We talked with Roger Evans, Deputy Mayor of London, about the business development challenges facing cities today as they compete globally for skills and investment. Roger told us about his passion for the city and its vibrant development, describing recent initiatives such as the “Smart London” plan adopted in 2014. He said that London’s economy is expected to double over the next 20 years. We hope to be there to see if he is right, but the chances are high that he will be.
We are in a post-crisis environment with many cities also facing budgetary restrictions. Could you tell us briefly how you have coped with these challenges?
As the Greater London Authority, we have worked with experts in the field to identify the challenges facing our city and have subsequently taken the necessary measures in cooperation with businesses to address them. While London has not been immune to the effects of the financial crisis, I am proud to say that London has remained an economic engine for growth and has continued to attract investment despite the crisis.
Despite the economic downturn, London saw its share of UK Nominal gross value added (GVA) rise from 19.8% in 1997 to 22.8% in 2012. Furthermore, London’s economy is expected almost to double in size over the next 20 years. London is also doing incredibly well compared to the EU with an economy that is larger than that of Austria, Belgium, Greece, Ireland, Norway, Sweden and Switzerland and larger than Denmark’s and Portugal’s combined. Globally speaking, London remains one of the top five most successful cities in the world by total GVA.
London is also doing incredibly well compared to the EU with an economy that is larger than that of Austria, Belgium, Greece, Ireland, Norway, Sweden and Switzerland and larger than Denmark’s and Portugal’s combined.
As the Greater London Authority, we have an economic team comprising 11 economists from a variety of backgrounds ranging from academia to the City to monitor the performance of our capital city’s economy. The data and analysis of our GLE Economic team forms a basis for our policy and investment decisions.
Do you also work with external experts and advisers?
Yes, indeed. We team up with external experts as well. For instance, we all know that small and medium-sized enterprises are the key to economic growth. Without SMEs, growth and job creation is simply not possible. As the Greater London Authority, we teamed up with the London Enterprise Panel to try to understand what the state of play was in relation to SME finance in London. We jointly commissioned a study, which reviewed the current supply and demand for different types of finance in the capital and identified the size and type of current gaps in order to assess the evidence to see whether a new publicity-backed initiative for SMEs in London can be justified. The study illustrated the worsening failures and funding gaps since the beginning of the economic downturn and helped us to identify five possible areas in the market suitable for possible intervention.
London also works closely with business to deliver its economic strategies. Our Mayor has a business advisory panel, the London Enterprise Panel (LEP) that was set up in 2012 to contribute to the delivery of the Mayor’s Economic Development Strategy. Chaired by the Mayor of London, the LEP is the body through which the Mayoralty works with London’s boroughs, business and Transport for London to take a strategic view of the regeneration, employment and skills agenda for London. In London, we also have a unique system of governance that contributes to the city’s success. Chancellor George Osborne is pushing for more devolution as one way of replicating London’s economic success in other cities throughout the UK.
Regarding new investments, could you tell us about some of your key initiatives?
In London, we have been trying to support business-led growth. We have seen great successes, especially in the technology sector overall and the financial technology sector in particular. Tech companies in general also raised 80% of total funding and 70% of deals while the financial technology sector is responsible for a record hike in venture capital being poured into London’s start-up scene.
London and Partners, a public-private partnership created with backing from the Mayor of London and designed to promote the capital outside the UK, announced in July that of the £94 million (EUR 130 million) venture capital funding raised during the first half of the year, £75 million (EUR 103 million) was invested in London businesses and of that, 40% was being invested directly into local financial technology.
What are the most recent developments in the field of high tech investment?
It is a combination of factors that enables London to possess high investment potential that, as a local government, we try to help unleash. London is a global financial centre and is also home to a cluster of start-ups known as Tech City or Silicon Roundabout. Tech City attracted more than 115 000 new companies in April 2013 alone. In London, we are currently seeing the merging of these two strengths through the financial technology sector.
In an interview earlier this year, Eileen Burbidge, a partner at early-stage venture fund Passion Capital and the Mayor of London’s tech ambassador, said that the city has become such a tech powerhouse because it excels over other tech hubs around the world. London combines the technology and digital innovation of Silicon Valley with the Wall Street financing heritage of New York and the policy making of Washington DC – all in one phenomenal city.
In the UK, our national policies have also helped. The Government runs a Seed Enterprise Investment Scheme (SEIS), which gives an initial 50 pence income tax break for investments up to £100 000 (EUR 138 000), capital gains deferral and loss relief. Investing across a range of schemes can mitigate risk.
As you just mentioned, London is increasingly becoming a hub of the digital economy. What are your other initiatives to accompany start-ups and business clusters?
London is the digital capital of Europe. In London, we saw technology clusters flourishing and stepped in at national level to help them grow even faster. Tech City UK was launched in Shoreditch in 2010 by our UK Prime Minister David Cameron and the Mayor of London, Boris Johnson MP, to support the East London tech cluster known as Silicon Roundabout. Since then, Tech City UK has increased its support to Greater London and other cities around the UK. Five years after the launch of this initiative, new research shows that London has cemented its position as the most important tech hub in Europe and is forecast to boost its economy by £18 billion (EUR 25 billion) in 2015.
The digital economy is also a key driver of growth and jobs for the UK and London. Between 2013 and 2014, 15% of all companies set up in the UK were digital, and digital companies are responsible for 1.45 million jobs. In London, the technology and information sector employs approximately 382 000 people.
To help the digital sector grow even more, in June 2015 our Mayor launched an online hub for the capital’s thriving digital industry. Sponsored by IBM, and created by Gust, the “Tech.London” website includes all the latest information and resources that people in London can use to access opportunities in the tech sector, connect with each other, and grow their businesses. Content includes London’s latest start-ups, investors, events, jobs, classes, blogs, videos, workspaces, accelerators, incubators, and other tech or start-up resources.
The figures produced by Oxford Economics show that the number of companies in London’s digital technology sector has grown by 46% since the launch of the Tech City programme in 2015.
The figures produced by Oxford Economics show that the number of companies in London’s digital technology sector has grown by 46% since the launch of the Tech City programme. The sector now employs almost 200 000 people, 17% more than in 2010.
Could you tell us more about the “Smart London plan” released in 2014?
A major stimulus to London’s digital technology came in 2014 when the Mayor of London released the “Smart London plan”, in which a team of experts set out how they believe new technology and innovation can be used to help the capital work more efficiently. The plan includes establishing a Smart London Innovation Network that will bring London’s entrepreneurs and innovators together with the organisations already delivering and financing London’s new infrastructure and services.
Some other activities of the “Smart London plan” include the “Launching a Smart London Innovation Challenge” that asks entrepreneurs, researchers, businesses and Londoners to develop creative solutions to challenges posed by the growth of the capital, along with increasing the uptake of computer science in the capital’s schools and doubling the number of businesses setting up technology apprenticeships. In the near future, we would like to ensure that London has one of the fastest wireless networks in the world. Furthermore, we are working with London’s boroughs on “smart approaches” to shared challenges through freeing up London’s local-level data and scaling up innovations across London. Finally, we are creating a “Smart London” export programme that will sell London’s expertise to the world.
Finally, what is the state of global competition between London and other cities in the biotech sector?
In terms of the biotech sector, we are seeing that London is again becoming increasingly appealing to biotech companies. The amount of funding received by UK life science companies reached a 10-year high last year, indicating that Britain is finally starting to catch up with the US in biotech, and thus preventing the migration of companies overseas. Thanks to investments and entrepreneurial reforms, London in particular now competes directly with New York in this area.
In the past, UK life science companies complained of a lack of risk capital compared with the US. In London, we are keen to address this grievance and are currently planning a £10 billion (EUR 14 billion) boost to investment in life sciences. The Fund would invest in a wide portfolio of drugs at different stages of development, which would help spread the high risk involved in biotech and thus help attract investment.