Does a thriving tech sector really benefit a city – or does it just increase inequality?

500m around Silicon Roundabout. Is this as far as its benefits stretch? Image: Google Maps.

The tech sector has been making its presence felt in many larger cities for a number of years now, and in an uncertain era is proving to be one of the dynamos behind the “next economy”. That’s a good thing right? More jobs, more money, smarter cities?

Well, yes – but who exactly is it a good thing for?

Some of the cities that profess to be the smartest, most data driven, tech paradises – London and San Francisco come to mind – have both a flourishing tech sector and high levels of inequality. How smart are these cities, really, if they are teeming grounds of unfairness?

Research shows that, left to its own devices, the tech industry can be quiet self contained, producing an insular organism with few spillover benefits for the wider city. Positive externalities from tech clusters can be highly localised: spending by firms tends to occur in a particular zone, sometimes in a radius as small as 500m of their base. (This of course differs with location.)

Nevertheless there is a global trend of tech growth leading to one part of the city benefitting disproportionately, creating gentrified ghettoes and social tension of the sort witnessed in San Francisco. Tech growth in the Bay Area has driven property prices to levels far out of kilter with the average local salary, pricing out smaller firms, and costing the city infrastructure funding due to tax exemptions and privately run transport services.

This need not be the case. Tech is not an untameable force of nature. Its impact on a city and who gets to share in its potential benefits are grounded in the choices we make as a society. The question is, as as a tech industry grows, what are the best policy decisions to enhance opportunities on offer to the greatest number of people?

Experience shows that, if there is proactive leadership and public decision making about who should feel the benefits of tech growth, then it can be balanced across a city.

Take Chicago, where mayor Rahm Emmanuel’s office has formulated “The City Technology Plan”. It provides long-term strategies to use the burgeoning tech sector to enhance social as well as economic opportunity for Chicagoans. The main strategies include building a next generation digital infrastructure; fostering tech education through 2smart communities”; and providing for efficient and open government, and civic innovation.

The primary goal of the plan is to provide social and economic opportunities, with resident engagement, access, and skills – as well as job creation – among the top objectives.  Where there is effective leadership, city-level planning can be instrumental in ensuring that the spatial clustering characteristic of tech sector growth leads to positive spill over effects for the whole city.

But it won’t just happen organically; there needs to be planning and engagement if these mutual benefits are to be reaped. City and industry leaders alike need to collaborate and make decisions as to the level and type of interaction between tech growth and the wider city. As the Royal Town Planning Institute has argued, an important function of contemporary planning is recognising and understanding current economic factors and growth trends so that strategic decisions surrounding development add value to the local area. By understanding the needs of a community, planners can assist with achieving successful outcomes by working closely with the private sector, leaders and neighbouring authorities

In The Death and Life of American Cities Jane Jacobs promotes

the need of cities for a most intricate and code grained diversity of uses that give each other constant mutual support, both economically and socially... The science of city planning and the art of city design, in real life for real cities, must become the science and art of catalysing and nourishing these close-grained working relationships.

This may mean the creation of new roles at the city level: employing a tech lead in the mayor’s office as has been done in New York, Dublin, and London. However, if this is the route taken, the remit of the city tech lead needs to be wider than just inviting tech companies to locate in the city.

Ideally the tech lead would liaise with city planners who can articulate the issues being faced by the city – such as housing affordability, infrastructure pressures, and skills shortages. Dialogue with industry leaders about their plans may then reveal how the growth of tech could feed into a plan for addressing these issues.

Industry too should to take account of the affect it has on, and what it owes, the city in which it sets up. After all, it is often planned public investments in infrastructure that makes a city attractive to firms and their aspirational employees in the first place. And it’s this that continues to facilitate growth through the creation of what the Brookings Institute’s Bruce Katz has christened “Innovation Districts”:

…mash ups of entrepreneurs and educational institutions, start-ups and schools, mixed-use development and medical innovations, bike-sharing and bankable investments – all connected by transit, powered by clean energy, wired for digital technology, and fuelled by caffeine.

Whether or not it is acknowledged to the extent it is in places like Chicago, many cities have a relationship with the tech sector. The more this relationship is formalised, the more likely it is that conscious decisions as to how each can mutually support the other’s goals will be made.

One of the RTPI’s current work streams focuses on the relationship between cities and the tech sector. The project will combine case studies and evidence drawn from interviews and round tables with industry leaders, members of the academic communities, and city planners. Taken together, these will articulate the role planning has to play in creating the kind of places that attract tech – and planning's role in ensuring that the economic growth that emanates from tech clusters benefits the wider metropolitan area.

The huge potential for mutual economic and social support that exists between a city and the tech sector should be nurtured into a collaborative relationship that has as its objectives the provision of public goods – as well as economic growth.

Joe Kilroy is a policy offer at the Royal Town Planning Institute. You can find him on Twiter here.

To find out more about the RTPI’s tech project click here.

 
 
 
 

Treating towns as bastions of Brexit ignores the reasons for the referendum result – and how to address them

Newcastle: not all cities are booming. Image: Getty.

The EU Referendum result has often been characterised as a revolt of Britain’s “left-behind” towns and rural areas against the “metropolitan elite”. But this view diverts attention from the underlying issues which drove the Brexit vote – and ironically has diverted policy attention away from addressing them too.

It’s true that a number of big urban authorities, led by London, voted to stay. And overall people living in cities were less likely to vote leave than towns. Setting aside Scottish cities and towns, which both voted very strongly for remain, Leave polled 51 per cent of the vote in English and Welsh cities, compared to 56 per cent in local authorities that include towns. (Consistent data isn’t available below local authority level.)

Yet there is a lot of variation underlying this average across towns. In Boston, 75 per cent voted Leave, and in Hartlepool and Grimsby it was 70 per cent. But at the other end of the scale, there were a number of towns that voted to stay. For example, Leave polled at 49 per cent in Horsham and Harrogate, and 46 per cent in Windsor and Hitchin. In places such as Winchester, Leamington Spa and Bath, the Leave voted amounted to less than 42 per cent of the vote.

What drives this variation across towns? Data from the Centre for Cities’ recent report Talk of the Town shows economic outcomes were the biggest factor – with towns that voted Remain also having stronger economies.

For a start, pro-Remain towns generally have smaller shares of people who were either unemployed or claiming long-term benefit. (This is based on 2011 data, the latest available.)

Towns which voted Remain also had a higher share of jobs in high-skilled exporting businesses – an indication of how successful they have been at attracting and retaining high-paid job opportunities.

And both measures will have been influenced by the skills of the residents in each town: the higher the share of residents with a degree, the stronger the Remain vote.

So the Brexit vote was reflective of the varying economic outcomes for people in different parts of the country. Places which have responded well to changes in the national economy voted to Remain in the EU, and those that have been ‘left behind’ – be they towns or cities – were more likely to have voted to Leave.

This sends a clear message to politicians about the need to improve the economic outcomes of the people that live in these towns and cities. But the irony is that the fallout from the Brexit has left no room for domestic policy, and little progress has been made on addressing the problem that, in part, is likely to have been responsible for the referendum outcome in the first place.

Indeed, politicians of all stripes have seemed more concerned about jostling for position within their parties, than setting out ideas for domestic policy agenda. Most worryingly, progress on devolution – a crucial way of giving areas a greater political voice – has stalled.


There was talk earlier this year of Theresa May relaunching her premiership next summer focusing on domestic policy. One of her biggest concerns should be that so many cities perform below the national average on a range of measures, and so do not make the contribution that they should to the national economy.

But addressing this problem wouldn’t ignore towns – quite the opposite. What Talk of the Town shows is that the underperformance of a number of cities is bad not just for their residents or the national economy, but also for the residents in surrounding towns too. A poorly performing neighbouring city limits both the job opportunities open to its residents and impacts on nearby towns’ ability to attract-in business investment and create higher paid jobs.

This isn’t the only factor – as the last chart above suggests, addressing poor skills should be central to any serious domestic policy agenda. But place has an influence on economic outcomes for people too, and policy needs recognise that different places play different roles. It also needs to reflect the importance of the relationships between places to improve the access that people across the country have to job opportunities and higher wages.

The Brexit vote didn’t result from a split between cities and towns. And if we are to address the reasons for it, we need to better understand the relationship between them, rather than seeing them as opposing entities.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

Read the Centre’s Talk of the Town report to find out more about the relationship between cities and towns, and what this means for policy.