Knowledge Islands: The Bull Case for the UK

There has been a general sense of malaise in the United Kingdom, in part the result of the chaotic sequence of Conservative governments.

While there is much to improve, there is also a case to be made that the United Kingdom is on the cusp of a tremendous surge in wealth, health and purpose. This opportunity is not pre-determined. It will require the new Labour government to pursue a distinct strategy. In this essay below, I define the three key elements of the strategy: (1) Place-making, (2) Deep tech Venture Capital, and (3) Lab-to-Fab Reindustrialization. I propose a way in which these can be implemented across 150 cities and large towns in the UK.

UNLEASH THE UK VIA A NETWORK OF 150 KNOWLEDGE ISLANDS: EXECUTIVE SUMMARY

A proposed strategy for the incoming Labour government.

The new government can seed 150 engines of wealth, health, and purpose across the British Isles, thus transforming the United Kingdom into The Knowledge Islands. The proposed strategy would aim to solve the UK housing backlog of 4.3 million homes, turn the largest 150 UK cities and towns, and their surrounding market towns and villages, into global talent magnets, create c. £2.6 trillion in broadly distributed wealth, consolidate the UK’s position as a top 3 global and EMEA Deep Tech leader, and transform the UK from industrial laggard into the most advanced manufacturing network in the globe. It would drive renewed purpose across many forgotten British cities and engage all citizens in contributing to this mission. By improving the quality of life in cities, it would drive improvement in health, life expectancy and mood. All of this while attracting c. £1 trillion in capital and generating above-market returns.

This strategy would draw on the lessons of places like London, Oxford, and Cambridge in the UK, and best practices from the Bay Area in California, Austin in Texas and Boston in Massachusetts. It would be applied across the largest 150 cities and towns in the UK, using three levers: (1) Place Making; (2) Deep Tech Venture Capital; (3) Lab-to-Fab Reindustrialization. It would draw on inexorable global shifts in technology, capital, workforce, and supply chain, and position to best meet the demands of global and local talent. Talent wants affordability, healthy and attractive places, a dynamic local economy, and the ability to learn. Above all, it wants purpose, and this is the core outcome we should aim to deliver.

The combined effect of applying these three levers could generate in the range of £2.6 trillion in inflation-adjusted UK wealth growth over 10 years, a roughly 20% increase from current UK wealth of £13 trillion, and additional to existing trend growth in wealth. It aims to attract over this period c. £1 trillion in incremental capital investment or £100 billion per year, and to deliver above-market rates of return to this capital by exploiting heavily under-valued real and intangible assets. It would leverage c. £110 billion of ‘seeding’ capital over the decade by attracting existing UK capital pools such as UKIB, BBB, Homes England, landholdings, philanthropic assets, and via growth-based tax relief. The UK wealth multiplier of this seeding would be 15:1, and the seeding investment would deliver market rates of return, though with higher risk exposure and longer timelines than the follow-on capital.

At a local level, over the next decade, the wealth effect would average a £17 billion increase for each of the top 150 UK towns or cities, having attracted £7 billion in capital, with c. £700 million required in ‘seeding’ investment. The strategy would be deployed locally, based on encouraging and supporting high-agency coalitions of local ‘founders’, including universities, SMEs, FTSE 300s, Global enterprise, local government, philanthropies, and citizens.

The core engine of this strategy would be the intersection of Place Making, Deep Tech Venture Capital, and Lab-to-Fab Reindustrialization. Place Making means: to deliver on the UK housing backlog, focusing on the top 150 cities and towns in a way that is most attractive and healthy to talent, and that generates sustained, distributed economic wealth, in contrast to the skewed, uneconomic model that has prevailed for the last seven decades. Deep Tech Venture Capital means: to build on the UK’s leadership in advanced, exponential technologies, by quadrupling Venture investment, massively upskilling, and distributing this investment across the top 150 UK cities and large towns. Lab-to-Fab Reindustrialization means: building a network of advanced manufacturing centers across the largest 150 cities, maximizing the use of robotics, Artificial intelligence, cybersecurity, and factory automation, to pursue high-growth and high-margin global markets, while securing the UK supply chain.

The highest leverage in this mix would come from £6 billion invested over a decade to seed the Deep Tech Venture Capital lever, with a projected 110x wealth multiplier. However, it is the marriage of the three levers that creates a positive flywheel effect, ‘cold starting’ many unproductive locations, and then encouraging them to thrive on their own. Ultimately, we are seeking to spark a new Industrial Revolution, but one that is simultaneously driving improved wellbeing, sustainability, and purpose. While this might seem rosy-eyed, other countries, such as Switzerland and Singapore, are on comparable trajectories. 

Why aim so big, so fast, across so many cities, across multiple domains?

One may be tempted to be small, to be focused, to analyze before we act. The truth is that the UK has been paralyzed by analysis, it has been too cautious, it has failed to connect the natural dots between place-making, technology, and fabrication, between local strategies and the needs of the world of finance, between the worlds of venture capital and the City of London, between real and intangible assets. The outside world is now moving at an accelerating pace, both with technological possibility and with global threats. We cannot afford to stay behind. This does not mean to be reckless in our policies or in the use of capital. At the core of the proposed strategy is a bottom-up, evidence-based, self-correcting and market-based philosophy. Cities must be both ambitious in their aspirations and realistic about their true comparative advantages. Universities must lean-in from their ivory towers to become self-conscious agents of their surrounding economies, the City of London needs to rekindle its history of merchant banking and adventure capitalism, the venture capital sector needs to step up to be competitive with the American behemoth, we need to leap-frog from a manufacturing laggard into an advanced manufacturing leader.

It seems fanciful that the UK could achieve all of this, have you not read the news?

By many metrics, the UK is stalling in economic growth. However, there are pockets of outstanding global leadership that suggest a pathway that can be scaled. The UK’s technology sector has multiplied in value by a factor of 16x in the past decade, reaching c. £800 billion in value. Regeneration projects such as Argent-developed King’s Cross are world class. London has vaulted from technology laggard to a top 3 tech city in a decade. Oxford and Cambridge have evolved from sleepy university towns into true economic dynamos, Manchester, Birmingham and Bristol are close on their heels. The UK today leads Europe in Deep Tech VC. Talent wants to flock to the UK, and we have deep reservoirs of natural and historical depth that can be awakened.

Global markets are poised to explode, and the UK is well placed. One analysis suggests 6 emerging global markets, from the $1.7 trillion Bio Economy to the $17 trillion Experience Economy, and that the UK is the #1 best placed country to exploit these new markets. 

Why not concentrate on a handful of super-clusters vs. spreading across so many locations?

We are in a rapidly decentralizing technology paradigm, most notably in the EMEA region. In 2010 there were only 12 mature tech clusters in the world, meaning places that received c. £100m a year in venture investment, and that host one or more ‘Unicorns’ (billion-dollar tech companies). Of these, only 5 in the EMEA region. As of 2023 this number had shot up to 162, of which 73 in EMEA. With remote work, cloud, and AI, knowledge is rapidly distributing, and we should expect the number of mature tech hubs globally to pass 1,000 locations within the next decade. The UK’s tech leadership is much more concentrated than that of its European peers or the US, and there is a risk of falling behind by being too concentrated. There is little evidence that there is any special magic that makes places uniquely capable of becoming tech hubs, what has been lacking in many cities is a critical mass of early-stage investment, especially in the Deep Tech areas which will dominate the future of global technology.  

Why not let the market dictate Venture Capital? Why do we need to seed local markets?

Often the most ‘controversial’ area for local investment is the venture capital component, despite clear evidence that it has by far the highest multiplier effect, and that as a pooled investment it generates good returns (8% IRR on a pooled basis in the UK in recent history). In a £2.2 trillion economy, seeding the Deep Tech Venture Capital component of the strategy would require £6 billion or £600m per year, roughly 0.03% of UK GDP. This seeding would be expected to ‘crowd-in’ another £9 billion in private capital (to jointly fund 150 city-based seed funds at £100 million per fund), that would then be expected to attract £150 billion in late-stage or follow-on private capital, to create £660 billion in tech value and over £1 trillion in UK wealth. British Cities and Towns have been starved of this capital, and the evidence is strong that with quite a small investment, economic growth flourishes.

Why not keep muddling along? Do we need a new approach?

Given the challenges of aggressively pivoting the British venture market from software into Deep Tech, quadrupling the size of UK VC investment, locally integrating venture with place-making and advanced manufacturing in 150 locations, there is a need for a different approach. It requires an ambitious, market-oriented approach that is designed to work intimately at the local level, to synch with both the UK venture world and the City of London, to cooperate and also compete with the nearby EMEA markets, to leverage the potential of the UK’s FTSE 300 and its vast network of SMEs, to harness the potential markets and capital in the US without an excessive talent drain, to deeply integrate across place, tech and fabrication into ‘whole of society’ strategies, while partnering with existing UK institutions at the national, regional, city, town and neighbourhood level.

A detailed strategy is provided below.

UNLEASH THE UK VIA A NETWORK OF 150 KNOWLEDGE ISLANDS: DETAILED STRATEGY

The British Challenge and Opportunity

The UK is at a pivotal moment, with a feeling of disorder and stagnation, and yet with the UK arguably better placed than anywhere to thrive. This essay proposes a bold strategy combining three levers: place, technology, and fabrication. It proposes that the New Labour Government should aim to inspire a surge of bottom-up, local initiatives, with strategic top-down support where it is well placed to doing so.  

The proposed strategy has actionable principles, rooted in evidence of recent success in pockets of the UK such as London, Cambridge and Oxford, and global best practices.

Knowledge Islands Strategy Principles:

1.     It is rooted in the goal of distributed wealth creation, in combination with improved health and renewed purpose. It is thus aiming at sustainable prosperity.

2.     It is intended to be applied across the whole of British society, anchored around the largest 150 university cities or towns[i] of the UK. These 150 locations should, in turn, become dynamos for the surrounding towns, villages and hamlets, with particular focus on strengthening the centers of the over 1,250 British ‘market towns’[ii].

3.     It aims to deepen and extend the UK’s current leadership in technology in Europe, but also to fuse technology with a New UK Re-Industrialization, heavily concentrated in the Old Industrial Cities[iii] of the UK, and focused on a leap towards Advanced Manufacturing, integrating robotics and AI into production workflows.

4.     In a world where the best talent can be anywhere, it is centered around place-making, with the goal of maximizing the strength and attractiveness of British places.

5.     By combining the benefits of place, technology, and fabrication, it positions the UK to bid for talent of all kinds, the best academic practitioners, the most ambitious entrepreneurs, new industrialists, those who make society their focus. It turns every hamlet, village, town and city in the UK into an element of the overall strategy.

6.     It aims to create opportunities for all in society to contribute, and to challenge all to maximize their purpose, across public, philanthropic or private endeavors.

The British Cloud and its Tech Silver Lining.

The UK has averaged 1.5% annual real GDP growth over the past decade[iv], while global growth has averaged 2.8%[v], and the US 3.1% in the same period[vi]. UK net-worth is today at around £13 trillion, having grown 0.5% in real terms per year in the past decade, compared to 2.6% globally and 4.5% in the US[vii]. The UK has been falling behind.

Technology has been the silver lining in the British cloud. UK tech-driven growth in the past decade has generated £700 billion in new UK private company value and easily contributed over £1 trillion to overall UK wealth growth[viii].

Underlying this tech wealth effect is a complete ecosystem, combining the efforts of universities, angel investors, venture capital firms, private equity, banks, and many quasi-governmental support organizations, such as UKRI and BBB. The UK tech flagships are the over 156 Unicorns (or billion-dollar companies), the highest presence of Unicorns in Europe and 3rd highest in the world.  

Without the tech effect, UK net-worth would have declined by -0.4% per year in real terms. As a contrast to the poor performance of the UK stock market, on current trend, the UK tech market will reach parity with the value of the UK FTSE by 2032[ix]. As the weight of UK tech increases, it will have an even greater impact on British GDP growth and wealth.

Releasing the brake, putting the foot on the accelerator.

The new Labour Government needs to seize on this tech momentum, combining technology investment with well-crafted strategies for place-making and advanced fabrication, all anchored around making the UK highly attractive for talent of all kinds. Overcoming the sluggishness of our planning and industrial capacity development, we need to combine the high speed of venture capital with a systematic approach to double down on success. The locus of initiative must be local, anchored around the top 150 British cities and larger towns, their surrounding 1,250 market towns, and the over 6,000 villages across the country[x].

Tapping into the Coming Age of Exponential Technologies.

What we have seen to date in technology is only the beginning. The world is in the early innings of a technology transformation that could exceed the impact of the first Industrial Revolution. Investment house ARK forecasts over 10% in real GDP growth impact by mid-2025, based on the combined effect of new technologies.

Figure 1 Historical and Projected Effect of New Technologies

ARK 2024 Report. ARK projects that a cluster of exponential technologies such as AI, Cloud, Autonomy, Robots, Advanced Batteries, Reusable Rockets, 3D Printing, Precision Therapies, Programmable Biology, Smart Contracts, and others, will drive the fastest ever rate of GDP growth

Another analysis, by the Horizon Group and Vantage, forecasts six new transformational trends, each generating between $1.7 trillion and $17 trillion in global economic opportunity. These are defined as Bio-Growth ($1.7 trillion), Net Zero ($4 trillion), Circular ($4.5 trillion), Wellbeing ($9 trillion), Exabyte ($11 trillion), and Experience ($17 trillion). The same authors developed an Index of countries, based on how well positioned each was to participate in these new trends. The UK placed as the leader in one category, Circular Economy, as well as overall leader for the entire global index[xi].

While these trends lean heavily on technological developments, four of the trends, the Net Zero Economy, Circular Economy, Wellbeing Economy, and the Experience Economy, are explicitly about integrating technologies into societal transformation. This is a complex challenge, which UK society is very well suited to succeed in, combining technological leadership with environmental concern, focus on wellbeing, and deep experience in place-making, and even a history of ‘muddling along’. The next few decades may be extremely suitable for what the UK does best.

The UK is Positioned to Lead in Deep Tech.

The new wave of technology is different from that of the past two decades. While software remains critical, over the past 12 months there has been a shift towards integrating software with hardware and real-world environments. The dominant venture theme is ‘Deep Tech’, combining the latest in Artificial Intelligence with advances in biology, new materials, robots, automation, and advanced manufacturing.

The UK is well placed in the shift towards ‘Deep Tech’. Per a Nov 2023 study by Deal Room[xii], the UK has created the most value in Deep Tech across Europe, and British Universities such as Oxford, Cambridge, Imperial, UCL and Bristol are top ranked.

Figure 2. Deep Tech Spin-Out Value by University and Country. The UK Deep Tech system has benefitted heavily from the emergence of University backed venture ecosystems, first developed in London, Oxford and Cambridge, and now expanding to other British University cities, such as Bristol, Manchester, Birmingham, and Newcastle.

The global shift towards Deep Tech is deep-rooted, and only just beginning. It has been triggered by global changes such as Covid-19 (prompting an acceleration in mRNA use and more broadly computational biology), focus on sustainability (requiring deep science and technology to harness new energy and pollution models), uncoupling and reshoring (requiring new technology to enable countries to gain better control over their supply chain), volatility and war (requiring new defence technologies), and the impact of GenAI (requiring massive expansion in compute, energy and access to supply chain, as well as accelerating the move towards robotics and automation).

Lab-to-Fab: Integrating Deep Tech into Advanced Manufacturing.

The shift to Deep Tech will transform local geography as much as it does global. Unlike the prior waves of tech that were focused on finance (Fin Tech) or enterprise software, the Deep Tech companies that scale will need access to large amounts of fabrication capacity. Whereas it made sense that Fin Tech in the UK was focused on Greater London, UK Deep Tech will naturally want to be close to traditional centers of manufacturing, which have cheaper land, greater making skills and a predisposition to ‘make things’.

The UK has an ideal network of Older Industrial Cities (OICs), many with universities, ready to play a fundamental role in the next generation of technology. We can think of this as the ‘Lab-to-Fab’ motion, whereby a new technology could be first developed in a university lab, then spun-out into a nearby venture-backed firm, then scaled up into one or more fabrication centers built to support global scale and cost requirements.

The ‘Lab-to-Fab’ motion is evident in US companies such as Tesla, and recently in the emergence of co-manufacturing start-ups such as Hadrian, set-up to enable space exploration by aggregating the manufacturing of multiple start-ups in that sector.

Lab-to-Fab is a colossal opportunity for the UK, by solidifying its current leading position within the European Deep Tech space, but also in decentralizing British Technology across all the British Older Industrial Cities, and in rebooting its Industrial Sector to world-class level. If the UK can pull this off, it will be a realization of a new UK-led Industrial Revolution.

The UK has world-class regeneration capabilities, while many places are at risk.

Just as the UK is in the middle-innings of a technology revolution, so it is in place-making. Cities such as Manchester, Liverpool, Birmingham, Newcastle, and Sunderland have adopted ambitious regeneration strategies, with combined investment exceeding £100 billion. London has had £250 billion in real-asset investments over the past decade, has 280,000 approved homes, and a pipeline of £9.5 billion in approved regeneration projects, per a recent report from Opportunity London[xiii]. There are currently £9.9 billion in government place-making support for initiatives across the country, per a recent report titled ‘More than Stores’, that evaluated the regeneration status of 350 locations across the UK[xiv].

However, this same report notes that failures in implementation have left the core of many British towns and cities seriously exposed to decline. Per the report:

“The evidence suggests that our high streets are suffering and continuing to decline. This critical urban fabric is often most vulnerable to economic turbulence. The decline of physical retail, which has been accelerated due to the pandemic, has compounded the challenge for businesses and communities”. Brian Mullin, CEO of Marron, Design Consultancy.

Weaving a ‘whole of society’ strategy.

Just as the first Industrial Revolution was not only about technology and manufacturing, the next version will also require a ‘whole of society’ strategy. It will ask every part of British society to lean in, and to move into uncomfortable and unfamiliar territory.

Universities will need to evolve into ‘Knowledge Enterprises’, by becoming self-conscious rather than accidental drivers of their local economic zones[xv]. They will need to partner with venture capital, local government, and alumni to create a network of local, high ambition start-ups, support local place-making, and engender a local ‘lab-to-fab’ ecosystem tuned to their home location’s unique comparative advantage.

Coalitions of cities and their surrounding market towns and villages, universities, local business interests, philanthropies and others need to come together to define and execute on ambitious place-making strategies, appealing to the interests of global capital. They must seek to understand what will pass ‘investment committee’ for private investors and reverse-engineer these requirements in developing local proposals that will make sense to the City, to Wall Street, to the Venture world, to global investors.

LOCALIZING ACTION ACROSS 150 UK CITIES AND LARGE TOWNS

If this is the way, what are some practical approaches for the New Government to engender rapid, self-correcting, scalable action across 150 or more key cities or large towns, and their surrounding networks of towns and villages? 

The three levers of growth are Place Making, Deep Tech Venture Capital, and the Lab-to-Fab Reindustrialization. These should ideally be done in concert since they each fuel the other. Place Making attracts Deep Tech talent, which helps to spawn new fabrication and company formation. New companies and products generate income and thus drive increased demand for additional Place Making, and so on. As they start to build speed, these three levers become a flywheel system, requiring less and less energy to build further local momentum.

Lever 1: Place Making.

Britain has a long history, a natural bounty, and deep instincts on how to make beautiful places. With knowledge-work and remote-work revolutions under way, top global talent will be increasingly choosy in moving to the best places. We need to reverse the failed UK urban planning model of the latter 20th century, and focus on building beautiful, walkable, high-productivity, and healthy city centres, market town centers, and neighbourhoods to attract and retain talent.

With an estimated UK backlog of up to 4.3 million homes[xvi], or 430,000 new homes per year if done in a decade, a plan to build 300,000 more homes per year than current trend of 130,000 would unlock over £54 billion per year (£540 billion in total) in incremental annual place-based investment[xvii]. Construction has a 3x multiplier effect on GDP[xviii], implying the potential to add £161 billion per year in GDP via additional housing. Using a 5x wealth multiplier, this implies £805 billion in additional place-driven wealth.  We could leverage a 10% seeding investment to help kick-start this process, or £5.4 billion per year and £54 billion over a decade.

To get maximum impact, the UK must be highly intentional in using this investment to improve the quality of British villages, towns, and cities. One key strategy is to expand existing city and market town cores, where development is less likely to face resistance. The top 150 British cities and large towns represent collectively 35 million people[xix], representing c. 16 million homes at the UK average ratio of 2.2 people per home. Assuming a goal of 3 million additional new homes in 10 years, or 300K homes per year in the top 150 cities, this would imply adding 1.9% in housing stock per year in each of these cities. This is a historically achievable number, below the national house production level in the 1960s, which averaged around 2.8% in housing stock increase per year at a national level[xx]. The town centers of the roughly 1,250 market towns can be considered as additional elements of each city’s strategy, thus augmenting the available capacity even further. Our current level of housing production has declined to 0.5% per year on a national level, or 1/5th the productivity of the 1960s[xxi], suggesting that there is substantial potential to expand capacity. 

New housing in city cores or market town cores will be more compact than the traditional semi-detached or single-housing model. Housing will ideally be developed via re-kindling the successful strategies of prior place-making waves, by creating a variety of uses within defined walkable neighbourhoods with access to green space. We can think of highly desirable neighbourhoods such as Kensington & Chelsea in London that combine some of the highest density in the UK with high levels of desirability. Density, if well done, is a powerful tool of urbanization, by improving productivity per acre, easing job commutes, driving more active lives, and reducing car-dependence. It also improves investor returns, thus attracting more private capital.

The world-class British place making organization, Create Streets, has done extensive work in showing how to improve the quality of place, through a variety of tools, including Design Codes, Regeneration Strategies, Street Designs, and Master Plans[xxii]. Create Streets has shown that it is possible to combine beauty, economic productivity, and higher quality of life, for a lower cost than our current development pattern. The place-making approach embraced by Create Streets, by designing for walkability, community, and economic productivity, can help any street, neighbourhood, town, district, or city to become more attractive for talent. It recently published a report Becoming a Nation of Town Builders[xxiii] with a compelling strategy to support Labour’s target of 1.5 million additional homes in 5 years. 

As this approach is applied at scale in the UK, it can start to bend the cost curve of housing, increasing affordability, reducing commutes, but also making every place more desirable to attract both talent and investment.  

To accelerate cost deflation in housing, we should apply modularization and automation as has been done in computing and electric cars. This approach has been highly successful in driving the housing cost curve down in Japan and Scandinavia[xxiv].  Modular manufacturing reaches efficient scale around 1,000 homes per year, so a plan for 300,000 homes per year could spawn hundreds of new Home Fabrication Centers, located in the edges of cities. These would also become important elements of the ‘Lab-to-Fab’ strategy defined below.

How to engage in a place-making process.

The current model for house building is inefficient. Developers face a long and uncertain process, and often constraints that limit the application of creative place-making strategies. Financing companies are discouraged from creative solutions by some of the perceived complexity of place-making. Cities are under budget pressure and often have lost their skills in place-based development. City centers have become undesirable as retail commerce has been replaced by online or out-of-city commerce. Residents in the suburbs of cities will often only commute in for work and the occasional night out and, with remote work, perhaps only some days in the week, further undermining the economics of city centers.

But there are many untapped assets and opportunities in these cities. The local government, the universities, and other key stakeholders are often large landowners and have the ability to either cornerstone or provide critical planning approval for place-making projects. There are many under-developed brownfield, parking lots, sheds or other low-productivity areas that could become much more productive contributors to the overall place experience. City centers will typically host the main train station, providing walkable access to train-based transportation. The British train network, while imperfect, provides a large proportion of the country with relatively easy access to one of the top 3 global centers of finance, commerce, and art, making any city with London access within 3-4 hours, part of the ‘Metropolitan Experience’. Dag Detter‘s book, The Public Wealth of Cities: How to unlock hidden assets and boost growth and prosperity, exposes the ‘hidden’ wealth of cities that can be tapped to help kick-start placemaking strategies[xxv]. 

The key representatives and power brokers in a city must come together to develop an ambitious and exciting place-making strategy, with a strong narrative of place, and a clear hierarchy. In many cases, the first move will be to strengthen the neighbourhoods within walking distance of the main train station. These are the neighbourhoods where the first impressions of a city are made and they are often marred by self-defeating planning decisions of the past, such as one-way systems that encourage high car speed, failed commercial centers, and ugly office buildings.

Poor planning makes the first approach from the train station in many British cities at best neutral and often unattractive to talent. We need to think about the approach into the city as a kind of ‘Unbox’ experience, in the way in which we purchase a new iPhone, and it almost magically updates from the prior version, so that in minutes we are ready to be productive. We can imagine replacing fast streets that kill local commerce, with slower streets that encourage walking, biking, and shopping. Tearing down ugly buildings from the 1960s and replacing them with beautiful vernacular buildings adjacent to parklets and tree-lined cities. Reopening abandoned canals, riverways and other natural features that have been obscured or made unsafe for the local population. Encouraging high-growth companies to locate conveniently close to the station, at a discount to London costs.

Beyond the cornerstone district, we can then map a series of neighbourhoods, each configured to deliver a high proportion of people’s daily needs within walking distance. Each neighbourhood plan should be bottom-up, in incorporating the desires and needs of those closest to it, with some overarching top-down guidance and support. We should include in this process the cores of surrounding market towns, and develop a network map, including exploring creative ways to harness car-free transit between each neighbourhood, from old byways and bike paths to light rail, to underground, overground or even aerial strategies. We should broadly adopt the principle of subsidiarity, in which the decision-making is as local as it can be.

A key role at the city level is to aggregate across all the neighbourhood and surrounding town plans and ensure that they collectively meet the requirements of potential funding sources. A well-integrated and well thought out plan could create an investment opportunity of £1 billion or more, making it compelling for global investors.

In all of this, the role of government or philanthropic investment can be decisive. It is likely that the earliest projects will not generate ideal return profiles and thus fail to attract private capital. Local governments could potentially put land they own into the mix on a risk basis, to be paid after private capital, or leverage concessionary finance from local philanthropies to reduce the rate of interest to allow a project to ‘pencil out’. A 2022 study titled ‘The State of Brownfield’ showed that there are 67,000 acres of UK brownfield available, much owned by local, philanthropic or government institutions, that could result in 1.2 million additional homes, with close to half already permitted[xxvi]. If these were developed to the level of highly desirable neighbourhoods such as Knightsbridge or Kensington, these acres could deliver 3 million or homes[xxvii].

Local transit will be critical. People cannot reduce from 2 cars to 1, or even go car-less, if they cannot accomplish their daily tasks via a combination of walking, biking or transit. While a lot of focus has been on High-Speed Rail, local solutions are more critical for daily living. This includes increasing the frequency, speed and reliability of existing transit networks, as well as via tactical and relatively inexpensive moves to combine new housing clusters with new transport. Create Streets illustrates the potential to combine transit and new housing in a human-centered and less expensive way than prevailing road expansion strategies in one of its recent papers, Stepping off the Road to Nowhere[xxviii]

The local universities can have an outsize role in this strategy. They can often cornerstone key local development projects such as labs, housing, or inner-city research parks (in contrast to traditional research parks built in rural areas). Universities might also be significant landowners directly or via alumni and other relationships, and this land could play a critical role in the place-making strategy. By developing venture capital funds along the lines of Oxford’s OSE, Cambridge’s CIC and Northern Gritstone, universities can help drive a start-up ecosystem in the city center, which in turn will help improve the returns for place-based investors, encouraging further real-assets investment.

Lever 2: Deep Tech Venture Capital.

Venture capital is the most powerful tool of economic development in today’s economy, and the US’s four-decade lead in developing its venture sector is a key reason why it has grown faster than Europe. As covered in a paper by Gornall and Strebulaev in “The Economic Impact of Venture Capital: Evidence from Public Companies”[xxix], prior to 1979 the United States and Europe created large public companies at the same rate.

After 1979, with a surge of venture-backed firms, the United States moved far ahead of Europe in its ability to create large companies, gaining a massive advantage over Europe in GDP growth and wealth formation. Gornall and Strebulaev estimated that venture-backed firms went from 1% of US market capitalization in 1979 to 40% in 2020, thus accounting for 79% of total US market capitalization growth during this 40-year period.  The global technology sector, largely incepted by venture firms, is today valued at over $30 trillion[xxx], and the five largest companies in the world are all American, venture backed, firms.   

The impact of technology in the UK has been equally positive, though smaller given that it has only been seriously developed in the past decade. Over the past decade, around $10 billion in seed investment has helped attract $150 billion of multi-stage investment (a 14x multiplier), creating $850 billion in increased tech value (an 85x multiplier on the seed investment and a 5x multiplier on total tech investment) and $1.35 trillion in wealth effect (a 135x multiplier effect on the seed investment and an 8x multiplier on total tech investment) [xxxi] [xxxii]. The c. $160 billion invested in UK technology (much from overseas), represents only 1% of the total UK financial sectors’ AUM (Assets Under Management), and yet it has been the locomotive driving the UK economy.

A similar multiplier effect has been observed at a local level, in US markets such as Boston and Austin, and in the London market, as well as in the small university towns of Oxford and Cambridge, which have been re-invented around technology. These experiences suggest that venture capital could similarly be used in the top 150 British cities and large towns, to ensure the UK truly dominates the emerging Deep Tech Venture Capital opportunity.

Setting a target for UK venture could begin with reverse-engineering from a value target. The US tech ecosystem is worth in the range of $20 trillion[xxxiii], which implies a tech value per capita of $61K. In comparison, the UK’s tech system is worth $1 trillion, or $15K per capita. If the UK aims to reach the current US average, it will imply reaching a total tech value of $4 trillion by adding $3 trillion to the existing $1 trillion. An additional $3 trillion in UK value (£2.4 trillion) one decade from now would require in the range of £480 billion or £48 billion in additional tech investment per year, assuming a 5:1 ratio between value and investment.

In 2023 UK tech investment was £17 billion, after peaking at £31 billion in 2021. Venture capital, both globally and in the UK, has historically moved in 20-year cycles, with long troughs following a peak, as was last evident in the year 2000 peak and subsequent trough. Therefore, if UK VC follows the pattern of the last cycle, we could anticipate many years of ‘below peak’ investment. Q1 2024 is about 30% down from the 2023 number, suggesting that 2024 tech investment could be in the £13 billion range or lower. Without intervention, instead of seeing Tech value surge to multiple trillions, the UK is likely to experience a venture capital plateau or decline, as venture investment lags during the technology trough.

The sectors which are predominant today are different from those dominating the past decade. From 2013 to 2022, the dominant verticals in the UK were areas such as Fin-Tech (which attracted over 1/3 of UK VC investment), enterprise, and healthcare[xxxiv]. In 2023, in contrast, the dominant theme was Deep Tech, which captured 1/3 of all investment[xxxv], with electric mobility, EV batteries, and autonomous mobility as the top 3 sub-categories.

Venture has also been heavily skewed towards London and the South and has been far less prevalent in many of the Older Industrial Cities in the North and across the British Nations. The lack of regional depth and Deep Tech expertise is compounded by the limited experience of the UK venture capital sector in fabrication and the more complex capital planning cycles associated with making things.

Pivoting the UK venture capital sector into tripling in size, majoring in Deep Tech, and tightly aligning with manufacturing, will not happen by accident or by muddling through. It requires a well-crafted strategy, leveraging all the elements of UK PLC, including aligning the vast network of quasi-government organizations that could support this effort, key British commercial leaders, key British partners, the Universities, and the worlds of Venture Capital and City of London Finance.

In the past five years, the UK VC sector has raised in the range of £30 billion[xxxvi], suggesting considerable ‘dry powder’ capability. The UK VC sector has been critical in leading the first waves of early-stage investments, whereas in later stages international technology investors tend to dominate. These British venture reserves could be attracted into Deep Tech investment through a combination of manager training, by supporting the growth of global Deep Tech market expansion, and by reducing VC concerns on hardware and capacity investment through co-manufacturing capacity and other market support mechanisms. Many of the skills in other VC verticals are transferable to the Deep Tech sector. To develop greater specific Deep Tech VC capability, programs could be developed to recruit talent into VC firms with corporate, SME or academic experience in relevant technologies and target markets.  

However, most of the VC capacity is in Central London, and there is a need for an ambitious regional expansion strategy to extend the Deep Tech effect into the British manufacturing heartland, beginning with the London boroughs. To this end, we could envisage an initiative aiming to create as many as 150 local seed funds, each investing an incremental £100m across these 150 locations, for a collective £15 billion in additional seed investment capacity. If we consider that each of these cities would need to invest, on average, around £3.6 billion into place-based regeneration to meet their share of 300,000 additional homes per year[xxxvii], the £100 million represents only 3% of the housing investment.

The combined effect of local place-making and local venture capital generates significant local wealth compounding. A £3.6 billion investment in local place-making over a 10-year period can generate £5.4 billion in wealth[xxxviii]. The £100 million in local venture capital in each key city or large town could attract as much as £1 billion in follow-on capital and generate a local wealth effect of more than £5 billion[xxxix], in addition to an expected annual rate of return of 8% based on historic UK venture performance[xl].  In addition to these independent effects, the two levers will self-reinforce: place-making will help to attract talent and capital locally, improving the performance of venture-backed firms. Venture-backed companies will drive increased wages and demand for housing, improving the returns for place-making.

At some stage, ‘cold markets’ can become hot and thus require no further stimulus. This effect has been clear in the super-heated markets in Oxford and Cambridge. The mistake in the Oxford and Cambridge strategies was to be insufficiently bold in place-making, but their recent experiences point to a generalizable UK strategy.

Aggregated across the UK, £15 billion in Deep Tech seed VC can help ‘crowd-in’ an additional £150 billion in follow-on capital, for a combined £165 billion. At a 4x multiple, more conservative than the current UK venture multiplier, this could drive £660 billion in additional UK technology value, and over £500 billion in UK new wealth[xli].

For the Central Government, seeding such an initiative would require in the range of £6 billion, by allocating £40 million per location. The remaining £9 billion to seed 150 cities could be raised through locally generated investment (pension funds, local companies, local philanthropies, global enterprises with a local commitment, university endowments, alumni networks, real-asset investors in the local place-making, and global investors interested in gaining early access). Universities or equivalent high R&D local enterprises would be key local players, as sources of spin-outs, company support, specialization strategies into high-growth sectors, and as talent attractors.

£6 billion represents a very small investment relative to other investment categories in the UK. If we attribute only 10% of the growth in UK tech worth to the British Business Banks’ investment of around £5 billion in the past decade, this still represents a 14x multiplier. By pooling across 150 funds and potentially 2,000 or more companies, this investment is extremely safe. Mechanisms such as the Mansion House Compact, which aims to unlock £50 billion in pension and insurance funds[xlii], could be a partner in this initiative. Many of the finance companies behind this agreement have interests in real asset investing, and thus can be prime beneficiaries of the synergies between place-making and venture capital.

At a local level, the same group that comes together to organize the place-making strategy could easily spin-out an adjacent venture capital group. These efforts are quite different in kind, but clearly benefit from significant collaboration.    

But we are not done. A third lever can be brought to bear: re-industrialization via a ‘Lab-to-Fab’ transition. Many of the top 150 UK cities are very well positioned to host a new manufacturing revolution, one that is automated, cleaner, smaller in size, networked, and distributed. The UK Older Industrial Cities can host the British leap into Advanced Manufacturing.

Lever 3: Lab-to-Fab Reindustrialization.

By ‘Lab-to-Fab’ we are describing a pathway for the UK to rapidly build a network of advanced manufacturing plants, by first developing ‘precursor’ Deep Tech companies, and then supporting their evolution into large-scale fabrication. We can see this motion in the biology realm where leading biotech companies build ‘factories’ for stem cells, DNA, RNA, mRNA, and other products. We can see this in the formation of co-manufacturing start-ups that act as enablers for an entire ecosystem of companies, or in the evolution of electric aviation or advanced robotics companies into developing state-of-the-art fabrication. At the core of this metaphor is the idea of tightly coupling venture capital, start-ups, and manufacturing, ideally within a local network. 

Leading venture capitalists Marc Andreesen and Ben Horowitz were recently asked via Twitter whether the US could recover its lost leadership in manufacturing via a combination of AI, robotics and Advanced Manufacturing, and simultaneously reboot America’s Old Industrial Cities. As leading thinkers in global VC, founders of the largest venture capital firm in the world, and leaders in the pivot towards US Deep-Tech Re-Industrialization through the ‘American Dynamism Fund’, their opinion is worth reflecting on.    

Their response includes the following comment:

“The only prospect for rebuilding US manufacturing is advanced manufacturing. The only potential is to climb the tech stack and build new kinds of factories that are fully robotic and fully AI enabled. I think there is a path here. You might almost call this an operation Warp Speed[xliii] for manufacturing. America will once again be the number 1 manufacturing country in the world, not because we are opposed to automation, robotics, and AI but because we are going to embrace all of this new technology as hard as we possibly can” (Marc Andreesen, May 2024[xliv]).

The US is already moving rapidly in this direction. A16Z, the firm led by Andreesen and Horowitz, recently raised a staggering $7 billion for their latest fund, with rivals such as General Catalyst and Bessemer Venture Partners rapidly following suit. A June 2024 conference in Detroit titled ‘Re-Industrialize’[xlv], looks to become the ‘South-by-South-West’ of this decade, as the American VC herd turns rapidly into the integration of GenAI and other advanced technologies into Advanced Manufacturing. 

This bottom-up activity intersects with the vast amounts of capital raised by the US government via the CHIPS Act and the Inflation Reduction Act, which have spawned over 200 new factories in the US and could create as many as 800,000 new manufacturing jobs[xlvi].  The last time this happened in the US was during World War II[xlvii]. By many indicators we are at one of those times.

The UK has the opportunity for a similar leap-frog or ‘Warp Speed’ strategy. Again, we can work backwards from an ideal outcome. The UK invests 1.5% of GDP in manufacturing and has about 50% the level of manufacturing of countries such as Japan and Germany, suggesting that it should target to double this level to 3% of GDP, growing from £35 billion a year to £70 billion a year, or an incremental investment in manufacturing of £350 billion over a decade. Ideally, the bulk of new investment will be oriented around Advanced Manufacturing, and the industries of the future that will first originate in Deep Tech ‘labs’.

Assuming this beyond-trend investment is applied into the 150 Older Industrial Cities, this implies £2.3 billion per city in manufacturing investment. Using the US average of $1.6 billion per factory[xlviii] (£1.3 billion), building one advanced manufacturing location in each city would cost collectively £200 billion. The remainder of the investment (£150 billion in total and £1 billion per city, might be applied to SME adoption of advanced manufacturing capabilities, local Advanced Fabrication catapults along the lines of Sheffields’ Advanced Manufacturing Research Center (AMRC)[xlix], Maker spaces, Fabrication training capacity, including new K-12 and higher-ed institutions, and additional software and services investment.  The costs to set-up this fabrication capacity could, in fact, be lower. Co-manufacturing company Hadrian has so far raised $256 million to set up its initial facility[l].  

The local economic impact of a £2.3 billion investment per city region in manufacturing would be comparable to that of construction, estimated at a 2.7x multiple[li]. Applying this ratio would imply a £3.1 billion local wealth effect[lii] per average city, and £517 billion in aggregate. Seeding the Lab-to-Fab transition in 150 cities could require in the range of £50 billion in co-investment, via direct funding or through targeted tax relief. As an example from the US, the CHIPS Act in the US has already attracted $256 billion in private investment, with a government commitment of $53 billion, implying a ‘crowding-in’ ratio of 5x.  Over time, we should expect the ratio to increase, as further commercial investment is unlocked.

The approach to local manufacturing investment should be like that in Place-Making and Deep Tech, and closely integrated with how the other two levers are applied in each city. The focus of each investment might be driven by areas of exceptional local R&D expertise or other local advantages, for example expertise in verticals (e.g. aerospace or car manufacturing), manufacturing disciplines (e.g. materials, bio-manufacturing, robotics), access to raw materials or preferred supply.

The ‘Lab-to-Fab’ motion can be a powerful pathway to UK ‘Warp speed’ industrialization. On the Deep Tech side, start-ups will need progressively larger funding to advance their product and commercialization, each requiring evidence of progress. A Deep Tech firm might then ‘jump’ to a co-manufacturing site as its first move into large scale fabrication. As it moves to achieve global scale, it might choose to build its own factory, and could tap into funding support for this purpose.   

X-FACTOR PRODUCTIVITY BENEFITS

The local impact of Place-Making, Deep Tech VC and Lab-to-Fab will create a substantial local productivity and wealth lift beyond the impact of each individual component. There is a productivity gap of 50% or more between London and the South East and the bulk of British cities[liii].   As extensively covered by the British non-profit group Center for Cities, a significant driver of the gap is the low density and poor commuting options in many Old Industrial Cities, in contrast with the higher density and better commuting options of the Greater London region[liv].

All three levers will have a material positive impact on local productivity: Place-Making by increasing density, reducing commuting time and increasing access to local and distant jobs (hence the importance of focusing on city cores rather than spreading the house making far and wide), localized Deep Tech VC by accelerating the growth of high paying tech jobs, and via the secondary effect of tech jobs into additional local service jobs, Lab-to-Fab by accelerating the growth of high paying advanced manufacturing jobs, and by its ripple effect on local supply chain and secondary service jobs.

We could assume through the combined effects an increase in GDP per capita of 10% or £3,500 per capita for the 35 million people living in the 150 cities, which implies £122 billion in increased GDP and £613 billion in productivity-driven wealth. Adding the impact across the surrounding market towns and villages would yield an even higher number.

FINANCING THE UK TRANSITION

In essence, we would be seeking to attract £1 trillion in investment over a decade, to generate £2.6 trillion in wealth, a roughly 20% increase over current UK levels. We would assume that circa 10% of this investment would be ‘seeding’ investment, provided by a mix of government, philanthropy, local pension funds, quasi-governmental groups such as UKIB or BBB. The remainder would be competing with projects across other global locations.

How would we go about attracting both the private and the seeding investment?

It is useful to begin with framing the local wealth equation. What are the 150 cities and large towns worth today? How much local wealth could be tapped. If we take an ‘average’ top 150 city or large town of 233,000 people, earning on average £35,000 per year, a simple starting value for the wealth of each city is around £40 billion, likely double that if we include the surrounding network of market towns and villages[lv]. At the city level we are discussing a wealth increase of £17 billion or a 42% increase via the three levers. To this end, we need to attract £7 billion in private capital via an initial seeding investment of £773 million, 2% of the initial wealth of the city. Some portion of the investment might come from central government financial support, perhaps 10-20%, but we should assume the bulk will have to come from local interests, national Quangos[lvi] or philanthropies or through investments in kind.

Land. If we assume that Place-Based investment will be at a rate of 15 units per acre (compared to a current city average of 6 units per acre[lvii], and still below the 50 units per acre in Kensington), this implies that 200,000 acres are required, or 1,333 acres for each city + towns network. Local authorities, the central government, Quangos, and philanthropies collectively own close to 7 million acres[lviii]. UK companies likely own 3 million or more acres[lix]. Therefore 200,000 acres would represent 2% of the collective available amount from institutions. Given that land could represent 10% or more of the Place-Based and Lab-to-Fab investment, getting access to land on a concessionary or patient capital way could help to de-risk projects and seed private investment.

Charities. British charities own a collective £250 billion in assets[lx]. This asset base can contribute to supporting one or more of the three levers, for example through low-interest loans, seed grants or patient equity investment. 

Local Government Pensions. The UK’s Local Government Pension Schemes own a collective £369 billion in assets[lxi]. With growing evidence that local investment has the potential to deliver above-market rates of return, and the benefits of investing in the local economy, some of this capital could be accessed as part of the seeding component.

Quangos. Quangos were studied in detail in a critical report by Richard Norrie at Civitas, titled ‘The Failing Quango State’[lxii].  He estimates that Quangos or Arm’s Length Bodies (ALBs) spent in 2020 £224 billion and employed 319K people.  Given the low productivity and low investment in the UK economy over the past decade, it is fair to challenge how effectively this money is spent, and perhaps reallocate a portion of this towards one of more of the three proposed initiatives.

The UK and Global Financial Sectors: tapping into regime change. The UK Financial Sector has £8.8 trillion in assets under management (AUM), within the context of £78 trillion in global AUM[lxiii]. After a decade during which the UK’s AUM doubled, in 2023 there was a 12% decline, as almost every category was hurt by a higher inflation environment.

As leading economist Michael Spence argued in 2022, the global economy and the investment world is facing a ‘Regime Change’[lxiv]. This is much more than a cyclical low, or a temporary disruption. As the head of one investment group expressed ‘what has worked the past 10 years will not work anymore’[lxv]. Investments in US Office Commercial Real Estate (CRE) have declined in value by over 40%, and look like they have further to fall[lxvi], global venture investment has declined to the level in 2019, and is down 50% from its peak[lxvii], the LDI meltdown under Liz Truss was estimated to have cost the UK pension £425 billion in assets in 2022[lxviii], and required an aggressive intervention from the Bank of England.

The UK and global investment worlds have been mostly in ‘triage mode’ during the past two years as managers have sought to adjust to the new post-ZIRP (Zero Interest Rates Policy) reality, and perhaps hoped for a global ‘soft landing’ to resume the old model. As it is become increasingly clear that the old model is not coming back, that inflation and high interest rates are higher for longer, investors are going to be increasingly looking for alternative investment strategies.

The UK, closely competing with France and Germany, remains one of the top destinations for investment across Europe[lxix]. Historically, global interest in the UK has been heavily channelled through London, in part because many of the other top 150 UK cities and towns offered fragmented and uncompelling strategies for global investors.

There are growing signs of increasingly ambitious and compelling place-making and regeneration strategies across the UK. London is blazing a trail with an ambitious strategy under the brand of Opportunity London. While complex to coordinate, London benefits from its status as one of the top ranked investment destinations in the world, and an explicit goal of this strategy has been to simplify investor access.

The challenge if you are ‘not-London’ (with a few exceptions such as Oxford, Cambridge, and Manchester), is that the complexity of the process is too great for many investors, the plans too small. London does not need to develop a technology strategy because it already has one, whereas most of the cities in the UK lack a credible such strategy despite having the tools for one at their disposal. Market towns on their own are too small to attract non-local private investment, but if integrated into city regions they can help those strategies become more compelling, and access private capital through a higher-level strategy.

The rest of the country needs to similarly put together a similarly ambitious plan. That is the essence of the Knowledge Islands proposal.

Author notes: Dominic Endicott is an Anglo-American management consultant, company founder, and venture capitalist. He is co-author of the book ‘Knowledge Towns: how colleges and universities become talent magnets’, published in 2023 by Johns Hopkins University Press[lxx]. His current practice includes several initiatives in the United States and the United Kingdom, applying the ideas in the book, along similar lines to the proposed Knowledge Islands proposal.

The concept of Knowledge Islands or Knowledge Isles intends to capture several ideas. One is the idea that each location should at some level be its own ‘island’ of innovation, but that collectively they can become a stronger whole. The other is a term that could be uniquely ‘owned’ by the UK, in the same way that Israel has become ‘the start-up nation’. The proposed strategy would push the UK into self-consciously organizing around the development and commercialization of ‘knowledge’, most obviously in application of advanced technology, but equally importantly in encouraging the flourishing of artistic, literary, place-making, music, oratory, thespian and many other forms of knowledge.

As much as this strategy is focused on the hard math of economic development and technology enabled growth (traditionally ‘left brain’ activities per Ian McGilchrist’s masterpiece The Master and His Emissary: The Divided Brain and the Making of the Modern World[lxxi]), it is equally important to aggressively balance this out with ‘right brain’ activities. In building the Knowledge Islands, the role of the arts is central to the success of the entire initiative.

dominic@knowledgetowns.com

[i] In some cases, the target locations are technically towns, but for purposes of this essay we simplify to categorize them all as cities. Not all 150 cities or towns have universities, but they likely have equivalent institutions. In addition, as part of the strategy, it will likely make sense to add a higher-ed and other high R&D institutions.

[ii] https://medium.com/@MetLines/down-market-reviving-englands-market-towns-1-2-55f2c65b2527

[iii] Based on the designation developed in the US by the Brookings Institute, see  https://www.brookings.edu/wp-content/uploads/2018/04/2018-04_brookings-metro_older-industrial-cities_full-report-berube_murray_-final-version_af4-18.pdf

[iv] Based on 2013-2023 inflation adjusted values https://www.statista.com/statistics/281744/gdp-of-the-united-kingdom/

[v] https://www.worldometers.info/gdp/#google_vignette

[vi] Based on 2013-2023 inflation adjusted values https://www.statista.com/statistics/188141/annual-real-gdp-of-the-united-states-since-1990-in-chained-us-dollars

[vii] Based on Credit Suisse 2023 Data Book, UK is $16B and US is $140B as of 2022. In comparison, in 2012 it was $12B and $71B. US wealth grew 7%/pa in nominal terms and 4.5% real and UK net worth 3%/pa and 0.5% real using a 2.5% average inflation https://data.worldbank.org/indicator/NY.GDP.DEFL.ZS?locations=US  

[viii] This is based on the following calculations: UK technology value has increased from $162 billion in 2012 to $994 billion in 2022 ($832 billion increase). Digital employment has increased from 2.2 million to 4.7 million or by 2.5 million people. If we assume 50% of the tech value increase stays in the UK, this implies $416B in value (£333B at 1.25 x rate). If we assume average digital wage is £60K, this implies £150B in new digital GDP or £750B in digital wealth using a 5x wealth/GDP multiplier. Total is £1,083 Billion. This is a conservative estimate, that excludes the multiplier effect of tech jobs on the rest of the UK economy and UK housing costs. The full tech effect is likely to be higher.

[ix] UK Tech Value, 2010-2023 and Base Case Scenario to 2032. Based on TechNation Data to 2021. Deal Room to 2023. Forecast from 2023-2032 based on historical correlation between cumulative investment and technology value, FTSE value based on 2023 number

[x] https://commonslibrary.parliament.uk/trends-and-inequalities-in-cities-towns-and-villages/

[xi] https://www.vantageresearchgroup.com/presentation/Newsweek

[xii] https://dealroom.co/reports/the-european-deep-tech-report-2023

[xiii] https://opportunity.london/

[xiv] https://www.shma.co.uk/our-thoughts/more-than-stores-report/

[xv] The term ‘Knowledge Enterprise’ was developed by Michael Crow, the President of Arizona State University, to define a university as heavily engaged in the economic growth of its surrounding communities https://president.asu.edu/the-president, https://research.asu.edu/

[xvi] https://www.centreforcities.org/housing

[xvii] Based on average home size of £76 sqm and average cost of £2,360/sqm equals £179K average cost. If we assume 430K homes are build each year (300K additional homes per year over current levels of circa 130K), this implies additional investment of £53.7 billion per year https://www.zigguratrealestate.ph/post/how-big-is-a-house-average-house-size-by-country-2023, https://costmodelling.com/building-costs

[xviii] See, for example, a recent study of the effect of construction in the US economy by Stephen Fuller at George Mason University https://leadingbuilders.org/wp-content/uploads/2020/07/Residential-Construction-Economic-Study-5-2020.pdf

[xix] https://worldpopulationreview.com/countries/cities/united-kingdom

[xx][xx] For example, in 1967 housing stock was 14.8M homes and 415K new homes were added, for a ratio of 2.8%

[xxi] 133K new homes on an existing base of 27 million homes (133K/27M = 0.5%)

[xxii] Projects - Create Streets

[xxiii] https://www.createstreets.com/wp-content/uploads/2024/06/Becoming-a-nation-of-townbuilders-Create-Streets-smaller.pdf

[xxiv] https://www.mckinsey.com/capabilities/operations/our-insights/making-modular-construction-fit

[xxv] https://www.amazon.com/Public-Wealth-Cities-Unlock-Prosperity/dp/0815729987

[xxvi] https://www.cpre.org.uk/resources/state-of-brownfield-report-2022/

[xxvii] This would imply c. 50 homes per acre

[xxviii] https://www.createstreets.com/projects/stepping-off-the-road-to-nowhere/

[xxix] “The Economic Impact of Venture Capital: Evidence from Public Companies” by Will Gornall (Sauder School of Business, University of British Columbia) and Ilya A. Strebulaev (Graduate School of Business, Stanford University and National Bureau of Economic Research). Note: article was updated in 2022

[xxx] https://companiesmarketcap.com/tech/largest-tech-companies-by-market-cap/

[xxxi] Sources (1) Seed investment based on estimated early stage investment 2012-2022; (2) Multi-stage based on remaining UK tech investment per TechNation reports; (3) Tech induced jobs based on TechNation figures of 2.5m additional digital jobs and 2x multiplier for induced-jobs, digital jobs at higher compensation than non-digital jobs; (4) Tech value based on TechNation and Dealroom data; (5) UK Wealth NSV formula

[xxxii] This graph showed the UK Tech multiplier analysis from 2012 to 2022 in $ terms.

[xxxiii] For example, one analysis of US tech stocks adds up to $18.8 trillion, while the value of private tech companies is estimated at $3.8 trillion globally, and c. $1.4 trillion for those in the US https://stockanalysis.com/stocks/sector/technology/, https://www.cbinsights.com/research/report/unicorn-startups-valuations-headcount-investors/

[xxxiv] See for example the vertical breakouts from 2015 to 2020 in the TechNation 2021 report https://technation.io/wp-content/uploads/2021/03/Tech_Nation_Report_2021_deck_v3.pdf

[xxxv] https://dealroom.co/reports/uk-innovation-forward-look-for-2024

[xxxvi] https://dealroom.co/reports/uk-innovation-forward-look-for-2024, page 10

[xxxvii] 3.0m homes*£179K per home /150 cities = £3.6 billion

[xxxviii] £1.5 billion / 5 years = £300 m per year*3x construction multiplier = £900m per year*5x wealth multiplier = £4.5 billion

[xxxix] Applying a multiplier of 50x the venture seed investment. This is below the UK average of 132, and in line with observed venture capital wealth multiplier effects in Boston, Austin in the US.

[xl] https://www.bvca.co.uk/Research/BVCA-Publications/Details/Performance-Measurement-Survey-2022

[xli] Assume that 50% of the tech value remains in the UK, or £330 billion. £165 billion over 10 years or £16.5 billion per year generates 206,000 jobs assuming a cost of £80K per job. Via a job multiplier of 2x, 412,000 secondary jobs are created, at an income of £35K or £14.4 billion in total. Combined with the £16.5 billion direct GDP impact this adds to £30.9 billion in incremental GDP, and at a 5x multiple, this is £154 billion in wealth, which combined with £330 billion in tech value, adds to £484 billion in new wealth.

[xlii] https://www.theglobalcity.uk/insights/mansion-house-compact

[xliii] This references the US mRNA and Vaccine strategy during Covid 19

[xliv] This is covered after 1 hour and 7 minutes in the recent podcast of the Ben and Marc Show https://podcasts.apple.com/us/podcast/ai-robotics-the-future-of-manufacturing/id1713388101?i=1000655793988

[xlv] https://www.reindustrialize.com/

[xlvi] https://www.statesman.com/story/news/politics/politifact/2023/12/17/manufacturing-jobs-created-president-biden-politifact/71931018007/

[xlvii] https://www.cambridge.org/core/journals/journal-of-economic-history/article/world-war-ii-and-the-industrialization-of-the-american-south/B02C45F9CB7CBE9F6568EAC33F2EF0C1

[xlviii] Based on $400b commitments until 2030 and around 250 projects and 250m square feet of construction https://www.nmrk.com/insights/thought-leadership/manufacturing-momentum-advanced-manufacturing-ascendancy-in-north-america

[xlix] https://www.cambridge.org/core/journals/journal-of-economic-history/article/world-war-ii-and-the-industrialization-of-the-american-south/B02C45F9CB7CBE9F6568EAC33F2EF0C1

[l] https://www.cbinsights.com/company/hadrian-1

[li] https://www.defense.gov/News/News-Stories/Article/article/3189049/us-manufacturing-ecosystem-key-to-economic-growth-innovation-competitiveness

[lii] £1.9 billion over 10 years is £190 million per year, at 2.7x multiplier, this implies £513 million in GDP, at 5x this is £2.5 billion in wealth effect.

[liii] https://www.centreforcities.org/productivity/#geography

[liv] https://www.centreforcities.org/productivity/

[lv] 233,000 * £35,000 income per capita = £8.1 billion in city GDP * 5x wealth/GDP ratio = £40 billion

[lvi] https://en.wikipedia.org/wiki/Quango

[lvii] Based on average across the top 10 British cities http://www.demographia.com/db-ukcities2021.htm

[lviii] Local authorities in the UK still own 1.3 million acres, even after sales of 5.4 million acres over the past few decades. Other major landowners in the UK include, the Forestry Commission (2.2 million acres), MoD (1.1 million acres), the National Trust (589K acres), the RSPB (332K acres, Whitehall (193K acres[lviii]), The Duke of Atholl’s Trusts (145K acres), the Crown Estate (678K acres), DEFRA (116K acres), the Church of England (110K acres), Homes England (19K acres), and the Honorable Artillery Company (14K acres). Sources: see for example, local authorities https://neweconomics.org/2022/03/losing-the-plot; Whitehall https://whoownsengland.org/2016/09/14/what-does-whitehall-own/

[lix] A review of title ownership showed that the top 10 companies in the UK own between then 224K titles. Assuming 15 acres per title, this implies 3 million acres https://whoownsengland.org/2017/11/14/the-companies-corporate-bodies-who-own-a-third-of-england-wales/

[lx] https://www.civilsociety.co.uk/news/richest-10-charities-hold-27-of-sector-s-wealth-after-assets-decline.html

[lxi] https://lgpsboard.org/index.php/schemedata/scheme-annual-report

[lxii] https://www.civitas.org.uk/content/files/PDF-version.pdf

[lxiii] https://www.theia.org/industry-policy/research/investment-management-survey-files

[lxiv] https://www.project-syndicate.org/commentary/global-economy-regime-change-lewis-turning-point-by-michael-spence-2022-01

[lxv] https://www.bloomberg.com/news/articles/2023-06-27/beschloss-warns-regime-change-to-roil-investments-of-old

[lxvi] https://www.fitchratings.com/research/structured-finance/us-office-cre-values-yet-to-trough-recovery-will-be-protracted-20-03-2024

[lxvii] https://www.statista.com/statistics/1422267/vc-investment-worldwide-by-quarter/

[lxviii] https://www.cityam.com/liz-truss-mini-budget-helped-knock-425bn-off-pension-funds-assets-in-2022/

[lxix] https://www.ey.com/en_gl/foreign-direct-investment-surveys/optimism-remains-in-europe-as-foreign-direct-investment-declines

[lxx] https://www.amazon.com/Knowledge-Towns-Colleges-Universities-Education/dp/1421446278

[lxxi] https://www.amazon.com/Master-His-Emissary-Divided-Western/dp/0300188374