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, fears techUK. 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.

We must unleash digital talent to unlock power of the North

techUK has called strongly for closer collaboration between local and central government and the tech industry to fill these gaps, and has listed 10 recommendations to government to achieve urgent levelling up across the UK’s nations and regions.

  • Ensure that Project Gigabit reaches all areas of the UK, particularly rural communities.   
  • 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.
  • Improve skills data to ensure that activity, such as funded digital bootcamps, and comparisons of these activities are consistent across the UK.
  • 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.
  • Data should be shared more regularly on initiatives such as Help to Grow Digital to allow local activities to support national schemes.
  • 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.
  • 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.
  • 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.
  • 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.
  • Local collaboration to ensure digital connectivity reaches all areas of the UK and Mayors and Combined Authorities have an important role to play.

“There is a stark divide in the UK’s local, regional and national tech scenes. If we want to back the UK’s future economic growth, that can’t be allowed to continue,” said techUK CEO Julian David. 

“The technology sector has been growing exponentially and has the potential to add an extra £41.5 billion to the UK economy, however, for that to happen it needs to be strong across the whole of the UK.

“In the Local Digital Capital Index, we strongly encourage government to work with the tech industry to ensure we achieve the levelling up, boost local communities and the overall economy.”

Kulveer Ranger, SVP at Atos and techUK board member, added: “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’.”

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