Tech Country report 2013
Executive Summary
London's "Silicon Roundabout" (or Tech City to give it its official name) has been a happy discovery for the Government. Right under its nose, within a short cab ride of Westminster, and reasonably near the former Olympic site, they have stumbled upon what could be Britain's answer to Silicon Valley... perhaps.
That the Government has displayed such enthusiasm is hardly surprising; playing host to a successful cluster can bring enormous economic and social benefits as clusters generate and drive prosperity for businesses, individuals and indirectly the national economy itself. However, clusters like Tech City typically require decades of patient, sensible macroeconomic and industrial policy-making if they are to reflect their archetype, Silicon Valley. Unfortunately these timeframes do not coincide easily with short election cycles and even shorter media cycles. As a result governments often cannot resist the temptation to tinker at a microeconomic level, or attempt to "create" clusters with grand infrastructure schemes. That Britain is tentatively feeling its way through the worst economic downturn in half a century only makes this problem more acute.
In all the excitement surrounding Tech City, it can be easily overlooked that Britain as a whole has a long history of playing host to high technology clusters, and looking beyond the M25 there are many clusters with decades of development already completed. This report then, is an attempt to shift greater attention to technology clusters beyond the M25. It does so by adopting a systematic method to examine a series of case studies from a sample of clusters and agglomerations from around Britain. Examples such as Cambridge and Bristol display what it takes to compete in some of the world's most competitive high-tech industries; we learn from the oil and gas industry in Aberdeen, and Formula One in the Midlands that world beating technologies can arise from unexpected origins; and from Manchester we look at over a decade and a half of development is beginning to take shape. Each case study aims to provide a perspective on the range of challenges and advantages inherent in each example. Collectively, they provide input to a set of policy recommendations in the following areas:
Knowledge Workers
The importance of highly trained workers in the technology based industries cannot be understated. All the clusters researched for this report rely on a steady, and expanding stream of highly skilled workers. This will require not only an expansion of science and technology in UK universities, but also changes to immigration policy, and how that policy is communicated overseas.
Funding and Finance
When the development of an industry relies on supply of capital, it can be tempting for policymakers to flood the market with capital. However we recommend that first and foremost a steady supply of private capital should be the preferred basis for investment in a healthy ecosystem.
Regulatory Policy
We are reminded that regulatory policy should be developed with the ends in mind, rather than the means. Over-regulation and excessive red tape are sure ways to snuff out dynamic innovative environments.
Transport Infastructure
Public funding does have a place in providing a suitable environment to do business; many of the clusters studied were established due to strong national and international transport links. Ensuring the quality of these links helps ensure growth in the future. However the current impasse on HS2 rail links and the expansion of Heathrow jeopardises Britain's future growth.
Industrial Policy
Businesses are often at their most innovative and effective when they straddle traditional industry grouping, however this can mean that industrial policy aimed at helping one industry can have unintended effects on others. Consequently, the Department of Business Innovation and Skills (BIS) should make the understanding of UK clusters a priority.
Developing Networks
Networks are vital to developing successful clusters, though they must be allowed to form as grassroots movements first to ensure a cluster develops its own DNA. However networks need not be restricted by geography. Clusters will develop wherever meaningful interaction drives the spread of ideas.
Cultural Considerations
The final area of policy consideration is one of culture, and here a combination of myth and cynicism acts to hold back development of technology clusters. It is virtually impossible to "legislate" cultural change; however the centralised nature of British Government provides the opportunity to influence the nation's cultural agenda.
With a clearer understanding, it is hoped that these cases will provide an informative guide as to how government can seek to use policy to 'tune' these existing clusters to achieve higher performance without submitting to the temptation of grabbing headlines with grand follys in cluster creation.
Of course the sample of case studies is not the entirety of clustering in the UK. There are many other examples such as the computer games industry in Edinburgh, offshore energy in the Northeast, agri-tech businesses in Norfolk, and a developing technology network in Cornwall to name just a few1. So it is hoped that the methodology developed for this study can provide a means to identify and analyse other technology clusters as well, providing central and local policymakers with the tools to develop these other clusters to their full potential. Ultimately this is the aim of innovation in Britain and that of the BVCA - not just a tech city, but a Tech Country.