Nationwide success for thriving UK tech sector

While the ‘London Bubble’ continues to reign supreme as Europe’s tech capital, other towns and cities across the UK are quietly establishing themselves as major players in the digital world of tomorrow.

London with technical connectedness illustration over the skyline

David Sapsted

20 March 2020

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It is not so much a technological revolution as a technological devolution. In February, for example, the government-backed organisation Tech Nation held the finals of its second Rising Stars competition, Britain’s only national, early-stage scale-up contest. When the almost 400 contesting ventures were whittled down to 10 winners, only two were from London, with the others coming from Truro, Cambridge, Edinburgh, Birmingham, Southampton, Glasgow, Manchester and Cardiff.Mike Jackson, entrepreneur success director at Tech Nation, comments, “The Rising Stars are great examples of the strength of the UK tech ecosystem. The winners highlight that innovation, determination and ambition in this fast-growing sector can be found right across the UK.”

UK tech: a booming sector

Recent research for the government’s Digital Economy Council illustrates the ever-strengthening position of the UK’s tech sector, which is growing six times faster than the rest of the economy.Last year, investment in UK digital tech reached a record high of $13.2 billion, up $4.1 billion on 2018 and representing a third of all European tech investment. Venture capital investment rose by 44% year-on-year – a rate of growth that outstripped the US, China, Germany and France.

Not just London: sharp rise in venture capital investment in tech start-ups in the UK regions

Fintech, artificial intelligence (AI) and deep tech, and clean energy were the best performing disciplines. While London’s pre-eminent role remained unassailable as home to some 40% of the industry’s employees, the role of regional centres has become increasingly important. Data from KPMG showed a sharp 37% rise in venture capital investment in start-ups last year in regions all over the UK.Antony Walker, deputy CEO of the industry association techUK, says, “The UK has a world-leading digital economy, but historically much of the wealth and employment generated by the tech sector has been concentrated in London and the South East. The good news is that this is changing. One of techUK’s members, Sidetrade, has just opened a brand new AI tech hub in Birmingham, creating 70 high-value jobs that will bring real benefit to the West Midlands. Investments such as this are what the government’s narrative about ‘levelling-up’ is all about, ensuring that the towns and cities that were at the heart of the industrial revolution can play a full part in the digital revolution.

“The growth of high-tech industries also has important political and social benefits, giving the regions that champion these industries a new identity and drive, encouraging metro mayors and local authorities to demand more and have greater aspirations for their communities. We have seen this work in both the West Midlands and Manchester.”Some university cities, notably Oxford and Cambridge, have tech credentials going back decades. Cambridge, particularly, has done much to justify its soubriquet of‘ Silicon Fen’ after becoming home to a vast array of technology companies since the computing boom of the 1980s.Giants such as Microsoft Research, Amazon and Apple all have a presence in a tech city led by chip design firm ARM, which was the subject of a £23.4 billion takeover deal in 2016 by Japanese firm Softbank. Cambridge leads the way in emerging technologies such as AI, virtual reality and driverless cars, and is also home to several computer games studios.“The ‘golden triangle’ between Gloucester, Cambridge and Guildford perfectly encapsulates the balance of open jobs and reasonable cost of living,” says Amanda Stansell, senior research analyst at Glassdoor.“The growth in flexible working also means employees are no longer spending every day, 9-5, in the office, meaning the location of the company is less important than it once was. Companies can get away with not having offices in the larger, expensive cities – like London – as employees are prioritising flexibility and convenience over the prestige of an office address.”

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Tech hubs foster innovation in UK cities, especially Birmingham, Edinburgh and Glasgow

Several key cities have been creating smart hubs to foster innovation. Greater Birmingham’s fintech cluster, for instance, has seen significant growth, the latest being led by cybersecurity firms. The total number of fintech companies now stands at more than 2,000, making it the largest cluster of any UK city outside of London.And there is more to come in ‘Brum’, says Yiannis Maos, founder of Birmingham Tech Week, which will be held in October 2020. “Birmingham has the potential to be a world-leading ‘tech city’. Birmingham Tech Week is about showcasing the region’s cutting-edge capabilities, attracting investment and converting our existing talent into the leaders of tomorrow through invaluable networking and collaboration. Birmingham Tech Week will be a catalyst for change; reinforcing locally and nationally that this is a passionate region on the rise. This marks only the beginning of a fantastic growth journey for regional tech.”North of the border, Edinburgh finds Glasgow hot on its heels as the pair vie for the title of Scotland’s tech capital. The latest figures from Accenture’s UK Tech Talent Tracker found that Edinburgh had retained its position as the third-largest pool of digital talent in the UK.Les Bayne, joint managing director of Accenture Scotland, says, “There is a great deal to be confident about. Edinburgh is defined as a home to the digital native: 20-40-year-olds now account for 35% of the population, the highest in Europe. The University of Edinburgh is also recognized as a world leader in informatics and computer science, and Glasgow has been proposed as one of the UK’s four hubs for quantum computing. Whether a start-up or large enterprise, digital talent is available.”

Fast-growing regions: Reading, Thames Valley, Yorkshire

Meanwhile, accountancy and business advisory firm BDO has given Reading & the Thames Valley a prime spot in its rankings of regional tech hotspots, pointing out that Tech Nation found Reading’s tech company density to be approximately seven times higher than the national average.“Reading is the fastest-growing region in the UK, growing by about 2.5%,” says Simon Brooker, BDO’s managing partner for an area whose occupants include major league tech firms such as Microsoft, Oracle, Huawei, Cisco Systems and Symantec. “Last year, we had three times as many SME start-ups than Birmingham and Manchester combined,” he adds.For its part, Yorkshire claims to be the fastest-growing area for digital tech jobs between 2016-19 having seen a 48% increase, from 58,000 to 86,000, with two-thirds of them based in the Leeds area. Roger Marsh, who chairs the Leeds City Region Enterprise Partnership, comments, “Our research highlights that the northern tech scene is thriving, with so many fantastic opportunities for entrepreneurs to grow their businesses here. We’re extremely proud to see that Yorkshire has the highest growth rate in terms of digital employment in the country, which we predict to continue as workers begin to seek more affordable options outside of the capital and the commuter belt.“We have a great talent pool, with Leeds City Region boasting nine universities and, of course, the new offices for Channel 4. Over the past few years, we have seen such an increase in not only tech giants relocating to our region, but also some exciting and innovative start-ups setting up shop here.”

Milton Keynes: smart city status

Other areas are mounting their own challenges. Milton Keynes, for example, is making the transition to smart city status, becoming the testbed for both national and international smart mobility projects.“The town is uniquely placed because it’s in the middle of the Oxford-Cambridge arc and is an equal distance to two world-class centres of research, with access to excellent engineering and science talent,” says Dr Jamieson Christmas, founder and chief executive of Envisics, an augmented reality company developing head-up displays.“Its strong transport links and close proximity to funding in London means it’s an ideal place to incubate technology companies of all sizes, especially start-ups that require flexibility and cost efficiencies to succeed.”

Access to international talent

The one concern for all tech companies, however, remains the accessibility to overseas skills once new UK immigration rules come into effect at the start of 2021. According to a report from the think-tank, the Entrepreneurs Network, 49% of Britain’s fastest-growing start-ups had immigrant co-founders, with 42% of them from the EU. And nine of the UK’s 14 unicorns had at least one foreign-born co-founder.techUK’s Antony Walker wants to see a restructuring of the visa system with further reforms to the “cumbersome” Start-Up and Innovator visa routes. But, he adds, “Overall, the UK will remain open to highly skilled talent from around the world, although it will take time for companies to adapt to the new system. The government will need to continue to work with start-ups and the wider tech industry to ensure that the skills needs of the fastest-growing part of the UK economy can be met.” And that is no longer just in London, but in so many other parts of the UK, too.

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Manchester attracts the best and brightest tech talent

According to the first ‘UK Tech Town Index’ compiled by CompTIA (the Computing Technology Industry Association), Manchester is currently the best place for IT employment opportunities in the UK. In an examination of more than 200 towns and cities across the country, Manchester came first in a top 10 comprising Bristol – earning second place for providing more year-on-year job opportunity growth in tech than anywhere else in the UK – Leeds, Birmingham, London, Cambridge, Edinburgh, Bath, Basingstoke and Reading.Career progression options and high quality of living in the North West, based on the cost of living and tech job demand, were among the reasons cited for Manchester’s No 1 ranking. The city has been chosen by Innovate UK to be the Internet of Things City Demonstrator, a showcase of how Internet-connected technology and data can be used to transform urban areas.Elise Wilson, Greater Manchester Combined Authority’s head of digital, says, “I’m delighted that in Greater Manchester we are leading the way and doing digital differently. It’s great to see that we are perfectly positioned to become one of Europe’s top-five digital city-regions, boasting some of the most cutting-edge technology firms in the world. To help Greater Manchester to keep pace with this rapid growth, we are putting in place a range of initiatives to recruit a highly-skilled workforce from all our communities regardless of their background or starting point.”

Democratisation of the technology industry

And if London’s fifth position in the rankings raised eyebrows, Graham Hunter, vice-president of skills certification at CompTIA, explains, “Of course, this doesn’t mean London is slipping. The sheer diversity and number of employers and jobs alone would have put London at the top of the list, but with a cost of living 103% higher than anywhere else in the UK, it prices many people out of developing a career there. Clearly, a democratisation of the tech industry is underway. Techies across Britain can relax with the knowledge that their field is growing, no matter where in the nation they’re based.”

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