London is still the start-up capital of Europe – but its crown is at risk

TechHub, near London's "Silicon Roundabout". Image: Oli Scarff/Getty.

Silicon Valley often gets the lion’s share of attention when it comes to start-ups – and perhaps for good reason. But earlier this year, David Cameron launched a bid for its dominance, declaring that the UK should be “the startup nation of Europe”.

Startups’ low operating costs, lean management structures, and ability to pivot quickly mean they have the power to disrupt the business ecosystem and exert competitive pressure on prevailing companies. This, in turn, drives improvements in productivity and prosperity in the overall economy.

Digital businesses, in particular, are doing a fine job of disrupting whole industries and turning on its head our basic understanding of how we source goods and services. Just think of AirB&B and Uber.

Not all cities provide equally fertile ground for such startups, however. Nesta, as part of the European Digital Forum, set out to determine what it is that digital startups and scale-ups want from a city.

Working with digital entrepreneurs to determine what matters to them, we ranked 35 capital cities and known innovation hubs in the European Digital City Index. Combining multiple metrics – including digital infrastructure, culture and skills availability – we found London, with its plethora of “unicorns” such as Wonga, Zoopla and Shazam, to be top of the list.

The top 10 cities for digital entrepreneurs.

But why does place matter at all given the virtual nature of digital entrepreneurship?

Environmental conditions within cities still have a strong impact. For instance, local cultural attitudes towards entrepreneurship vary hugely and can influence the number of people who start new enterprises.

Physical connections between people are often highly significant in forging business relationships, and many venture capitalists prefer to invest in specific regions. Likewise, many digital firms still rely upon geographically-bound markets, if only to encourage initial network effects.

Contributing to London’s success is its access to capital, particularly its developed venture capital markets; a marked entrepreneurial culture, with a willingness to take on risk; and positive knowledge spill overs from multiple world-class universities such as Imperial, UCL, LSE and Kings.

But the Index also found that London is a victim of its own success.

Increasing costs – for labour, office space and day to day living expenses – give cause for concern. As any small business knows, cash is vital. So while London is a good place to acquire investment, the costs of living and working here also drain businesses of cash much more rapidly than elsewhere.

While these problems were not found to be enough to deprive The Big Smoke of its top place, policy-makers should not be complacent.

Extending small business rate relief to co-working spaces, incubators and accelerators may help somewhat, at least in the short term. However, high local taxes, a dearth of reasonably priced commercial buildings, migration pressures and an uncertain foreign worker programme all play a part in reducing the attractiveness of entrepreneurs looking to set up or relocate to London.

The city is also being challenged by the likes of Amsterdam. As explained in CITIE – a project which assessed the policy environment of 40 leading global cities – Amsterdam's size permits policymakers to experiment more with policies that will drive innovation and entrepreneurship. The Dutch capital has also been investing resources into its overall innovation strategy with projects like the Smart City initiative, where new products can be tested in a "living lab" and tweaks made according to real-word feedback.

Berlin, too, is a challenger to watch. In this year’s ranking it was marked down for its slow and costly digital infrastructure; in comparison with some cities in Eastern Europe, which have jumped straight to fibre from dial-up modems, the German capital is relatively sluggish. However, the city is making progress towards the German government’s goal of comprehensive 50 Mbit/s broadband by 2018, and this constraint is likely to be short-lived.

Paris, on the other hand, was expected to be a close contender, but was let down in our ranking mainly by its local market conditions: some digital goods and services here are growing at a surprisingly slow rate compared with the rest of Europe. This is a more difficult problem for city authorities to fix, but were this to be remedied, we believe that Paris could prove more attractive than London.

While London may be leading the pack, the capital cannot rest on its laurels if it wants to maintain its position. The Index provides food for thought for Europe’s competing cities and suggests ways policy makers can assist those trying to develop the local startup ecosystems – and helping Europe to perhaps, one day, trump its competition across the Atlantic.

Christopher Haley is head of startup and new technology research, and Siddharth Bannerjee digital startups researcher, at Nesta, the UK’s innovation foundation.


Here are my five favourite London council estates

The Dunboyne Road estate. Image: Steve Cadman/Wikimedia Commons.

The author is a Labour member of the London Assembly. In the name of impartiality, CityMetric would like to extend the invitation to write similar columns to representatives of other political parties.

From successful post-war efforts to move families out of slums and into modern homes, to today’s efforts to construct a new generation of social housing, there’s much to be celebrated in London’s precious council housing stock.

This year we celebrate the centenary of the Addison Act, which established a national building programme with government funding for the first time. So here – in no particular order – are my top five London estates:

1. Dunboyne Road

In 1965, the newly established London Borough of Camden was bold and radical when it came to public housing. Their architect’s department boasted 98 staff, led by Sydney Cook. The Grade II listed Dunboyne Road (pictured above) was Britain’s first high-density, low-rise estate. Designed in the late 1960s and completed in 1977, it was the first major work by architect Neave Brown.

Its concrete construction and geometric layout are eye-catchingly modernist, but the 71 flats and maisonettes fit neatly into their surroundings; a reimagining of the classic London street for the 1960s. Each has a private terrace and own entrance onto the central pedestrian walkway and communal gardens, with stepped levels and dual-aspect windows creating light throughout.

Neave Brown himself lived on the estate in the final years of his life remarking, “Who am I to say, but it’s beautiful”.

2. Lilington Gardens

Located just off Vauxhall Bridge Road, the fourteen blocks at Lilington Gardens were built between 1964 and 1972. Between three and eight storeys each, it was again a rejection of the tower blocks which dominated the era, showing that mid-rise housing could provide both beauty and density.

Image: Ewan Munro/Wikimedia Commons.

At a time when Westminster could be proud of the quality of its housing, John Darbourne and Geoffrey Darke won a competition to design the new estate. The result was something special, eschewing modernist forms for something more rugged and layered. The layout allows for secluded green spaces, while the red brick cladding echoes the neighbouring Victorian church of St James the Less. Like all good estates, it included a pub – the Grade II*-listed Pimlico Tram (now The Cask). It was included not as an afterthought, but an integral part of the estate’s design.

3. Ossulston Estate

By the early 1950s, the London County Council’s architect’s department was the biggest in the world, building housing on a huge scale in addition to showp iece projects such as the Southbank Centre.

Though their suburban estates – Downham in Bromley, and Becontree in Barking and Dagenham – were pioneering examples of low-rise of modernity in metroland, these efforts did not always suit the needs of poor city dwellers who weren’t able to move further out. The Ossulton Estate, however, built between 1927 and 1931 on the site of a Somerstown slum and located between Euston and St Pancras stations, did exactly that.

Image: Stephen McKay/Wikimedia Commons.

Chief architect George Topham Forrest’s work was inspired by visits to ‘Red’ Vienna and Ossulston bears distinct similarities to Karl Marx-Hof, which was constructed at the same time. While the roofs and windows have traditional elements, the overall aesthetic is a modernist classic. Like many estates in post-war years, it suffered from neglect and a lack of investment, but following a £6m improvement programme by Camden Council in 2004, the Ossulston is now back to its brilliant best.

4. Alton Estate

Roehampton’s Alton Estate, completed in 1959, was designed by a team led by Rosemary Stjernstedt – the first woman to serve as a senior public sector architect in Britain.

The two parts of the estate – East and West – are the crown jewels of British post-war council housing. Alton West was Le Corbusier in Albion: six ultra-modernist blocks modelled on the Unité d’habitation in Marseille, set among the landscape inherited from the Georgian Mount Clare house. Alton East was a softer, Scandinavian-inspired design of the “new Brutalists” in the LCC.

Image: Stevekeiretsu/Wikimedia Commons.

Rising above the trees to the north east of Richmond Park, the Alton Estate stands testament to the visionary idealism of post-war council housebuilding. On its completion, visitors flocked from across the globe, with American critic G.E. Kidder Smith calling it “probably the finest low-cost housing development in the world”.

Sadly, Alton West however is now at risk from ‘regeneration’ proposals which would see 288 existing homes lost. While council estates should not be fetishised, with investment, improvement and expansion encouraged, any change must be done sensitively and with residents’ backing. I hope that Wandsworth Council and Redrow will follow the mayor’s Good Practice for Estate Regeneration and hold a ballot before plans go ahead, and that if they do, they build on Rosemary Stjernstedt’s legacy.

5. King’s Crescent

When it comes to regeneration Hackney Council have taken an altogether different approach to Wandsworth.

Located on Green Lanes opposite the magnificent Clissold Park, King’s Crescent’s route to a successful and well-supported regeneration project hasn’t always been an easy one. The early 1970s estate was blighted by poor construction, navigability issues and an ill-fated partial demolition in 2000 which turned much of the landscape into hoardings and rubble. But thanks to a step-change in resident engagement and a transformation programme funded by Hackney Council, by 2023 it will be host to 765 new and refurbished homes.

Image: David Holt/Wikimedia Commons.

In the era of government-imposed cuts to local authority budgets, councils have to be pragmatic about funding choices and the new King’s Crescent does include homes for private sale. This is understandably a source of some consternation, but it’s also the source of funding which has made the regeneration possible. Hackney has ensured that more than 50 per cent of the new homes are genuinely affordable, with 97 brand new council homes for social rent.

The new developments have greatly enhanced the area, using both new build and renovation to stitch the estate better into its Victorian surroundings. Existing homes have been retrofitted with balconies, while disused garage space has been repurposed for modern flats. Hackney have clearly thought carefully about character and open spaces, as well as ceiling heights, windows and internal storage.

It is an exceptional project – one of a growing number of new schemes now being spearheaded by ambitious councils across the capital. In 2018-19, the Mayor of London funded the start of 1,916 new council homes – the highest figure since 1984-85.

…what about the Barbican?

On the fiftieth anniversary of its opening, it would be remiss not the mention the Barbican. It’s a brutalist masterpiece and a fantastic feat of post-war planning and design. The location and design are clearly outstanding, but it’s the bright and modern interiors which are truly to die for.

So why is it not on the list? Although it was built by the City of London Corporation, not one of the flats was ever available at a social rent. The properties were built to let at market rents to workers in the City, who later found themselves in the fortunate position of being able to snap them up under the Right to Buy – still the fate of far too many of London’s vital social homes.

Tom Copley is a Labour member of the London Assembly.