The Tech Community on ‘Tech City’

In his speech on Thursday, David Cameron revealed his plans for
a new ‘Tech City’ based in East London and suggested a variety
of ways in which the government will stimulate growth in
technological businesses.

The emphasis of Cameron’s speech was very much on how the government is “on the side of the high-growth, highly innovative companies of the future.” We took a look at some of the online
responses to his speech to see how his main ideas have gone
down with the tech community.

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1. The Entrepreneur Visa, which will make it easier for people from outside of the EU with adequate support from a leading investor to start a company in the UK.

Commenters have suggested that the Entrepreneur Visa does not address neither the issue of retaining skilled programmers here who find it difficult to renew their Tier 1 visa nor the inability of companies in the UK to recruit talent from around the world who are unable to join the skilled workforce here. Additionally, people have stated that there should be efforts towards developing “homegrown” talent and retaining them. They are also saying that IT grads should be put to use within the country, preventing such skills and talents to be leaving overseas for better opportunities elsewhere.

2. A reduction in Corporation Tax, which will form part of the framework towards maximizing UK’s innovation potential.

The notion of a reduction in Corporation Tax has only sparked skeptics who question its effectiveness. With a promised 1% tax reduction, public responses have directed their attention to the widely accepted belief that larger corporations have always been able to dodge large tax sums through access to more resources compared to start-up and smaller firms. “Tax relief always rewards companies that are good at playing the system” (www.guardian.co.uk).

3. The announced set-up of the Business Angel Co-Investment Fund to boost angel investment in start-ups.

The responding concern lies with the lack of tax benefits and incentives for angel investors, besides business and students. Angel investors need to be stimulated by tax benefits and the government is off on a tangent if they are trying to boost angel investments by reducing Corporation Tax where they should be promoting and providing for these investors to take risks.

4. A review of the Intellectual property framework and copyright laws: making sure such policy and regulations foster and maximize creative innovation and cater to the modern internet age.

It seems as though the government is confusing patent with copyright. One deals with the innovation of ideas while the latter deals with the expression of it. David Cameron alleged, “The founders of Google have said they could never have started their company in Britain. The service they provide depends on taking a snapshot of all the content on the internet at any one time and they feel our copyright system is not as friendly to this sort of innovation as it is in the United States” (wired.co.uk). Online reactions continually claim that IP laws have nothing to do with Google not starting in Britain, rather, “where would we find the thousands of engineers required to create it?”(eu.techcrunch.com)

The true reason for limited creativity is the lack of advice networks available for entrepreneurs and start-ups. Additionally, many people indicate that the talent pools and the London graduates are being sucked into finance and banks and that incentives need to be provided for engineering students and likewise to follow through working for UK tech companies.

5. Establishing an environment that will maximize the promotion of technology companies by collaborating with global companies and universities.

This was the most ear-grabbing part of the speech, where Cameron revealed that companies such as Intel, Facebook, Google and Cisco have promised to invest in the future of Tech City, basing their offices there and offering support to UK businesses.

More specifically,

• Cisco promises to establish an Innovation Center in the Olympic Park.

• Google has agreed to create an Innovation Hub in East London as a creative space for research, developers, and academics to come together.

• Vodafone has committed to bringing its Vodafone Ventures investment fund towards British technology.

• West Coast Institution announces that it will become a fully-fledged bank in the UK providing financing for technology and life science companies.

• Barclays will create a new facility in East London to provide specialist banking services to high growth technology companies in the area.

• British Telecom has agreed to bring superfast broadband into the area

• The Olympic Legacy Company has agreed to create an “accelerator” space in the Olympic Park, providing office space for companies in East London.

• Financing and expert advice will come from large firms such Qualcomm and McKinsey and Company.

• Facebook has promised to create a permanent home in East London for their successful Developer Garage programme.

• And finally, University College London and Loughborough University’s aim to “build a bridge between academia and enterprise in the Olympic Park”.

Now, the only question left is: who has been assigned to make sure that these companies follow-through? These are numerous idyllic arrangements, but may be futile without the action to back them.

The uncertainty that tints the matter is already growing with comments like these:

“I help run the Facebook Developer Garage London events, and Facebook have confirmed to us today they have no plans to move their London office, start another office, nor have made any plans for a permanent home for our events…Thursday, November 04, 2010 3:52:41 PM” (wired.co.uk/news/archive/2010-11/04/david-cameron-silicon-roundabout).

The reaction by some people to the bringing-in of “big guns” from outside of the UK has been varied. Some have suggested that the presence and support of these multinational companies in our technological hub will stimulate business in East London and the UK, leading to growth. On the other hand, some say that the UK should look to experienced entrepreneurs within its borders to provide that support for first-timers.

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So, is this attempting to welcome companies like Facebook and Google a solution or a superficial demonstration? Are the efforts committed to moulding London into the next leading place in the world for high-tech growth and innovation in the tradition of the Silicon Valley in the best interests for London? We can only wait to see how the government implements its proposals.