Silicon Cities: Supporting the development of tech clusters outside London and the South East of England

Thursday, 14 August 2014

Silicon Cities: Supporting the development of tech clusters outside London and the South East of England

Synopsis

The government should put ‘rocket boosters’ under the idea of directly elected Mayors to ensure that all parts of the country are in a position to benefit from UK’s world class technology sector.

Our report says that Britain is already benefitting from the growth of technology firms with 1.2million people employed in the sector. The technology sector also received more equity investment than any other sector over the past three years. However, the fruits of this success are predominantly being felt in and around London and the South East. 

A recent study showed that the concentration of tech employment in the South East is greater than the national average in as many as 47 out of 66 local authorities, with Wokingham having more than five times the national proportion of technology workers. In London alone, 21 out of 33 local authorities have a higher proportion of workers employed in technology related roles than the national average. Between 2009 and 2012, 27% of all new jobs in London can be attributed to the technology sector and there are now an estimated 34,000 tech businesses in the Capital. 

The report argues that ‘clusters’ – geographic concentrations of interconnected companies and institutions in a particular field - are the most effective way of boosting the technology sector across the country. It highlights a number of challenges facing northern towns and cities:

  1. A ‘brain drain’ from the North. Over a third of graduates from major universities leave the North East (37%) and North West (36%) while as many as 55% leave Yorkshire and the Humber. For STEM subjects, the figures are 35%,34% and 52% respectively. Those from the top ranked universities leave in higher numbers.
  2. A lack of local leadership. As many as 37 local authorities are covered by more than one Local Enterprise Partnerships (LEPs), creating a mismatch between the geography over which LEPs have responsibility and the business communities on the ground.
  3. Access to finance. A study by the UK Business Angel Association found that businesses in London and the South East attracted 54% of angel funding in 2012/13. At a venture capital level, the two regions also dominated, receiving 58% of total UK investment.
  4. Transport links. The average speed of journeys from Manchester, Newcastle, Liverpool, Leeds and Sheffield to London is 77.6mph, compared with an average speed between those northern cities of just 46mph. Slow journeys make it harder for people to move between clusters to access and share work, ideas and opportunities and is a major barrier for foreign and London based investors. 

The report makes a series of recommendations to boost the growth of technology clusters in the North, including:

  • Reviving the idea of directly elected Mayors with appropriately devolved powers to lead economic growth in their areas including the development of tech clusters.
  • Investing in rail and road infrastructure to better connect northern towns and cities. High Speed 3 should be carefully considered but policymakers should also be aware that travel between towns and cities is extremely slow. 
  • Encouraging universities to let students retain the intellectual property of products or services they create while studying. Stronger bonds between the university and graduate may help retain more top quality entrepreneurs in the local area.

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silicon cities: supporting the development of tech clusters outside london and the south east of england