Bringing high tech business to the North East

Putting in place the infrastructure for new kinds of business requires vision and leadership.

Everyone knows the phrase "coals to Newcastle". This is a tale of "software to Cambridge". From Newcastle. When I started my business thirty years ago it seemed far-fetched. There were less than 10 technology businesses in the whole of the North East. Now there are over 300, from software to computer games to cloud computing. Only London has a higher rate of high tech start ups. So we are doing our bit for "rebalancing" the economy.

The obvious questions are why and how? The simple answer is that while some industries depend on capital to get going, for technology companies it is people.  Software and computer games are by their very nature "weightless" products that can be sold in every corner of the world over the internet without any significant transport costs – the exporter’s dream. If you can sit a talented programmer or a creative designer in front of a computer, they can be producing saleable products that are instantly exportable.

The greatest asset for any region is its universities. The greatest problem in the North East is raising the aspirations of our own population to go to them. In a global competition for talent, you need places "where talent wants to live". This means that you need to have a buzzing music and cultural scene – Newcastle has been voted one of the world top party cities - good affordable housing and easy ways to get to work. Tyneside and the rest of the region has a justifiable reputation as a great place to be and this has been fostered over the last decade by a combination of strategic, long-sighted public investment in creative and cultural infrastructure like the Sage Gateshead, and the establishment of organisations like Generator who support the music industry and make events happen.

University involvement and partnership with business has grown by encouraging graduate internships and establishing "hatcheries" nurturing embryonic businesses. Publicly-funded initiatives like Sunderland Software City and Digital City on Teesside have been able to provide guidance, mentoring, premises, and networking for new business. Organisations like North East Access to Finance help fund the growing numbers of start-ups and high growth companies.

I chaired the Regional Development Agency until it was closed this year. Its founding idea – that public and private sectors need to support each other - is right. Here are three things that would make the biggest difference in the next ten years. Firstly, there needs to be more productive and innovative partnerships between the private sector, the universities and the public sector. Each offers different elements to the mix. Entrepreneurial ideas and drive, a trained and educated workforce coupled with innovative research and development in the right "connected" locations are the fundamental building blocks for this industry. Secondly businesses like this need finance. Often UK banks are reluctant to lend to this sector so we need to create small grants that allow clever people to test ideas and then more substantial equity investments as businesses mature and develop. Finally we need vision, leadership and role models. People who see what the North East's economy could look like and have the ambition, drive and determination to make it happen. The region has changed much since the dark days of the Likely Lads, what we need for the future is tomorrow’s Bob and Terry having Masters degrees in software engineering and creating world-leading software.

Paul Callaghan is Chairman of Leighton, the North East-based technology, software, media and communications group that he founded.

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Theresa May defies the right by maintaining 0.7% aid pledge

The Prime Minister offers rare continuity with David Cameron but vows to re-examine how the money is spent. 

From the moment Theresa May became Prime Minister, there was speculation that she would abandon the UK's 0.7 per cent aid pledge. She appointed Priti Patel, a previous opponent of the target, as International Development Secretary and repeatedly refused to extend the commitment beyond this parliament. When an early general election was called, the assumption was that 0.7 per cent would not make the manifesto.

But at a campaign event in her Maidenhead constituency, May announced that it would. "Let’s be clear – the 0.7 per cent commitment remains, and will remain," she said in response to a question from the Daily Telegraph's Kate McCann. But she added: "What we need to do, though, is to look at how that money will be spent, and make sure that we are able to spend that money in the most effective way." May has left open the possibility that the UK could abandon the OECD definition of aid and potentially reclassify defence spending for this purpose.

Yet by maintaining the 0.7 per cent pledge, May has faced down her party's right and title such as the Sun and the Daily Mail. On grammar schools, climate change and Brexit, Tory MPs have cheered the Prime Minister's stances but she has now upheld a key component of David Cameron's legacy. George Osborne was one of the first to praise May's decision, tweeting: "Recommitment to 0.7% aid target very welcome. Morally right, strengthens UK influence & was key to creating modern compassionate Conservatives".

A Conservative aide told me that the announcement reflected May's personal commitment to international development, pointing to her recent speech to International Development staff. 

But another Cameron-era target - the state pension "triple lock" - appears less secure. Asked whether the government would continue to raise pensions every year, May pointed to the Tories' record, rather than making any future commitment. The triple lock, which ensures pensions rise in line with average earnings, CPI inflation or by 2.5 per cent (whichever is highest), has long been regarded by some Conservatives as unaffordable. 

Meanwhile, Philip Hammond has hinted that the Tories' "tax lock", which bars increases in income tax, VAT and National Insurance, could be similarly dropped. He said: "I’m a Conservative. I have no ideological desire to to raise taxes. But we need to manage the economy sensibly and sustainably. We need to get the fiscal accounts back into shape.

"It was self evidently clear that the commitments that were made in the 2015 manifesto did and do today constrain the ability to manage the economy flexibly."

May's short speech to workers at a GlaxoSmithKline factory was most notable for her emphasis that "the result is not certain" (the same message delivered by Jeremy Corbyn yesterday). As I reported on Wednesday, the Tories fear that the belief that Labour cannot win could reduce their lead as voters conclude there is no need to turn out. 

George Eaton is political editor of the New Statesman.

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