Disrupting cities: are tech firms to blame for rising inequalities?

By Steven McGinty

In cities across the world, there is growing unease at the impact of tech firms on local communities. In San Francisco’s Silicon Valley, “Google Buses” – the corporate commuter buses for Google staff – have been the subject of multiple protests by local activists, including the blockading of buses and displaying provocative banners.

The protesters’ main grievance? Housing. Researchers at the University of Berkley have found that rents close to bus stops used by Google employees are 20% higher than in other comparable areas.

It’s not just about Silicon Valley

In East London’s Tech City – home to both Google and Amazon – there have also been housing pressures, with property prices increasing by 13% in the two years to April 2017.

Further, The Economist has produced a map of London gentrification, showing that affluent young professionals are living in the inner-city, whilst poorer, often less educated ‘service workers’, are being pushed to the outskirts of the city. As Professor Richard Florida describes it “London is the archetypal example of a class-divided city”.

In Dublin, where Google and Facebook occupy 4% of all commercial office space, local activists have blamed tech firms for their housing crisis. Aisling Hedderman of the North Dublin Bay Housing Crisis Community, highlights that

“…we’re not going to see housing provided for families, but houses provided for single people and couples. And as long as people are willing to pay the high rents it’s going to keep driving up the rents

Tech firm Airbnb has also received a lot of attention for its impact on housing. Airbnb, who enable people to rent out their properties or spare rooms, has faced challenges in a number of cities. For instance, in November 2017, Vancouver introduced new regulations to stop businesses from offering short-term rentals through Airbnb and similar services. This means people can only rent out their principal property – which the city hopes will increase the availability of long-term rentals.

Technological change is nothing new

Edward Clarke, former analyst at the Centre for Cities, however, argues that the real problem for cities is not gentrification but poor city management.

In his view, urban neighbourhoods have always experienced periods of change, highlighting that Shoreditch’s status as a tech hub follows a long tradition of innovators moving to the area. And that research has shown that ‘new jobs’ (such as those in the digital and creative sectors) bring higher wages to an area, for the people working for these firms and in other sectors. Instead, Mr Clarke suggests there is a need to build more homes, and to consider developing on part of the Green Belt.

To alleviate these challenges, cities have started to recognise the need for closer collaboration. New York, Dublin, and London have all recruited tech leads to work with the tech sector. However, Joe Kilroy, policy officer at the Royal Town Planning Institute (RTPI), highlights that tech leads must have a remit that is wider than encouraging tech firms to move to the city. He explains:

Ideally the tech lead would liaise with city planners who can articulate the issues being faced by the city – such as housing affordability, infrastructure pressures, and skills shortages.”

Toronto and Kitchener, Ontario

In 2017, Toronto and its small town neighbour Kitchener announced plans to introduce a new transit line to ensure the city can cope with an expected influx of new tech workers.

It may be surprising to some that it’s not Toronto that’s the main tech player, but the region of Kitchener-Waterloo, home to the University of Waterloo and the birthplace of the Blackberry. It’s internationally recognised as a hub of innovation and prides itself on being different to Silicon Valley, viewing itself as more of a community than a series of business networks.

Local tech leaders acknowledge the importance of reaching out and working closely with local charities on issues such as affordable housing, as well as offering their skills to the community.

Final thoughts

Cities must ensure that the growth of the tech sector benefits everyone, and that sections of society aren’t left behind. However, big tech firms also have a role to play, and should become active participants in their communities, leading on areas such as education and skills and housing. Only then, will these tech firms truly prosper while having a lasting and positive impact on the surrounding communities.

The Knowledge Exchange provides information services to local authorities, public agencies, research consultancies and commercial organisations across the UK. Follow us on Twitter to see what developments in policy and practice are interesting our research team. 

Fairness Commissions: tackling poverty and inequality in the UK

by Stacey Dingwall

Next month, Brighton and Hove will become the latest council area to publish the report of its Fairness Commission. Established in 2015, Brighton and Hove’s is one of 24 Fairness Commissions set up in the last five years across the UK, in areas ranging from Dundee to Plymouth.

What are Fairness Commissions?

Fairness Commissions began to come together in 2010, in the wake of rising inequality in the UK. Inspired by the publication of The Spirit Level: Why More Equal Societies Almost Always Do Better by Kate Pickett and Richard Wilkinson (the founders of The Equality Trust), local authorities came together with academics, trade unions, and third and private sector partners to draw  up recommendations for ways of tackling inequality and poverty in their local area.

Similar to a parliamentary select committee, Commissions begin their work by gathering evidence from the public, which is then analysed and synthesised into a final report containing recommendations to the local authority. Typically, this process lasts for a year.

In their report on Fairness Commissions published in July 2015, the New Economics Foundation outlined the typical stages of holding a commission:

  • Scope: decide what and whom you are targeting with the commission.
  • Language: decide what to call the commission and define its purpose.
  • Resource: decide on a proportionate budget and allocation of staff time.
  • Leadership: invite commissioners to participate and appoint chairs.
  • Communication: start talking about the commission locally and invite people to participate.
  • Participation: gather evidence and solutions through a range of methods.
  • Analysis: develop recommendations based on the evidence and possible solutions.
  • Recommendations: make recommendations for change to the relevant organisations.
  • Implementation: put the recommendations into action.
  • Evaluation: monitor progress, measure change, and report on it.

Fairness in London – the Tower Hamlets story

Two key reports have been published by Commissions in London: one by the pan-city London Fairness Commission and another by the Tower Hamlets Fairness Commission. Inequality between the East and West of the City dates back to Victorian times and while Tower Hamlets has seen some improvements, most notably due to investment in education, this gap still persists. Although home to the global financial hub Canary Wharf, a major contributor to the borough’s £6 billion a year economy, 49% of Tower Hamlets’ residents live in poverty – the highest proportion in the entire country. Despite ever increasing house prices and rents in London – an average income of £75,000 was required to privately rent in the borough in 2012 – a fifth of its residents earn under £15,000 a year.

These figures, alongside evidence of stark health inequalities and the impact of welfare reform, formed the basis of the Fairness Commission’s inquiry in 2012-13. Speaking to residents, the Commissioners found a distrust of the big business that now dominates the borough, partly due its perceived contribution to the gentrification of the area. Residents whose families had lived in Tower Hamlets for generations spoke of feeling like they existed in a “parallel world” and that opportunities in the borough were inaccessible to them. The Commission’s final report made a total of 16 recommendations, for local and national government and the third sector, aimed at bringing the local community back together and making Tower Hamlets a fairer place to live.

Fairness and inequality – the political agenda

The London Fairness Commission was one of the organisations who made recommendations to the new Mayor of London ahead of his election on the 5th of May. In a poll conducted one week prior to polling, the Commission found that three out of four respondents believed that the income gap between those on the highest incomes and those on the lowest incomes had increased over the last five years, and that the majority would welcome the introduction of an annual London Fairness Index to test whether the city is a fair one in which to live.

The Index was one of the key recommendations in the Commission’s final report, which described the city as a ‘ticking time bomb’. Housing, transport and childcare were identified as the three biggest issues facing London, and the Commission made a number of recommendations on how to address these, including:

  • a binding London minimum wage of £9.70 per hour;
  • setting ‘affordable rents’ at 30% of household income rather than 80% of market rent; and
  • suspending the right to buy scheme for five years while supply is increased.

Reducing inequalities was also a key feature of the Scottish Parliament elections, with First Minister Nicola Sturgeon pledging that the SNP would “use every power” to tackle poverty and inequality in the country. Sturgeon also detailed plans to implement the recommendations of the Independent Advisor on Poverty and Inequality, publish a Fairer Scotland Action Plan, and reintroduce the socioeconomic duty for public bodies to consider the impact that their decisions will have on narrowing inequalities.

With the UK government committed to continuing their austerity programme, and persistent evidence that the UK is one of the least equal of the world’s developed countries, it’s clear that reducing inequality and striving for fairness will, and must, remain high on the political agenda for the foreseeable future.

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