The QT

Friday 14 June 2024

Let’s level up on policies

Jamie Hardesty believes the Government needs to live up to its slogans and do more to drive tech start-ups with the potential to scale up if the North East is not to be left behind

If the last 14 years of Conservative government have taught us anything, it’s that the Tories love a slogan. Be it a ‘Northern Powerhouse’, a ‘Midlands Engine’ or an entire nation ‘Levelling Up’, this government has left a trail of big ambitions to be accountable for. And even with a General Election looming ever-closer, new campaign slogans continue to churn.  

Michelle Donelan, secretary of state for science, technology and innovation, recently announced plans to make the UK a ‘scale-up powerhouse’. Launched last month in East London, Donelan outlined the Government’s tech policy goals for 2024 with tech scale-ups firmly at the centre of her department’s first ‘policy sprint’.

Ambitious objectives include making the UK home to half of all European tech unicorns — private companies valued at $1bn or more — by 2030, a tech scale-up forum setup with a direct channel to Whitehall, a pilot to support 20 high potential businesses and the launch of a ‘Dragons’ Den-style’ series of pitching events.

There is nothing wrong with ambition: ambition and progress are synonymous in the technology industry. It makes sense for the Government to embrace and support the high-growth potential of UK technology scale-ups, i.e. companies which have increased their turnover and/or employee numbers annually by more than 20 per cent over a three-year period and have 10 employees at the start of that period. I’m sure there are ideas here which can help drive UK tech growth.

We need only look at the main headline from the 2023 ScaleUp Institute Report — UK scale-ups generate £1.3trn in revenues (58% of the UK SME economy) despite representing just 0.5% of businesses — to appreciate their worth. The problem is such companies are few and far between, especially in the North East.

So, we must ask, what role will UK regions like ours play here — if any at all? It’s incredibly unclear how the Government plans to simultaneously Level Up our regional playing fields and propel the UK into a new age of not only technological scale but one in which we are the frontrunners of the international pack. 

Not for the first time, the North East is in danger of being left behind when it comes to government direction in the tech sector. Policies create winners and they create losers. If UK tech is to double down on scale-ups — and small tech ecosystems like ours have few scale-ups to support — then we’re surely only adding to the disparity that already exists. This isn’t exactly fitting with repeated government messages of closing gaps and shortening divides, a la Levelling Up, is it?

Michelle Donelan, secretary of state for science, technology and innovation

Our region boasts an incredible FTSE-100 tech success story in Sage PLC and has a small number of current tech scale-up success stories like SoPost, iamproperty and Inflo Group to celebrate. We certainly aren’t incapable or without success. However, the region’s technology ecosystem is still broadly nascent in comparison to regional counterparts like Manchester, Bristol and Cambridge (never mind the capital). 

The North East has a volume challenge: other regions produce greater multiples of established digital tech companies, boast significant exits and have serial entrepreneurs investing back into their local economies. Coupled with access to talent, finance and market challenges, our small but mighty region has long punched above its weight in the UK tech conversation. Though if we’re honest, our lands aren’t yet wholly rich with tech success.

To address our volume challenge, we need to enable more business births. We need more people to want to and understand how to launch technology start-ups. There needs to be high-quality support to help. We don’t get scale-ups without start-ups. This is why the Government’s course of action here feels much more top-down than bottom-up. The ‘scale-up powerhouse goals’ set out will likely work for London (most policies do) but let’s not conflate London and the UK as one and the same. Is government accounting for regional differences?

Whether I believe in Levelling Up or not, I truly believe in the potential and people of North East England. It’s not the ones and zeros behind tech, quantum or supercomputing which fascinate me, rather I’m invested in the tech sector because of its ability to transform prosperity and change people’s lives for the better. 

Tech can be a leveller, a democratiser and a catalyst for social mobility. Many successful entrepreneurs have prospered with hand-me-down hardware and standard speed internet connection! Privilege helps but it certainly isn’t prerequisite. 

While I understand the UK’s need to remain competitive on the global stage and indeed the need to unlock scale-up potential, we’re in danger of shifting towards elitism here. Introducing policies where already-established, high flying regional ecosystems are set to benefit the most isn’t levelling the playing field. No, it’s making tech entrepreneurship a more privileged game. It’s the weakest who lose out.

The global headquarters of North East-based tech success story Sage

I spend much of my time advocating for the region, telling stories about our tech sector and supporting founders and teams as they attempt to grow. A lot of those people, indeed those behind our successful scale-ups, are ‘normal’ people who have fought tooth and nail to realise success and helped put the North East on the tech stage. We must build policies that work for them.

I’ve two questions for the Government and I hope they come with simple, straightforward answers: how are you ensuring that the tech scale-ups which do exist in the North East can benefit from plans and how, together, can we build policy and actions which look at prosperity and levelling up working in congruence. We mustn’t forget the North East. How’s that for a slogan?

Prototype miners safety lamps invented by leading scientist Sir Humphry Davy were first tested in Hebburn Colliery in 1816, proving to be a success.

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