The UK’s silicon suburbs and tech towns are booming, with 16 towns showing a higher proportion of digital tech employment than the UK average.
New data from the UK’s Tech Nation body indicates that the tech sector in the UK has grown 2.6 times faster than the rest of the British economy.
Not only that, but the number of jobs in digital and tech rose at five times the rate of the rest of the economy.
‘This is a huge success story, and we are working hard to make sure the benefits of digital technology reach every corner of the country as we build a Britain that is fit for the future’
– MATT HANCOCK
Tech Nation’s new report revealed that turnover of digital tech companies grew by 4.5pc between 2016 and 2017, compared with the UK GDP, which grew 1.7pc over the same period.
In the past year, British digital tech companies raised £4.5bn in venture capital investment.
Growth and scale
“From fintech to healthtech, self-driving cars and artificial intelligence, the UK’s digital tech sector is having an impact on every aspect of our daily lives and economy,” said Eileen Burbidge, partner at Passion Capital and chair of Tech Nation.
“Tech Nation’s survey of the industry shows that confidence and optimism is high, but it is important for us to keep supporting this sector and give British companies the best chance they can to grow and scale.”
Notable exits for the sector in 2017 included Matchesfashion.com, which was sold to a private equity investor for almost £750m; and Leeds-based Callcredit, which was acquired by TransUnion for £1bn.
There were also several so-called mega funding rounds during the year, with game development platform Improbable raising £370m from Japan’s SoftBank, food delivery service Deliveroo raising £284m and mobile network Truphone raising £249m.
Some of the UK’s fastest-growing tech companies include: Improbable, Deliveroo, Farfetch, TransferWise, Funding Circle, Revolut, The Hut, Skyscanner, FanDuel, Oxford Nanopore, BenevolentAI and Darktrace. DeepMind, acquired by Google in 2014, is a global leader in AI and still based in London.
In total, the UK has seen £42bn venture-backed exits between 2013 and 2017. Companies that have gone from start-up to household names, with stock market listings worth billions of pounds in less than a decade, include Just Eat, Zoopla and Purplebricks.
The proposed purchase of Zoopla by US investor Silver Lake for £2.2bn, announced last week, underlines the success and future potential of the UK’s digital tech businesses.
In the suburbs, I learned to thrive
The Tech Nation 2018 report also revealed the rise of the UK’s silicon suburbs and tech towns, where the digital sector is growing fast in urban areas not usually associated with start-ups and tech businesses.
These smaller population centres are attracting more digital tech businesses just as the whole UK tech sector widens the growth gap between itself and other sectors.
The report identified 16 towns that are showing a higher proportion of digital tech employment than the UK average. These include: Newbury, Reading, Basingstoke, Burnley, Slough/Heathrow, Livingston, Stevenage/Welwyn Garden City, Guildford/Aldershot, High Wycombe/Aylesbury, Southend, Enniskillen, Telford, Cheltenham, Stafford, Huntingdon and Swinford.
Eight cities were also revealed to be showing above-average tech employment trends beyond locations such as East London and Manchester. These cities include: Portsmouth, Bristol, Cambridge, Southampton, Oxford, York, Salisbury and Bath.
Tech Nation’s 2018 report also reveals that the digital sector’s workforce is older than commonly perceived and more ethnically mixed than the average UK workplace.
On average, 72pc of UK digital tech workers are over the age of 35, challenging the stereotype that jobs in this sector are the preserve of millennials.
Around 15pc of those in digital tech jobs are from a black, Asian or ethnic minority background, significantly higher than the 10pc across all UK jobs.
However, the dearth of women in the tech sector remains a major factor. Only 19pc of the digital tech workforce is female, compared to 49pc across all UK jobs.
Brexit? What Brexit?
Despite the tech sector (in London especially) campaigning heavily for the UK not to leave the EU, the report indicated that the UK tech sector is confident about its prospects post-Brexit.
According to the report, the only places that cite Brexit as a top challenge are London and Cambridge. In general, tech communities across the UK appear optimistic for their growth prospects.
More than 70pc of respondents think the number of digital businesses in their local area will rise over the next 12 months while more than 90pc think the scale of digital businesses will either expand or stay the same.
The biggest causes for concern are talent (83pc), access to funding (49pc) and transport (29pc).
It is clear that the tech sector in the UK may be the silver lining in the looming Brexit cloud storm, but policymakers would be wise to heed the concerns of tech entrepreneurs if the sector is going to get the UK through the tumultuous years ahead.
“Tech Nation 2018 not only highlights the underlying strength of our digital economy but also emphasises its huge potential,” said UK digital secretary Matt Hancock.
“Our world-leading tech firms are growing fast and creating the high-skilled, high-paying jobs of the future. They are a hotbed of innovation, creativity and entrepreneurial spirit.
“This is a huge success story, and we are working hard to make sure the benefits of digital technology reach every corner of the country as we build a Britain that is fit for the future.”