Silicon Cities report - Eddie Copeland

Tech Policy

Tech Clusters can support the Northern Powerhouse

14 Aug , 2014  

In recent weeks, political parties have set their sights firmly on measures to boost economic growth in the North of England. In June, George Osborne outlined his wish to see a ‘northern powerhouse’ and last week endorsed a call from five northern cities for a £15billion investment in science, transport and infrastructure. In July, Lord Adonis published ‘Mending the Fractured Economy’, a review for the Labour Party, which called for greater devolved powers for the regions and more support for science and innovation clusters. And this month Nick Clegg launched ‘Northern Futures’, a project inviting online responses to the question: ‘How do we build on the strengths in the North to create an economic core in the heart of the region that can compete with the biggest cities in the world?’ Are these recent announcements an attempt to win northern votes close to election time? Perhaps. Is the focus on the North’s prosperity a vital part of the UK’s future economic development? Certainly.

Silicon Cities

Contributing to the debate, today Policy Exchange publishes Silicon Cities, a report arguing that a central strand of any northern development strategy should be supporting the region’s tech clusters. The technology sector has a proven track record of developing the high-growth companies that can deliver private sector job creation. (The digital technology industry alone accounted for as much as 27% of the total increase in employment in London from 2009-12.) The challenge is that tech companies, tech jobs and the prosperity they bring are highly concentrated in London, the South East and Cambridgeshire. Yet cities such as Manchester, Newcastle, Sunderland, Leeds and Sheffield all have strong ambitions to become tech centres of the North. What approach can government take to help them succeed?

At a local level, the report argues three things are needed.

Elected Mayors

To thrive, tech clusters need to play to local strengths, overcome local challenges, and build on their natural competitive advantage in specific fields. Every region’s strengths and challenges are different. Some need to invest more in transport within their city. Others need to focus on soft spending on areas such as networking between businesses, entrepreneurs and investors to build their cluster community. Others still may require new research facilities or faster broadband. The role of local government should be to help address those needs and challenges quickly and effectively.

That role would best be served by directly elected mayors, with greater devolved powers, who could act according to local priorities. Having a single elected official at the head of a whole city region would provide a very visible and directly accountable individual with which the private sector could communicate – a significant advantage over the need to deal with members of multiple local authorities and LEPs. (One of the clearest lessons from London Tech City is that having clear, easy and frequent communication channels with policymakers is extremely important.) Mayors – working together with LEPs – should have a clear requirement to focus on the economic development of their areas. This kind of independence would give the UK’s clusters the ability to compete on their own terms, maximise their strengths and address local issues in a way that a one-size-fits-all policy from central government never could.

Brand Power

From Silicon Valley to Berlin, tech clusters all around the world are trying to attract investors, skilled workers, technology entrepreneurs and their businesses. Foreign direct investment will also be vital for the success of the UK technology economy. In short, government – mainly through UKTI – has a major role to play in promoting the UK’s technology capabilities internationally. Within the next five years, it is unlikely that a globally-competitive brand can be created for each individual northern tech cluster – they do not yet have the critical mass needed to compete against the world’s leading centres of technology.

However, a compelling message could be created around a ‘northern powerhouse’ whose combined technology capabilities would be among the most impressive in the world. An example of this idea in action is the work of the Northern Health Science Alliance. The NHSA helps coordinate activity between eight northern cities that have strengths in medical sciences and promotes the North as an internationally recognised supra-regional life science and healthcare system.

To be clear, this is not to imply that northern cities or tech clusters are homogeneous – clearly they are not. Newcastle, Sunderland, Manchester, Salford, Leeds and Sheffield all have strengths in aspects of software and digital media but also have their own very distinct specialisms. To an international audience, a northern region offering different specialisms but collaboration where required, with a single entry point via UKTI, could be very attractive and benefit all northern tech clusters.

Transport

In order for the brand to mean anything, it needs to be backed up by reality on the ground. Holding northern clusters back from sharing their immense pool of resources, people and ideas are the poor transports links that connect them. The average speed by rail of journeys from Manchester, Newcastle, Liverpool, Leeds and Sheffield to London is 77.6mph, compared with that between northern cities of just 46mph. The government has indicated an interest in building a high speed rail link between Manchester and Leeds. That idea should be considered carefully, but policymakers must be aware that travel between other cities including Newcastle, Liverpool and Sheffield is also very slow by both rail and road, suggesting that attention needs to be given to the wider transport needs of the North.

Policy Exchange - Northern Train Speeds

Conclusion

Whatever the political motivations behind their recent announcements, politicians must not pretend there are quick fixes to northern growth. Instead, it is in the interest of all parties to capitalise on this northern consensus by putting in place the policy measures that will ensure success in the long term. That means letting the private sector lead; providing cities with empowered, responsive and democratically accountable local political leadership; building a brand that can compete with the most advanced technology clusters in the world; and providing the infrastructure to let northern cities unleash their collective strengths.

Policy Exchange is grateful to BVCA, CCIA and Technology Policy Unit partner, Fujitsu, for their support for this project.

Follow Eddie Copeland on Twitter @EddieACopeland

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