Stoke at the heart of the UK’s digital economy. The success of that kind of policy at national level is clear in the massive boom in the UK video games industry since 2014, when the video games tax relief was brought in. Having a similar tax break for local companies via a new enterprise zone would have a similar effect, turbocharging our local games industry. That enterprise zone could take the form of a more formal partnership with Staffordshire University. For example, there are already a number of university enterprise zones across the country.

Originally, four pilots were backed by £15 million of funding from the Department for Business, Energy and Industrial Strategy, with the universities required to match-raise £2 of match funding for every £1 of Government investment. The pilot schemes will be fully evaluated at the end of the scheme in 2023, but an interim report from 2018 found that the university enterprise zones had been successful in attracting new businesses on to sites at the universities, with tenants confirming that the university enterprise zone had led to a positive impact on their business activities. The four pilot university enterprise zones were set up specifically to attract high-tech firms to locate near universities.

We should adopt a similar model, but instead of focusing on high-tech firms it should focus on complementing what is already going on in Silicon Stoke. Potentially linked in with the existing centre of excellence that is Staffordshire University, which has a strong relationship with Epic Games, the creator of Fortnite, that initiative could rocket-jump Stoke-on-Trent’s ever growing digital offer. Staffordshire University has been exploring how to support video games businesses to set up locally, and a new video games enterprise zone could be the final piece in that jigsaw.

To some, Stoke-on-Trent may not seem like the natural choice for a burgeoning video games and digital cluster. However, as was written in The Guardian only recently, “something is stirring” in the shadows of our industrial heritage, and the scene is already set for us to become the heart of the UK’s video games sector.

Stoke-on-Trent is one of the new Zoom towns or cities where remote and flexible working is king. According to the recruit company Indeed, we are the third biggest growth area of that kind of work. We have an incredibly strong base to build on. We were one of the first cities in the UK to benefit from VX Fiber’s fibre-to-the-premises open access model, which brought gigabit-capable internet to the doorstep of homes across our great city. VX Fiber has hooked up just over 50% of homes across the city, and aims to have 150,000 serviced by the end of 2023. That £50 million network, in which the Government invested £9.2 million, will unleash a staggering £625 million into our local economy and form the bedrock of our digital -revolution.

Thanks to our successful levelling-up funding bid—again, done with my hon. Friends the Members for Stoke-on-Trent Central (Jo Gideon) and for Stoke-on-Trent South—Stoke will become the first city in the UK to have a stadium that specialises in e-sports. We will be able to make the most of the ever-growing e-sports market, which has a global audience of 500 million people.

Based in the constituency of my hon. Friend the Member for Stoke-on-Trent Central, the City of Stoke-on-Trent Sixth Form College was one of the first 44 trailblazer colleges that started teaching the new digital production, design and development T-level. It is one of the Government’s computing hubs, driving forward the teaching of computing in schools and colleges across the country.

Stoke-on-Trent College has formed a partnership with VX Fiber to open a full-fibre academy, which will offer courses on a huge range of digital skills, from motion capture, software engineering and drone mapping to underground radar surveying and electrical equipment maintenance and testing. As my hon. Friend the Member for Stoke-on-Trent Central pointed out, the college has also recently opened its new digital and creative hub at its Cauldon campus, part-funded by the Stoke-on-Trent and Staffordshire LEP with £250,000 to create sector-leading digital and creative learning facilities.

Staffordshire University, on our doorstep, is the leading university for video games in the country. The university set up its first video games course in 2004, with 55 students enrolled; it now offers roughly 20 different courses in this sector, with more than 2,000 students enrolled. The university is internationally recognised and ranks as the 13th best institution in the world for games design and development. Talent trained in Stoke-on-Trent has gone on to play a big role in the UK’s leading games studios. Some 31% of Codemasters’s staff come from Staffordshire University, while 20% of Rare’s staff are Staffordshire alumni and 13% of the staff at powerhouse studio Rockstar Games were trained in Staffordshire.

We now need to keep that talent in Stoke-on-Trent and avoid the brain drain. It is great that the games industry in the west midlands has already seen the biggest growth in the UK of 132% between 2017 and 2019, much of which is based in Birmingham and Leamington Spa. The next step is to get the games industry to take off in Stoke-on-Trent and Staffordshire. With our almost unrivalled digital infrastructure and local skills base, we make the perfect location for the UK’s next video games cluster.

I am pleased to say that, on the back of this strong foundation, businesses are taking note. With the size of our local talent pool and the shortage of talent elsewhere in the country, we are already starting to see companies set up in Stoke-on-Trent. Last year, the leading advertising agency VCCP opened a new office, in partnership with one of our leading digital businesses, Carse & Waterman, and staff from VCCP London have been working locally to raise awareness and provide training, work experience, mentoring and paid internships.

In conclusion, we have the perfect building blocks to make Silicon Stoke a reality. We have the top-notch infrastructure needed to capitalise on the innumerable opportunities the new digital revolution will bring. We have a long conveyor belt of locally trained talent, which starts in our primary schools—thanks to the Digital Schoolhouse—and continues all the way to Staffordshire University. We have a clear vision of how to seize this opportunity and the backing of the fantastic leadership team on Stoke-on-Trent City Council for our vision of Silicon Stoke. Levelling up is key to most video games, and with the extra boost a video games enterprise zone can provide, video games will be key to levelling up Stoke-on-Trent.

11:19

[The Minister for Media, Data and Digital Infrastructure (Julia Lopez)]

Thank you for your chairing this debate, Dame Angela. I am grateful to my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis) for highlighting the important role that the video games industry plays in supporting very high-skilled jobs and levelling up across the UK. I appreciate the characteristic forcefulness with which he makes the case for his exciting vision of Silicon Stoke.

As my hon. Friend says, something is stirring in Stoke. It is a fantastic city with a very bright future and, through our investments in gigabit broadband—another area that I lead on—it is one of the best connected places in the UK. It is represented by three MPs who have great belief in and passion for the place they represent, and it has great local leadership from Councillor Abi Brown and one of our nation’s youngest Lord Mayors, Councillor Hussain.

I am glad to see Stoke’s three MPs in the Chamber—they are giving Teesside a run for its money as a powerful parliamentary lobby. They are united in their efforts to keep building on the city’s success story and proud history in the creative industries. I pay tribute to my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) for her close working with Stoke-on-Trent College, Staffordshire University and creative businesses such as Carse & Waterman. I also pay tribute to my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), who was banging and clattering his pottery drum for the city in the dark days of the previous Parliament, long before these two 2019 upstarts came along.

I want to set out how we are supporting the video games sector to build on very strong growth, and how we think video games can contribute to our mission of levelling up the country. I will also talk about the importance of skills in achieving those goals. It is great to hear about the really strong partnership working between local MPs, councillors and educators in Stoke.

[Jack Brereton]

Can my hon. Friend the Minister think of a possible reason why the video games industry would not locate to Stoke-on-Trent? I cannot think of a single one.

[Julia Lopez]

I agree. With great digital connectivity and the partnership working between central and local government, there is a great story to tell about Stoke. It is certainly something that I will take back to my Department after the debate, as we look at the initiatives we are focusing on in the creative industries.

The video games sector, as my hon. Friend the Member for Stoke-on-Trent North rightly pointed out, is flourishing. It contributed about £2.8 billion to the UK economy in 2019, and that is reflected in the number of people employed in the sector, which has grown from 13,000 in 2011 to 27,000 in 2019.

The Department for Digital, Culture, Media and Sport is incredibly proud to support the growth of our creative businesses, and we are doing a lot of work to ensure that the games sector, in particular, can thrive. We are putting together a £50 million creative industries programme—a sector vision—as part of our spending review settlement, and I will take away some of the really exciting ideas that have been put forward. That includes up to £18 million invested in the Create Growth programme, which will help high-growth, creative businesses access finance across six regions in England outside London so that they can reach their growth potential. We will be announcing the regions for the Create Growth programme this summer. That builds on the success of our £400 million Creative Scale Up pilot programme, which to date has supported more than 200 businesses across three regions, increasing a total aggregate turnover of £13.5 million.

We have also announced specific support for the video games sector through a £800 million expansion of the UK Games Fund, which will accelerate the growth of the UK games industry. Since 2015, the fund has supported more than 190 early-stage video game development projects, and supported businesses that have the potential to grow and flourish. That builds a strong vibrant SME developer community. I am interested to hear some of the ideas that have been put forward, and I very much encourage small businesses in Stoke to apply for that programme.

My hon. Friend asked what more we can do to support local businesses through tax incentives. Obviously, a lot of this is outside my remit, but we recognise that the future growth of the games sector requires us to maintain our competitive edge in tax reliefs. We must ensure we that continue to be an attractive place to do business, given the global competition. Our games tax relief has strengthened the UK’s reputation as one of the leading destinations across the world to make video games, and it has really worked. Since it was introduced in 2014, it has supported 1,640 games, with UK expenditure of £4.4 billion. In 2020-21, the relief supported the development of 640 games. We have to ensure that we continue to be internationally competitive. We keep all these tax incentives under close review, and I will continue those discussions with the Treasury in advance of any economic statement.

In the 1970s, “Dungeons & Dragons” coined the term “levelling up” for when the player reached certain milestones. Since then, the notion has become a central feature of many popular video games. We take that forward as a mission in our levelling-up agenda. We think the creative industries play a critical role in supporting regions across the UK, and game development has been key, from Sheffield to Leamington Spa, from Newcastle to Bristol, and from Knutsford to Dundee. Some 55% of game development roles are outside London and the south-east, so it truly is a UK-wide industry. Video game clusters are engines for local economic growth and jobs throughout the country. The £39 million Creative Industries Clusters programme, run by the Arts and Humanities Research Council, has supported Dundee’s video games cluster through InGAME. I am keen to look at the lessons we can learn from that to see whether any of them can be applied to Stoke. The funding has created 337 new companies since 2020, and created or safeguarded 477 jobs.

We are committed to continuing that kind of cluster work and I want to see that success replicated in Stoke. It is great to see the investment in the Ceramic Valley enterprise zone and the announcement last week about the £56 million levelling-up funding that will be going to development opportunities in Etruscan Square and the transformation of Stoke’s Spode site.

We are also working extremely hard on digital connectivity. We invested more than £8.5 million through the local full-fibre network project, which has helped to incentivise commercial investment in the region, including the VX Fiber plan, which will be targeting more than 30,000 properties for a gigabit-capable connection. For those not in line for the commercially or publicly funded roll-out, we will be investing more in Project Gigabit. The procurement for Staffordshire, which includes Stoke, is anticipated to cover another 70,800 premises and will be taking place later this year.

Alongside robust growth and relentless innovation, we need to make sure that the skills are in place to help the video games industry reach its full potential. That is why we are working very closely with some of the bodies that my hon. Friend the Member for Stoke-on-Trent North mentioned. Our creative careers programme has given 27,000 young people hands-on experience with industry, through immersive events and work experience opportunities. The next phase of that programme, with a three-year grant competition launched this month, will launch fully later this year and do even more to support people, particularly those from lower socioeconomic backgrounds.

Specialist skills are needed to support video games, from development and production to art and sound design. In Stoke, there are a range of further and higher education study opportunities in place for routes into the video games industry, from diplomas in games design and programming at Stoke-on-Trent College, to games courses at Staffordshire University and Keele University. I know that Staffordshire University, in particular, provides an excellent pathway to a career in gaming. The university won the 2021 excellence in university and industry collaboration award from the UK video games industry trade association, TIGA—you say tigger, I say tiger; I am not entirely sure which one is correct, but we should probably call the whole thing off. The award is supported by a partnership with UK Games Fund’s Tranzfuser programme, which supports graduates to take an idea for a game to a playable reality.

Staffordshire University was the first university in the UK to offer a degree in e-sports in 2018, and now offers postgraduate courses too. That shows that Stoke-on-Trent remains committed to becoming a hub for gaming. I am really interested to hear more about the e-gaming stadium and hope to learn more as the proposal is developed.

I am pleased to see that funding from the Build Back Better scheme has been secured to create a virtual reality hub for Stoke-on-Trent College. We continue to invest in important opportunities for young people across the United Kingdom to get the resources and knowledge they need to progress exciting careers in the creative industries. I look forward to working with my hon. Friends to support regional hubs, not only to keep local talent, but to attract new talent from across the country.

As we have already said this morning, Stoke is a great place to do business, with low office rents, great digital connectivity and inspired leadership. With a vision like Silicon Stoke, there is a really exciting future that we can build here. I will take away some of the comments on tax reliefs. We will continue to work in partnership with local colleges and I want to look at the potential for a creative cluster. With the levelling-up funding in place as well, all kinds of things are going on here. I say to businesses across the UK, “Go to Stoke; it has got inspired parliamentarians who are working very closely with us in Government and with a diligent and energetic local leadership.”

[Jonathan Gullis]

We would love to welcome the Minister to meet the Silicon Stoke board members, and to have a joint MPs’ roundtable with leading actors in the sector—some are in Stoke and some are not—so we can help get the message out about why Stoke is a great place to be.

[Julia Lopez]

I thank my hon. Friend for his generous invitation, which I am sure I will be able to take up shortly. I commend him and my hon. Friends the Members for Stoke-on-Trent South and for Stoke-on-Trent Central for their passionate vision for the great city that they represent. I thank them for the debate today.

Question put and agreed to.

11:29

Sitting suspended.