The centre cannot hold: the future of UK regional policy

By on 31/10/2023 | Updated on 31/10/2023
Dame Melanie Dawes speaking at the Strand Group event ‘Why hasn’t UK regional policy worked? The views of leading practitioners’
Dame Melanie Dawes speaking at the Strand Group event ‘Why hasn’t UK regional policy worked? The views of leading practitioners’. Photo: Strand Group

Successive governments have failed to reverse the UK’s regional inequalities and over-centralisation. At a Strand Group event last week, some of those who’ve tried to do so set out their prescriptions for a more balanced Britain. Matt Ross reports

“National politicians and civil servants have got to let go of some stuff – and if they don’t feel that they’ve let go of more than they feel comfortable with, then they haven’t gone remotely far enough,” said Dame Melanie Dawes.

Speaking on 25 October at Kings College London (KCL), she was arguing for a major devolution of central powers down to the local and city-regional levels. And her view was well-informed: while she’s currently chief executive of the UK’s communications regulator Ofcom, between 2015 and 2020 Dawes ran the department responsible for housing and local government.

For 20 years, UK governments of all stripes have recognised the need to close gaps in household incomes, productivity and growth between the South East and other regions – particularly the North and Midlands. But Labour governments made only modest progress in the years to 2010; and since the financial crisis in 2008, inequalities have grown steadily worse. Boris Johnson’s ‘levelling up’ agenda achieved its goal of winning him support across Labour’s former heartlands, but never had substance beyond a couple of grant funding pots. Having interviewed 93 key figures – including three prime ministers and six chancellors – last week KCL’s Strand Group published a major report, ‘Why hasn’t regional policy worked?, delving into the problem.

Report co-authors Dan Turner and Nyasha Weinberg found that successive governments’ failure to reverse regional inequalities was not inevitable, but rooted in a lack of top-level leadership and ambition, constant changes of policy, and an ill-conceived dependence on central direction to address problems that demand local solutions. Power was sucked into London during the 1980s and 1990s, explained Turner; and “having centralised, it becomes very difficult – with the best will in the world – to decentralise”. But there is now widespread recognition that local areas must be put back in control of their own destiny. The question is exactly how to do so – and at the Strand Group event, some of those who’ve led the agenda since the early 2000s debated what they’ve learned from their limited achievements.

The case for a regional layer

Lord Mandelson, who twice served as business secretary during the 1997-2010 Labour administrations, made the case for strong, strategic direction from the centre. The newly elected Tony Blair was keen to support the regeneration of former industrial areas, “and our judgement was that that couldn’t happen unless central government – with all its heft and power and money and determination – was really getting behind that effort,” he recalled.

Peter Mandelson

“We were very sceptical about local government,” Mandelson added. “We felt that there were very significant political and capability gaps in local government, but we weren’t going to rely on central government alone.” Their solution was the regional development agencies (RDAs): nine quangos established to oversee economic growth, strategic spatial planning and land remediation, sitting between Westminster and England’s 300+ local authorities. In an act condemned by Mandelson as “wanton vandalism”, these were abolished by the incoming coalition government in 2010 “without any thought about how they might be adapted, built on, continued in some form”.

Any effective regional policy model, Mandelson argued, will include a regional layer. “I don’t believe we can find any workable template for regional policy and devolution in the future unless we recognise that there are going to be national priorities and funds, nationally significant investments in key infrastructure,” he said. “Something has to join that and the local government executive delivery and decision-making.”

Letting local geographies lead

Unsurprisingly George Osborne, chancellor in that coalition government, took a different view: the RDAs, he argued, lacked local accountability or a connection to local geographies. After a failed experiment with ‘local economic partnerships’ – which “weren’t really working,” Osborne acknowledged – in office he focused on developed ‘mayoral combined authorities’ (MCAs).

George Osborne

Bringing local authorities together at a city-regional level, MCAs take some powers from both the local and the national levels, providing democratic accountability through a directly-elected mayor. Each MCA is slightly different, reflecting local leaders’ variable willingness to put aside parochial rivalries and pool decision-making under an elected mayor; and some parts of the country have made much greater progress than others. The model “will lead to messy bits of the country which don’t quite work out,” commented Osborne, but nonetheless he argued for pursuing devolution “by carrot, not stick”.

“If we try and impose solutions, they fall apart: they don’t achieve consensus, and then they get undone by the next people who turn up,” he said. “The mayoral models that I helped create in Manchester, in the West Midlands and elsewhere have endured.” The fact that these mayoral jobs are big enough to attract senior politicians, he added, demonstrates the strength of the MCA model.

Build on what you’ve got

Pat Ritchie has approached these problems from every angle – as chief executive of Newcastle City Council, deputy chief executive of One North East RDA, and chief executive of the national Homes and Communities Agency.

Pat Ritchie

The RDAs did good work, she argued, but “they didn’t have all the levers; and I think one of the biggest weaknesses of the RDAs focused on productivity was the lack of any real traction on skills.”

Her strongest message was the need for consistency from central government. “It would be great if we could just decide on something and then actually make it work and develop it,” she said, pointing out that reorganisation “takes up time, and takes people away from focusing on the real work – which is how to build a consensus around a strategy that works for a regional economy, and how to get the right levers”.

Lord Sainsbury, a minister for science and innovation under Blair between 1998 and 2006, pressed home this message: “Whatever you do, don’t change the whole thing again just when something is beginning to work,” he said, backing the MCA model. Reflecting Ritchie’s comments on skills, Sainsbury also argued for mayors to win control over the provision of further education (FE) training courses.

“Most FE colleges are ludicrously underfunded, and their main objective in life is to stay afloat,” he explained. “The way you do that is by running courses which are cheap to run and which are very popular, and so we produce every year millions of hairdressers.” But this approach fails to build skills provision around the needs of local employers, Sainsbury pointed out: in his view, MCAs should be able to align FE funding with their economic development strategies.

Read more: Levelling up lessons: how to make regional development work

MCAs also need control over strategic spatial planning and transport, Sainsbury argued. “To have a city like Manchester where the spatial planning is done at the local authority level and the transport policy is done in Whitehall is just ludicrous. If there’s one organisational issue which you could be absolutely sure of, it is that you should do spatial planning and transport at the same level,” he said, calling the current arrangements “absolutely idiotic”. Ritchie took his point, though she argued that local authorities are best placed to make “very contested, very local” decisions over individual sites.

The challenge of ‘Bidenomics’

All these questions are becoming more pressing for post-Brexit Britain as the “big power blocks – the United States, China, the European Union – are deploying very large sums of money to support particular technologies and industries,” commented Osborne. “The UK does not have the firepower at the moment to match that, nor anything like that kind of institutional consensus inside Whitehall about how you even might go about doing that kind of thing.”

“That is a huge challenge to the British state and the British economy,” he added. “And I don’t see either political party, or Whitehall, or indeed the broader academic, business community in the UK having an answer yet.”

Yet one must be developed, said Dawes: “Government action is needed in an ever more fragmented world, politically, and [one in which] supply chains are drying up.” That action, she argued, should be channelled through “strong, well-resourced, big-enough political structures locally, that are accountable to their local electorates. And until you have that, it’s very, very hard for Westminster to let go – because who is it letting go to?”

Dawes also backed the MCA model, arguing that “you’ve got to devolve more of the Treasury toolkit on the tax side, as well as just budgets”. Devolution will, she added, require a very firm push from the top of government: “When you’re a civil servant, your accountability is first to ministers, and secondly to Parliament,” she said. “In order to devolve, you’ve got to have a rather different set of imperatives created, or it’s going to be very hard to move that system. You have to push very hard to create the right incentives, in the civil service and indeed for ministers.

Lord Sainsbury

In Lord Sainsbury’s opinion, these empowered MCAs should work alongside a national government armed with industrial strategies for each of its key sectors. “Countries as varied as Singapore, Taiwan, Germany and Canada have industrial sector strategies, and if you’re going to compete against those countries and say to British industry: ‘You’re on your own against this,’ then you’re in real trouble,” he commented. “You can have industrial sector strategies, and devolution of powers.”

Competing models

Mandelson did not agree. “They’re the opposite!” he cried. And he argued that local authorities and MCAs lack the capabilities or scale to realise national goals without an intermediate layer. “A lot of local government is in a state of acute financial crisis in this country,” he said; progress will require leadership from central government. “We’ve got to find the institutional means to bring those two working together in pursuit of a serious national growth plan.”

Most panellists, however, clearly felt that national governments have spent far too long promoting structural change at the cost of frontline delivery. “I wouldn’t reinvent the wheel and try and introduce some new regional structure. Let’s run with what works and has bedded in,” said Osborne. The next government should accelerate devolution to the MCAs, he argued, mentioning health spending, skills and tax-raising powers.

“Quite a lot of consensus has been built over the last 20 years on devolution structures,” he concluded. “Don’t reinvent the wheel: build on what has worked, give it more heft, give it more power, trust in the local mayors, and double down.”

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About Matt Ross

Matt is Global Government Forum's Contributing Editor, providing direction and support on topics, products and audience interests across GGF’s editorial, events and research operations. He has been a journalist and editor since 1995, beginning in motoring and travel journalism – and combining the two in a 30-month, 30-country 4x4 expedition funded by magazine photo-journalism. Between 2002 and 2008 he was Features Editor of Haymarket news magazine Regeneration & Renewal, covering urban regeneration, economic growth and community development; and from 2008 to 2014 he was the Editor of UK magazine and website Civil Service World, then Editorial Director for Public Sector – both at political publishing house Dods. He has also worked as Director of Communications at think tank the Institute for Government.

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