Start-ups in London’s Tech City have reacted angrily to the news that the Prime Minister David Cameron has withdrawn the £50 million he promised to spend regenerating Old Street’s “Silicon Roundabout”.

The gyratory, considered by many to be at the core of the UK technology scene due to the large number of small tech companies based there, was due to get a civic centre and a new hi-tech institute as part of the makeover.

However, a spokesperson at the Prime Minister's Office told Techworld last month that the government is no longer investing the money. 

Given that a permanent solution for the roundabout will be technically difficult and some way off, that money has gone back into general expenditure,” he said.

Ashon Spooner, founder of Phundee, a newly-launched crowdfunding platform based a short walk from Silicon Roundabout in the Google Campus start-up building, said: “Pulling the £50 million fund shows a lack of focus and planning by the government as well as undermining a sector that is truly helping transform the economy.

“London has arguably the most thriving tech scene in the world. It has more financial technology startups than anywhere in the world, and some of the world's largest companies are currently relocating from the US to East London. In fact, over a quarter of all job growth in London is coming from the digital sector, but for this to continue, we need to keep investing in infrastructure and world class workspaces."

George Burgess, a 21-year-old entrepreneur behind Shoreditch-based education app, Gojimo, said: "Ultimately, Shoreditch will still thrive as a great start-up ecosystem, but the government should be following through on commitments it makes, particularly those which could have such a strong benefit for the wider community.

"I'm particularly disappointed that the government won't be following through with its student centre. This country needs to encourage more young people to take up programming and to think in a creative and entrepreneurial manner."

Labour MP, Chi Onwurah, added: "David Cameron likes to make announcements and position himself at the front of the technology revolution but there isn’t any follow-up," said Onwurah, who was previously the shadow minister for innovation. "With Tech City, he took what was already there, gave it a brand, said he would give it some money, and then moved on to invest it in the Internet of Things."

But Ken Crabtree, CFO at telephone answering service provider, alldayPA, believes the money could be better spent elsewhere.

“Huge amounts of money has been pumped into the capital, now other cities need more sustained support,” he said. “Countries with strong economies have more than one city driving growth, so the government must do more to foster business outside London.

"This £50m should be used to build and support infrastructure and talent across the country. For example, the BBC move to Salford in Greater Manchester has brought investment and employment to the area. Cambridge is another example, as it is a hub for technology and bio-medical innovation.

"Still, there are more areas ripe for investment, with Milton Keynes and Bristol principle among them.Creating a number of vibrant technology communities across Britain will drive collaboration and competition within the country, providing a foundation from which the businesses of the future can prosper."