Newly appointed Digital Secretary, Nicky Morgan, has said that foreign investment in UK tech firms in 2019 has already reached 2018 levels, despite only being eight months into the year. However, separate research released by Accenture shows that London continues to dominate as the capital for tech job vacancies, despite years of promoting the ‘Northern Powerhouse’ as an opportunity for investment.
Morgan said that between January and July 2019 the UK’s tech sector attracted $6.7 billion of investment, with more than half of these investments from America and Asia. The Minister said that this figure could well exceed $11 billion before the end of the year.
Whilst $11 billion sounds like a lot of capital, if we compare it to the money being spent in Silicon Valley, the UK still pales in comparison. That being said, the British government will be looking to the tech sector as one of the primary forces in the economy to drive growth post-Brexit.
Writing in the Telegraph, Morgan said:
Companies in the sector are spreading wealth and prosperity by creating high-paying, high-skilled technical jobs alongside new opportunities in non-technical roles. In Belfast, for example, tech vacancies now account for almost one in four of total job vacancies. There are fantastic opportunities in cities with strong sectors such as Glasgow and Leeds.
And according to Tech Nation, the digital economy, with 2.1 million employees, is now a bigger employer than sectors including hospitality, with 1.3 million people, and financial services, with 1.2 million people employed.
Our talented workforce, alongside our business friendly environment, is a good reason we are so adept at producing so called ‘tech unicorns’, big firms using technology to power their ideas and worth more than $1 billion dollars. We are outperforming our European neighbours in creating such firms with more than 72 companies in this bracket born in the UK.
The Minister said that as the UK leaves the EU and looks to expand its trading relations around the globe, the growing interest from two fo the world’s largest technology markets (the US and Asia) is “one more reason we should be optimistic about our future”.
Morgan also pointed to some of the work that the government is doing to promote the tech sector as a whole. She said:
We are determined to support these companies. Alongside investment in home-grown talent such as £84m for a world-leading new centre for Computing Education for Schools led by tech talent, the new Prime Minister recently announced new immigration plans to attract the world’s top scientists and bolster the UK’s standing as a hub for science and innovation.
We are also investing millions of pounds to give digital skills training to career changers and underrepresented groups through our Digital Skills Innovation Fund.
Today, Tech Nation, alongside the Government’s Digital Economy Council, is launching the Bright Tech Future Awards to celebrate the often unsung heroes building our fastest-growing companies and recognise the strength and depth of our talent.
The divide continues
Despite the Minister’s optimism about the growth in foreign investment, separate research released today by Accenture raises questions about the distribution of tech investment and talent across the UK. For years now the government has been trumpeting the opportunity presented by the ‘Northern Powerhouse’, where it wants to connect the local economies of Manchester, Leeds, Liverpool (and others).
Whilst some progress has been made, Accenture has found that 37% of UK’s ‘emerging tech’ professionals (155,000) cite their current location as London. Emerging tech is classified as professionals working in areas that include data analytics, artificial intelligence, blockchain, extended reality and quantum computing. A total of 422,00 UK-based professionals work in these fields.
The London-based professionals currently account for more than the combined number of jobs in emerging tech available in ten other UK cities, including Manchester, Edinburgh, Bristol and Liverpool.
Accenture notes that with tech salaries on average 10% higher than other roles, the concentration of technology professionals in London threatens to further widen the wealth and skills gap between the South East and the rest of the country.
Zahra Bahrololoumi, head of Accenture Technology in the UK & Ireland, argues that this does not have to be the case:
London is currently the default choice for many, but we want to prove that the capital is far from the only option. Availability of talent is one of the biggest factors in establishing a successful technology business.
We’ve found that there’s so much of this talent in other cities, but it’s being overlooked. Once businesses realise the potential and bring more opportunities to people in other cities, we can create a tech economy that benefits the entire country, rather than just London.