The UK Tech Cluster Group (UKTCG) has launched a report outlining how the next
Government can harness the potential of the country’s tech ecosystems to support
businesses and people right across the UK.

Launched at a Parliamentary reception on January 9, hosted by Alex Davies-Jones MP, the
in-depth report sets out four ways in which development of the tech industry can support
social mobility and economic growth.

Katie Gallagher OBE, chair of the UKTCG and managing director of Manchester Digital,
said: “In launching the report and our ‘Four Big Ideas’, we’re calling for Government to
harness the huge potential of technology and the tech industry to unlock the potential in
every region of the UK.

“Across the UK, we have numerous strong and individual tech ecosystems. By creating a
digital and innovation policy which supports business and individuals in each region, we can
support true social mobility and see real opportunity for businesses to grow alongside the
fast-moving innovation within tech.

“In setting out ‘Four Big Ideas’ for the next government, we are ready to help ensure new
technologies unlock the potential of every business, every person, and every place. If we
want our sector and our local communities to go far, then we need to go together.”
Alex Davies-Jones MP said: “Ensuring all people and businesses across the UK can
participate in and benefit from a growing digital economy is vital to our shared success.
“This report from the UK Tech Cluster Group outlines four crucial ways in which Whitehall,
local leadership and industry can better work together to help every place to reach their
potential.

“New technologies can support and grow businesses in all corners of our country and offer
opportunities for exciting new careers in every community. But we need to work together to
ensure national policy encourages local innovation. I welcome this report at a crucial
juncture for our economy.”

The in-depth report has identified ‘Four Big Ideas to Harness Tech’s Potential Across the
UK’. They are:

• A globally competitive tech talent pipeline in every region: ensuring the economy
  delivers opportunity for all and drives social mobility by unlocking tech talent.
• Driving digital innovation at the foundations: ensuring every business can understand
  and benefit from the opportunities which tech brings.
• A UK Innovation Policy which gives every place a chance: by embedding digital tech
  at the heart of regional development strategies and incentivising collaboration.
• Mobilising ecosystems to help businesses to start and grow: by recognising that
  ‘place’ matters, and tech communities can underpin the success of devolution.

Katie added, “We see this moment as a start of a conversation about how good practice
from the grassroots can inform better delivery through a new partnership with Whitehall. We
need to learn the lessons from the last decade of centralised tech policy and delivery
through departmental silos, which has left so much potential untapped. As grassroots tech
leaders, we look forward to working with Parliamentarians to put our plans into action.”

The UK Tech Cluster Group (UKTCG) brings together tech organisations from every region
and nation of the UK to help them thrive.

Download your copy of the report here.

The Government has been talking about making the UK a super-charged tech economy for some time now, so the tech industry was eagerly awaiting this Budget (March 15). It’s certainly interesting times for the sector and the UK economy. Last month, we saw the launch of the new Department for Science, Innovation and Technology and in the last couple of weeks, the collapse of Silicon Valley Bank and  rescue of the UK arm by the Government facilitating a private sale to HSBC. 

We’ve highlighted some key announcements and how they affect tech ecosystems across the UK. 

Devolution 

The Chancellor announced ‘Trailblazer’ deals for Greater Manchester and the West Midlands; which includes a single funding settlement and more powers and responsibilities   for post-16 technical education. Other Combined Authorities have also expressed a willingness to take on these powers when available to them. 

Katie Gallagher, chair of the UK Tech Cluster Group, said: “We welcome news around Trailblazer powers for Combined Authorities in Greater Manchester and the West Midlands. More local control of resources and responsibilities for skills funding presents a huge opportunity to harness the potential of learners and better align skills and talent to the needs of employers in growing and fast-moving sectors like tech. 

“Given how important tech is to the future of the economy and the potential impact on regional economies, whatever mechanism is used to devolve funding into the regions it must make provision for expert and specialist support from regional tech clusters who understand the maturity of their clusters and where there are gaps that need funded interventions.”

Investment Zones 

The Government committed as expected to funding Investment Zones, an idea which was refined by the current Chancellor at his Autumn Statement and now describes ‘’12 high-potential-knowledge-intensive growth clusters across the UK’’. 

There will be four across Scotland, Wales and Northern Ireland; with eight in England. These areas are all in the North or the Midlands and include: the West Midlands, Greater Manchester, the North-East, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool.

Each English Investment Zone ‘’will have access to interventions worth £80m’’ and will be tasked with driving growth of at least one of green industries; digital technologies; life sciences; creative industries and advanced manufacturing. 

Timescales are yet to be finalised, though the Government is keen to agree the first proposals by the summer and all Investment Zone proposals agreed by the end of the financial year, with funding expected to commence from April 2024. 

Katie added, “Today’s announcement around Investment Zones has the potential to better enable collaboration between tech firms, industry and academic partners. We hope the design of these programmes will support innovative SMEs to collaborate and accelerate R&D.”

R&D Tax Credits

In the Autumn Statement, the Chancellor announced cuts to R&D tax credits used by tech startups. Since then, the industry has called for this to be reversed, as it would have a negative impact on the tech industry, particularly for early-stage and research-heavy startups. A survey by COADEC found that startups expected to lose 30-40% of what they currently receive. 

In his speech, the Chancellor partially reversed the reduction in R&D tax credits by making provision for an enhanced credit for firms spending over 40% on R&D to be able to receive 27% relief. There is a further relief for some firms in Life sciences and creative industries of 34% – 39%. 

Katie added, “The tech industry as a whole was hoping for more than a partial reversal of the previous reduction of R&D tax credits incentives to encourage SME innovation in a difficult economic climate. It’s of vital importance to allow early-stage startups and innovators to flourish and grow their companies.” 

AI and Quantum 

A new AI competition, called ‘The Manchester Prize’, will offer  £1 million for innovation in AI and a National Quantum Strategy is designed to direct £2.5 billion of investments over 10 years with the aim of driving R&D application of Quantum technologies in the UK. 

In conclusion, while it is good to see funding available for place-based initiatives such as Investment Zones and Levelling-Up Partnerships, it is crucial that their design provides a mechanism to crowd-in innovative SMEs who underpin R&D and local growth, and invest in the ecosystem relationships which ensure long-term benefits for businesses and communities. 

Tech Clusters operate as a ‘connective tissue’ within regional ecosystems driving and supporting innovation. This helps to make  ‘Levelling Up’ a reality –  creating opportunities, jobs and growth for people across the UK. It is crucial that devolved funding drives grassroots innovation, and that future fiscal events and central government policy are developed with the growth and development potential of our tech clusters in mind. 

The UK Tech Cluster Group (UKTCG) welcomed the Shadow Secretary of State Lucy Powell to Manchester Technology Centre for a meeting on the future of digital tech across the UK. 

Lucy, who is also the MP for Manchester Central, talked about Labour’s upcoming plans for the digital economy. Katie Gallagher, MD of Manchester Digital and chair of the UKTCG, and group members provided insights from their work with businesses about what is needed to unlock the full potential of the tech economy right across the UK.    

Lucy Powell outlined that as the official opposition, the Labour Party are keen to support all parts of the UK and ensure that digital regulation, data and AI policies nationally underpin the work of local and regional leadership and businesses across the UK in delivering a world-leading tech economy which works for all communities. 

Lucy explained, “We are keen to work with the tech industry in all parts of the UK. With proper devolution, local leaders could design their own programmes and decide how funding is allocated without the expense and time of bidding to multiple fundings pots held in Whitehall.” 

Phil Jones, director of innovation at Wired Sussex, said: “The ‘connective tissue’ of our local and regional ecosystems are crucial to driving innovation – both for high productivity businesses, and in the foundational economies. Through our work at the grassroots, we see practical ways to support more people and companies to benefit from the opportunities which the digital economy creates. 

“As a sector, we are keen to help young people really understand the wide variety of career pathways within the industry with huge scope for progression. We also need a more supportive environment for the Angel sector, and a better way to connect early-stage start-ups with Angel investors. All of this would create a wider ‘connective tissue’ to support the growth of the tech industry.”

David Dunn, CEO at Sunderland Software City, agreed, “It’s really important that we reach into schools to help develop the tech pipeline. So we need to create more talent, from school age to ensure we have a growing pathway into the tech industry.” 

Katie outlined some current limitations of the Apprenticeship Levy. “We would like to see the opportunities for smaller employers, who often don’t take on apprentices for fear of the unknown. It would be great to see an awareness campaign as well as some level of reform around how businesses can use the Levy.

“The funding that goes into Business Growth Hubs, for example, is for generic businesses, not specifically tech or startups. Devolution can help the tech sector as local leadership and their business community know where they need specific funding.”

Katie reiterated how important it was to include smaller tech clusters in wider programmes, otherwise they frequently miss out. 

Phil added, “Engaging with partners on the ground who collectively understand industry needs and barriers to growth and inclusion, is crucial to ensuring all parts of the UK are able to share in the success of our tech sector.”

Yiannis Maos, CEO of Birmingham Tech, expanded on this, “We need to support our tech SMEs to reach their potential  because that’s where growth happens. This also creates jobs in our communities and drives innovation across the economy.”

The UK Tech Cluster Group works with Government and Parliamentarians as well as local leadership, industry and partners within our clusters. Members are represented on the Government’s Digital Economy Council and Digital Skills Council and collaborate nationally to support the smart, sustainable and inclusive growth of the UK’s tech ecosystems.

Following today’s (7/2/23) announcement of Prime Minister Rishi Sunak’s reorganisation of Whitehall departments, the UK Tech Cluster Group welcomes the creation of the new Department of Science, Innovation and Technology. 

Led by Michelle Donelan, Government plans for the new technology department to ‘drive the innovation that will deliver improved public services, create new and better-paid jobs and grow the economy.’ 

The UK Tech Cluster Group works to support tech businesses and our regional digital ecosystems to thrive. Directly supporting over 6,000 businesses per year with a monthly digital reach of 1.5million impressions, we operate at the local grassroots and in partnerships nationally to deliver for more start-up and scale up businesses; drive the tech skills agenda; enable digital adoption and harness innovation through technology. 

 We look forward to connecting with the Department over the coming weeks, building on our strong relationship with BEIS and DCMS in pursuit of tech excellence and a digital economy in which the whole of the UK can share.  

Katie Gallagher, Chair of the UK Tech Cluster Group, said: 

“It is welcome news that the government has reaffirmed its commitment to supporting the tech sector at this critical juncture. Research in 2021 found that the digital sector employs around 1.66 million people: accounting for 4.9% of all jobs. It also contributed £148 billion to the economy – amounting to 7.6% of the UK total.’’

‘’As Managing Director of Manchester Digital, and in working with industry and Government on the Digital Skills Council, I see the critical importance of keeping momentum and ensuring businesses can start, grow, and innovate through technology, while more people are supported to build digital careers’’. 

“Ministers across government – including the Secretary of State and Chancellor in their recent Bloomberg speeches – have been clear as to the importance of digital tech to growing the economy.  We look forward to continuing to work with them to help deliver on this agenda by building on success and unlocking potential in all parts of the UK’’

Chancellor Jeremy Hunt said his Autumn Statement needed to tackle the cost of living crisis and rebuild the UK economy. This was the first fiscal event since March 2022 to be accompanied by a set of OBR Forecasts and took place amidst a challenging climate of high inflation. 

The Chancellor also made bold statements around a need for better translating innovation into companies; and making the UK the ‘world’s next Silicon Valley’ by delivering post-Brexit supply-side reforms which mirror the success of the City of London in the 1980s regulatory ‘Big Bang’. Changes to R&D Tax Credits announced will be legislated for in the Autumn Finance Bill 2022, and the Government will consult on the design of a single scheme ahead of Budget 2023. 

The Government is clear that this will include cloud computing and data as planned, and that R&D Tax Credits are to be considered as part of the total budget envelope for supporting R&D. As Beauhurst noted at the weekend, there is a risk that cuts to R&D tax credits for small companies may inhibit growth and investment at a time when this is badly needed.   

We are also keen to hear further details on the Government’s plan for Investment Zones, which will now include universities as key partners. Ensuring that innovative digital businesses can be part of ensuring their success would surely allow Government to build on the models to drive place-based R&D such as the Innovate UK Launchpads, Innovation Accelerators and Strength in Places Programme. The UK Tech Cluster Group stands ready to advise on developing these proposals to ensure digital businesses across the country can help drive recovery from recession; building on our work to deliver on this at the grassroots with university partners in our communities.    

Katie Gallagher, chair of the UK Tech Cluster Group and MD of Manchester Digital, said: “Despite the impending recession, the tech industry across the UK regions remains strong and vibrant. While it’s encouraging to see the ambition to become the ‘global Silicon Valley’ and a re-commitment to R&D, we know that supply-side regulatory reforms will only go so far and the Government needs to actively invest in programmes that will help.

‘’We desperately wanted to hear more commitments to help both the tech talent pathways to ease the ongoing skills crisis, as well as firm commitments to help early-stage start-ups which are imperative to growing our tech economy.

“We are eager to hear clarification on which part of the previous Northern Powerhouse and HS2 rail commitments will go ahead, as they will help our NW tech businesses recruit and do business. 

“We welcome news around devolution, however, the regions and nations of the UK  need even more freedom to make decisions for their own communities and businesses in order to drive innovation and growth that the UK so sorely needs. 

“A change to how the Apprenticeship Levy works would have helped businesses unlock more funding to upskill existing staff and bring in new talent pipelines. There should be a huge focus on upskilling the UK workforce, as well as developing our talent pathways right from school age.

“Overall our tech and digital industry across the whole of the UK is strong and innovative,  but is being held back by lack of joined-up-thinking around funding in people and skills, as well as ongoing Brexit fallout.”

Ben Shorrock, managing director at techSPARK in Bristol, said:

“It is clear today the UK is in for a rough ride economically; our tech communities right across the UK are the drivers of the innovation that will power us out of this recession. It’s encouraging to see good news like protecting the £20bn annual R&D budget, potentially unlocking capital from insurers and expanding SEIS all of which will support tech growth. However, it’s imperative that the government, when looking at reducing fraud doesn’t throw the baby out with the bathwater and stop our innovative businesses access schemes like R&D tax credits.”

Despite the current leadership contest within the Government, high inflation and a possible recession, the UK is still in a great place to continue developing the tech industry across the regions. 

There has never been a more critical time to focus on creating more high value jobs and high productivity, or to focus on developing the regional tech eco-systems.

As chair of the UK Tech Cluster Group, I have recently been appointed onto the Government’s Digital Skills Council, along with a number of other ministers, academics, tech organisations and tech entrepreneurs to work together to address current and future needs for digital skills and to develop more digital jobs. 

The council has been set up to: 

• promote routes into digital careers and opportunities for the labour market to re-skill and up-skill to meet current and future employer needs
• increase awareness of resources that enable pathways into digital and digitally enabled jobs for workers in non-digital roles
• promote mechanisms to provide increasingly diverse access to digital roles and digitally enabled roles

A changing society 

During the Covid-19 pandemic, many businesses had to undergo speedy digital transformation to keep up with demand and are still seeing increased sales due to ongoing changing consumer habits. 

The future is digital – this has been known for a long-time, but we need to ensure that we have a workforce with the right tech skills to develop the whole of the UK as a global tech powerhouse. The Government has ambitious aims to transform the UK into a digital economy – but there is still an enormous job to do closing the growing tech skills gap, in upskilling the workforce, and developing more tech-focused talent pathways right from early school-age. 

Driving forward the tech agenda 

We are looking forward to working together as a group of tech leaders, ministers and organisations to develop the UK regional tech industry and help it thrive and flourish. Bringing experts together with in-depth knowledge of the regional ecosystem is the best way to develop a strong tech-based future across the whole of the UK. 

The Queen’s Speech set out a series of Bills due before Parliament in support of Government’s efforts to underpin recovery from COVID-19 and drive forward the levelling-up agenda. 

This legislative programme accompanies policy direction set out in March’s ‘Build Back Better’ budget and precedes an expected Autumn Spending Review. 

The UK Tech Cluster Group notes Government’s commitment to a lifetime skills guarantee; enabling flexible access to high quality education and training throughout people’s lives; the fastest ever increase in public funding for research and development; and proposed legislation to deliver the Advanced Research & Invention Agency. 

Launching the UK Digital Strategy at our Annual Conference in June last year, Secretary of State Oliver Dowden underlined the critical importance of building a highly-skilled digital workforce across every region of the UK, so that people can shift into the digital or tech sectors or digitise their own businesses; driving growth in both the tech sector and traditional industries in order to adapt, survive and thrive in the recovery.

We wholeheartedly agree that Digital Skills and Collaborative Innovation are vital in harnessing the potential of businesses and communities across the nations and regions of the United Kingdom. 

Through our work in connecting and supporting businesses large and small and driving skills provision and innovation in our regional ecosystems, we understand the critical importance of local coordination to ensure Government’s policy objectives deliver a recovery that works for businesses, learners and communities at the very grassroots of UK tech. 

The group looks forward to continuing to work with the Secretary of State and his Officials to ensure we continue to drive Covid recovery and allow technology ecosystems to flourish UK-wide.

In our sixth roundtable session as part of the national Recovery Roadmap program, the group discussed how we best support the UK public and higher education sectors to better understand how digital technology can enable increased productivity and be equipped with the trial solutions and knowledge to show the potential return on investment.

Now, we can easily have conversations with anybody at any point across the country, which is really, really good. Although technically we could do that before, there’s been a real culture change and I hope we can take the best things going forward as we reenter the workspace next year. 

Ethan Wroe, Policy Support Officer at Department for Digital, Culture, Media and Sport

Watch the roundtable discussion

In the UKTCG’s third roundtable event, a panel of experts explore how digital skills and capabilities will be essential in the new normal enabling the UK’s economic recovery.

Attendees

1. Ben Shorrock, ​Managing Director TechSPARK, UKTCG Steering Board
2. Robert Walker​, Strategic Project Manager, Sheffield City Council
3. Jennifer Wells​, Knowledge Exchange Manager, University of Brighton
4. Emma Woodcock​, Chief Information Officer, Yorkshire St John University
5. Andrew Henley​, Co-I and Wales lead ESRC The Productivity Institute, Co-I ESRC Productivity Insights Network & Professor of Entrepreneurship and Economics at Cardiff University
6. Andy Salmon​, Vice Principal, Bath Spa University
7. James Bedford​, Digital Cluster Development Manager, Science & Technology Council
8. Mark Lockett​, Sales Director, TechnologyOne
9. Michael Veasey​, Economic Development Consultant, Essex County Council
10. Kate de Vries​, Economic Development Officer, Norfolk County Council

In our fifth roundtable session as part of the national Recovery Roadmap program, the group discussed what their experience of the coronavirus outbreak can tell us about the future role, priorities and shape of public services. The session focussed on four key areas: the integration of services; inequalities in access and outcome; the relationship between local and national services; and the role of civil society—the private sector, charities, volunteers and community groups—during coronavirus.

One thing I’ve noticed is it’s much harder to produce serendipity in innovation. A lot of our projects start from bumping into someone on the way to the train station or similar. We’re lucky living and working in Oxford.  Without those accidental moments it’s become harder and we have to work on it much more. 

Llewelyn Morgan, Head of Innovation, Oxfordshire County Council

Watch the roundtable discussion

In the UKTCG’s third roundtable event, a panel of experts explore how digital skills and capabilities will be essential in the new normal enabling the UK’s economic recovery.

1. Ben Shorrock, UK Tech Cluster Group Director
2. Ian Owen, General Manager Public Sector, TechnologyOne 
3. Claire Main, Economic Development Officer, Bournemouth, Christchurch and Poole Council
4. Rachel Burdis, Inward Investment Manager, Invest North East England 
5. Sarah Talbot, Head of Innovation, Swindon Borough Council 
6. David Henderson, Head of Transformation, Hargreaves Lansdown 
7. Llewelyn Morgan, Head of Innovation, Oxfordshire County Council 
8. Declan Murphy, Economic Development Projects Officer, Bristol City Council 
9.  Ethan Wroe, Policy Support Officer at Department for Digital, Culture, Media and Sport

Digital skills and capabilities will be essential in the new normal enabling the UK’s economic recovery. However, digital skills are broad, wide ranging and dispersed. COVID-19 gives an opportunity to reflect and change outmoded structures and ensure the workforce has the chance to have the right skills at the right time through a robust data-driven approach.

Something that we’re touching on is also the impact of having a diverse group with different backgrounds and different experiences. Having a diverse group leads to the most fruitful economy, collaborations and creativity. It brings new ideas to the table. And it’s something that I think we really need to be striving towards as we respond to this crisis.

Georgina Phillipson, Enterprise Support Coordinator, Oxford Brookes University

Watch the roundtable discussion

In the UKTCG’s third roundtable event, a panel of experts explore how digital skills and capabilities will be essential in the new normal enabling the UK’s economic recovery.

Panel speakers

1. Ben Shorrock, MD TechSPARK, Director UK Tech Cluster Group
2. Katie Gallagher, Managing Director, Manchester Digital, UKTCG Steering Board
3. Johnathan Williamson, Director, TechnologyOne
4. Andy Salmon, PVC, Bath Spa University
5. Diane Milne, Senior Funding Officer, Dundee City Council
6. Alastair Irons, Dean of Computing, University of Sunderland
7. Ben Atha, CEO, The Developer Academy
8. Michelle Gordon, Corporate Manager, Economy & Business, Babergh & Mid Suffolk District Councils
9. Mick Westman, Founder at Digital Innovators Ltd & Vice President at the Solihull Chamber of Commerce
10. Georgina Phillipson, Enterprise Support Coordinator, Oxford Brookes University
11. Rob Passmore, North Devon UNESCO Biosphere Reserve