YORKSHIRE is being overshadowed by its rivals in the South in the battle to attract fast-growing, small innovative firms, according to a new report.
The report by the think tank Centre for Cities found that seven out of the top 10 cities in the UK for “new work” – which is carried out by small and medium-sized enterprises (SMEs) in the creative, digital and professional sectors – are in the South East.
None of the top 10 cities are in Yorkshire and the report warns that the uneven spread of creative and digital companies is reinforcing economic disparities.
Around half of all SMEs in places like Reading, Cambridge, London, and Oxford are involved in new work sectors, the report said.
Aberdeen tops the UK chart with an estimated 56.7 per cent of its SMEs active in the digital, creative and professional services sectors. By contrast, only around one in five SMEs in Burnley and Doncaster is in the new work sector, the lowest concentrations in the UK. Doncaster is one of the 10 least productive places in the country, according to the report.
Leeds, at 19, is the highest ranked city in the region with more than one third (35.8 per cent) of SMEs involved in the digital, creative and professional services sector. York is ranked 22nd, with 34.6 per cent of SMEs operating in the new sector, according to the report. Sheffield is ranked 41st, with 29.4 per cent, and Hull is 59th with 23.6 per cent.
Supported by global insurer Zurich, the report, Small Business Outlook 2015 offers an analysis of the challenges and opportunities for SMEs in UK cities.
The report concludes that the top 10 UK cities with the highest concentrations of new work SMEs are also among the most successful places in terms of overall productivity, jobs growth and wages.
Alexandra Jones, chief executive of Centre for Cities said: “For places to prosper and grow, they need to consider how they can build on their existing strengths to support the kinds of highly-skilled and agile firms found in creative and professional industries, as well as the traditional focus on attracting inward investment from big businesses and multinationals.
“Helping these firms to grow should also be a top priority for the Government in its efforts to rebalance the national economy, including the Northern Powerhouse initiative. Most importantly, the Government needs to give cities greater control over skills, infrastructure and spending, to help them become more responsive to the needs of local businesses.
“The Government’s plan to let local government keep business rates is a welcome step towards giving cities more of the tools and flexibility they need to support local businesses. Local leaders should use these powers to create a better environment for innovative firms to thrive in, especially in places which have seen slow growth.
“That means, for example, improving digital infrastructure, tackling skill-gaps in the workforce, and helping local businesses to trade internationally. By doing so, cities can ensure they are in the strongest position to support the kinds of businesses which offer the best route to long-term growth and prosperity.”
Digital entrepreneur Dr Adam Beaumont, the chief executive of Leeds-based aql, said the report confirmed that digital capability is a key driver for growth.
He added: “Where the Leeds City Region has a unique advantage, is that the infrastructure is already in place to support sustained growth in this sector.”
He said Leeds was the only city outside London with a standalone internet exchange.
He added: “IXLeeds is the London-independent hub for data exchange – providing a platform which can expand to support the next generation of data demands in the region.
“Leeds, as an independent internet centre, also has access to the US via the North West coast of Britain and access to Europe, Scandinavia and beyond via the North East coast, providing the UK with increased resilience in terms of fibre connectivity to the rest of the globe.
“These fibres are our digital trade routes.
“The more routes we have, the greater the stability of the UK’s global connectivity.”