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East London Tech City

Volume 524: debated on Wednesday 9 March 2011

I am very grateful for the opportunity to address the House on the question of the east end tech city. As some hon. Members may be aware, in November, nearly six months ago, the Prime Minister made a speech that attracted the attention of all the east end. We are anxious to know what progress has been made with the plans that he outlined.

In his November speech, the Prime Minister said:

“We’re not just going to back the big businesses of today, we’re going to back the big businesses of tomorrow.”

Who could argue with that? He went on to say, thrillingly for us in the east end:

“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.”

That idea of the east end as Silicon valley was very engaging. The Prime Minister said:

“Something is stirring in East London”

and pointed out that

“three years ago, there were just fifteen technology start-ups around Old Street and Shoreditch”

but that as he spoke there were more than 100. Certainly anyone who knows and lives in Hackney can see how the Shoreditch and Old street areas—despite the challenging economic circumstances—continue to blossom and to show any amount of creative energy. As the Prime Minister pointed out, one reason for those two areas becoming a hub is to do with cultural and artistic life, quite outside Government planning. That is what happened in San Francisco, and it is happening in parts of the east end.

The Prime Minister made some specific points, however, and it is on those points that I want to press further. He said that the Olympic Park Legacy Company had agreed to create an accelerator space in the Olympic park,

“providing office space for companies that grow out of East London and beyond.”

I should like to know what progress has been made in creating the accelerator space. He also said that Imperial Innovations, the venture capital arm of Imperial college London, was to advise on making the accelerator space

“attractive to spinout companies from academia and beyond.”

What sort of advice has Imperial Innovations given? How many meetings have happened, and what progress has been made? The Prime Minister spoke also about University college London and Loughborough university agreeing

“to work with the Olympic Legacy Company to build a bridge between academia and enterprise in the Olympic Park.”

I assume that that will happen after the games, but I should still be interested in any information that the Minister may have.

One of the companies that the Prime Minister mentioned was Cisco. Last month, he and John Chambers, the Cisco chairman and chief executive officer, announced the details of the British innovation gateway, a five-year effort by Cisco to drive economic growth through high-tech innovation. The British innovation gateway aims to increase the number of pioneering high-tech companies. The programme will include the creation of two network innovation centres, the first of which will be in Shoreditch.

The Prime Minister went on, in his speech, to discuss other companies and businesses that would contribute. We understood that McKinsey and Company will share expertise, and that British Telecom has agreed to bring forward the roll-out of superfast broadband. I particularly want to know what is happening about that, because it is the key to the sort of businesses that we are considering. I understand also that Qualcomm, one of the world’s leading wireless technology companies, will provide expert advice.

The other issue that the Prime Minister touched on was finance. He said that Vodafone had committed to bringing its Vodafone Ventures investment fund to the capital. It would be interesting to know whether it has invested any money since then. He said that

“Silicon Valley Bank, a West Coast institution…will become a fully fledged bank in the UK”.

Has it become a fully fledged bank yet? He also said that

“Barclays will create a new facility in East London to provide specialist banking services to high growth technology”.

Again, we should like to know more.

The Prime Minister went on to talk about some of the US companies that are to set up research and development space. He mentioned Intel setting up a new research lab. I am not sure whether it has been set up yet. Google was to create an innovation hub. I am not sure whether that has happened. The speech also mentioned that

“Facebook has agreed to create a permanent home in East London for their successful Developer Garage programme”.

On all those issues, I would be interested to hear what those American businesses are doing, and what has been done about business and finance.

I want to talk a little also about the possible involvement of the local authorities in the exciting new developments that I have outlined. I could say, on behalf of Hackney council, that it very much welcomes the Prime Minister’s initiative—and not only Hackney council, but boroughs across London. However, I think that local government leaders—what we might call the big society—want to know when the Government will align their investment and support with Hackney’s local regeneration activities. It is one thing to bring in American and British businesses, make more money available and roll out the broadband; but it would make sense to align that with what the local authority is doing.

A number of small and medium-sized businesses have flourished in the creative digital centre in Shoreditch, Dalston and Hackney Wick, on the back of investment initiatives proposed by the previous Mayor, Ken Livingstone. We believe that the western half of the Olympic park in Hackney Wick holds significant opportunity. Will the Government work with Hackney borough council and the Olympic Park Legacy Company to ensure that our global ambitions for growth are integrated with our innovative local economy and the people of Hackney?

We are also concerned about investment in skills and training. It is fine to have coffee bars and cultural activity, and even to roll out broadband. However, we do not want a Silicon valley-type development in the east end that will be like a cuckoo in the nest, to which local people have no access, and where they cannot find opportunities. If local people are to be involved, skills and training are important. How do the Government see their further and higher education policies supporting what the Prime Minister announced in November and Hackney’s successful network for delivering training to local people of all abilities?

The Government are meeting and encouraging big global companies such as Google and Cisco, but we are concerned that they are not connecting them to the local economy and the local authority, which would mean that their investment could make a real difference. We are anxious that the Government’s activities, which we welcome in principle, should be aligned with what the local authority does. I have lived in Hackney for 23 years and I have seen every sort of Government regeneration programme going, all the way back to Michael Heseltine. Sometimes I have said about regeneration programmes, under Labour and other Governments, that if we stood on a street corner giving people bags of money, ordinary people might have benefited more. I have seen all that is good and all that is bad about Government-led regeneration.

I think that the Prime Minister is probably right that sometimes regeneration is a bottom-up activity. That is what happened in Silicon valley—and in parts of Hackney. It is extraordinary: Hoxton, which was a very run-down area when I first became an MP, is now the Soho of the east. If I go through it at night there are clubs and entertainment, culture and art galleries. Some of that was helped by local government and Government regeneration, but much was bottom-up. One of the things that helped the east end to regenerate was the amount of cheap warehouse space, which meant that artists such as the new British artists—Tracey Emin, and so on—found it cheap and practical at the beginning of their careers to go and work there.

I am very open. Having seen how the east end has developed over 20 years and how Government and local government intervention work, and sometimes do not, I appreciate and understand the bottom-up approach that the Government are taking. However, we must have a clear outline and infrastructure. I would like to know what is happening about broadband. I would also like to know what is happening in relation to the businesses and financial-sector people that the Prime Minister mentioned in his speech last November.

I am anxious to find out whether the Government are willing to align what they are doing with the successes that we have had, both at the London level under the Mayor and also at the borough level. I wait with interest to hear what the Minister has to say.

I congratulate the hon. Member for Hackney North and Stoke Newington (Ms Abbott) on securing this debate, on what is indeed an important subject. It is about our high-tech strategy for the nation as a whole, and for one of the crucial places where we are delivering it—the hon. Lady’s constituency, especially in and around Shoreditch.

I particularly appreciate the way in which the hon. Lady quoted so liberally from the Prime Minister’s speech on 4 November. I was at that event, as was the Mayor and many investors and entrepreneurs. She summarised an excellent speech, in which the Prime Minister made clear how committed the Government are to the area. At the heart of the area—it is part of the east London tech city initiative—is Shoreditch, which is increasingly becoming the location of choice for budding entrepreneurs.

The hon. Lady has given us these figures, but I remind the House that in July 2008, the area was home to some 15 high-tech companies; our latest estimate is that there are now 200, and there have been some conspicuous examples of successful companies being developed and sold on. was sold to CBS for $280 million; others successes are TweetDeck and Songkick; and Dopplr was sold to Nokia for $22 million. Some valuable companies are being created there, and the coalition Government are committed to helping the area to continue with its impressive growth rate. We believe in it as a cluster.

The Government cannot create clusters out of nothing, but once clusters have emerged organically, it is absolutely the responsibility of Government to push them forward whenever they can and to remove barriers. That is what the Prime Minister’s speech of 4 November was about; it followed an announcement about the area. I assure the hon. Lady that progress is continuing. I shall give some examples.

John Chambers, Cisco chairman and chief executive officer, was in London recently, and I met him with the Prime Minister. He unveiled details of the British innovation gateway scheme on 31 January. That new $500 million scheme will see Cisco pledging a long-term investment of money, technology and manpower to help boost entrepreneurship in the United Kingdom, particularly in east London tech city. Having been present at the discussions between John Chambers and the Prime Minister that took place at No. 10, I can tell the hon. Lady that we got into the practicalities of encouraging John Chambers to consider investment in the east end of London. Indeed, that is where a significant part of his investment will go.

I was not at the Cisco meeting, but when I read the press reports of what was said it seemed quite unspecific. When will the programme of investment start? The Minister says that he urged the Cisco chairman to invest in the east end, but did he commit himself to doing that? If so, what proportion of that money will be invested in the east end?

We do not know exactly what the time scale will be or exactly what the allocation will be, but the decision has been made by Cisco’s CEO to commit $500 million. That key decision was taken by the CEO and discussed with the Prime Minister, and work is now under way in Cisco to allocate the funding.

Cisco is not the only example. Google has announced that it will open its innovation space in 2011 in Old street. That will be a creative space for its researchers to come together with developers and academics to create the next generation of applications and services.

Does the Minister have an opening date for the Google innovation space? How many staff members will there be, and what sort of investment will be made in that space?

We do not yet have that information. I admire the hon. Lady’s impatience on behalf of her constituents. She wants detail about the pounds, shillings and pence and the number jobs involved. I should explain that, in short order, we have delivered strategic commitments from big businesses. Decisions to commit to the area have been taken at the highest level.

Of course, the challenge—United Kingdom Trade and Investment is working hard on this—is to convert the big decisions into practical jobs on the ground. Having seen the commitments made by Cisco and Google, including when Google’s Eric Schmidt was in London recently, I have no doubt that the follow-up will happen and that we will get there. Commitment has been made at the highest level.

I am touched by the Minister’s confidence in these declarations by the big moguls. However, we in the east end know that talk is cheap. The sooner that Ministers can come to us with dates, facts and figures, the happier we will be.

I understand exactly the point that is being made by the hon. Lady. There will be various opportunities, perhaps in a follow-up debate in a few months’ time, when I will be happy to report progress to the House and to the hon. Lady.

On behalf of the Government, I am also in close touch with the entrepreneurs and business community in east London tech city. I shall report to the House some of the activities that we have been involved in—and there are more coming. I was at the launch in the east end of the Google-Boston Consulting Group report, “The Connected Kingdom”, on 28 October.

I met a group of entrepreneurs and business people at London’s TechHub on 20 December. I visited the new branch of the Silicon Valley bank on 10 January, which the hon. Lady mentioned. It is a valuable business model, and I know that the Financial Services Authority is close to reaching a final decision on a banking licence. The Department for Business, Innovation and Skills sponsored an event with McKinsey on 17 January. The Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) met 60 angel investors, specifically aimed at enabling entrepreneurs in tech city to pitch to them for investment; that took place on 26 January.

I have had meetings with the vice-chancellors of some of the universities that the hon. Lady mentioned, and with others. I can report to the House that the Secretary of State and I will meet University college London, Imperial college London, the Olympic Park Legacy Company and Loughborough university next week further to discuss progress on the Olympic legacy site. We are continuing to work actively on the matter, and there will be a series of further events. I shall be going to a workshop on access to finance at Shoreditch on 4 April, and I shall continue my close contact with that community.

As for local initiatives, I understand that BT will deliver on its commitment and that it will upgrade its services. It confirms that it will upgrade both telephone exchanges in the area, in Clerkenwell and Shoreditch, to its superfast broadband service.

The hon. Lady rightly asked about the involvement of the local community. I shall focus on that aspect in my closing remarks. She can play a crucial role. I know that she is committed to her community. It would be great if we could improve links between the entrepreneurs and the business start-ups at tech city and, for example, local schools. There is a really good atmosphere around the TechHub at what is called Silicon roundabout. It should be possible to involve Hackney schools more, so that teenagers could meet the entrepreneurs in tech city, see what software programmers do and some of the apps that they are developing. They could even come forward with ideas on apps for their mobiles and watch the software developers trying to rise to the challenge.

That would be fantastic. It would be for the good of the young people in the hon. Lady’s schools and a fresh challenge for the entrepreneurs. If she wants to work with me on this, I am confident that we could make those connections. Looking nationally, one of the things that I worry about is that, despite large numbers of students doing IT and computer science, we do not do very well on getting them into the right kinds of jobs that use their skills. If we can improve the links to entrepreneurial business leaders at an early stage, we could do better. I would be up for working with her on such a project, and hope that she would be willing to consider it.

The Minister makes an interesting point. In Hackney, children are very much interested in IT, but they do not make the move from an interest in IT to the IT professions. I would welcome the challenge of trying to link young people with what is happening in tech city. Moreover, there is the broader concern that young people in areas such as mine often have relatively narrow horizons. Anything that opens up their horizons and makes them understand the connection between studying today and an interesting and exciting job tomorrow is clearly a good thing.

I am grateful to the hon. Lady for her positive response. Let us try to work together on that. I bet the kids are much more sophisticated users of the apps on their mobile phones than either I am or she is. We should cut out the middle man and get them to talk directly to the software developers. I assure her that I will keep in very close touch with tech city. We will bring in another set of major venture capitalists from not just the UK but internationally to consider investing in businesses in the area. I know that the negotiations have not yet been concluded, but we are also focusing on specific businesses that are considering undertaking training and apprenticeships in the area. As well as the high-tech software programmer-type jobs that are on offer, we know that the local community wants to fill the technical jobs that can come through apprenticeships.

I mentioned aligning what the Government are doing with the local authority. There is a concern at local authority level that it is not involved or cited in the Government proposal. If the Government do not want to align themselves with the local authority, they could at least let it know what they are doing, but the local authority is sort of being kept in the dark.

I am sorry that the hon. Lady thinks that. I am sure that it will be possible to arrange for the chief executive of the council to have a briefing on what UKTI is doing. I am up for working with the local community. If it would be helpful for such a meeting to take place, I undertake to ensure that it happens—if it is not happening already. We want to work with the local community. This economic development is, of itself, good for the local community. As the hon. Lady rightly says, having all this activity has transformed the area in the past 20 years. If it would be helpful to have a meeting, I would be happy to suggest it to UKTI.

We are delivering on the ideas set out in the Prime Minister’s speech three months ago. We are making progress and we are absolutely committed to the scheme. I am confident that we will continue to achieve the high ambitions that he set us, and I am very happy to keep the hon. Lady closely in touch with progress as we advance.

Sitting suspended.