Tag Archives: #digitaleconomy

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

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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.

The UK digital economy: how can the government support digital businesses?

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By Steven McGinty

Last month, the House of Commons Business, Innovation and Skills (BIS) Committee launched an inquiry into the UK’s digital economy. Iain Wright MP, the Chair of the Committee, explained that:

“Digital technology is rapidly changing the economic landscape in which firms operate. Nothing short of a digital and tech revolution is taking place, with new entrepreneurs and business models emerging and existing businesses having to adapt quickly to keep pace.”

The inquiry will focus on three areas:

  • Government actions affecting businesses in the digital economy;
  • how to maximise the opportunities and overcome challenges in the sector;
  • how the sector can contribute to improving national productivity.

The BIS Committee is asking for submissions from those involved in the digital economy, including digital businesses and companies hoping to benefit from technology.

 Why should the government support the digital economy?

Innovate UK expect that, by 2015, the UK digital economy will account for 10% of GDP. Tech City UK report that the sector employs 1.5 million people (about 7.5% of the total workforce); although this is expected to increase by 5.4% by 2020. In 2013-2014, 15% of all the companies formed were digital businesses. Most were based outside of London (74%) and nearly all were SMEs (98%). The majority (90%) of digital companies expect revenues to grow within the next year.

Technology clusters

Technology clusters play an important role in the UK’s digital economy. There are 21 clusters across the UK, with expertise ranging from software development to marketing and advertising. The majority of digital businesses consider themselves part of a cluster (65%). Bournemouth has the fastest growing digital cluster, with a 212% increase in the number of companies formed since 2010. Its specialism is digital marketing and advertising.

This growth suggests specific focus should be given to technology clusters. Tech City UK found that a third of digital companies highlighted access to funding as a challenge, particularly outside of London and the South East.  One suggestion offered by Tech City UK is that businesses need to take advantage of European funding where possible.

Other forms of support could include: providing fast and accessible broadband; access to a pool of skilled employees; suitable workspace, particularly in the South East; and business and mentoring advice.

Digital Economy Strategy 2015-2018

At the beginning of the year, Innovate UK set out a strategy to support UK businesses in getting the most out of digital technology. It sets out five main objectives:

  • Encouraging digital innovators
  • Focusing on the user
  • Equipping the digital innovator
  • Growing infrastructure, platforms and ecosystems
  • Ensuring sustainability.

Within the strategy, actions are put forward for how these goals will be achieved. For instance, to ensure sustainability, Innovate UK would work closely with UK research councils to encourage cross-disciplinary academic collaboration and help connect it to real-world business needs. If even some progress is made with each of these objectives it would be hugely beneficial for the UK digital economy.

Innovation centres – the Digital Catapult

The Digital Catapult is a national centre that aims to accelerate the UK’s best digital ideas to the marketplace, in order to create new products, services and jobs. It was established in 2014 by Innovate UK and is based in the Knowledge Quarter in Kings Cross. There are also three local centres in the North East and Tees Valley (NETV), Brighton, and Yorkshire.

The Digital Catapult centres focus on the challenges associated with: closed organisational data; personal data; creative content; and the internet of things (IoT). The centres are involved in a number of projects, including IoTUK, which has been launched as part of a £40 million government investment in the internet of things (the use of networks to allow the exchange and collection of data from everyday objects, such as fridges). The programme aims to increase the adoption of high quality IoT technologies and services throughout business and the public sector.

Regina Moran, CEO at Fujitsu UK&I, notes that:

“The IoT has the potential to turn ideas in a hyper-connected world into fully realised digital services but it has challenges ahead and it’s encouraging to see the Government investing in its development.”

 Regulation

The Prime Minister, David Cameron, has managed to convince the European Commission (EC) to review the VAT regime for tech start-ups, arguing that it punished British entrepreneurs. The regime, which was implemented in January, forced companies to pay tax in every country they traded in rather than their headquarters. It also eliminated a £81,000 threshold for which companies have to register for VAT duty.

However, the Commission has recognised that this was adversely affecting small businesses. Therefore, measures such as the reintroduction of the VAT threshold and a single registration scheme for cross-border taxes, will be included in the Commission’s consultation.

The UK government’s approach shows a commitment to providing a competitive business environment and a single European market in digital services. It’s likely that most digital businesses would support the government’s approach.

Concluding remarks

The upcoming BIS Committee inquiry will provide an opportunity to reflect on the government’s approach so far. Although evidence confirms that the digital economy has been growing, there may be areas that the UK is failing to capitalise on. In a highly competitive globalised economy, it’s important that the UK exploits any strategic advantage, ensuring that innovative ideas are brought to the market quickly.

The inquiry will also provide an opportunity for a dialogue between the government and the private sector. This increased collaboration can only be good news for the UK’s digital businesses.

Here at Idox, we take an active interest in the future of the digital economy and eagerly await the Committee’s findings.

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IDOX Plc announced on 8 October 2015 that it had acquired the UK trading arm of Reading Room Ltd. Reading Room, founded in 1996, is a digital consultancy business with a focus on delivering websites and digital services that enable its customers to make critical shifts into digital business and client engagement. It has an international reputation for its award winning and innovative approaches to strategic consultancy, design, and technical delivery.