London’s digital skills shortage: a priority for the new Mayor

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.


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

The Scottish budget 2016-17: what does it mean for digital?

THe Scottish Parliament, Holyrood, Edinburgh

The Scottish Parliament. Image by dun_deagh via Creative Commons

By Steven McGinty

Last week, the Scottish Finance Secretary, John Swinney, published his budget for the next financial year. Unsurprisingly, it begins by outlining the financial challenges facing the Scottish Government. Mr Swinney highlights that the Scottish Budget will continue to fall year-on-year, and by 2020 will have fallen by 12.5% in real terms since 2010. These figures paint a very bleak picture for Scotland’s public finances.

However, with this pressure on public funds, the Scottish Government has given a clear commitment to digital. The budget states:

The Government will take steps to extend digital applications in public services, increase the use of shared services, secure further value from procurement developments, ensure effective use of assets and reduce overlap between public services. The digital agenda will both produce savings and improve the quality of our services.

What funds have been made available?

In cash terms, the funding for Scotland’s digital strategy has more than doubled to £116 million. This has been achieved by merging a number of distinct budgets, which, according to the Scottish Government, reflects the integrated nature of the strategy. The majority of the funding has been allocated to capital expenditure projects, which have increased their share to £92.2 million.

It’s expected that these resources will cover areas such as digital infrastructure, digital participation, digital public services, and the digital economy.

What digital initiatives have been introduced?  

The Budget makes a number of commitments to support digital change in Scotland, although, very few details are given about specific digital projects.

The main initiatives outlined in the report include:

  • Spending over £100 million to improve broadband services, as part of the £400 million Digital Scotland Superfast Broadband (DSSB) programme. It’s expected that by the end of 2015, 85% of premises will be connected to a next generation broadband network, rising to 95% by the end of 2017.
  • Establishing an ‘Alpha Fund’ to help improve the efficiency and quality of digital public services. It’s hoped that this can be achieved – like most digital transformation programmes – by developing common services that can be used across government.
  • Supporting the Digital Transformation Service to develop digital public services from a user perspective and to realise the benefits of digital technology.
  • Developing the National Records of Scotland’s (NRS) digital services, including progressing with the ‘Data Linkage Framework’ strategy, which is expected to deliver data research projects that benefit the public. The NRS will also be preparing for the next Census, in 2021, which will mostly be delivered digitally.

What other announcements may impact digital?

For the ninth consecutive year, the Scottish Government have continued with their manifesto commitment to freeze council taxes. Councillor Michael Cook, who is vice president of COSLA, the Convention of Scottish Local Authorities, has argued that Scottish Government cuts to local government revenues are “unprecedented”, and are coming at a time when local government are already facing massive pressures. He suggests that this could lead to job losses and changes to services.

In addition, the Scottish Government has chosen not to change the Income Tax rate for Scotland – a power recently devolved to Holyrood. Mr Swinney argues that this new power is limited, and any changes would go against the principle that taxation should be proportionate to the ability to pay.

Both of these decisions will have implications for the digital sector. For instance, companies that provide services to local government may find some new challenges as local government revenues have been cut by 3.5%.  It may mean that companies will have to further prove their value, as local government looks to reduce their costs or improve the services they provide. Yet, it could also bring opportunities, as the need for technical solutions that provide efficiencies has never been greater.

The decision not to raise Income Tax may also benefit Scotland’s digital sector. If Income Tax had risen in Scotland, recruitment might have become more challenging, or at least more expensive, as skilled staff might have been tempted by lower taxes elsewhere in the UK.

Final thoughts

The Budget has not provided any real surprises. Local government needs to make savings, and politically, increasing taxes would be difficult, especially with the Scottish Parliamentary elections next year.

Therefore, the digital sector needs to focus on addressing the challenges highlighted in the Budget. This includes providing creative, efficient, technological solutions that support the everyday needs of both central and local government.


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