Since sweeping to power last year, Keir Starmer’s Labour government has made a clear promise: to rebuild the British economy from the ground up. After more than a decade of London-dominated tech growth, Labour wants to decentralise innovation and foster a tech ecosystem that extends beyond the capital, with cities like Sheffield, Newcastle, and Cardiff standing alongside Shoreditch as hubs of digital excellence.
The groundwork for this nationwide ambition is already being laid. In early 2025, the government launched its AI Opportunities Action Plan – a comprehensive blueprint to harness artificial intelligence across the economy. The plan prioritises public sector transformation and includes the creation of AI Growth Zones, specifically designed to stimulate innovation in regions historically underrepresented in the tech economy. These zones will benefit from improved infrastructure, tax incentives, and tailored local investment strategies to draw in both startups and established firms.
Labour’s aim isn’t just to parachute a few startups outside the M25, it’s about rewiring the entire innovation ecosystem to be genuinely regional.
This means transforming local universities, research centres, and FE colleges to turn them into regional anchors of tech talent and R&D. It means pushing the British Business Bank and other financing mechanisms to fund ventures outside the Golden Triangle of London, Oxford, and Cambridge.
And, perhaps most crucially, it has to mean devolving power – and funding – to local leaders.
That’s where the English Devolution Bill comes in. This legislation, currently passing through Parliament, proposes a significant transfer of powers from Westminster to combined authorities and metro mayors. These powers include control over transport, skills policy, infrastructure, employment support, and local industrial development. In practical terms, this could mean mayors in places like South Yorkshire or Greater Manchester having the tools to create their own local tech accelerators, adapt training programmes to fit emerging sectors, or launch targeted investment funds.
These moves align with the government’s soon-to-be-released Invest 2035 Industrial Strategy, which will outline long-term goals across key growth sectors including AI, clean tech, advanced manufacturing, and life sciences. What sets this approach apart from previous governments is its commitment to “mission-driven” policy, which frames tech growth not as an end in itself, but as a vehicle for tackling deeper social and economic challenges – climate change, inequality, and public service reform among them.
But regional rebalancing won’t be easy: the UK’s digital divide is still all too real. In some areas, superfast broadband access is patchy. In others, the local skills base is not yet ready to meet the demands of a fast-moving digital economy. And although the rhetoric around decentralisation is promising, many regions are still waiting for meaningful fiscal powers to match their new responsibilities.
For this to truly succeed, the private sector also needs to be convinced.
London continues to dominate UK venture capital, accounting for over 70% of all startup investment in Europe in recent years. Labour’s challenge is to make other cities competitive not just in talent or infrastructure, but in investor confidence. That may require co-investment schemes, region-specific tax breaks, and a more aggressive push to diversify public procurement.
Yet there are bright spots. Cities like Leeds are growing into health tech hubs, Newcastle is gaining recognition for digital manufacturing and smart city projects and Belfast and Edinburgh have shown leadership in fintech and AI ethics, respectively. What’s missing is the national strategy to bind them all together – a networked, cooperative UK tech economy that functions more like a grid than a pyramid.
Labour has made a compelling start. With a mix of bold policymaking, regional empowerment, and public investment, the UK could be on the brink of its first truly nationwide tech boom.
But it won’t happen automatically. It will take political will, policy coherence, and constant pressure from civic and business leaders outside the capital to ensure this vision becomes more than just another promise.
If Labour succeeds, the future of British tech won’t just be built in Shoreditch – it will be shared by Sheffield, scaled in Swansea, and sustained by every region across the country.
