One in four start-ups choose the Northern Powerhouse over London
24% of IT decision-makers would choose the North over London to launch a startup. Discover what the Northern Powerhouse has to offer tech companies.
London may be acknowledged as the best location for IT and technology talent in the UK, but our recent research reveals that 1 in 4 (24%) decision-makers would choose to launch a start-up in the Northern Powerhouse over the capital.
The Northern Powerhouse is a proposal to boost the economy of Northern England and Wales by increasing investment in businesses, technology, transport links and governance. With the IT and tech industry in the North of England now worth over £330 billion a year to the UK economy, tech companies are investing in the region at a faster rate than anywhere else in Europe.
With lower operating costs than London, the North has attracted several large firms, including the BBC, Channel 4 and HMRC. International travel fare website Booking.com are also currently investing in the region.
We recently hosted a roundtable in Manchester to discuss the findings of our reserach on how the North rivals London for best tech talent. A great morning of discussions and sharing on the Northern Powerhouse and its impressive growth. Have a read of our report here: https://recruiting.cwjobs.co.uk/northern-powerhouse-report
Manchester most likely location for new offices
Of the 300 decision-makers and IT professionals that completed our survey, Manchester was named as the most likely location for a new office, with a majority of 21%. London came a close second with 20% of the vote.
Interestingly, respondents from the North said they were much more likely (33%) to choose Manchester, with 71% saying their organisation is increasingly hiring talent from the city.
Why are start-ups choosing the north over London?
In a recent blog post, we listed Manchester specifically, as one of the best UK cities for technology jobs. It’s one the UK’s largest technology hubs and is home to Media City, where the BBC, ITV, and Ericsson are based. The city’s digital sector alone is worth £2.9 billion to the local economy, and it has the largest number of digital jobs outside of London.
According to our report, the principal reason that respondents would choose to set up in London is that the city has the most appealing things to do outside of work. However, the cost of living is considered more appealing in Leeds (60%) and Newcastle (53%).
According to commercial mortgage broker ABC Finance, London scores 89.55 on the cost of living index, making it the most expensive city to live in the UK. By comparison, Liverpool, Newcastle Upon Tyne and Cardiff are three of the least expensive cities to live in the UK.
The tech skills gap is still a challenge in the North
Despite the North being the location of choice for start-ups, the region is still affected by the tech industry’s skills gap. Our survey found that more than four in five (84%) decision-makers say that their company finds it difficult to hire IT and technology talent. Of those respondents based in the North of England, 88% confirm that this is the case. This shows that the tech sector’s skills gap is truly a country-wide issue.
The UK tech industry is valued at £184 billion and employs 1.5 million workers. However, with uncertainty over Brexit immigration policies, the industry looks set to face recruitment challenges for some time to come.
CWJobs’ Director Dominic Harvey recently shared his thoughts about the tech skills gap in an interview with Business Reporter:
Has the London tech bubble burst?
We’ve previously written about the rise of London as a tech hub, citing access to education, a high concentration of developers, and network and learning events as being responsible for the city’s tech growth. But has the London tech bubble burst?
Commenting on our survey findings, our Director, Dominic Harvey answers: ‘Not quite, but Manchester is proving itself as an ever more dominant force for tech talent. The city’s strong tech educational institutions and the appealing work/life balance it offers make it an ever more viable option compared to London.’
He adds that London is still considered a very attractive city to grow a business and that this isn’t likely to change any time soon.
In response to the survey, Henri Murison, Director of Northern Powerhouse Partnership, adds: “It is promising to see that the Northern Powerhouse is so favoured as a place for digital start up activity. We need to support tech start-ups with access to investment funding and mentoring, as well as train and retain our young people to meet the demand for highly-skilled digital roles.’
Mr Murison goes on to say that the Northern region needs to see improvements in connectivity and needs to lead the way on digital infrastructure.
Download the “Nurturing the northern tech hub” report
Learn how the NorthernPowerhouse rivals London for the best tech talent – download our report.