Wednesday 4 July 2012

Cluster Policy and (a tale of) Tech City

Centre for London's Tale of Tech City makes for an interesting read. SERC's Max Nathan was involved and you can read his take on it here. One broader point that strikes me however is that the report highlights the difficulties of cluster policies.

This is a sentiment that is clearly (partly) shared by the report's authors. To my reading, their first three recommendations suggest that they think current government policy isn't getting it right. The most striking of these is the suggestion (I am sure correct) that the government would be wrong to see Tech City as a solution for the Olympic Park legacy problem.

Their next three recommendations are essentially aimed at solving a problem of the government's own making. In a globalised world, high tech industries benefit disproportionately from being able to attract the very talented. The government's immigration policy, to put it mildly, is not helping here. But this is as true for many other high tech organisations and not unique to Tech City.

On recruitment more generally, the report makes some suggestions on Recruitment Fairs (with which I certainly wouldn't argue if market participants think worth the costs).

Recommendations around finance and mentoring are the most 'cluster orientated' but also the ones were it becomes trickiest to figure out whether they are the right things for government policy to be doing. Should finance seek to encourage entry or growth? The report appears to plump for both. I am all for competition, but how do we know that government subsidised entry is good for a cluster? Are we sure that mentors' time spent supporting other (potentially rival firms) is better spent doing that than running their own business? Is a £150m Capital Fund aimed specifically at Tech firms a better vehicle than a larger general fund that supports all kinds of businesses (I am sure the former is better for Tech City - so consistent with the report's objectives. But is it the right thing to do from a wider policy objective?).

The report also makes suggestions about the planning policies of the relevant local authorities. These call for more flexibility around, and provision of, affordable workspace. Again, no particular arguments there, but not a problem that is unique to Tech Firms (even if they are more affected than most). Internet connectivity recommendations have a similar feel to them.

Finally we are back to Governance of the strategy itself. Very important of course, because as my comments make clear, we really have no idea what targeted cluster policies should do to reinforce the strength of clusters. There are, of course, many cluster policy advocates who would disagree, but personally I remain highly sceptical.