East London Tech City

Lord Willetts Excerpts

Wednesday 9th March 2011 Westminster Hall

[The Minister for Universities and Science (Mr David Willetts)]

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. Last.fm 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.

[Ms Abbott]

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?

[Mr Willetts]

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.

[Ms Abbott]

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?

[Mr Willetts]

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.

[Ms Abbott]

Will the Minister give way?

[Mr Willetts]

Yes, especially as she asks so plaintively.

[Ms Abbott]

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.

[Mr Willetts]

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.

[Ms Abbott]

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.

[Mr Willetts]

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.

[Ms Abbott]

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.

[Mr Willetts]

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.