How to read David Cameron's Tech City speech in Shoreditch

What follows is an annotated version of the speech given by David Cameron on hi-tech innovation today. My annotations are shown in red.

The speech is clearly part of one of the Coalition's most important political tasks in the coming years of austerity, which is to convince people that it is pro-growth. Let's see how it stacks up...

PS Given that I actually founded and run an internet firm in Shoreditch, I've taken the liberty of dropping in a few bits of local knowledge.

Update 22:40 BIS has now published a document, Blueprint for Technology, that underpins the speech. I have therefore added a postscript to the end of this post with reflections on that. Please scroll to the bottom if you want to start there.

***

Thursday 4 November 2010

East End Tech City Speech

A transcript of a speech given by the Prime Minister in East London on 4 November 2010.

CHECK AGAINST DELIVERY

Introduction
Ten days ago, when I set out the coalition’s strategy for growth at the CBI conference, I announced an important change in government policy towards business and enterprise. For a long time, that policy has been broadly this:

Identify the big ticket industries where Britain is strong -- and work strategically to strengthen them. Of course, we will continue to get behind our competitive advantages. And we will focus relentlessly on removing barriers to business success across the economy. But we’re combining that with something else.

The world of business is changing at an astonishing rate. Insurgent companies are taking advantage of thousands of new innovations and millions of new consumers to generate billions in revenue within a matter of years. This is where so much of the promise of new jobs and opportunities lie. That’s why, as part of our strategy for growth, we’ve made a really important decision.

We’re not just going to back the big businesses of today, we’re going to back the big businesses of tomorrow. We are firmly on the side of the high-growth, highly innovative companies of the future.

Every government on the planet says the same. As did Labour. With good reason, these companies are the holy grail of government support for business the world over. Sorry Dave, your approach is not an innovation.
 

Don’t doubt our ambition. Right now, Silicon Valley is the leading place in the world for high-tech growth and innovation.

Er, of a certain kind - internet, computing, mobile etc.

But there’s no reason why it has to be so predominant. Question is: where will its challengers be? Bangalore? Hefei? Moscow?

My argument today is that if we have the confidence to really go for it and the understanding of what it takes, London could be one of them. All the elements are here. And our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make East London one of the world’s great technology centres.

Question is: Why not Cambridge? Which already has ARM, Autonomy, CSR and others. Surely that is the place that could compete with Silicon Valley. The answer has to be: real estate. This is about regenerating East London. A very worthy aim.

I know this can't -- and won't -- happen overnight. But today, I want to show how we can get there.

East London
I know you’ve heard this many times before. Governments all over the world have tried to create their own Silicon Valley -- but it never seems to happen. So why here in East London and why now with this Government?

Let me start with the ‘why here’. Something is stirring in East London. Only three years ago, there were just fifteen technology start-ups around Old Street and Shoreditch. Companies like the concert service Songkick; Moo, which prints business cards; and Last.fm, an online music community that was sold for £140 million. Fast forward to today, and there are now over one hundred high-tech companies in the area.

Personally, as someone who founded and now runs an internet company in Shoreditch, I think those numbers look dodgy.

This on its own is incredibly exciting. But combine that with the possibilities of the Olympic Park. Just a few tube stops away, there’s the potential for nearly one million square feet of flexible office and research space which our technology companies can expand in to. Add to that the Olympic Park’s green spaces, cafes and sports facilities, the quick access to City Airport and St. Pancras International and the fact that London has more outstanding universities than any other city in the world and it’s clear that in East London, we have the potential to create one of the most dynamic working environments in the world.

Yeah. Not bad. My staff hate the idea of moving to Stratford. But you're starting to make it sound possible (please, no one tell anyone back at the office I said this or I'll never get a biscuit again).

And I believe we can really turn this vision into a reality. We understand where previous governments have gone wrong. They believed that they could design and create a technology cluster from on-high. But the lessons from Silicon Valley are instructive. There was no grand centralised plan.

Yes, the US Government and particularly its investment in defence industries gave it a head-start. And new firms were attracted by the cheap rents, the venture capital and the pool of talent at Stanford University. But so much of Silicon Valley’s growth was organic. As the sociologist Richard Florida has argued, young and creative people were drawn there by the Bay Area’s good quality of life and San Francisco’s vibrant cultural scene.

Also of course Shoreditch strengths, rather than Stratford ones.

 

This teaches government some simple things. Go with the grain of what is already there. Don’t interfere so much that you smother. But do help out wherever you can. Help to create the right framework, so it’s easier for new companies to start up, for venture capital firms to invest, for innovations to flourish, for businesses to grow.

All good.

Government Action
It’s by having that sort of understanding that you arrive at the blueprint we are publishing today. The policies in this document set Britain on to the path of becoming the most attractive place in the world to start and invest in innovative technology companies. £200 million of equity finance for businesses with high growth potential.

That sounds good. How do I get my hands on that?

Indeed, we are today setting ourselves the ambition of making Britain the best place in the world for early stage and venture capital investment £200 million for new Technology and Innovation Centres -- one of which could be in the Olympic Park.

Interesting. Bit weird. A TIC in what? But interesting.

Significantly boosting UKTI support for technology companies who are either starting up in the UK or trying to expand into new markets including spending at least £15 million and establishing a global task force for new technology.

Bit vague, but UKTI and allied trade services are already very useful - especially for small firms - so it's good to hear they'll be improved.

Opening up government procurement budgets to small and medium-sized firms.

I am totally cynical about this one. Labour promised this over and over again and never delivered. The ministers were sincere. They just never got round to grappling with the really deep civil service reasons why it never happens. Value for money and risk-aversion just take them back to the big suppliers over and over again, and these guys know exactly how to milk the system. Now the Coalition is talking about it in just the same way, but also showing no sign of doing the hard work to make it happen.

And today, I can announce two further proposals. The first is to do with visas. Despite net migration reaching hundreds of thousands a year over the past decade, not enough was done to attract the next generation of wealth creators and job makers.

Tier one -- the immigration route through which the best and the brightest are supposed to come to Britain -- was a total failure. Indeed, the Home Office recently published research that showed that a third of tier one economic migrants are doing unskilled work. That’s wrong and it’s got to change.

So as we introduce our limit and reduce non-EU economic migration, we will reform tier one to make sure that it is genuinely a route only for the best. And as part of that package, I can announce today that we will create a new Entrepreneur Visa. These Entrepreneur Visas will mean that if you have a great business idea, and you receive serious investment from a leading investor, you are welcome to set up your business in our country.

Whatever you think about the wider visa issues, this is a perfectly good little idea.

So as we act to bring net migration to Britain down to the tens of thousands, I want this message to be heard loud and clear the whole world over -- in every classroom or laboratory where a bright idea is born, every bedroom where a business case is put together.

If you've got an idea, if you want to create jobs, and if you have the ambition to build a world beating company here in the UK, we want you; we'll make it easy for you; we'll put out the red carpet for you. With our new Enterprenuer Visa we want the whole world to know that Britain wants to become the home of enterprise and the land of opportunity.

That doesn't sound very convincing to me. But I'm glad he's saying it. All the visa stuff must make the UK look a bit hostile to many overseas at the moment.

The second new announcement I can make today is to do with intellectual property. The founders of Google have said they could never have started their company in Britain. The service they provide depends on taking a snapshot of all the content on the internet at any one time and they feel our copyright system is not as friendly to this sort of innovation as it is in the United States.

Over there, they have what are called "fair-use" provisions, which some people believe gives companies more breathing space to create new products and services. So I can announce today that we are reviewing our IP laws, to see if we can make them fit for the internet age. I want to encourage the sort of creative innovation that exists in America.

I feel really, really uncomfortable about this. The Spectator recently published a diagram showing the connections between key families in the Coalition, businesses, thinkers and others. They called it the "Gangs of Westminster", but it's more like a sprawling family tree of medieval royalty. In this diagram, Google has "married" into clan Cameron by giving a top "public affairs" job to (from memory, might be a bit out) the niece of Sam Cam's step father. The company's chief exec, Eric Schmidt, is also on a top panel of business advisers that Cameron has appointed and seems to be a pal of George Osborne. And then we get this - which is a proposal to change the law to make it easier for Google to eat other people's lunch. Google wants to own the world's content. It wants to be able to maximise its income by being the gateway to all content. And it doesn't want to have to pay the writers, artists and publishers that created that content. So it would like to have the rules on "fair use" loosened. That way, for example, it could get Google Books out of court and into the market. So until we see some arguments that suggest this isn't just about what's good for Google, this just sounds like favouritism, or worse. And by the way, Google takes all its profits back home to the US while many of the content creators are British!

Business Action
But the really exciting thing we’re announcing today isn’t to do with these more traditional government levers. For the past few weeks and months, we have had dozens of meetings with technology companies and venture capital investors from across the world.

We said to them: “Here’s our vision for East London tech city -- a hub that stretches from Shoreditch and Old Street to the Olympic Park. This is what local businesses are saying they need. What part can you play in making it happen?” I have to say: the response has been overwhelming.

Just listen to what’s been agreed for the Olympic Park. The Olympic Legacy Company has agreed to create an “accelerator” space there, providing office space for companies that grow out of East London and beyond. Imperial Innovations, the venture capital arm of Imperial College London, is going to advise on making sure this accelerator space is attractive to spinout companies from academia and beyond. Indeed, they will be encouraging some of their own brilliant companies to be based here.

All good.

We’ve also spoken to over a dozen leading venture capital investors to encourage them to follow suit. What’s more, Cisco will establish an Innovation Centre in the Olympic Park, focusing on technical excellence, and University College London and Loughborough University have agreed to work with the Olympic Legacy Company to build a bridge between academia and enterprise in the Olympic Park.

All good.

But what about here -- in the heart of East London where there’s already so much to work with? We’re working with business to make sure the infrastructure and advice you need is in place. So McKinsey and Company, one of the world's leading strategic consultancy firms, has agreed to share its expertise in establishing this technology cluster and help start-up companies in the area grow into global giants.

That sounds helpfu. I'd like to speak to them.

British Telecom has agreed to bring forward the roll-out of superfast broadband in the area, so you have some of the fastest internet speeds in the whole of Europe.

That's good.

And Qualcomm, one of the world’s leading wireless technology companies, will provide expert advice to East London start-ups on intellectual property matters, helping them to protect and commercialise their technologies.

More good.

We’ve also asked some of the world’s biggest businesses and banks to help provide the finance that’s so urgently needed. So Vodafone has committed to bring its Vodafone Ventures investment fund to the capital, to hunt out cutting edge British technology. Silicon Valley Bank, a West Coast institution, is today announcing that it will become a fully fledged bank in the UK, providing financing for technology and life science companies. And Barclays will create a new facility in East London to provide specialist banking services to high growth technology companies in the area.

Yup, these sound like useful additions to finance scene.

Finally, we’ve persuaded some of America’s most dynamic companies to set up research and development spaces right here. So Intel will establish a new research lab in East London, focusing on performance computing and new energy efficiency technologies. Google has agreed to create an Innovation Hub in East London too, which will be a creative space for their researchers to come together with developers and academics to create the next generation of applications and services.  

Quite interesting. These I would have expected these to go to Cambridge. Maybe the Olympics Park is close enough. Is there a train to Cambridge from Stratford?

And Facebook has agreed to create a permanent home in East London for their successful Developer Garage programme, which brings together and inspires the most talented developers and entrepreneurs here in the UK. All in all, this is a who’s who of some of the world’s biggest companies -- and an extraordinary list of proposals.

I want to thank each and every one of the companies and investors that has come together to do this. It’s like nothing that has happened in our country before. It is a genuine innovation network -- bringing together high growth start-ups, universities, investors and global companies. And thanks to these efforts, we can help make East London one of the world’s great technology centres and sow the seeds for sustainable growth throughout the economy. 

Yes, I agree. It's a comprehensive package. There's quite a lot that's vague, but will surely get fleshed out. And putting Shoreditch together with the Olympic Park is a smart idea (even if it may fail). All in all, that makes me think this launch has probably been brewing since well before the election. But still, Cameron's done a good job pitching it.

Conclusion
Let me end by saying this. We’re in a world where money is incredibly tight. And we’re a government that is one hundred percent committed to giving power away and trusting in the creativity of the British people. I know those two things raise one big question: What is government for?

You’ve got some of your answers today. Of course, we will change laws where necessary so we break down the barriers to innovation. But more than that, we will use our power and influence to agitate for, cajole and inspire the change we want to see.

The incredible response from the private sector has shown just what a powerful tool this can be. Businesses coming together, using their expertise and applying their resources to making London a centre for innovation, for putting Britain on the path to economic dynamism.

That’s what I mean when I say we’re all in this together.

And that’s why I believe Britain can have such a strong, positive and confident future.

In short: This is in the main a standard bit of regional development work, and it's great to have the PM flying the flag like this. The Entrepreneur Visa thing is new and may help a bit, though if Vince Cable doesn't get his way the overall visa picture seems likely to be economically damaging. The IP review is the bit that's both big and new, and that - until I see some evidence to the contrary - I find anti-British and disturbing. So there's nothing here to alter the conclusions in Why Cameron lacks credibility on growth.

 

POSTSCRIPT 22:40 - PONDERING THE BLUEPRINT FOR TECHNOLOGY

The Blueprint for Technology is a document published alongside Cameron's speech. He ends his foreward to it by saying:

"In this blueprint, we begin a process to improve the UK’s
ability to turn big ideas into big successes. We highlight
what we’re doing to turn our world-class research into
world-class products and businesses, and we mark the
path forward with important milestones for the coming
months. We recognise that we have more to do to
create a world leading framework for technology, but we
are committed to achieving our goal."

This is a let out clause. He is telling us that we should not try to judge this document as if it reflects a fully thought through piece of policy. And it's a good job he does. Because this isn't a coherent policy document. It's an assortment of proposals and notions, connected only by sometimes tenuous links to the word "technology", and accompanied by overblown rhetorical claims (like those above) that Cameron has not earnt the right to make.

In terms of policy development, there is no need to rush out a paper at this stage. The government is new. It has a lot to do. A white paper on growth has been promised (though slightly ominously the Blueprint doesn't mention that or give a date for it). No, this document - and Cameron's speech - are required by the government's desire to show that it is being energetic in pursuing growth. I have been arguing this is a political necessity for months. What I didn't expect was the vigour with which Cameron would pick up the ball at this early stage.

Well, there's no point picking apart in detail a document that isn't supposed to be taken seriously. But just to give an example, the document often elides two meanings of the word "technology". There's a robust, general meaning lurking in there when it gets on to, eg, Technology and Innovation Centres. But a lot of the time, the meaning seems to be what it would be at Engadget - internet, mobile, gadgets. In his introduction, Cameron says:

"For well over a century, the shape of successful business
remained largely the same. They invested heavily in capital
and raw materials, grew slowly and then dominated
markets for generations. In recent years, that model has
been blown apart by high-growth, high-innovation firms.
It wasn’t long ago that technology companies like Apple
and Google didn’t even exist. Now each one has a
market value of over $100 billion. This pace of growth is
accelerating exponentially. Companies such as Facebook,
Twitter and Skype are worth billions of dollars and
reached a global scale more quickly and with less capital
than any businesses before."

There's no recognition here that all the firms cited live in one corner of the forest, and elsewhere in the woods, the big beasts of capitalism continue about their business as ever before.

The TICs text is worth quoting in full as it must represent the latest thinking:

"The centres will enable
industry to exploit new and emerging technologies, by
providing a capability that bridges research and
technology commercialisation, de-risking the process for
business and accelerating the route to commercialisation.
This will help make new technologies investment ready
and able to attract venture capital or other forms of
investment, shortening the time to market. Working with
industry and government, the Technology Strategy Board
will develop a strategy and implementation plan for the
elite network of centres by April 2011."

The document then continues with:

"Support for these centres, together with support for R&D,
knowledge transfer, and demonstrators will enable the
Technology Strategy Board to support and incentivise all
stages of technology development."

This all sounds great until you ask how much money the TSB is going to have (we don't know) and realise that, restricting ourtselves to the TICs for a moment, £200m over four years is £50m a year, which could easily be spread over 10 centres, ie £5m a year each. And even a Shoreditch start up can blow that kind of money. Unless they treble the TSB's budget, the funding has absolutely no chance of living up to the hype that Cameron is developing.

On finance, we have two bits of poignantly earnest nonsense. First, Cameron is asking Michael Heseltine for money for business angels:

"The Government will also encourage its SME
finance delivery body, Capital for Enterprise Limited, to
work with Business Angel groups to set up a Business
Angel Co-Investment Fund through a bid to the
Regional Growth Fund. If successful, this will boost Angel
investment in start-ups, particularly in areas that have
depended heavily on the public sector for jobs."

Second, he's also asking local authorities to finance hi-tech start ups from their pension funds.

It's not that these aren't worthy ideas. But you have to ask, if Cameron really believes these investments are the keys to our economic future, why is he scrabbling around trying to fund them with the loose change left down the back of the sofa while blowing billions of additional expenditure on consumption in health, overseas aid and defence?

My colleagues at Research Fortnight will do a full report on the document tomorrow.

 

 

Comments

[Paul Goldberg]

Regrettably London-centric. May I make a mischievous suggestion? (I am writing from Liverpool.) I suggest that Silicon valley owes its success in part to its geographic distance from Washington and Wall Street. The rebellious, anarchistic souls who founded Silicon Valley had to get away from the stultifying influence of Big Government and Big Finance, so they ran away to a place where at the time, people mainly went to discover themselves rather than gold. To apply that principle over here, we see immediately that London is the wrong place to duplicate that success in the UK. (You sensibly ask "Why not Cambridge?". The problem with that suggestion is that it's too boringly obvious.)

[anonymous]

I am a 35 year old American female who currently owns and operates a small business at Pinewood Studios alongside with British business partner.

I have been establishing a lawful residency here in the U.K. since 2001. I am educated here in the U.K. with a British B.A. and an American B.A. I have no current dependents. I have NEVER used any or have attempted to use any public funds. I am a tax payer. I have no criminal record and I speak English.

As of October 2010 after a year long legal battle, H.O. and the Immigration Tribunal have denied me permission to remain here in the U.K. with unclear reasoning, contradictions of their own words, lack of investigation, and breaching Article 8 of the E.C.H.R.

Their decision has now threatened the closure of this business that will leave my business partner out of work and will render any possibilities for future employment for others within the British Film and Television industry.

Put it where your mouth is Cameron and thanks for nothing.......