Future economic growth could be held back by “sharp regional divisions” in the UK’s technology sector, according to a new techUK report published today.

The Technology Trade Association has published the second iteration of its Local Digital Capital Index (LDC Index), which measures the strengths of the UK’s regional digital ecosystems, and concludes that the technology sector, which is concentrated in and dependent on the south of England, is not sustainable for the UK economy as a whole.

The trade body called on the government to work with the industry to ensure the sector’s future growth, create jobs and invest locally.

The LDC Index scores are based on six components: digital infrastructure, finance and investment, skills, digital adoption, research and development, and trade. The findings paint a picture of a digitally divided nation; TechUK points out that there is a divide between rural and urban areas, but also between South and North and UK countries.

The techUK index found that Greater London and the South East scored consistently high across various components. More localized data also showed that the biggest tech investment hubs, such as London, Oxfordshire, Gloucestershire, Bath and Bristol, predictably display a strong multi-component digital ecosystem.

However, Northern Ireland, Wales and North East England do not fare as well, even though digital connectivity in the North East is relatively strong.

The UK’s lack of a robust digital ecosystem is threatening the country’s growth, techUK has warned. The technology sector is growing exponentially, leading to more jobs and higher wages, and the Index shows that additional investment is essential to harness the digital ecosystems of those local areas that are currently lagging behind to ensure their growth and benefit citizens.

We must unlock digital talent to unlock the power of the North

TechUK is calling for closer collaboration between local and central government and the tech industry to fill these gaps, and has listed 10 recommendations for the government to deliver urgent improvements across UK countries and regions.

  • Ensure that the Gigabit project reaches all areas of the UK, especially rural areas.
  • Investment zones announced by the government should also be “tech zones” to attract people to work, set up businesses and secure new future investment.
  • Improve skills data to ensure that activities such as funded digital bootcamps and benchmarking of these activities are consistent across the UK.
  • Digital actions and activities should be identified in future bids and upgrading projects undertaken by local councils to help address regional divides and exclusion.
  • There should be more regular data sharing in initiatives such as Help to Grow Digital to allow local action to support national schemes.
  • End-to-end and consistent data to measure data ecosystems across the UK. To build a working model that can be adopted across the UK, the Government should launch a test bed with the Joint Authority.
  • The devolved government and elected mayors should publish and regularly update their digital strategies. Central government cannot do this alone and must empower local agency and accountability.
  • Finance and investment lags behind London regionally. Improved access to venture capital (VC) and angel investment, better signposts to support and test new proposals, such as the creation of new limited regional funding in partnership with elected mayors, focused on digital outcomes and supporting vital national infrastructure.
  • Make changes to the Standard Industry Classification (SIC) and Standard Occupation Classification (SOC) to better reflect the technology sector and changing occupations for better tracking and data collection.
  • Working together at local level to ensure digital connectivity covers all areas of the UK, with mayors and combined authorities playing a vital role.

“There is a stark divide in the UK’s local, regional and national tech scene. This cannot be allowed to happen if we are to support the UK’s future economic growth,” said techUK CEO Julian David.

“The technology sector is growing exponentially and has the potential to add an extra £41.5bn to the UK economy, however for this to happen it needs to be strong across the UK.

“In the Local Digital Capital Index, we strongly encourage the government to work with the technology industry to ensure that we achieve a lift, boost local communities and the wider economy.”

Culvir Ranger, senior vice president of Atos and board member of techUK, added: “Amid the cost of living crisis, it is more important than ever that local communities can harness the potential of the growing digital industry to ensure their future prosperity.

“Using our expertise in innovation and skills development, we are keen to work with other industry partners and third sector organizations to help develop local digital skills. We call it “Innovation”.

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‘Stark divide’ in UK’s regional tech sector could hold back growth