Why regional policy failed

By Ann McGauran | 30 October 2023

A prestigious panel gathered to hammer out why regional inequalities in the UK have continued to rise over the past four decades was always going to lead to verbal fireworks.

The line-up of heavyweight bruisers – or leading practitioners – speaking at the packed event included both former Labour secretary of state for business innovation and skills from 2008-2010 Lord Peter Mandelson and former Conservative chancellor in the Tory/Liberal Democrat Coalition Government from 2010-2016 George Osborne. That combination alone augured confrontation.

The audience at King’s College in London buckled up as the panel began to unpick the key issues set out in the impressive analysis from the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government.

The paper, entitled Why hasn’t UK regional policy worked? is based on 93 published in-depth on-the-record interviews. These resulted in more than half a million words from two generations of those who led regional policy between 1979 and 2015. They included Prime Ministers, chancellors, ministers, mayors, local authority leaders and others.

The report’s four authors – Dan Turner, Nyasha Weinburg, Esme Elsden and former Labour shadow chancellor from 2011-2015 Ed Balls, sought to understand why UK regional policy had failed to tackle rising inequalities. Successes were identified too, including ‘addressing regional employment inequalities; in decontaminating and reestablishing post-industrial city centres; and in enabling the growth of London (and, relatively, Greater Manchester, Oxford, Cambridge and Scotland) – as well as shared frustrations’.

There is, said the report, a ‘remarkable amount of consensus on the issues that have plagued policy in the past and why they came about; but the way forward is not totally clear’.

Back to some of what co-author of the report Dan Turner called the ‘panel to end all panels’ (see below) had to say. Mr Osborne and Lord Mandelson were perhaps not the best poster children to illustrate that consensus.

They slugged it out instead. Lord Mandelson said Regional Development Authorities (RDAs) – set up by the Labour Government, then abolished by the Coalition Government in 2012 and replaced with Local Enterprise Partnerships – were created because ‘we felt there were very significant political and capability gaps in local government, but we weren’t going to rely on central government alone. And that’s why in 1998-99 John Prescott and I created RDAs. We were institution-building right from the very beginning’.

He added: ‘I’m a great fan of combined authorities and directly-elected mayors. But something has to exist to join the national priorities and funds and the local government. That’s why I remain of the view that the institution-building we need for the future has to find some institutional connection between the central and the local.

‘One of the worst decisions taken for the Midlands and the North of this country was the wanton vandalism with which RDAs were simply disbanded.’

Was it right to abolish them? asked Mr Balls. Mr Osborne hit back: ‘The RDAs just did not embed themselves. If they had been successful, popular and doing their job then the incoming Tory/Liberal Democrat administration in 2010 would of course not have abolished them.’

The report itself underlined that most interviewees defended their policy choices, ‘but pointed to a lack of ambition and insufficient spend across the full suite of policy levers’, whether skills, infrastructure, innovation, housing, public service reform or institutional changes like devolution.

And they identified a persistent spending bias towards London and the South East and a failure to reform the planning system as driving geographical differences.

Those involved with more recent reforms – such as Mr Osborne and former minister for cities 2011-2012 and one of the main architects of devolution policy Greg Clark – told the interviewers they faced persistent opposition from some Whitehall departments when they were trying to put City Deals together.

The report contains a treasure trove of views that reflect hard-won experience, and is one students and practitioners of regional policy and centre-local relations will pour over for years.

Those hoping to form the next Government could do worse than to look closely at the lessons on offer from such luminaries as former Prime Ministers John Major and Tony Blair.

Mr Major emphasised his vision for ‘statesmanship’ – for the three parties to ‘come together and agree broad heads of agreement so that we can be certain that the policy of levelling up – and the investment to improve productivity and create a fairer society – can continue until completion’. And he doesn’t think agreement on very long-term areas of expenditure that spread through several parliaments is impossible.

Mr Blair’s interview revealed he is convinced the one thing that will happen over the next decade is ‘at some point, people will realise that we are in a completely new age where ideological solutions are just a distraction’.

He added: ‘What it really requires is analysis and understanding. It’s why it’s so important for Labour, when it comes in, to make it clear that you’re going to try and put at least a core, a spine, of policy down that a sensible Conservative Government in the future could also follow.’

Perhaps those who have announced the imminent demise of the current Conservative Government’s levelling up agenda have spoken too soon.

The panel

Ed Balls – professor of political economy at King’s College London, Labour shadow chancellor 2011-2015 and report co-author

Lord Peter Mandelson – Labour secretary of state for business innovation and skills 2008-2010

Dame Melanie Dawes – chief executive of Ofcom and a former permanent secretary of the Department for Communities and Local Government from 2015. She continued this role for the Ministry of Housing, Communities and Local Government and the Department for Levelling Up, Housing and Communities until 2020.

George Osborne – Conservative chancellor of the exchequer 2010-2016

Pat Ritchie CBE – chief executive of Newcastle City Council 2013-2021, and former deputy chief executive of the One North East Regional Development Agency

Lord David Sainsbury – Labour minister for science and innovation 1998-2006

Why Hasn’t UK Regional Policy Worked? A snapshot of views

Lord Bob Kerslake: (This interview was conducted in July 2022. Lord Kerslake died in July 2023.) ‘We have had a regional policy on investment. It’s just been the opposite to what everybody thinks it is. It moved money massively to the South rather than to the North.

‘I think there was a lot of scepticism of local government. I’ll name names: Tony Blair.’

Michael Gove: ‘I think the positive lesson is that there is now a broad recognition across UK politics that addressing regional inequality is urgent, and that it’s not a case of pushing water uphill or attempting to reverse history. It is, depending on your point of view, either a productivity and economic efficiency imperative or a social justice mission, or all of the above.’

Lord Michael Heseltine: ‘When they were first announced, the Local Economic Partnerships were really a fig leaf to say, “We believe in partnership.”’

‘There is one area which I must plead guilty [of] of course. I got rid of the metropolitan counties in 1979...I regret that I got rid of them. I think I should have reformed them.’

Dame Melanie Dawes: ‘I think local government structures are a serious impediment to central Government feeling that it can trust to delegate. And quite a lot of the economic levers at a local level are held by district councils which are extremely small and really not able to take on the kind of bigger responsibilities that you would hope that you could delegate. And even my choice of the word delegate there is intrinsically a top-down concept, so it runs very deep!

‘When I was in DCLG/MHCLG, I formed the view the failure to take forward the Redcliffe-Maud proposals in 1970, which was a decision of the Heath Government, was a missed opportunity to streamline local government.’

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