Image by Maciek Lulko via Creative Commons

By Steven McGinty

London’s tech industry has become one of the key drivers of growth in the capital. Within the first  nine months of 2015 the industry raised approximately £1.1 billion; a substantial increase on the £911 million raised throughout 2014. Over the next 10 years, Oxford Economics research expects the sector to grow at a rate of 5.1% per year and to generate an extra £12 billion of economic activity. It’s predicted that this will create an additional 46,000 digital jobs.

However, the growth in London’s tech industry is not guaranteed. Although current London Mayor Boris Johnson claims there are more professional developers in London than in San Francisco’s Silicon Valley, a recent CBI/KPMG London Business Survey indicates that there is still a shortage of skilled professionals.

Jess Tyrrell, Associate Director for the Centre for London and Director of the Connecting Tech City Programme, explains that “the skills shortage has grown from an ‘issue’ to a ‘crisis”. She warns that unless London can develop its talent pipeline, its digital potential may never be realised.

London Mayoral election

With so much at stake, it’s not surprising that the tech industry has become an issue in London’s mayoral election. One of the front runners, Conservative MP Zac Goldsmith, has promised that he’ll appoint a chief digital officer (CDO) to manage the city’s data and introduce a £1m “Mayor’s Tech Challenge” to encourage innovation. He has also voiced concerns at losing young tech professionals because of the cost of housing.

Labour MP Sadiq Khan (reported by YouGov to be currently leading the race) recently met with leaders of the industry body Tech UK. The organisation noted that Mr Khan was particularly interested in tackling the skills shortage and looking at how young Londoners could be better represented in the tech industry.

The Mayoral Manifesto for the Digital Economy

At the end of last year, the London Assembly Economy Committee published a manifesto identifying the main three challenges that the Mayor should seek to address. These were:

• poor broadband connectivity for London businesses
• a lack of gender and socio-economic diversity in the digital labour market
• the significant shortage of skilled workers

The first challenge is self-evident. For a digital economy to be successful, it must be built on fast, reliable, access to broadband. Perhaps more interesting is the relationship between improving diversity and the skills shortage. Most notably, there is a strong argument that encouraging non-traditional groups – i.e. those who are not white, male and middle class – will help reduce the skills shortage.

Martha Lane Fox, co-founder of the lastminute.com (and an advisor to the UK government on rolling out broadband and digital services) is in favour of increasing diversity and believes that unemployed women should be trained to help address this skills crisis. In an article for the Financial Times, she states that:

“Any company – or, more boldy, country – that dramatically improves its tech diversity will have enormous competitive advantage.”

The Committee’s manifesto also makes a number of recommendations for the new Mayor. For example, it suggests that tech apprenticeships should be designed to give disadvantaged Londoners the best possible training, and that the Mayor could endorse the industry-led TechTalent Charter, which aims to increase gender diversity in the tech industry.

London’s Digital Future: The Mayoral Tech Manifesto 2016

In January, Tech UK, the Centre for London, and the Tech London advocates released their manifesto for the future London Mayor. Ben Rogers, Director of the Centre for London, states that:

“The responsibility of the next Mayor is to ensure that London gets the best of the digital revolution.”

Like the London Assembly’s report, the Tech Manifesto focuses on the current skills shortage, noting that 93% of tech firms believe the skills gap is having a direct negative impact on their business.

The manifesto argues that London must do more to mend its fractured talent pipeline. One suggestion put forward is to establish a Digital Apprenticeship Task Force within the first 100 days of the new Mayor’s term of office. Its purpose would be to improve the quality and quantity of higher and degree-level apprenticeships. The next Mayor, say the authors of the manifesto, should work with the tech sector to ensure that the apprenticeships are fit-for-purpose, and should be particularly focused on areas where demand for skills is greatest.

With the EU referendum on the horizon, it’s also interesting to note the emphasis on tech companies having the freedom to recruit talent from across the globe. The manifesto recommends that the next Mayor should be an advocate for providing clear routes for migrant workers under the Tier 2 skilled worker visa, and oppose any restrictions. It also suggests that the Mayor should work with London universities to investigate the possibility of a trial of the Post-Study Work Visa for occupations where there is a clear skills shortage.

Final thoughts

The shortage of tech skills is a global problem. However, it’s a challenge that London must address if its digital economy is to avoid a slowdown. A key priority for the next Mayor of London should be to develop the tech industry’s talent pipeline. In practical terms, this is likely to involve protecting the industry’s access to skilled migrant workers, to ensure London’s growth in the short term, alongside investing in London’s diverse population and encouraging the best and the brightest to seek out exciting tech careers.

Follow us on Twitter to see what developments in policy and practice are interesting our research team. 

Further reading: if you liked this blog post, you might also want to read our other articles on the digital sector.