Mike Emmerich is the Founding Director of Metro Dynamics. He was Chief Executive of New Economy in Manchester, a leading player in the emergence of the Greater Manchester Combined Authority and served as a Civil Servant in both the Prime Minister’s Policy Unit and as a founding member of the Treasury’s Productivity Team.
This interview was conducted on 18 July 2022.
Q: Could you tell us about your role in growth and regional policy over the past few decades?
For the last seven years I’ve run a company that specialises in ‘place’ in the UK, doing economics and strategy, working for city leaders and increasingly for investors in cities. Before that I was one of the key people involved in Greater Manchester and its push for devolution – I was one of the four people in the room when the first devolution deals were negotiated. I followed that up doing several more for other cities later. I’ve also been an academic running a governance institute, worked in Number 10 in the Policy Unit on the ‘local’ brief, and I also worked on these issues in Treasury and other places for a long time before that.
Q: What have been the main successes of policy in this area over the past few decades? And what are your main frustrations?
The key success is that the combination of deindustrialisation finally working its way through the system of our cities, and their attractiveness as places, allied to policy which has recognised the primacy of cities as drivers of economic growth, has seen us learn how to get growth going in cities again.
We’ve experimented along the way but learned the hard way that it’s about doing a few, right things well for a long period of time. Where we’ve done that, I think you can see the results: in Manchester, Leeds, Birmingham and elsewhere.
There’s much left undone in those places and in the places surrounding them, although I think there are also benefits in the places around them, as we’ve seen during Covid-19. Towns and cities have benefitted, even more than they were already doing, from the fact that there are now people earning wages in relatively high-productivity jobs in the core of cities. Those workers live in the surrounding areas, so more of that money has flowed into those places.
The frustration is that we haven’t yet arrived at a model of how we can ensure every place is the best it can be. That’s because of a whole series of things I’m sure we’re going to go on to discuss, which are to do with the peculiar way this country works and which mean that we remain a long way off where we need to be.
Q: How would you characterise the evolution of thinking around this policy area? How does what we think now look different to what we thought in the late 1990s and early 2000s?
I think nearly all the progress we have made has been made by city leaders, with investors and, at best, the benign neglect of the central state. I don’t think the central state in this country can claim a huge amount of credit.
Curiously, of all the White Papers and Acts I’ve been involved in or read before I was in Whitehall or have seen since, the recent Levelling Up White Paper is probably the most coherent exposition of the arguments. The policy framework leaves a great deal to be desired but, nevertheless, that says something quite interesting.
We’ve been at this regeneration and rebalancing thing for a century, one way or another. There have been occasional reports, like the Barlow Commission, that have really tried to look at these arguments. They are few and far between, compared to the sort of pie-in-the-sky White Papers by Secretaries of State who aren’t around for much longer than it takes for the ink to dry and never get to implement what they proposed.
I think it’s been a very locally driven process; a process in which experimentation with Regional Development Agencies was undoubtedly an important facilitative part of the story.
Q: Are there common factors at work in those places that have turned around, or is this just a case of serendipity and good luck?
I don’t think luck plays a huge role in it. I think cities can get things wrong and stop progress.
Take somewhere like Bristol. Bristol is the only one of the core cities in the UK which makes a positive contribution to the UK economy. I think all other core cities are still a net drain on the exchequer – very unusually in the world. Bristol is there, despite a city culture that hasn’t, until relatively recently, favoured growth.
In most places cities that have really terrible legacies of decline have seized the way economic change has happened: from human mobility to human capital, the growth of the knowledge economy, the powerful role that universities play as generators of students and of knowledge that goes into industry. I think what’s happened is that cities have latched onto that idea of seeing that there’s a rising tide and have really done the right things to try and encourage it. That’s not to do with serendipity, that’s to do with really purposeful action. I think some have done better than others; some were leaders, some were not. Where they’ve done so, they’ve done so purposefully and got the rewards.
What made that possible is the fact that – certainly until austerity – we had a macro environment that was conducive to it. What’s interesting is that even though all these cities rely on Exchequer funding, as net drains on the public purse – they are still managing to perform tolerably well, even though austerity’s clobbered these cities hard.
London continues to pull away. All the analysis shows that London is doing very well indeed, and they’ve not gone absolutely racing backwards in recent years. Far from it. Actually, I think you can look at the cities and say that there is some cause for real optimism, even if the challenges remain pretty daunting.
Q: You have framed this in terms of cities. Some work suggests that the relevant divides are not about other cities versus London, but other regions versus the South East or even towns versus cities within all regions. How do you think about these different divides?
My basic view is that they’re slightly overblown. Let’s just take England. Barrow exists significantly for building submarines and ships. There are communities on the east coast like Grimsby and Hull which have had a legacy in fishing. (And even then, in the case of Hull, it’s seeing a renaissance through offshore wind, and Barrow through a new generation of submarines.) But they are outliers.
The majority of the towns that we really worry about are, and always have been, parts of urban systems that are centred on major cities. Bradford was the capital of wool; Leeds provided the finance. Manchester was Cottonopolis; Bolton and Bury and Rochdale and Castleford, and all these other places around them, were part of an urban system. This isn’t me making this up: you can look at the tram maps from the 19th century, they were there. The railway system, the canal system – they were designed to facilitate this process. I think it’s simply historically incorrect to counterpose cities and regions as being in different economies, they were always linked.
Secondly, it was always the case that there were differing kinds of economies in the big cities and the towns and cities around them. The challenge for us has been to come up with a model that is about accentuating growth wherever it can be. This does not mean pretending that towns and cities, or certain mining and mill towns, don’t matter. Nor does it mean pretending that you can have successful mining and mill towns if you have cities in the state that they have been for too long.
Having got the markets working tolerably well in a lot of big cities, we can see how it’s easier for that snowball effect to provide benefits: to spread that heat and light around. People say, ‘That’s trickle-down economics.’ No, it’s not trickle-down economics. It’s exactly what got London where it is, with places like the New Towns around London having been in a really tough state for decades that now feel a part of a functional economy.
I’d love to hear people who frame it differently, saying, ‘We can regenerate the market towns because the cities are fixed.’ Do they really think that? The evidence isn’t with them on that. I think we’ve got to think in a sophisticated way about what the links between them are. I think at our best we’re starting to do that – with relatively little encouragement from a governance system which doesn’t think in those terms.
The economics of this are pretty clear. The north of Leeds is broadly similar to the south of Manchester: there were always commuter communities where people went into the city to work. The problem that we had when we were growing up in the Seventies and Eighties was that the jobs that those people used to go to went away. It is good economics to simply replace what we lost – the jobs in city centres – with new ways of investment, in new industries, where people are earning productively because they’re providing things that the national and international market wants. I presume that people who are in favour of regions over cities will accept that that’s a legitimate argument.
Then the argument becomes: take the north of Manchester and to the east of Manchester – i.e. the mill towns, or to the west of Leeds and Bradford where a lot of the mill towns were. What do you do about those places when, to a very significant degree, the reason they exist went away? That’s a much more difficult problem. I really refuse to accept that what I’ve said is trickle-down: it’s recognising that city economies, many of them, have very tight boundaries, and the benefits of that flow through commuting into places where there’s always been commuting.
Nor would I say the policies that are needed for former mill and mining towns are trickle-down either. I’m saying that the hot property markets elsewhere lead to people choosing to live in them; they become commuter towns, sometimes for the first time or in a more meaningful way than previously. That’s part of the solution. But so too is local industrial policy, a policy for advanced manufacturing, a good education policy and a whole bunch of other things too.
Q: How does the capacity and capability of local government across the UK vary when facing these problems?
I think local government capability has been eroded very badly. I always recall saying to people in my organisation in Greater Manchester – where we had somewhere between 50 and 70 people working on economic strategy, funding, and what have you – that almost every single one of us were funded because those local authorities had chosen to keep us employed rather than people working on frontline services. I always thought that was a privilege. I thought it was economically and socially the right thing to do, and the numbers showed it in terms of what we got for the city. But in too many places, people didn’t make that judgement for a whole variety of reasons after 2010.
There has been a very significant reduction in the executive capacity of local government. Even the best Local Enterprise Partnerships [LEPs], except possibly those that are basically the same as Combined Authorities, have much less capacity than their predecessors [the Regional Development Agencies, RDAs]. I’m working on a lot of projects now where we’re substituting for that capacity or where we’re working with the private sector who are trying to help. But the day is coming when, if we’re going to continue to build strong places with strong local governments and strong combined authorities, people are going to have to start investing. There’s issue after issue – low productivity; the climate crisis; the post COVID health economies – where the cerebral capacity is limited, the strategic capacity is limited. The vision isn’t quite where you’d want it to be. We’re facing challenges more complex than in generations.
Q: Is it fair to say that some of this capacity had been built up before 2010?
Yes. I think where the RDAs really added value was in places that had smaller economies, smaller councils, less strategic capacity. I think cities and local authorities everywhere have more capacity and central government funding. EU funding and other things made it more possible to act. And all of those have clearly been
Q: Has the move towards combined authorities helped overcome that loss of capability? And if so, is that about funding, leadership, or the model itself?
Undoubtedly. Ironically, it’s not principally money. Many combined authorities are desperately, dangerously, close to representation without taxation – people used to protest about the opposite of that. I think it’s quite peculiar that were set up very light touch, strategic, metropolitan governance, or county level governance with virtually no additional money.
What it has done, with the money that has come in, is use the ability to flex those funding levels and, over time, build the willingness of the constituent local authorities to work together and use their resources constructively on behalf of the whole place. Combined authorities have seen the whole become greater than the sum of the parts.
I think it’s undoubtedly the case that most of the combined authorities are in that place. some are much further down the road than others. I can’t immediately point to one and say: this place is less strategically capable as a result of adopting a combined authority.
Q: What should metro mayors be doing? Is this mainly about economic regeneration, or ought it go further – as some of our interviewees have suggested – into social policy and public service reform?
It remains the case that the principal local authorities in any area hold the major service responsibilities for social services and education. Health exists at a super-local level. Increasingly, what you’re seeing is cooperation between authorities and the NHS, which is where Richard Leese [former leader of Manchester City Council] is in his new role.
I don’t think it’s as simple as either/or. It remains the case that, if you’re in a vulnerable family in Manchester or Rochdale, then it’s going to be the local authority that’s going to have the role. Do I think we’re going to systematically remove tens, hundreds, thousands of people from vulnerability, by principal local authorities acting alone? No, I don’t. I think to that extent using combined authorities for public service reform is absolutely right.
A long-term process of labour market liberalisation, allied to the hollowing out of the economies of many of our places, has long-term consequences for communities: the level of wellbeing, the level of stability, of income, of wellbeing, of education. These are genuinely first order political strategic issues that require principal local authorities, the combined authorities and indeed the government to work through. Michael Marmot has made this clear in endless number of reports, which no one seems to have the wherewithal to bring into effect.
Q: Where should be the priorities for where you push next as a mayor?
I don’t want to answer that question in its own terms, because I think that is to fall into the trap of our overly-developed national state and its underdeveloped spatial dimension.
I was talking with Henry Overman the night before the Resolution Foundation LSE 2030 Commission Interim Report, and he said to me, ‘I think before we think about the next stages of devolution, we’ve got to decide whether we want to get serious about this, for the first time ever.’ I think what Labour did with the RDAs was bold, but in the scheme of things – and Germany is the obvious comparator I’m going to draw every time when I think about this – it was not serious. These were meaningful sums to achieve some physical regeneration. These were not meaningful sums or meaningful leaders or meaningful institutions to heal the kinds of wounds which exist – as existed between the East and the West in Germany and which exists in material degree between much of non-South Eastern England and that quarter of the country.
If we draw the debate as being, ‘Which service lines should we devolve? And how many tens of millions?’, we’re simply missing the point. Having seen what the interim report of that commission said, it was exactly the sorts of analysis saying, ‘There’s some hard choices here. We have to really get serious about this.’
Yes, I think fiscal devolution is important. I think devolution of innovation policy is important. I think letting experimentation happen on new forms of industrial policy, because our national state hasn’t got that right over the years, all these things have got a role to play. The further education system could not be in worse hands than it’s been all my working life in central government. All these things have got to be in scope for devolution. But you could do any of them and probably all of them and – if we weren’t serious about giving real latitude and powers to civic and regional leaders, to do things their way, with budgets that could make a difference – then we still won’t be being serious.
Q: ‘Getting serious’ in that way would mean thinking deeply about the accountability and legitimacy of mayors and local leaders. We have different models in the UK – with devolved parliament, a London Assembly, and combined authorities. Are these enough?
I worked in Number 10 with a prime minister with a 150 majority. I’ve spoken to virtually everyone who’s done that Number 10 job since, covering every possible range of government situations, except a minority government (large majorities; small majorities; coalitions). We’ve never really managed to break through on the level we need to if we’re serious about this under any of them. That leads me to the conclusion that you’ve got to think really long term.
The problem is that for all the different ministers – Gordon Brown invested a lot of his own personal political capital in RDAs, supporting John Prescott; Tony Blair had his priorities around cities and mayors; Boris Johnson coined a whole new phrase for it, Levelling Up; George Osborne had the Northern powerhouse – the truth is that these always get traded away for the big priorities of health and education. There are good reasons for that, because the most important thing to a prime minister is what’s most important to the electorate today, and that tends to be those issues.
I therefore think it’s peculiar that we expect to fix this by governments of the day choosing to make this their number one priority. It doesn’t surprise me that they don’t. I wish that they would. And I’ve variously advised ministers that they should try. But if we think we’re in the wrong ballpark for this, the wrong sets of powers and the wrong sets of resources for regional leaders, for mayors, whoever, then I think that’s a product of the way that we approach this as a country.
I therefore think that leaves you, not with a binary choice, but with two different strategies. One is to do what you can within the system as it exists now: devolving, creating licensed experiments through the different sorts of governance we’ve got. We’ve got the London model and Mayoral Combined Authority model – let’s see what works in them. I don’t think we evaluate enough of what we’ve learnt.
But on the other hand, and I’m as in favour now as I ever have been, is a second strategy: a process of long-term reflection, across political boundaries, on the constitutional implications of such a centralist economy. This would be to open up the possibilities of creating a durable settlement for how we might do this differently and more meaningfully to achieve more radical goals.
Q: Could this happen? We have heard from others how, even with three figure majorities after 1997, issues like unitarisation were ducked by otherwise reformist governments.
I think central government is to blame. I arrived in Number 10 in the Policy Unit in the back end of 2000. By then, there seemed to me to have been an implicit deal: John Prescott wanted to have regional assemblies and was backed by Gordon Brown; Tony Blair wanted to have city mayors, something to which Gordon Brown and John Prescott were opposed. They made damned sure that neither of them were going to get what they wanted by imposing referenda. And there you go. The whole system had screwed it up before you even started, by imposing referenda.
I think referenda were a stupid idea then, I think they’re an even more stupid idea now. They are not the way we do business. We elect governments. We expect government to do the business that they’re elected to do without resorting to these things. If it’s a good idea it will be in the manifesto and they’ll do it.
I don’t actually accept the notion that we were serious about constitutional change in England. We absolutely were in Scotland, Wales and Northern Ireland in that period. I think we’ve actually got a bit more serious about England now because of the legacy of that Northern Powerhouse speech and the creation of the combined authorities. That said, I think they are a very best first attempt and one that needs a lot more work.
I think what we need is to see the incremental growth of powers and experimentation, especially in those areas where central government has not got a great track record – innovation and economic development, and probably public service reform too. But at the same time, I think there must be an open-and-shut case for us to take a good hard look at how we want this country to run in the future.
I remain worried that if London carries on growing the way it has done over the last period, and what has happened to the North East continues to happen, then sooner or later London looks like Germany, and the North East looks like Greece. At that point the polity is going to struggle to hang together in the way we all want it to. It only works if there is a deal in which every part of the country has got the ability to participate economically, politically and socially in the right sort of way. And I find it hard, after 30-odd years of doing this, to imagine a world in which Whitehall’s ever going to let go of enough power to do that. I think that’s got to be something that we do through a process other than ministers in government.
Q: One thing we have seen over the decades is the pendulum swinging from local, sub-regional, regional to national leadership for economic development. Is there ever going to be one tier of government that we permanently empower to take that forward, or will it need to keep swinging?
I don’t think this is insoluble. I remember saying this to George Osborne and Greg Clark. There’s always an answer to the Yorkshire conundrum: firstly, focus on city-regions. This has been ever present since the 2008 Sub-National Review from government. I remember sitting in meetings in the Treasury in 2008 and 2009 when I was working for Greater Manchester, in which the notion of creating a statutory city regional pilot for Manchester, and another one in Birmingham or Leeds, I can’t remember, was settled as government policy.
This came after experimentation with RDAs. As RDAs were playing a bigger and bigger role, at the zenith of their power, the ‘functional economic area’ became government policy – let’s not rewrite the history books on this. That’s because it’s good economics.
I completely get that the politics of localism and of market towns are pulling us in a different direction. One of the real problems underneath all of this is that the economics are pointing in one direction and the politics are pointing in a completely different direction. People like me spend a lot of our time working out how we can make that work. That’s the background to this. The focus on the functional economic area did not start with George Osborne and definitely didn’t start with Eric Pickles. It started with statutory city region notion, after the Sub-National Review in 2008, 2009.
And how will you square that then with regions? How would you deal with this in Yorkshire? Well, it’s easy. I don’t think that those vulnerable families with children at risk are going to be served very well, principally, by a city region or indeed a regional organisation. There are services that are inherently local. I agree that unitarisation of local authorities here would be a distraction: I can find literally hundreds of reports telling me that unitarisation will be better if we go for it, written by the proponents of unitarisation. I can find literally no reports written which show, at high academic standard, that unitarisation delivered said benefits, and if there are I’d love to read them.
I’d love to know what the right answer is. Call me a conservative if you wish, but I don’t think you go mucking around with local government unless you know that there’s a benefit from it. I don’t think those benefits are clearly enough established. You’re always going to have some sort of local government. I have found one study that looked at the experience of unitarisation in Germany and Austria which found little evidence of cost savings. But the turnout at elections fell post-unitarisation and turn-out for the far right rocketed.
So, if you go back to Yorkshire, if you’ve got vulnerable families they’re going to be looked after by Calderdale or Wakefield or whoever. Then you’ve got the economic stuff or the strategic public service stuff. That naturally exists, as we’ve seen in the NHS through different varieties of regional and subregional working, at the functional economic area (health economies tend to mirror that). That’s the place where, naturally, a lot of that strategic stuff lives.
But then, is there a place called Yorkshire that a very powerful brand, that means a lot to the people who live there? Yes. So, why not give that responsibility for things like tourism, inward investment, trade? So, you’ve got vulnerable families being dealt with by a local authority that’s close to them; strategic things to do with transport and how people live their lives and some aspects of public service is being dealt with at a city-region level; and then have a regional tourism and investment. All these things are inherently fixable, I think. I don’t actually accept it’s as complicated as some suggest.
Q: How receptive do you think ministers and officials in Whitehall are to this argument? Which parts are more sympathetic to decentralisation, and how has that changed over time?
I don’t think it’s changed very much at all. I don’t think the Treasury is the enemy of this stuff. I think the Treasury has generally been pretty well disposed towards trying to get decisions made closer to the people who they affect. It’s good economics that says you’ll get better results that way. The Department for Local Government has been generally supportive, but its economics tend to be pretty blunt. The Department for Business, Energy and Industrial Strategy, and its predecessors, have generally tried to point in different directions but inherently have generally been centralisers. I think one really interesting area to watch is the area of science and innovation, where the combined effect of a variety of people and institutions – involving Number 10 and the Treasury – have led to some devolution there. But then again, they also steward the skills system, which is a disaster area, centrally-controlled. Education, ditto. Welfare, ditto. Those things haven’t really moved materially in a very long time.
Q: How much is this due to officials as opposed to ministers?
I’ve known a lot of Secretaries of State for trade and industry, local government, welfare… quite a lot of them of very different hues. If they, to a woman and man, end up with very similar policies, it’s hard to blame them in the end. Most of them aren’t there long enough to really learn the mistakes. The more reflective Secretaries of State I’ve met over the years, talking to them after they’ve left, would generally say they wish they’d been bolder and more radical in lots of directions, including in giving power to others. It’s a very hard thing for a new minister to do at all, especially if these are jobs are not the Great Offices of State generally, but the sorts of jobs you do in order to get one of those jobs.
Q: What are the deep causes of this? We have we been trying and failing for a hundred years to get this right?
I don’t think there’s an easy or obvious answer to that. I was at a music festival in Leipzig recently and spent quite a lot of time going around the places like Weimar and Dresden, as well as spending time in Leipzig. It is just palpable that these places that have had a very troubled past, and that the unified German state has embraced them. Whether you’re living in Leipzig or Dresden is just the same as you were living in Hannover or Hamburg: you’re a German and the place you live in will have the dignity; you will have opportunity, there will be the investment that makes you a German.
I think if we really scratch below what it is to be English – let’s just stick to England for a minute – I don’t think we feel like that. I think we have double and triple and quadruple standards, in what it means to be a subject in this country. We put up with things in cities and towns, in the periphery of this country, that would be deemed unacceptable in the London that our decision makers and business leaders and senior civil servants live in. I think there’s something out of that German experiment we’ve got to reflect very hard on. For a country that’s just been through civil war over the issue of political citizenship (Brexit), I just wish we cared more about economic and social citizenship. If we did, we’d fix these problems far more readily than we seem able to.
Q: Have we got this right in the past, say after World War II, or is that a red herring?
The evidence is that in the first decades after the war, we had huge problems with the post-war recovery. But I think that the numbers suggest that not everything that happened up to 1979 was quite as bad as many modern commentators suggest. We for sure got a lot of things wrong. The central state got a lot of things wrong, and probably municipal leaders too – though I have not done much work on that.
Curiously, I think the thing that is most marked is probably not the policy entrepreneurialism of government and industrial and innovation policy at that time. The reason you can’t get regeneration projects to work in many mill and mining towns, or market towns, is because there’s just not enough income flowing around them for people to be able to shop in the new shops or buy the apartments. If we got one thing right in the post-war period, it was that levels of income across the economy played a more meaningful contribution to creating a sense of economic citizenship, than is the case as we look at modern Britain today.
Q: What, if anything, do you think has really worked? What’s the lesson we should be taking away from this conversation?
You can love or loathe Andy Street or Andy Burnham or Steve Rotheram, but the fact that there are these people standing up for their places, being a pain to the government, being a partner to the government, and trying to make things happen in their cities – many of which would not have happened had they not been there – gives me hope that we’re doing something right. I just wish we had a stronger institutional settlement that had elements of what we’ve lost along the way, to make that work better for their areas, and for those areas that don’t have what they have.
ENDS