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Back off, politicians: don’t mess with Shoreditch

Category : Business

The government has laid out plans for east London’s high-tech industries, but business ecosystems don’t obey wishful thinking

Watching politicians trying to promote technological innovation is like observing a group of maiden aunts trying to persuade the local teenage layabouts to take up yoga. The poor dears mean well, but they really have no idea what they’re doing. And in terms of achieving their goals, they’d be better off sticking to knitting or whatever it is that they do best.

Politicians are desperately keen on “innovation” for a variety of reasons. They think it’s cool and progressive and puts them on the right side of history. It promises to bring growth and prosperity either to their constituency, or to marginal ones, or to both. It impresses the prime minister. It gives rise to endless photo-opportunities. And so on.

In pursuing this obsession, politicians have two kinds of tool at their disposal. The first is area-focused and involves planning laws, tax-breaks, subsidies and other fiscal wheezes. The second approach is company-centred and aims to create incentives that will persuade technology entrepreneurs to carry out this mysterious activity called “innovation”.

There are a number of problems with this. The first is that most politicians – at least in Britain – couldn’t run a bath, never mind a company. The vast majority of MPs have no idea what it’s like to meet a monthly payroll, and only a tiny percentage (only one out of 650, according to a recent study) have experience of advanced research. So they have no idea of what’s involved in technology start-ups, which is why they have as much credibility with entrepreneurs as the aforementioned maiden aunts have with yobs.

The consequence is that most government policy in the field of technology is a combination of blissful ignorance and wishful thinking. Politicians see Silicon Valley in Palo Alto or the high-tech cluster in Cambridge and slaver. They’d like some of that. So they give high-minded speeches, zone land for “science parks”, offer tax-breaks and other incentives to firms and then sit expectantly awaiting “innovation”.

Provision of most of these requirements lies outside the competence of governments. The implication is that politicians can no more legislate for the success of a high-tech cluster than they can establish democracy by planting a neo-con flag in a Middle Eastern desert. Industrial ecosystems are complex; they take time to evolve; and they evolve in their own ways. And governments interfere with them at their peril.

Which brings us to the hopes currently entertained by David Cameron & co for “Tech City”, a “hub” of high-technology innovation stretching from Shoreditch to the Olympic Park. Cameron and chancellor George Osborne have spotted that something interesting is happening in east London and want to extend it, in the way that politicians do. “Our ambition,” declares the PM, “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.”

Before digging himself deeper into that hole, Cameron would do well to inspect “A Tale of Tech City”, a new Demos study of the Shoreditch phenomenon that gives an analysis of the creative ferment supposedly going on in east London. It found 3,200 firms employing 48,000 workers

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