“Stark divide” in UK’s regional tech sector could hold back future growth

London, the South East and East of England perform well, but the new report notes the necessity for levelling up in Northern Ireland, Wales and North East

LONDON, 24 October 2022: Future economic growth could be held back because of the ‘stark regional divides’ in the UK’s technology sector, says techUK in a new report published today.

The technology trade association has published the second iteration of the Local Digital Capital Index (LDC Index), which measures the strengths of the UK’s regional digital ecosystems, and concludes that a technology sector concentrated and reliant on the South of England isn’t sustainable for the wider UK economy. The trade body has called on the Government to work with the industry in order to secure future growth in the sector, create jobs and invest at a local level.

The LDC Index assessments are made across six components: digital infrastructure, finance and investment, skills, digital adoption, research and development, and trade. The findings present a picture of a nation digitally divided; techUK notes that there is a split between rural and urban areas but also between the South and the North and UK nations.

techUK’s Index found that Greater London and the South East scored consistently well across the various components. More localised data also found that the biggest tech investment hubs such as London, Oxfordshire, Gloucestershire, Bath and Bristol predictably show a strong digital ecosystem across multiple components.

However, Northern Ireland, Wales and the North East of England don’t perform as well, even though digital connectivity is relatively strong in the North East.

The lack of a consistently strong digital ecosystem across the UK poses a threat to the growth of the country. The technology sector has been growing exponentially, leading to more jobs and higher wages, and the Index shows that further investment is essential to tap into the digital ecosystems of those local areas currently falling behind to ensure their growth and for the benefit of the citizens.

Recommendations to Government

techUK strongly calls for closer collaboration between local and central government and the tech industry to fill these gaps, and has listed ten recommendations to government to achieve urgent levelling up across the UK’s nations and regions:

  1. Ensure that Project Gigabit reaches all areas of the UK, particularly rural communities.
  2. Investment Zones announced by the Government must also be ‘tech zones’ to attract people to work, base their business in them and secure new future investment.
  3. Improve skills data to ensure that activity, such as funded digital bootcamps, and comparisons of these activities are consistent across the UK.
  4. Digital actions and activities should be identified in future Levelling Up bids and projects made by local councils to help address regional divides and exclusion.
  5. Data should be shared more regularly on initiatives such as Help to Grow Digital to allow local activities to support national schemes.
  6. Conclusive and consistent data to measure data ecosystems across the UK. Government should look to running a testbed with a Combined Authority to build a working model that can be adopted UK wide.
  7. Devolved Government and elected Mayors should publish and regularly update their digital strategies. Central Government can’t do this alone and needs to empower more local activity and accountability.
  8. Finance and investment regionally lag behind London. Improved access to venture capital (VC) and angel investment, better signposting to support and test new proposals, such as the creation of new ringfenced regional funding in partnership with elected Mayors focused on digital outcomes and supporting vital national infrastructure.
  9. Implement changes to the standard industrial classification (SIC) and standard occupation classification (SOC) to better mirror the tech sector and changing occupation, to better tracking and data capture.
  10. Local collaboration to ensure digital connectivity reaches all areas of the UK and Mayors and Combined Authorities have an important role to play.
techUK's Local Digital Index paints a revealing picture of the UK's tech landscape, showcasing both its strengths and opportunities. Most importantly, the report underscores the immense potential of bridging the Digital GVA gap between regions, which could inject a staggering £4.8 billion into the UK economy and create more jobs for people across the UK. To realise this potential, we urge businesses, governments, and stakeholders to heed the recommendations outlined by the report. By embracing digital literacy, supporting skills development, and enhancing infrastructure, we can build a thriving tech ecosystem that benefits every corner of the UK.

Julian David

CEO, techUK

Having a data tool like the Local Digital Capital Index enables policy makers, businesses and civic leaders to make choices grounded in evidence. Our six critical components span infrastructure, skills, finance and investment, trade, adoption, and research and development. Taken together, they paint a picture of opportunity and challenge. Particularly through these times of great hardship for so many, I am hoping the findings help both those in power and those who need a voice on the ground take positive steps for change.

Professor Kerensa Jennings FRSA

BT Group Director, Data Platforms

Against the backdrop of a cost-of-living crisis, it is more important than ever that local communities can harness the potential of a growing digital industry to ensure their future prosperity. Using our experience at developing innovation and skills, we aim to work with other industry partners and third sector organisations to help develop local, place based digital skills pipelines. We call this 'Innovating Up’.

Kulveer Ranger, SVP

Atos and techUK Board Member

techUK – Building Stronger Local Economies

techUK champions the tech sector throughout the UK. We work with local authorities, devolved government, and local and national policy makers to advocate for the tech sector in strengthening economic growth and resilience. We provide opportunities for our members and local stakeholders to meet, build relationships, and collaborate to drive forward local projects. For more information or to get in touch, please visit our Nations and Regions Hub and click ‘contact us’.