Silicon Valley is a household name; less so its London equivalent Tech City, although there’s now enough interest in the area for one company to be running guided tours. So what are the chances for TechNorth? It’s the new government initiative that aims to bring together the nascent tech clusters in Liverpool, Manchester, Sheffield, Leeds and Newcastle.
Launching TechNorth seems a wise political move, as it fits the government’s rhetoric of re-balancing Britain’s economy away from London and the South-East. It’s also fitting as Tech City UK, the body set up to promote the London scene, has now expanded its remit beyond the capital to cover the whole country.
But will it work? Although there’s £2m a year on the table to support local firms and to attract foreign investment, I’m still unclear what the programme will actually do – and there are major issues that those behind development should bear in mind.
For a start, TechNorth would cover five big cities with more than 150 miles between them and some fairly poor transport links. In the real world, urban tech clusters are very tight-knit – built on a neighbourhood scale, sometimes around a few streets, which allow for lots of face-to-face contact between the thinkers and doers. In Liverpool, for example, a lot of the action is in Ropewalks or the Baltic Triangle.
In the case of east London, ministers originally planned to connect technology companies in Shoreditch around Old Street Roundabout (“Silicon Roundabout”) with the Olympic Park, a few miles to the east. That hasn’t proved possible, not least because there isn’t (yet) any real connection between the two, and Old Street firms didn’t want to move there.
With that in mind, the chances of creating a single “super cluster” across the Pennines seem slim at best. There are worrying echoes of the Thames Gateway here: a planning concept, not a real place. On the other hand, as has been happening in London, the TechNorth branding might help raise the profile of the start-up scenes in these northern cities.
Who is in TechNorth? The announcement has focused on the five Northern core cities, but cities such as York and Sunderland also have a lot of tech firms. It’s not clear why places like this are left out, at least for now.
Firms cluster together because it makes sense. They can tap into new ideas and pools of skilled workers – and share useful facilities and supports, from fast broadband to access to venture capital. But clusters also come with built-in tensions: as more firms arrive, pressure on space increases, rents rise and competition for staff and market share rise with them.
So if the foreign investment the government hopes to attract arrives in the form of big multinationals, these will simply displace smaller, younger, homegrown UK businesses – not a desirable outcome for anyone. Some sort of limit or deliberate focus of what sort of investment is desired is needed.
The investment programmes should be aimed at enriching the rest of the ecosystem, especially the specialist services tech firms need such as finance, lawyers, accountants and workspaces. These are only just starting to appear in London at scale and developing a similar sort ecology is likely to be a priority for other UK cities. Outside the capital, the UK’s venture capital scene is weak.
Fast internet is starting to become a basic need, at least for firms. So it’s disappointing that the Superconnected Cities scheme has retreated from rolling out faster systems to everyone, to simply providing vouchers for small businesses. But perhaps the main hurdle that TechNorth faces is that some of the most important levers to success are still held at a national level – it has little cash (the five-city budget is about the same as the original budget for East London alone) and policies such as tax breaks for investors, crowd-funding regulation, immigration and skills are all national government matters. Some policy can be locally maintained – branding, networking, planning and local investment pots – but it’s limited stuff.
Some of these national levers should be devolved: that has started to happen through City Deals, Local Growth Deals and this week’s Greater Manchester’s Metro Mayor agreement. But we’re still at the start of this process.
I don’t want to be too pessimistic, though. As my co-author Emma Vandore and I found in our 2012 study of Tech City in East London, the Old Street scene grew quietly for years without politicians really noticing. That could well be the likely trajectory for the various clusters in TechNorth.