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Silicon Valley UK Government Digital Skills Gap

London Tech City growth becoming stunted and jobs harder to fill after government PR overkill, says report

By Angela Haggerty, Reporter

May 20, 2013 | 4 min read

The UK government stands accused of "trying to take the credit for an economic success story" while failing to adequately fund and support the digital tech industry, following the release of a report warning of a growth stunt and skills gap in London's Tech City.

Shortages: The report highlighted a skills gap

The Tech City Futures report from GfK, commissioned by TechCityInsider in partnership with Grant Thornton, City University of London, Digital Shoreditch and Vitamin T, revealed nearly half (44 per cent) of Tech City businesses said the biggest challenge they faced was a shortage of skilled digital and tech workers in London, and 77 per cent said this was actively restricting growth.

Research director at GfK, Ryan Garner, said Tech City had reached a tipping point: "8.3 per cent of Britain's GDP comes from tech and that is expected to rise to 12 per cent by 2016. Our research shows Tech City is at a tipping point and hopefully this report will help find its way in spearheading that economic growth."

The report showed that survey respondents were unsure how effective government policy was in supporting industry growth; while there was praise for some initiatives, criticisms claimed that the government had become too focused on industry PR.

Editor of TechCityInsider, Julian Blake, said: "We're hearing very mixed messages about the role of government. While many applaud the Tech City initiative for promoting the area and attracting big US corporates like Google, others are sceptical, believing that the government is trying to take the credit for an economic success story that was happening anyway."

The London tech industry is estimated to be worth around £34bn a year to the UK economy, providing more than 48,000 digital jobs in London, according to a Demos report. A third of businesses which responded to the GfK survey said that a lack of access to capital was hampering growth, while 29 per cent believed their company was missing significant business opportunities as a result.

The news of struggles to fill jobs amid unemployment and austerity may raise eyebrows. Grant Thornton's head of early stage technology team in Tech City, Steve Leith, said the government needed to do more.

"Many of the startups around Tech City may be early stage, but they are tackling complex funding requirements to fuel rapid expansion," Leith explained. "While there is an increasing flow of angel capital, we see a growing gap for businesses requiring investment of £500,000 to £2m.

"This is in start contrast to the development of the funding community in the US, where the cycle of tech entrepreneurs reinvesting in startups is fully developed and the VC community has a greater appetite for risk.

"UK government supported initiatives such as the MMC London Fund and GrowthAccelerator may prove part of the solution, but more will be needed to fulfil Tech City's potential, and avoid a loss of talent and investment opportunities to the Silicon Valley dollar."

The skills proving most difficult to find in the London tech hub were in coding and developing; marketing and PR; business development; web design; and user experience. Staff retention was pinpointed as a problem, with 42 per cent of Tech City businesses reporting they found it difficult to keep their best talent. Businesses said they were often recruiting to replace staff and therefore less able to fill brand new positions.

The Drum was awaiting a government response at time of publishing.

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Silicon Valley UK Government Digital Skills Gap

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