Britain’s cities are enjoying a renaissance. Manchester is set to outperform Berlin and Tokyo for jobs growth over the next few years. Brighton is the top UK city to start a business. Hull is on the Rough Guides’ list of 10 cities to visit in 2016.

While there is always more to be done, we can see evidence that the UK’s economy is rebalancing away from the capital and towards the regions, and devolution will give cities more opportunity to shape their own futures.

Economic growth and social vibrancy are very welcome. However, the other side of the coin is that this growth can mean pressure on public services, traffic congestion, poor air quality, noise and other environmental problems that impact on standards of living. This is where the idea of the connected city, comes in.

A connected city uses new technology (Internet of Things) sensors, wifi, cloud services, analytics to support growth without compromising the quality of life for citizens. A truly smart/connected city will use less energy, have fewer traffic jams and produce less waste. It will provide better public facilities, greener transport and a cleaner environment for all.

That’s why this year’s BT Infinity Lab Awards are aimed at discovering fresh ideas from small and medium-sized enterprises (SMEs) that can make a big difference to the cities of the future. The UK is the second most innovative country in the world and our startup community has become a global force for innovation. In particular, digital SMEs are evolving business models and coming up with products and services we haven’t seen before - such as the smartphone app to monitor air quality developed by entrepreneur and former science minister Paul Drayson. Tapping into their ingenuity is essential to making smart cities a reality.

One of the most developed examples of a smart city in the UK is Milton Keynes, one of the fastest growing towns in the UK, where sensors gather data about everything from energy and water consumption to traffic patterns and send it to a central hub for analysis.

In just one example, using this information to understand how the city uses parking spaces has found that 7,000 of the city’s 25,000 spaces are empty at any one time. Guiding drivers to those free spaces via roadside displays and smartphone apps will cut CO2 emissions from vehicles driving around in search of spaces, reduce the need to create new parking spaces (which cost £15,000 each) and improve the overall experience for drivers and their passengers.

Every local authority already has lots of data from existing services such as highways monitoring, refuse collections, CCTV, energy consumption for street lighting and so on; the Internet of Things means they have the potential to capture much more. A core principle for a more connected city is to make that all data available to partners for analysis and innovation. By collecting, aggregating and storing data securely in the cloud, the authority can give controlled access to entrepreneurs, SMEs, academics and others.

And this is where larger companies like BT have a role. We can contribute the scale, the IT infrastructure and the cyber security measures that are needed to (a) enable the participation of multiple partners (b) take successful projects beyond a standalone pilot to a wider implementation and (c) manage huge amounts of data.

We also understand the transformative power of digital technology and want to work with partners who share that vision, which brings us back to the BT Infinity Lab Award: Connected Cities competition. It’s primarily a showcase for SMEs with big ideas about digital products and services for the public sector. Finalists will pitch their ideas on 26 April to a Dragon’s Den style panel of experts from the Cabinet Office, Department of Health, Department for Transport, Milton Keynes Council, TechHub and BT. The three winners will have the opportunity to work with BT and partners like MK:Smart to bring their ideas to life.

We’ll report back on them in due course.

Will Pryke is head of BT Infinity Lab