Bridging the gap

Jack Gilbert asks if the TechNorth initiative can bridge the regional divide in the tech industry and channel

The UK is a divided nation, and it is becoming more fragmented. Scotland may have voted against independence, but our regions are now pushing for more local autonomy while economic gaps continue to increase.

The government is striving to address this regional imbalance and is introducing a number of measures to spread growth evenly across the North and the South. Last month Nick Clegg unveiled TechNorth, an initiative which the deputy prime minister hopes will repeat the success of Tech City in East London, by stimulating tech growth in a cluster of five cities: Manchester, Sheffield, Leeds, Newcastle and Liverpool.

But can the scheme - along with other initiatives such as HS2 - help redress the regional divide in the economy and in the channel, or is it merely an empty political gesture?

"I hope the project will do what Tech City has done for East London: put the region on the international map," Clegg told CRN via email.

The scheme will have a budget of ￡2m per year, which will be used to try to attract investors into the North, encourage businesses to share resources and help start-ups source funding capital.

"TechNorth will harness the success of the work in East London, but the whole point is that TechNorth is an idea for the North, from the North. It came from the community as part of my Northern Futures initiative," Clegg said.

"It's estimated that, collectively, Manchester, Leeds, Sheffield, Liverpool and Newcastle have over 20,000 businesses in the tech, media, and telecoms industries. However, more than half of the technology graduates from Yorkshire and Humberside leave the North. That can't be right. My ambition, over time, is to double the number of tech jobs in the North."

Manchester: A beacon in the north

For some, this push from the government is piggybacking on growth that is already going on in certain areas.

"Greater Manchester is growing nicely and is a beacon for the north of England," said Phil Jones, managing director of Brother UK. "You are trying to connect these five cities and it is very clear that Manchester is going to lead the way in
that five."

Jones attributed Manchester's ongoing growth to a number of factors, including the relocation of BBC offices to Salford Quays, its transport links with an international airport and plans for HS2, along with Manchester's fast internet speeds.

Jones also felt that the potential growth of start-ups that could be driven by TechNorth represents a great opportunity for the channel.

"With these new businesses, they will need products and services that can be supplied by the channel; whether that is infrastructure or hardware, this can only be good for generating long-term demand for our channel."

Jamie Burke, sales director at reseller Softcat, felt that with Manchester leading the way, the North is en route to catch up with the South.

"I'm extremely supportive of Clegg's vision. However, I see TechNorth as an initiative that will simply accelerate a movement that has already started.

"When I look at my home town of Manchester and the fact that five or six of the big UK resellers now have offices in the city, coupled with innovative Manchester-headquartered tech companies such as ANS and UKFast, I don't see the North being too far behind the South," Burke said.

ANS chairman Scott Fletcher (pictured) agreed, and said the TechNorth initiative is a positive move from the government.

"The fact that number 10 is backing it [TechNorth] and it's playing its way into the narrative of what politicians are saying means on a national, if not a global, footing, we start to give an option to companies that want to come to the UK, other than just Silicon Roundabout," Fletcher said.

"There are a good amount of success stories in the North and I want Clegg to shine a light on what is already happening, as well as put a bit of fuel on the fire."

In addition to believing Manchester is leading the way in technology growth, Fletcher also backs "Devo Manc", a movement which calls for more political powers for Manchester. Other regions are also pushing for devolution, with council leaders from the East Midlands also requesting more autonomy.

Still a divide

But while there are many who claim the North is making ground on the South, there is much to suggest the UK's capital remains a country mile ahead of any northern city.

Cities Outlook 2014, an economic index, found that London created 10 times more private sector jobs than any other city last year and a quarter of the UK's economic output comes from the capital alone.

This divide is also clearly present in the channel among the nation's resellers. In CRN's Top VARs 2014, only 17 resellers headquartered in the north featured in the top 100 list, compared with 60 coming from London and the South East. The North East featured only one reseller in the list, Newcastle-based TSG, and outside areas such as Manchester and Leeds there appear to be few northern resellers who are competing with the big guns.

Andrew Mills, managing director of Datamills, a Sheffield-based IT services provider, said while there has been growth in "certain pockets" of the North, there are other areas that are still lagging far behind.

"Manchester, Leeds and Nottingham are the technology centres of the North, whereas Sheffield is one of the areas where the growth has not been there," Mills said.

He also felt that many companies are not moving with the times in areas around South Yorkshire.

"I have been introduced by one of my suppliers to an engineering firm in Sheffield that makes steel casting. That company does not have a computer. When a company asks them for a part for engineering, they have to physically write the order out in person."

While the internet connection in Manchester may be one of the fastest in the country, parts of South Yorkshire are still forced to cope with speeds that are detrimental to their businesses.

"The council started a fibre optic scheme five years ago in the area, but stopped it in August because it was costing them more to keep it open than to close it; this has left quite a few businesses stranded without broadband," Mills said.

One of Datamills' clients in Rotherham complains it now has a broadband speed of only 2MB.

In order to demonstrate the slowness of the internet connection, Mills is planning on going to a server in his client's office in Rotherham, downloading 32GB of data onto a memory card, finding a pigeon, strapping the memory card to the leg of the pigeon and flying it back to Sheffield from Rotherham, then trying an STP transfer from the client's server to his office, to see which one gets there first.

"[The] likelihood is the pigeon would get there first," Mills remarked.

A northern cluster?

Such stories raise questions about Clegg's ambitions to create a tech hub across five cities.

Dr Max Nathan, senior research fellow at the National Institute of Economic and Social Research, is among the sceptics.

"TechNorth connects five big cities with more than 150 miles between them. In the real world, urban tech is in very tight microclusters: neighbourhood-scale scenes which allow for lots of face-to-face contact. In Liverpool, for example, a lot of the action is in Ropewalks or the Baltic Triangle," Nathan wrote
in a blog post.

"So the chances of creating a single super-hub across the Pennines are slim at best. There are worrying echoes of the Thames Gateway here: a planning concept, not a real place."

Fletcher at ANS agreed that transport connections between northern cities need to be improved for this cluster to take off.

"To go from Sheffield to Liverpool takes two hours - that's just not good enough. We need to work on the cross-country commute and build some tunnels," Fletcher said.

Jones believes that while the northern cluster idea is "a lovely ambition", the scale of the plan is perhaps too big.

"Maybe we might have to change the label and call it an ecosystem rather than a cluster," he suggests.