Region in focus: The North-west
Read time: 6 minutes
Manchester is indisputably the UK’s second biggest tech hub after London and the South East – but there’s a great deal more to the whole North-west region, as our experts explain.
What are the key areas of tech in the North-west? What’s the landscape like?
The leading hub of the North-west is of course Manchester, which is second only to London and the South-east in terms of the new and emerging sectors that are driving the global tech economies of the 21st century.
Tech companies have raised £430m from investors in the year to date, according to figures from Tech Nation/Dealroom.co. The city’s tech businesses achieved a combined turnover of £3.2bn, according to Tech Nation.
But the prominence and success of tech and tech-enabled businesses extends way beyond the city of Manchester into the whole North-west region, which also covers Lancashire, Liverpool, Cheshire, Cumbria and more. The pool is deeper still, when you consider that traditional sectors like manufacturing are embracing new technologies such as IoT, AI and robotics to stay competitive and fit for purpose in today’s fast-moving, highly networked economy.
Greater Manchester and the North-west region are also especially strong in AI and data, e-commerce, fintech, gaming, life sciences, app development and medtech, and play host to a tech-led ecosystem that is favourable to start-ups and global giants alike. BusinessCloud's North West Tech 251 list, which is packed with early-stagers, scale-ups and established tech companies alike, is a useful barometer of the breadth of regional representation, with businesses located in Oldham, Blackpool, Bury, Macclesfield, Bolton, Widnes, Preston, Salford, the Wirral and points beyond.
Two of the region’s five unicorns (companies with £1billion-dollar-plus valuations, two of which originated in the North-west and three more of which have expanded here) are based beyond Manchester. The Hut Group is based in Northwich and AO.com is in Bolton, with Auto Trader, Boohoo and Onthebeach.com maintaining a presence in the city. Tech and manufacturing giant Bae Systems is also widely represented across the region, with centres in Preston, Crewe and Barrow-in-Furness, and Jaguar Land Rover continues to innovate its manufacturing operations from its Liverpool base.
In 2019, growth in the region shows no signs of slowing, as telecoms giant TalkTalk joins the The Northern Powerhouse Partner Programme after a major recruitment initiative in 2018, and global powerhouse Siemens, outlines plans to relocate its UK head office to Manchester. As both expand their presence in the North, they join an impressive cohort of businesses bringing significant job creation and economic opportunity across the region.
Manchester is also of course the birthplace of graphene, the extraordinary new material that is just one atom thick and has been hailed as the strongest and most conductive material in the world, with a huge variety of possible applications in everything from construction to electronics to medicine. The new (and award-winning) £61million National Graphene Institute and the planned £60m Graphene Engineering Innovation Centre form part of an innovation hub that will act as a focus for a wide range of trailblazing applied research, in association with partners, start-ups, universities and government research institutions.
All in all, the region has welcomed and nurtured an ecosystem of bigger players and bleeding-edge start-ups, who work together in a variety of innovative ways and enjoy the knowledge-sharing and mutual cooperation of a lively and engaging tech community. This is a place where people are genuinely keen to help one another, to share recommendations and referrals, and to work together for the good of the region and the sector.
What particular benefits does the region offer to tech businesses?
“We have the infrastructure, secure digital environments, and the talent pipeline to make things happen,” as Andy Burnham, mayor of Greater Manchester, said recently. “This puts us in the perfect position to trial new technologies: we’re agile enough to get up and running quickly, but large enough to test at scale before rolling out pilots UK-wide.”
These qualities extend across the region as a whole, which is well served by strong road links and Manchester airport, now currently expanding with a second terminal. And there are no fewer than 22 universities within an hour’s drive of the city of Manchester, many of them globally recognised as leaders in a variety of IT and tech disciplines. The strength and calibre of universities across the North doesn’t just offer a deep pool of young skills, but also generates much of the IP which businesses go on to develop and commercialise.
Business affordability is another important factor.
"In the Greater Manchester area, for example, operating costs are up to 40% less than in London."
The MediaCityUK at Salford is another big draw to the area. MediaCityUK is Europe’s only purpose-built hub for the creative, media and tech industries, where 7,000 people live, work and study. Home to the likes of BBC and Sony Ericsson, the campus is the first location outside of London with a 5G network. Its rated as Wired Certified Platinum in the North of England for its best-in-class broadband and telecoms infrastructure, giving bandwidth-hungry tenants a future-proofed technical environment.
Proximity to London is another important attraction, especially for global businesses looking to expand into the UK and who see the whole country as a single connected hub. London is just two hours away by train, and there is a positive and well-established spirit of cooperation and collaboration between the two regions, which are well-versed in pitching co-located solutions that offer the best of both worlds.
In terms of employment, the North-west offers a wealth of resource of skilled labour, not just from the universities but from a wide catchment area in surrounding communities and the larger businesses. Manchester was named the #1 regional city for creative talent (CBRE Creative Regions report, 2017), and offers the largest travel-to-work catchment area of any regional city. A young and growing population provides a constant stream of talent that enables companies to scale up their operations within short timescales while also keeping wage inflation and attrition levels low and stable. There is evidence too that the region is attracting significant volumes from London and other areas of the UK.
What’s the funding and investment landscape like?
First of all, as part of the UK, businesses in the region benefit for the same R&D tax relief and innovation grants as everywhere else. Businesses in the North-west, as elsewhere, are gradually learning that you don’t have to work in white coats or a wind tunnel in order to claim R&D relief. A lot of businesses, whether in manufacturing or food tech or financial services, may well have been developing software (or using other businesses to help them develop software) that can help them optimise their processes. And with good advice, they may find that a lot of this activity justifies a claim to HMRC, to help them fund their R&D tech spend. If you’re developing tech to resolve operational uncertainties, there’s a good chance that you may be eligible.
Similarly, a good adviser may well be able to steer a business towards other tax reliefs that it might be eligible for. Patent Box is one such example, whereby qualifying companies that have patents that they are making money from may qualify to pay tax at a lower rate.
In addition, there are some region-specific support and grant-making channels from the likes of MIDAS, Growth Platform, the Northern Powerhouse Fund, the Merseyside Special Investment Fund, the Technology Innovation Fund, and the Lancashire-focused Rosebud Fund. Some of the locally focused funds are under-exploited, which is another area where a good adviser with strong regional focus can add value.
More broadly and just as important, there’s a very active and vibrant investor scene in the North-west, with a wealth of private equity, venture capital and individual high-net-worth investors who are passionate about tech, and the enlightened support and enthusiasm of some very progressive local and regional authorities.
Manchester has also been named the top European city for FDI Strategy (fDi Magazine’s large European City of The Future, 2016/17), and the region is working proactively to attract more overseas interest, particularly from China and India.
What are the benefits in terms of lifestyle and cost of living?
In terms of rent and property prices, the region offers significant affordability and value for money, especially when compared with other regions such as the South-east. The lower cost of living in Manchester, compared with the rest of the UK, means that salaries and hourly rates of pay can realistically remain competitive, without adversely affecting levels of personal disposable income.
Then of course, the North-west is a great place to live and play in too. Sports-wise, the region boasts three of Europe’s biggest football teams, Manchester City, United and Liverpool, plus wonderful stadia and a prestigious history across cycling, both rugby codes, cricket and more. The region’s musical heritage takes in both The Beatles and the Halle Orchestra, and a range of famous venues.
From the natural beauty of the Pennines and the Peak District to the lovely coastline to the buzzing urban cool of its cities, there really is something to suit every lifestyle.
"This is a region that thinks hard about wellbeing and mental health awareness too."
What about the future?
Looking ahead, the region received yet another boost recently with the arrival of Amazon, which is investing 600 new jobs in the area as a start. More investment from China and India is on the cards. And at the start-up level, organisations like Tech Nation will continue to enable and nurture the success and growth of early-stage tech innovators.
But the great thing about the North-west is that, in every important respect, the future is already here. With 5G coverage already in place, a highly-developed ecosystem informed by a tight-knit community, and the second terminal at Manchester airport well under way, even the most innovative new business arrivals can hit the ground running.
Are you a fast growth tech business making waves in the North-west? Get in touch with our local team for more insights and advice, or to share your own, at [email protected].
This region in focus on the North-west has been compiled with expert input from:
Mark Sykes, Partner, BDO North West.
Mark heads up BDODrive, which sponsors Tech Nation Rising Stars and delivers focused advisory services to help tech and other businesses realise goals such as raising finance, global expansion and investor readiness. He works alongside Manchester and Liverpool inward investment agencies to help encourage more businesses to the region.
Julien Rye, Audit Partner, BDO Manchester.
Julien is a Senior Assurance Partner and North West Head of Audit with over 35 years’ experience. He has worked widely in the region with tech and Financial Services businesses, especially in the fintech area.
Vincent Walker, Tax Principal, BDO Manchester.
Vince is BDO’s Leader of R&D Tax services in the North of England and has helped hundreds of clients claim R&D Tax Credits over the years. He has advised family-owned, AiM and FTSE listed companies in such sectors as technology, construction, nuclear and retail.