Regional network drives growth of UK’s tech nation

Regional network drives growth of UK’s tech nation

Bournemouth, a coastal resort once known for its popularity with older holidaymakers, has a thriving digital economy with the number of tech start-ups rising 212% in 3 years

The rate of growth of technology start-ups in Bournemouth and Liverpool has outstripped London as Britain’s digital sector expands, research has revealed.

The country’s first survey of the digital economy has found that 74 per cent of companies and 85 per cent of workers are now located outside the capital.

London’s rising rents have deterred some businesses, while skilled staff and fast, cheap broadband have lured them to other parts of the country.

With 23 significant clusters of businesses, from Belfast to Dundee through South Wales to northeast England, Prime Minister David Cameron said it was time to recognise the digital sector outside London.

While the number of businesses in inner London rose 92 per cent between 2010-13, in Bournemouth it was 212 per cent and in Liverpool 119 per cent, albeit from much lower bases.

Greater Manchester, Belfast, Sheffield, inner London and South Wales are home to tech clusters with the largest companies by turnover. But about 90 per cent of all digital companies in the UK, which are mostly small and medium-sized, expect revenue growth this year.

“The UK is a tech nation. For the first time we have the evidence base to show that. We can now build on it,” Baroness Joanna Shields, chairwoman of Tech City UK, told the Financial Times.

Tech City UK, the group promoting the sector, found 1.46m people — about 7.5 per cent of the workforce — were employed in digital industries, with 252,000 in London.

Bristol and Bath, the next biggest cluster, has 62,000; Liverpool has 9,600 and Bournemouth 7,200. Most of the businesses employ fewer than 250 people, often collaborating with and working for larger companies.

“There are clusters all over the UK and they have different skills and specialisms. London is the world’s tech city but other cities can compete globally,” Baroness Shields said.

The northeast focuses on software and health, driven by Sage, the FTSE 100 software business, and its universities. Greater Manchester is home to media and financial technology businesses, while Bournemouth and Poole are the centre for digital marketing.

Tom Quay, founder of app builder Base, said fast, cheap broadband and skilled staff were part of Bournemouth’s appeal. Its university has the National Centre for Computing Animation while the Arts University has a highly regarded design course.

Base, which also builds products for companies around data, has hired five staff in the past year. “A lot have come back from London. They want to work on the latest technology but spend the weekend at the beach with their kids,” Mr Quay said.

Universities and the students they attract and educate were vital to clusters, with three-quarters of businesses in them saying they benefit from networking and collaborating with other entrepreneurs, Baroness Shields said.

London benefits from 36 incubators and 70 co-working spaces, which are starting to spread to the regions. Baroness Shields said the biggest challenge outside the southeast was finding finance.

Surveys of more than 2,000 businesses also revealed a perception problem. Executives in London, Cambridge, Bristol and Bath were the only ones to say their city had a positive image.

Baroness Shields said that would change as the technology sector grew. “The East End of London was deprived when tech companies first arrived.”

But Martin Kenwright, founder of Starship, a games and virtual reality studio in Liverpool, said it would require more state support to replicate that success in deprived cities. “They have the wealth of the City on the doorstep. We have Liverpool 8 [Toxteth].”

Tech City UK defined a digital business as “any company whose primary capability is producing software or delivering software-enabled hardware”, excluding manufacturers.

Software developers make Liverpool home

The red-brick warehouses of Liverpool’s Victorian docklands now rely on bits rather than ships to fill them as software companies take advantage of cheap rents and fast broadband.

A new breed of engineers are tapping into the legacy of pioneering video games studios such as Psygnosis, which created Lemmings, and Bizarre Creations.

Sony bought Psygnosis in the 1990s and produced the Buzz and Wipeout series of games for the PlayStation. But in 2011 Activision, which had acquired Bizarre, closed it and Sony shut its development centre a year later, although it kept its quality assurance department.

Many developers stayed in the city, however, and set up their own studios, including Firesprite and Lucid.

Ivan Davies, who won a Bafta for Buzz Jungle Party, founded Catalyst as a production house, delivering games for other companies. He said there were 31 games companies employing almost 600 people. He said low rents, good broadband, flexible space and support from Liverpool Vision, the council’s economic development arm, contributed to its success.

Many businesses are in the Baltic Triangle, sandwiched between the cathedrals and the redundant Cain’s brewery in Toxteth, which is to be redeveloped.

Ehealth is a growth area while non-games businesses include Draw and Code. It uses augmented reality and virtual reality tools to create paintings that move, spectacular laser light shows and interactive 3D models for architects.

Martin Kenwright, who sold his Evolution studios in Runcorn to Sony in 2007, has returned with another outfit, Starship. The man who created MotorStormF22 and other bestsellers, aims to fill a gap in the market for children’s games without the need to spend money on in-game extras. Playworld, a superhero game, is his first app and was among the top five in the Apple store on its release this week for £2.99.

He also plans a memory tool for dementia sufferers and a virtual reality cooking series. “We are Silicon scallies,” he said. “There’s something special about the place.” But he added: “We need to create IP [intellectual property], not just do jobs for other people.”

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