CityFixer

How to Build Urban Tech Centers Without Encouraging Inequality

Train the local community to work in the industry, for one thing.

Image Flickr/Eric Wahlforss
Hoxton Square, at the heart of East London's tech district. (Flickr/Eric Wahlforss)

Are so-called “tech ghettos” an inevitable product of any city-based boom in the tech sector? That’s a question explored by a new report from Britain’s Royal Town Planning Institute.

Too often, the report notes, cities experience major growth in tech industries without noticeable positive effects for the wider communities in which these businesses are located. The result is a two-speed economy plagued by economic segregation and even displacement for longer-term residents who can neither afford local rents nor access the new jobs created by the boom.

This isn’t to suggest that the tech sector is not economically vital. According to the report, the Internet economy will account for 12.4 percent of Britain’s GDP in 2016. It’s more that tech businesses seem to be less successful than those in other sectors in sending out positive economic ripples across society as a whole.

The issue is how to mediate more effectively between tech companies, communities, and governments to create a better spread of benefits for everyone. RTPI’s report does not present itself as a blueprint for eradicating all negative change, but it does show some routes through which tech company influence can be broadened and softened. Here are four of its key recommendations.

1. Train the local community

Too often, tech companies can seem like impregnable fortresses to inner-city communities. While they gobble up office space and push up rents, they also tend to import their workers from elsewhere. Lower-income communities often can’t access the training that would help them unlock the potential opportunities on their doorsteps, and are thus left with just a scanty crumb trail of entry-level service jobs. Established local businesses, meanwhile, can find themselves priced out by a boom many of whose innovative developments have too often passed them by, and thus failed to deliver significant benefits.

If cities improve tech training, and use local connections to tie this training to apprenticeships with companies that have relocated to the area, then a local community’s share in a tech boom can be greatly increased. Likewise, local leaders can encourage tech companies to pool expertise with local businesses.

Some U.K. cities are already experimenting with these approaches. In the London Borough of Hackney, a historically low-income area that’s home to the city’s Silicon Roundabout, community college traineeships have been linked up with apprenticeships in local tech companies. The city of Leeds has paired up with Google to create the Digital Garage, a pop-up located in the regenerated Leeds Canal Dock, where local businesses can go for advice and master classes.

2. Encourage meaningful regeneration

The regenerative effect of tech companies depends greatly on where they invest. There may be only a limited positive ripple effect for the wider community to be gained from a few extra digital creatives setting up shop in an old downtown warehouse. But in other locations, tech companies can still have a massive positive effect—and they’re more likely to head for these places if government incentives encourage them to look beyond the most obvious work sites.

The industrial city of Cwmbran, in South Wales, offers an example. Faced with a steadily dilapidating stock of factory buildings, the region’s planners offered to refund private companies who rehabilitated these buildings if they used the refund to invest in research and development or advanced manufacturing facilities. U.S.-based automobile component manufacturer Meritor accepted this offer, plowing a refund of £7.5 million ($10.9 million) from decontaminating its factory site into creating a world center of excellence for vehicle braking systems. The scheme enabled Meritor and Cwmbran to safeguard 1,170 jobs, most of them skilled.

3. Deliver public services

A tech boom can provide a community with a potential pot of invaluable resources on its doorstep. While tech companies’ presence may play a role in boosting income inequality in some places, using the sort of innovations in which they specialize can also reduce the tax burden for residents.

An example of this is the use of GPS mapping for waste collection, which several U.K. cities have employed to streamline routes and street-cleaning services, resulting in substantial savings. Such gains are small, but played out across all local government they could make a significant difference to city budgets.

4. Create better infrastructure

Granted, a city doesn’t need to host a tech hub to be able to develop better technological solutions to its problems. It’s nonetheless far easier for planners to start an in-depth conversation with the tech sector when there is a local presence, meaning that solutions can be thrashed out over a period of years if necessary.

Barcelona offers a classic example of this process. In 2010, the city began a lengthy dialogue with local company Bitcarrier on possible ways to improve urban mobility. The result, in 2013, was the installation of 19 sensors across the city that are able to provide citizens via an app with up-to-date traffic and transit information.

About the Author

  • Feargus O'Sullivan is a London-based contributing writer to CityLab, with a focus on Europe.