London's tech sector, recently crowned Europe's leading technology ecosystem, is facing an unusual bout of nerves following the arrival of Prime Minister Andy Burnham in Downing Street. The capital's companies raised $17.7 billion in venture capital last year and boast 138 'unicorns' — firms valued above $1bn — according to tech deal tracker Dealroom. However, Burnham's pledge to move power out of SW1, coupled with the abolition of the Department for Science, Innovation and Technology (DSIT), has sparked concern.
Uncertainty and Mixed Signals
The panic began before Burnham took office, with one Labour MP reportedly calling the closure of DSIT 'getting rid of the department of the future'. Ipsos polling from July 29 shows businesses are split: one third think Burnham has what it takes to be a good PM, one third disagree, and one third are neutral.
Under the new governmental structure, responsibility for national AI strategy and the AI Security Institute moves to the Cabinet Office, while telecoms, online safety, and the Government Digital Service go to an expanded culture department. Science and innovation support sit inside a renamed business department. This fragmentation leaves companies unsure where key policy issues like AI and copyright, data centres, and AI growth zones will ultimately reside.
Concerns Over Growth Priorities
Doniya Soni-Clark, associate director of external affairs at techUK, says members are looking for clarity rather than heading for exits. 'There are still a lot of details that need to be ironed out,' she says. Benedict Macon-Cooney, chief AI and innovation officer at the Tony Blair Institute for Global Change, warns: 'If you send out signals that essentially wealth creation and economic growth aren't your high priorities, then people that want to do that will go elsewhere.'
A March survey of 531 business decision-makers by techUK and Public First found 84 per cent of technology firms were unconvinced growth was genuinely a government priority, with nearly half considering moving investment or operations abroad.
The Manchester Factor
Greater Manchester already has a £5bn technology ecosystem, with over 10,000 digital and tech businesses, around 250 AI companies, and roughly 300 cybersecurity firms. The region's strengths in advanced materials, manufacturing, and cyber could benefit from Burnham's 'reindustrialisation' agenda. However, Manchester founders still struggle to access capital, with a regional study showing 74 per cent of start-ups used support programmes but didn't reliably translate into funding.
Macon-Cooney points out a stronger Manchester need not weaken the capital. Soni-Clark says techUK's members are not especially worried by devolution itself but want continuity. 'There's a lot of great work that's already happened,' she says. 'It would be a shame to dismantle it.'
Looking Ahead
The autumn Budget will provide a better test of Burnham's intentions than his opening week, reckons Soni-Clark. As Macon-Cooney puts it, Britain's window to compete in AI is 'very, very small'. The new prime minister's task is to widen the map without shrinking the opportunity.
