Technology and devolution – a new opportunity for tech firms?

As the UK prepares for a new Labour leader and prime minister, the focus is already shifting to devolution, regional power and promoting growth across the country. Devolution is a priority for longtime Manchester mayor and newly elected MP Andy Burnham, who will likely succeed Sir Keir Starmer at Number 10 next week; we expect the new government to build quickly on devolution and the new powers following the English Devolution and Community Empowerment Act.

With the English Devolution and Community Empowerment Act 2026 officially in force, Mayoral Strategic Authorities (like Greater Manchester and the West Midlands) are able to access expanded powers over infrastructure, data planning and localised funding.

Regional technology ecosystems have matured significantly over the past decade. Whilst London remains Europe’s largest technology hub, many of the UK’s fastest-growing specialist clusters now sit outside the capital. For example, Manchester has developed strengths in AI, cybersecurity and digital health; Leeds has become a centre for health technology and fintech; Bristol and Bath continue to lead in semiconductor design and advanced engineering; and Newcastle has established expertise in cloud computing and software.

A key part of this shift has been a move towards empowering regional leaders to support and fund projects and businesses in their communities and boost investment and growth in their regions. This is a Labour Party Manifesto commitment but also reflects the wider economic and political environment. For most Brits — and for most MPs — what’s top of mind are concerns close to home like the cost of living, local economic growth or strains on public services, housing or transport. Devolution often puts local leaders in a position to help address these issues, with regional mayors and combined authorities increasingly controlling transport, skills, planning and funding.

What does this mean for tech firms?

With the move towards devolution shifting decision-making from central government to local leaders, technology companies increasingly need regional strategies alongside national public affairs programmes. Rather than focusing solely on Whitehall departments, businesses should more and more build relationships with combined authorities, mayoral offices, local universities and regional innovation agencies to take advantage of these policy and business opportunities.

For example, the Local Innovation Partnerships Fund, announced in June 2026, gives English mayors greater control over R&D investment, and allows them to invest in projects that align with local priorities. The aim is to encourage partnerships between businesses, universities and local government that boost economic growth, allow them to commercialise research and create high-value jobs for the local area. This type of development could offer a significant opportunity for relevant tech firms, and it’s just the type of funding change we expect to see more of in the future.

Similarly, technology companies have often viewed government as a single customer; and yet regional markets just in England are quickly developing different priorities, innovation strategies and approaches to procurement. This opens up the market to tech companies offering unique products and services to a range of public sector authorities.

In particular, opportunities are growing across several areas:

• Digital infrastructure — as AI Growth Zones continue to develop, demand continues to increase for cloud infrastructure, cybersecurity, connectivity, energy management, data centre construction and digital skills providers.
• Public sector technology — local authorities increasingly need software that improves productivity, with many local authorities currently considering new and modernised solutions like AI-assisted customer service, digital-planning technology and AI-support for welfare services and automation tools.
• Place-based innovation — rather than competing nationally for every opportunity, businesses can grow by becoming embedded within regional innovation ecosystems.

What should the government consider?

Successful regional technology ecosystems often need a combination of factors — such as research facilities, access to investment and recognisable employers — to attract and retain talent. The idea is that devolution can strengthen these ecosystems by enabling regions to align transport, housing, planning, skills and innovation policy around sectors already possessing competitive advantages.

Tech companies should also consider several important caveats:

• Timings — not all local authorities are at the same stage, and some will have more advanced digital strategies or established digital infrastructure. Public sector timelines and decision-making can also be slow, and businesses will need certainty before investing. We are also increasingly seeing delays in digital-infrastructure planning and connectivity, with reforms expected in the coming months.
• Political fragmentation — the recent local elections in the UK, and the national Labour leadership contest, have brought forth a diverse portfolio of policymakers across the country. In England, Labour has a large majority of MPs and is almost certain to have, in Burnham, a new, left(er)-leaning PM from next week. And yet Reform UK dominated May’s local elections, resulting in many Reform-led councils with new, anti-establishment funding or delivery priorities. Finally, many local authorities are being reorganised and restructured, potentially leading to changes and delays as new boundaries and structures are established.
• Finances — it is true that local leaders’ budgetary priorities may be shifting; and yet the fundamental reality is still that many local authorities remain under financial pressure. Local governments get their funding from a variety of government spending, council tax and fees/charges; so whilst specific grants may be allocated for tech and innovation, councils will be looking for additional efficiencies and opportunities across their portfolio — meaning tech firms will need to compete with other exigencies.
• Public trust — tech firms face challenges here, in particular on the robustness and transparency of their safety measures. Companies and public services must chart a course for successful technology adoption, particularly around AI, as local authorities face increasing scrutiny over data protection, algorithmic transparency, cybersecurity and digital inclusion. Ensuring that industry can set out a clear vision with sufficient governance and safeguards in place will be essential.

Even amidst devolution and a new focus on local authorities, there remains a strong case for engaging both central and regional governments on recommendations to support greater investment across the UK. One area we are looking forward to seeing is how the government ensures its devolution strategies create stronger innovation ecosystems across the whole of the country by utilising a range of policy tools rather than simply moving funding decisions out of Westminster.

Conclusion

For tech firms, devolution represents a significant shift in how government engagement should be approached. We expect that companies investing early in regional partnerships and developing solutions tailored to regional challenges will be best placed to benefit from this shift.

As devolution and investment in tech continue to be political priorities over the coming months, we look forward to engaging with governments on how these projects will be designed and implemented.