Planning for the digital economy

The digital tech sector is the UK’s fastest growing sector.    Recent statistics show that it is growing as much as 50% faster than the wider economy.  In London alone, a new tech business starts up every hour.  Beyond London, digital tech clusters across the country are driving the economic resurgence of many cities and city regions.

The rapid growth of the sector means that its spatial footprint has become increasingly evident in towns and cities across the UK.  In May, the Royal Town Planning Institute (RTPI) published guidance on how town planning can respond to and guide the future development of the digital economy.  It makes recommendations for planners in two areas:

  • how to encourage the growth of the tech sector in their local area; and
  • how to make best use of the opportunities provided by the tech sector for the planning system

What is the tech sector?

The digital tech sector is increasingly diverse, and there is no straightforward definition.  The 2016 Tech Nation report identified 16 different sectors, some of which include:

There are currently around 58,000 active digital tech businesses in the UK.  It employs 1.64 million people, and job growth is more than double that of other sectors.  Roles are generally highly skilled and well paid, compared to other sectors.  Indeed, the average salary is 44% higher than the national average!

Location preferences

Digital tech, as a sector, thrives off well-planned spaces with access to good local infrastructure.  Tech firms and their employees tend to prefer easily accessible, walkable, multi-use districts. This results in the creation of ‘clusters’ of similar firms in central urban locations.

Clustering has a number of advantages for digital tech businesses – including easy access to large talent pools and the ability to network and exchange ideas face-to-face with local, likeminded businesses and employees – a key driver of innovation.

London, Manchester and the Greater South East have some of the largest digital tech clusters in the UK; however, the Tech Nation 2017 report mapped 30 significant clusters across the length and breadth of the UK – from Dundee to Exeter.

Facilitating the growth of the sector

The recent growth of the sector has already led to a number of economic policy responses, including the development of enterprise zones, innovation and business centres, and ‘innovation districts’.  The RTPI guidance also highlights a number of smaller-scale responses that can be utilised to attract and foster tech industry growth, including:

  • ‘de-risking sites’ by making sure that planning requirements are “practical, clear and known in advance of specific proposals coming forward
  • using public money for assembling and servicing sites that are more challenging
  • the provision of Wi-Fi in specific locations
  • making districts pedestrian and cycling friendly
  • leveraging Public Private Partnership models to build digital infrastructure

In addition to these responses, the RTPI makes three recommendations for planners on how they can create an environment that is attractive to digital tech firms.

First, it suggests that planners should monitor the local economy to get a sense of what local growth industries are.  Policies can then be adapted to local economic conditions.  Some local authorities already do this using company registration data.  For example, Camden Borough Council use this data to inform a quarterly ‘Business and Employment Briefing’.  It covers a range of measures, including business size and type, employment in the borough, commercial property, unemployment, worklessness and qualifications.

In order to attract and assist the growth of the digital tech sector, it is important for local planning teams to have a proper understanding of the sectors’ spatial preferences.  This is particularly important when drawing up local plans.  Therefore, the second recommendation made by the RTPI is that local authorities should employ someone to engage with local tech firms to find out how planning could help to better facilitate their growth. The roles of The Dublin Commissioner for Startups and the Amsterdam Chief Technology Officer are potentially interesting models for this.

Third, the RTPI recommends ensuring that there is sufficient housing, office space and transport infrastructure to meet capacity.  These three elements are the “fundamental ingredients for an economically and socially successful city”.  Without them, no amount of other interventions will attract firms to an area.

The Tech Nation 2017 report found that 30% of digital tech community members cited their local transport infrastructure as a ‘business challenge’.  Tech London Advocates report similar concerns, whilst also highlighting the challenges posed by digital infrastructure: “It has become increasingly clear that a fundamental challenge facing tech companies in London is infrastructure. The tech sector has grown so fast that the provision of office space and digital connectivity is having to play catch up”.

The digitisation of planning

The growth of the digital tech sector not only creates jobs and generates wealth; it creates opportunities for improved efficiency in other sectors too.  In planning, digitisation can free up time and resources, and create new tools for planners to utilise.  From the adoption of  geographic information system (GIS) software for mapping, to experimental trials of 3D modelling software and virtual reality in plan making and community engagement, technology has and continues to present a number of opportunities to improve the planning system.

Beyond planning, innovations in the digital tech sector aid the creation of ‘smart cities’ – where information and communication technology (ICT) and ‘Internet of Things’ (IoT) technologies are integrated to manage cities’ assets, with the overall aim of improving efficiency.  Examples of potential usage vary considerably, from supporting people with disabilities or chronic illnesses, to the provision of real-time traffic data, controlling streetlights and monitoring environmental data.

As such, a final recommendation made by the RTPI is to make use of local firms’ skills and resources to address cities’ infrastructural challenges.

Addressing inequality

Despite the rapid growth of the digital tech sector and its contribution to job and wealth creation, there is an increasing recognition that the benefits created by the sector can be insular and often do not spill over to the local economy.

Indeed, studies have found that the higher the share of tech employment in a city, the more income inequality there is.  On this basis, the digital tech sector has been criticised for its potential to create a ‘two-tier economy’.  There are also concerns about the gentrifying effects of digital tech clusters on local areas.  In London, for example, tech growth has increased the cost of living in some parts of the city, displacing smaller firms and lower income families.  It also poses a potential threat to innovation as startups are priced out of successful digital tech clusters.

Clearly addressing these issues poses some significant challenges for policymakers.  Last year, the RTPI made a number of recommendations in this regard, including helping local people to develop the skills needed by local tech companies.

Successful planning

The digital tech sector has enormous potential to enhance economic growth.  Through its ability to create the optimal conditions for the digital tech sector to thrive, planning can help to encourage this growth.  Understanding local economic trends, consulting with digital tech businesses about their needs, and ensuring that local infrastructure has the capacity to meet these needs, are vital to successful planning for the digital tech sector.  At the same time, ensuring that this growth is sustainable and benefits wider society are key challenges for planners.

Supporting regeneration and creative start-ups … what can we learn from Hackney?

View of Amazon HQBy Morwen Johnson

A traditional pub, standing alone in the midst of a massive development site in East London. The photo above, taken at the end of June, seems to sum up dramatic changes that are being replicated all across London as regeneration transforms many Boroughs. Social and community regeneration, however, does not inevitably follow from investment in commercial property development. And ensuring that local communities benefit, and are not displaced or excluded by processes of gentrification, can be a tough balancing act.

I recently went on a study tour within Hackney, organised as part of the RTPI Convention in June, to understand how the council’s planning and regeneration team have been working to attract investment into the area and tying this in to employment support and small business growth.

Rapid economic growth but continuing deprivation

A number of high profile major site developments are underway in Hackney, including multiple hotels and the new Amazon HQ. This has gone hand-in-hand with its emergence in the last few years as an attractive location for start-ups and entrepreneurs.

Hackney experienced a business growth rate of 40% between 2004 and 2012, 17% higher than London as a whole. The population of the Borough has also grown from approximately 265,000 in 2006 to an estimated 310,000 in 2015. A report from Tech City published last month also highlighted the importance of the key sectors of creative, technology and business services in the local economy – they make up 37% of all employment in Hackney and 54% of its 11,000 businesses.

It’s worth noting, however, that this economic success has come at a time when Hackney still has some of the highest levels of deprivation and poverty in London. For example, in 2016, 30% of nursery and primary school pupils are eligible for and claiming free school meals, rising to 33% at secondary level (London Datastore).

Vibrancy of the area at risk?

The improved perception of the area, while welcome, is pushing up property and rental prices. And now, as start-ups and small businesses risk being priced out of Hackney, it is important for the area to retain the ability to host start-ups. One solution is ‘meanwhile use’ – the temporary use of vacant buildings or sites, especially for community projects.

Hackney council has engaged with local developers and property partners to create innovative and cost-effective spaces on a temporary basis to promote local business, employment and culture.  Hackney House on Curtain Road is just one example – the building provides a café and bar area, as well as exhibition and meeting space for hire. Wi-fi and desk space is available for not-for-profit organisations and start-ups to use, and regular events encourage business networking. The project won the Best Town Centre project at the London Planning Awards in February 2016.

The council suggests that while it’s important to keep businesses in the area, the core aim should “be to keep projects innovative and exciting”. Some churn is inevitable and councils should “extend both a platform and an open mind to its current local business communities”.

Ways into work

Another example of collaboration which has delivered cost effective assets to support the local community is The Opportunity Hub on Pitfield Street. The council has been working to develop its role as a broker between the private sector and community sector to create jobs and training for local people. The Opportunity Hub sits next to a large housing estate and research showed that nearly a quarter of residents local to the Hub had never used the internet.

Previously a community centre that was only being used for two hours a week, the building has been redesigned to offer an antithesis to job centres. As well as having space for training or employer recruitment sessions, there is free hot-desking space. A team of information and guidance advisors are available and focus on getting local people ‘job-ready’. They also engage with local businesses to promote apprenticeships. Touchingly, the local group of women who used the previous centre for afternoon bingo now use the Hub space instead.

Hackney collateral

Looking to the future

It’s clear that the council in Hackney aren’t resting on their laurels. As well as continuing to use Section 106 as a tool to ensure larger businesses moving into the area will offer jobs to local unemployed people, they are planning another Opportunity Hub in the foyer of a local library. They are also looking at new ideas to provide space for temporary uses, such as the untapped potential of over 2000 empty garages in the area.

Close relationships between planning professionals, town centre managers and the business development teams appear to have helped the council to use regeneration to benefit the local community.


Read more about Hackney’s three year framework to promote enterprise and regeneration in the Tech City Best Practice report.

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Read some of our other blogs on regeneration:

Understanding science and innovation: key ingredients

Female scientist in a lab.

Image from Flickr user Robert Couse-Baker, licensed for reuse under a Creative Commons License.

By Steven McGinty

“Innovation distinguishes between a leader and a follower” Steve Jobs

From penicillin to Dolly the sheep, the UK has always been at the forefront of scientific innovation. Last month, the Chancellor, George Osborne, gave a boost to the scientific community when he welcomed the idea of a National Institute for Materials Research and Innovation in the North of England. The Chancellor said that this would create new jobs and attract further investment, emphasising that the government are committed to the creation of a ‘Northern Powerhouse’.

This is just one example of how scientific innovation can be used to support economic development. Below I’ve identified some of the key ingredients to developing innovation, as well as providing several examples of good practice across the UK and Ireland.

Innovation infrastructure

The North West Business Leadership Team (NWBLT) report highlights the importance of having the infrastructure in place to support innovation. Crucially, it suggests that the ability to create partnerships between organisations and across business, government agencies, and academia, helps firms to gain a competitive advantage. For example, the Virtual Engineering Centre, a partnership between the Hartree Centre and the University of Liverpool, supports companies such as Jaguar Land Rover to improve their business performance through the adoption of the latest techniques and tools.

Business clusters, particularly digital clusters, have also proven to be important for driving innovation and increasing productivity. These clusters involve bringing together the right innovative people and providing them with access to the right resources in a small geographical area.

Some notable examples include Tech City in East London, which is a cluster of technology and creative firms, and Dublin’s Digital Hub, a project based in the Republic of Ireland, which contains a range of firms, focused around digital media and entrepreneurship. The clusters blend technology companies with organisations from other sectors, including retail, leisure and advertising.

They also play a key role in helping start-ups to develop. For instance, it’s been shown that the development of the nanotechnology industry has been related to a small number of scientific clusters across the world.

Start-ups and agile SMEs

Start-ups and SMEs are important for bringing new products, technologies and services onto the market.  Universities can play an important role in providing a wide variety of support to SMEs. Several programs already exist in universities across the UK, including the University of Leicester’s “SME Support to Growth” project, which offers advice on exporting internationally, and the University of Birmingham’s Accelerating Business-Knowledge Base Innovation Activity (ABIA) project, which provides varied and tailored support to SMEs working in science and technology in the West Midlands, including access to support from doctoral researchers.

Additionally, the University of Manchester has also been very successful in launching SMEs.  This includes Nanoco, a firm that develops and manufactures quantum dots and semiconductor nanoparticles that are used in a number of areas, such as bio-imaging and solar energy.

The Organisation for Economic Co-Operation and Development (OECD) also highlights that SMEs can find it difficult to access early stage financing, particularly since the economic downturn. Therefore, it’s important that the government introduces and supports policies that provide access to finance. Two examples that already exist include the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS), which provide tax relief to investors who buy shares in high risk SMEs.

The Campaign for Science and Engineering (CaSE) has also raised the issue of investment in SMEs. They have voiced their concern over the UK government’s cuts to research spending, highlighting that the UK is below the EU average on research spending and is 21st in the league tables of research spending, behind countries such as Belgium and the Czech Republic. The report suggests that increased funding should be given to Innovate UK, a body that supports innovation in business.

Highly skilled workforce

The Department for Business, Innovation, and Skills emphasises the importance of having people with the necessary science, technology, engineering and maths (STEM) skills to generate new knowledge. In addition to technical skills, the report makes it clear that the UK must produce people who have an understanding of business management and the entrepreneurial skills to develop their innovation commercially.


Further Reading:

The Idox Information Service has a wealth of research reports, articles and case studies on a range of economic development issues. Abstracts and access to journal articles are only available to members.