Northern Powerhouse: The North's digital economy is booming but needs more infrastructure spending

 
Claire Braithwaite
Follow Claire
The Silicon Roundabout In Old Street
Source: Getty

This year has seen the potential of the Northern Powerhouse truly realised and our digital sector sits at the beating heart of this agenda.

The North’s digital economy is booming. It employs over 170,000 people and there has been a 57 per cent rise in new digital companies over the past three years.

The UK’s only FTSE 100 Technology company, Sage, was founded and headquartered in the North East. The North is also home to two of the biggest IPOs of last year – AO.com and Boohoo.com.

But, we have only just begun to scratch the surface on what our great region can achieve, and we must continue to work to provide the right conditions for its continued growth.

Read more: Tech entrepreneurs to Cameron: Welcome skilled immigrants

According to a recent report by think-tank IPPR, Northern England requires about £50bn in government infrastructure spending if it is to compare to the South.

Businesses live and die by the infrastructure available to them. You only have to look at the debate currently centring on the third runway at Heathrow to understand the fundamental importance of infrastructure to business.

Last week, I opened the Centre for Digital Innovation (C4DI) in Hull, a £4m tech hub for businesses and startups in the region. With it, the Northern tech industry demonstrated once again its attractive offering to the UK’s digital entrepreneurs offering the fastest broadband speeds in the country.

We more often than not read about the issues and problems facing our digital community with struggling and out-dated broadband connections reported in London.

These issues are certainly not as acute in the North of England. Boasting broadband speeds up to ten times the national average, the C4DI, for one, is the envy of digital firms based in the capital.

However, the appeal of setting up a digital business in the North extends far beyond having a high-speed broadband connection. In its recent European Digital City Index, Nesta identified London as the number one hub for tech in Europe. Yet, the city bottomed out in the rankings for cost of living.

What we know is that every business is different and must identify where to base itself on the needs that will be unique to that organisation. Each region and digital cluster across the UK has its own DNA and assets for business growth.

Read more: We need better infrastructure to keep London's tech growth from toppling

Across the North of England, digital entrepreneurs regularly cite the affordable living and the easy access to countryside as reasons for setting up and staying put in the region.

And while the cost of living might come in lower than the national average, the investment in infrastructure for the digital economy in the North has not.

Crucial tech clusters have developed across Northern England in recent years, supported by the considered injection of capital from national policy makers, local councils, and private sector backers.

Around £3.5bn has gone into funding the digital and technology infrastructure that has fuelled the rise of Manchester as a heavyweight creative centre. MediaCityUK is now internationally recognised as the home of the BBC and Europe’s first purpose-built hub for the creative and digital industries.

Software City in Sunderland is another runaway success story for Northern tech. A partnership between the private sector, government, and Higher Education, the initiative has elevated the North East to an almost unparalleled hub for software-based firms. The IT sector in the region now employs over 32,000 people, generating 1,500 jobs in 2014 alone.

London may well continue its growth as a tech hub in spite of its infrastructural challenges; the North, however, is flourishing as a direct result of its readiness to address the need for sturdy foundations for digital businesses.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles