Recently released data from London & Partners indicates that record levels of venture capital investment are flooding into the London tech sector, with a record £1.1 billion pounds being invested since the start of the year. Strikingly, 2017 has seen a fourfold increase in investment compared with 2013. This indicates that, despite Brexit fears, London retains its crown as Europe’s number one tech hub for global investors but we must make sure that we keep that place by protecting access to the world’s best talent.
As the tech sector continues to outperform the rest of the UK economy, London’s place in it will become all the more important. When London does well, so too does the rest of the UK. Mega-deals from challenger brands like Monzo and Improbable, and the recent opening of Europe’s newest technology innovation destination, Plexal, at Here East have helped to cement the tech sector’s future in the medium-term. Government too has recognised the strength of the sector; earlier this month the Department for Culture, Media and Sport rebranded as the Department for Digital, Culture, Media and Sport. This name change, 25 years after the department’s creation, signifies how much things have developed. There is now also a Minister of State for Digital who covers everything from broadband and mobile connectivity to the creative industries. This visible commitment by the Government to put digital at the heart of its agenda should be welcomed.
There are lots of reasons for London’s tech success: start-ups and major corporates look to London for its digital and geographical connectivity, the entrepreneurialism of its tech talent and the vibrancy of its urban life. We continue to lead Europe on all of these fronts and Sadiq Khan’s #LondonIsOpen campaign has made clear that the city remains welcoming and accessible. In fact, there’s no shortage of start-ups proclaiming the great things about London. Melissa Morris, CEO and Founder, Lantum, a company that recently secured £5.3 in funding in London said “London is the world’s coolest city – it attracts some of the most interesting people from across the world… We’ve just closed a round of funding, and our plans are very much about growth”.
So we should look to the future confident but not complacent. For many businesses and individuals who have chosen to make London their home, Brexit does pose uncertainty about their future. We should tackle this head-on and make clear that the UK, and the UK’s tech sector, remains economically competitive, attractive for investors and open for business as usual. If we don’t make that case clear enough we will see more examples of companies choosing not to expand in the UK. Although we are seeing a steady drum beat of enthusiasm in UK, potential investors like Samsung, have started to make announcements around discomfort in investing in the market. The European managing director for the global tech company, Felix Peterson, echoed the fears of some of us that London can be seen as “not a fun place to live unless you are really rich”. We need to make sure that we’re still a welcoming destination for companies by both tackling the cost of living and making sure there’s still easy access after we leave the EU.
Accessing the global pool of talent
One of the ways we can ensure a steady flow of the world’s best are working in the UK is to nurture students. Tech UK argued that international students should be excluded from the Government’s net migration target which will send an open message about UK universities. We must do everything we can to stop future drops in application rates. Realistically, without maintaining a steady flow of the world’s brightest and best, it won’t be possible to meet the UK’s future demands.
This has been reiterated by think tanks like the Centre for London. This month, in their Open City report, they called for London to strike its own deal on EU immigration post Brexit. In the report they pointed towards part of London’s benefits being the multitude of coworking spaces creating opportunities for innovation and disruption to become one of the world’s top global cities. Richard Brown, one of the report’s authors, pointed out that a ‘hard Brexit’ could force the loss of 35,000 financial jobs and around 35,000 additional jobs in related sectors in London. For a city that is not only dependent on immigration but thrives on it the fear of immigration is a real one.
These fears must be addressed if we’re going to keep up the momentum. The cost of living, one of the areas that Samsung pointed towards, has also been echoed by business lobby groups like the Confederation of British Industry’s (CBI) which represents companies large and small around the nation and London First whose members make up 250 of the capital’s CEOs. In the CBI’s most recent biannual London Business Survey of 186 employers who represent approximately 418,000 employees highlighted that the cost of living in London has a major impact on the ability for a firm to recruit and keep skilled employees. This was supported by over two thirds of firms saying the level of housing has an impact on their ability to recruit and retain skilled workers, while over a third said the same about transport costs with under a third about housing availability. A view that was reiterated by London First when it called for the winner of our most recent General Election, in its Manifesto for The 2020s, to urgently help housing associations build more homes and support the growth of build to rent. These points must be addressed if we want to ensure we attract and retain the people our city needs to make sure we stay a world leader.
To do this we need to ensure that we have access to the best global talent, long-term investment on the skills of the nation, infrastructure and affordable housing. Tech UK who represent over 70,000 of the country’s leading tech workers recently published their Global Tech Talent Powering Global Britain report which highlighted the fact the UK will face a tech talent cliff edge without urgent government action. It’s vital that UK firms continue to have access to the European tech talent we need to be able to grow. They believe that an abrupt termination of ongoing access could have a negative impact on the UK tech industry.
Closer to home, in the Tech UK report, they argued that the government should ring fence £250 million per year to help fund major and world leading domestic digital skills programmes. If we don’t build on the Government’s already existing Digital Strategy we risk having to rely on talent from abroad and not having a workforce that can rapidly evolve its skills.We should also be committed to ensuring that London continues to forge strong links to the rest of the UK to ensure the proceeds of this growth are trickles out. England’s newly elected city mayors have an important part to play in this and Andy Burnham in Greater Manchester and Andy Street in the West Midlands should continue to champion the tech aspects of their respective Northern Powerhouse and Midlands Engines. The current unpredictability in national politics presents a window of opportunity for the elected mayors to collaborate and deliver real successes for the tech sector. A perfect example of this is Andy Burnham’s manifesto pledge to hold Greater Manchester’s first digital and tech summit which happened earlier this month. It was an opportunity to outline Manchester as a digital and smart city leader.
Back in London, we should not ignore the fact that the new Industrial Revolution is moving eastwards. London’s tech sector is no longer confined to Silicon Roundabout; at Here East alone we are projected to contribute in our own way through a £450m boost to the UK’s GDP. Fashion technology is being cemented by the move of the London College of Fashion to the Olympic Park. Music tech, film tech, space tech, ed tech, retail tech, med tech and even good old-fashioned fin tech all add to the clusters that are evolving outside central London and along the Thames Gateway.
London continues to evolve and reinvent itself and this agility will keep it at the forefront of innovation. Through the continued commitment and collaboration between politicians, entrepreneurs, innovators, policy makers and academics, there is every reason that in the next five to ten years we shall continue to read good news about investment levels in London’s and the UK’s tech sectors. Although this can only be done if we remember the tech sector is a global industry and accounts for a sizeable chunk of our GDP. We can’t afford to be inward looking in our thinking and must instead ensure that we can still compete on a global level. Even the decisions made with our nation at the heart will have a significant global impact. The reason for this is simple, in the tech world, every company is a global one. One recent example is the announcement that electric MINIs will be built in Oxford. While the fully electric version of the car will be built in Oxford the electric motor will be built in Germany before being shipped to the UK for assembly.
If we want to stay global leaders we must build on the infrastructure stronghold that we have. We must increase our skills base and we must be an appealing place to both live and invest.
Gavin Poole, CEO, Here East
Image Credit: Everything Possible / Shutterstock