The purpose of the “Digital Stoke” project is to understand and support the emergence of a growing Information, Communication and Technology (ICT) sector in Stoke-on-Trent and North Staffordshire. While Stoke-on-Trent has historically been associated with industrial decline, the organic growth of a digital sector presents a new opportunity for economic regeneration. This research aims to (i) identify and map what constitutes the local digital economy, (ii) understand why the digital sector has developed locally, and (iii) analyse how it functions. The findings will inform evidence-based policy recommendations aimed at: (i) supporting digital firms and employment in Stoke; and (ii) raising Stoke’s profile as a destination for digital firms, thereby encouraging new investment (including Foreign Direct Investment), as well as attracting the attention of regional and national policymakers.
Report 1 details project findings arising from the analysis of secondary data together with analysis of the characteristics of digital industries and firms. A further document – Report 2 – will report findings supported by our analysis of primary data (comprising a web-scraped database of local ICT firms together with survey responses and extensive interviewing). Finally, policy recommendations – in Report 3 – will reflect the entire evidence base. Accordingly, the policy recommendations concluding this “Summary” are provisional.
This report comprises four parts. Part 1 posits that the ICT (or digital) sector, specifically Section J, as defined by Standard Industrial Classification (SIC) codes, serves as a reasonable and practical unit of secondary data analysis. This part then provides national context demonstrating the increasingly significant contribution of the ICT sector to the UK economy. Part 2 focuses on the three local authority areas comprising North Staffordshire (i.e., Stoke City together with Newcastle-under-Lyme and Staffordshire Moorlands districts) and concludes that Stoke’s ICT sector is characterised by substantial size, high productivity, continued growth relative to the local economy, and rates of enterprise entry and exit that compare favourably with national rates. Part 3 analysis the characteristics of digital industries and firms to better understand the ICT sector, in particular, its creative economy characteristics and its dependence on intangible assets. Finally, based on secondary data analysis (Part 1 and Part 2) and industry and firm characteristics (Part 3), Part 4 explains how we developed the survey questionnaire and interview schedules, which form the basis of our primary research. These primary research efforts will be reported in Report 2 and will contribute to more comprehensive, evidence-based policy proposals in Report 3.
At the national level, the ICT sector has increasingly contributed to the UK economy, compared to the manufacturing sector
The ICT sector has emerged as a major source of wealth creation in the UK economy, significantly outperforming the manufacturing sector in growth, productivity and employment. From 1990 to 2022, the ICT sector’s share of UK total GDP (total Gross Value Added) grew from 0.87% to 7.49%, while manufacturing’s share declined from 10.74% to 9.70%. Between 1994 and 2021, the ICT sector’s Gross Value Added (GVA) increased by a factor of 11.96, significantly outpacing both manufacturing (1.52) and the overall market sector (1.67). This sector also demonstrated strong growth in the number of businesses, between 2010 and 2021 ranking the third highest (46.6%), compared to all industries (24.7%). In 2021, the ICT sector generated higher turnover per employee, £211,951, compared to the private sector average of £164,955, while the growth of labour productivity (inflation-adjusted GVA per employee) identifies ICT as a strongly emergent sector: over the period 1994-2020, 534% growth in ICT labour productivity, greatly outpacing manufacturing’s 149%.
Over the past 50 years, while the manufacturing sector has shown limited job creation due to technical progress and increased capital intensity, the ICT sector has driven both wealth creation and employment growth. These trends highlight the potential benefits for Stoke-on-Trent in fostering its emerging digital sector.
Although economic complexity is highly “history dependent”, Stoke has developed a competitive ICT sector
Stoke-on-Trent ranks low in productivity (160th out of the UK’s 179 ITL3 regions in 2021) and economic complexity (60th out of 61 British towns and cities in 2019), which is a measure of a region’s relative level of accumulated knowledge and capabilities, and which strongly correlates with productivity and economic development. However, the city has developed a competitive ICT sector that exceeds national averages in employment intensity (even without adjusting for the employment of bet365, a major digital company classified under “Gambling and betting,” which can be classified as a digital company). “Digital Stoke” is not a one-firm phenomenon, but in 2023 comprised bet365, a major digital firm, 235 smaller enterprises in Stoke, and around 550 across North Staffordshire. This emergence, independent of Stoke’s industrial heritage and with minimal policy support, demonstrates the city’s potential to develop economic complexity by specialising in new knowledge activities. This transformation offers a model towards enhanced productivity and economic revitalisation for other post-industrial cities.
The ICT sector in Stoke is large and outperforms its local economy
In 2022, in terms of Gross Value Added (GVA) the absolute size of Stoke’s ICT Sector (SIC Section J) was around £1 billion: in current price GVA, £775 million (in real – i.e., inflation-adjusted – GVA, £898 million); but, adjusted for bet365, £976 million in current price GVA ($1,077 million in real terms). Two alternative approaches to adjustment for bet365 yield current price GVA of £1,051 million and £1,125 million respectively. Accordingly, the digital sector has already become a major component of Stoke’s local economy. In 2022, while the ICT sector accounted for 4.1% of local employment, it contributed 11.3% of GVA, up from 8.2% in 1998. This GVA share of Stoke’s ICT sector significantly exceeds that of both the rest of Staffordshire (2.3%) and the UK (6.5%). The sector has also shown strong growth, with a nearly 50% increase in real GVA over the past decade. As a result of this rapid growth, Stoke’s ICT sector ranked 40th among the UK’s 179 ITL3 regions in 2022, despite being the 118th largest local economy. Notably, when accounting for bet365’s contribution, based on three different adjustments, Stoke’s ICT sector ranking rises as high as 31st or 32nd nationally. In any case, Stoke’s ICT sector ranks by size within the first quartile of the UK’s ILT3 regions.
The sector’s productivity performance is also impressive, as evidenced by two distinct data sources. According to ITL3 data from the Office for National Statistics (ONS), labour productivity (GVA per employee) in Stoke’s ICT sector reached £155,000 in 2022, ranking 7th out of 168 ITL3 regions in Great Britain, significantly outperforming both neighbouring cities (Birmingham: £90,667; Manchester: £101,880) and the UK average (£90,988). The sector’s high productivity might come from digital industries SIC 61-63 (Telecommunications; Computer programming and consultancy; and Information service activities), which dominate Stoke’s digital economy in both employment and productivity. As a “sense check”, firm-level data from the FAME database indicates that, despite limited samples, Stoke’s ICT firms demonstrate productivity levels (Value added per employee) comparable to the national average. This evidence together suggests that the productivity of Stoke’s ICT sector is at best substantially better than the UK average and at least “national class”.
Stoke has become the engine of the digital economy in the North Staffordshire sub-region
The ICT sector has been increasing its weight in the local economy. From 2015 to 2022, the ICT sector – particularly SIC 62 (Computer programming, consultancy and related activities) – has steadily increased its share of local employment, growing faster than the national average. Based on web-scraped online job adverts and on the assumption that job adverts correspond to jobs filled, there is an indication that digital employment in Stoke not only accounts for a substantial share of employment but also a growing share.
Stoke has established itself as the engine of the digital economy in North Staffordshire, as evidenced by: (i) higher and faster-growing labour productivity compared to Newcastle-under-Lyme and Staffordshire Moorlands between 2015 and 2022; (ii) larger ICT employment (5,000 workers in 2022) compared to Newcastle (1,000) and Staffordshire Moorlands (300); (iii) strong employment growth of 67% (2015-2022), contrasting with declines in Newcastle (-20%) and Staffordshire Moorlands (-14%); (iv) dominance in SIC 62 activities, the largest component of North Staffordshire’s digital sector, with both employment and growth rates exceeding those of neighbouring areas; and (v) substantially larger average ICT business size compared to surrounding regions.
Stoke’s ICT sector is dynamic, with rates of business entry and exit that compare favourably with national rates: (i) while the number of ICT enterprises and local units peaked nationally in 2019 and locally in 2020, subsequent decline from their respective peaks has been substantially lower in Stoke; (ii) the local fall in the number of ICT enterprises and business units has been accompanied by an increase in average size so that ICT employment has continued to increase; (iii) local ICT employment increase has a strong bias towards full-time jobs; and (iv) in the context of an industry with substantial churn – i.e., exit and entry of businesses – from 2020 the net entry of ICT enterprises in Stoke compares favourably with net entry nationally.
The imperative to innovate is particularly strong in the digital sector, especially for SMEs
Our analysis of the characteristics of digital industries and firms suggests that:
While Stoke’s digital sector has demonstrated organic growth and achieved at least national-level productivity overall, this success should not preclude the need for active policy intervention and support. Particular attention should be paid to businesses lagging the productivity frontier. Public policies should focus on helping these lagging firms benefit from knowledge transfer initiatives, supported by local institutions such as the Council, Staffordshire Chambers, and local universities and colleges.
Stoke is in competition with other cities to attract and retain digital talent. Institutions contributing to the local digital ecosystem – businesses, Staffordshire Chambers, local universities and colleges, the local authorities, and others – should collaborate on a strategy to increase the supply of digital skills.
The relatively low rate of remote work in Stoke compared to neighbouring regions suggests that the high-earning digital workforce may be living and spending outside the city. This raises the need for policies to attract and retain skilled workers locally. Key initiatives should include improving housing quality and affordability, enhancing transport connectivity both within the city and to neighbouring regions, and developing attractive urban amenities and lifestyle offerings. Additionally, to ensure sustainable development, local fiscal policies should be adjusted for Stoke to capture more of the value it creates, allowing it to reinvest in public services and further growth.
Local authorities should focus on creating a comprehensive and sustainable digital ecosystem through consistent policy interventions. Given that the digital economy extends across wider North Staffordshire, coordinated action among local authorities in Stoke-on-Trent, Newcastle-under-Lyme, and Staffordshire Moorlands is essential. This cooperation should focus on investment in tangible infrastructure (e.g., low-cost housing and workspace, broadband coverage, and transport), intangible assets (e.g., education and skills, knowledge transfer, a business-friendly culture, and an environment in which face-to-face interactions and social capital can flourish) or both (e.g., Science Parks). The ecosystem development should align procurement and business support policies with local universities to promote publicly funded university research into basic intangibles and knowledge transfer initiatives. The success of these initiatives requires policy consistency beyond electoral cycles and strong political consensus among local authorities.
The existential importance of innovation for digital sector firms suggests a two-fold corollary for public authorities, particularly in partnership with colleges, universities and other providers of management education and consultancy advice: (i) to support non-technological innovation to help firms maintain existing markets and enter new markets (including export markets); and (ii) to support activities and infrastructure that enable technological innovation.
Despite its strong growth, the ICT sector in Stoke has attracted relatively little foreign direct investment (FDI), partly because of skill shortages — as evidenced by bet365’s expansion to Manchester for recruitment. Local authorities need to actively promote Stoke as a digital hub while addressing fundamental challenges. The city should develop a compelling brand narrative focused on digital innovation and establish clear communication channels to make the ecosystem more “readable” to potential investors. By creating a business-friendly culture and streamlining investment procedures, Stoke can position itself as an attractive destination for both private and public sector investment.
Authors Geoff Pugh, Yao Li, Mark Gregory, and Jon Fairburn