Geoffrey Norris was a special advisor at the U.K. Department of Business in Whitehall. Previously he worked as the principal business advisor in Number 10 to both Prime Minister’s Tony Blair and Gordon Brown.
This interview was conducted on 2 December 2021.
Q: Can you tell us about your role in regional and growth policy in the period prior to 2015?
I worked for the Labour Party in opposition prior to 1997, for Robin Cook when he was the shadow trade and industry spokesperson (1992-94). Then I worked for Tony Blair when he was elected leader in 1994. There weren’t very many of us and we did a huge number of things. I was focused on Department of Trade and Industry [DTI] issues, including regional policy.
Then after 1997, I was in the Number 10 Policy Unit working on business, industry, and energy throughout Tony Blair’s 10 years as Prime Minister. When Gordon became leader, I continued in the Number 10 Policy Unit. Then, I joined Peter Mandelson when he came back from Brussels in 2008, as his principal advisor at Business, Innovation and Skills [BIS] as it then was.
Q: In the run-up to 1997, was there was a perception that regional policy had been neglected?
No, I’m not sure I would agree with that. If you look pre-1997, effectively John Prescott in his various incarnations had done a lot on regions. The idea of Regional Development Agencies (‘RDAs’) had emerged.
My own view is that, if you were to think about Labour pre-1997, the politics of regional policy was ambiguous. At that point, Labour drew a lot of electoral support from what people would regard as ‘the regions’. But the political imperative was in addressing the Labour Party’s perceived ‘Southern Discomfort’ – winning in the South. That was quite a significant issue in terms of peoples’ thinking about some of these things.
Secondly, when you think about Tony Blair’s and Gordon Brown’s and Peter Mandelson’s emergence around what people refer to as New Labour, a lot of that was driven by this notion that you needed to have a new approach on the economy. An aspect of that was that previous efforts on things like industrial policy or regional policy had arguably not been very successful, had arguably been too interventionist, too statist. You needed to recast your pitch on these things.
Q: And the RDAs were the attempt to recast the pitch to give more autonomy, more devolved power?
That was John Prescott’s big interest. You establish the RDAs, and you establish a democratic deficit. That democratic deficit is addressed by having Regional Assemblies. That was the logic of his position. And the voters of the North East decided that they didn’t want it. I’m genuinely unsure where Gordon Brown would be in that.
Tony Blair was not an enthusiast for regional government. He did have his view: he was basically about winning, leading Labour to win again in the South. At the same time, he was representing a North East constituency which was at one point a coal mining and manufacturing place. His view was these places, these communities, needed to reinvent themselves, and he put a lot of emphasis on the importance of local leadership in that reinvention. I suspect his view was that we need to be less interventionist, less statist. Tony Blair would have said, ‘the person in Whitehall isn’t going to be able to solve the problem of Sedgefield’. They can help, but it’s down to the people of Sedgefield, or down to the people of the North East, to generate the leadership, generate the ecosystem, generate the alliances.
Q: What do you think were the primary influences or theories shaping the approach taken, especially on accountability?
I think there’s always a huge danger of over-intellectualising the policymaking process. If you looked at Prescott, he did have intellectual influences at that end, which were influential because they led to the creation of the RDAs. These are people like Mike Ward, Steven Fothergill. Those people had intellect, although it seemed to me that there wasn’t a lot of talk about agglomeration from them. A lot of it was a narrative thing. They were “go local, go regional” on devolution, which to me turned out to be one of the big issues. It’s not at all clear to me that in Gordon Brown’s extensive recasting of Labour’s economic policy, that there were any great intellectual influences.
Q: Are you surprised that the gap between regions has grown, not narrowed?
That immediately brings you onto the question of ‘why?’. I’m not surprised that industrial policy or regional policy hasn’t been able to overturn what are very big trends in the industrial structure. I don’t buy that it’s all globalisation, but I do think that the reason we’ve got a strong financial services sector is path dependent and deep in history. The strength of the UK financial services sector has been one of the big structural changes in the UK. The decline of certain types of manufacturing in advanced market economies is a big trend. If you look at what happened, we had a decline and we accelerated that decline by having a very high exchange rate through the mid-1990s through the 2000s. The other big thing, if you’re thinking about the UK’s regions, was just how big a shock the demise of the coal industry was.
Q: Could the rise of London could have been managed differently?
No. If you had had industrial developments certificates, and therefore attempted to control office development in Canary Wharf and the City of London, would Morgan Stanley, would Goldman Sachs have headed off to Manchester? Or would they have headed off to Amsterdam, Paris or Frankfurt? I leave it to you to give me the answer.
I don’t think financial services were ours to divvy out across the country. You have a very powerful cocktail. One of the other elements in the cocktail – and this is a much longer thing, over my professional lifetime – is that the UK economy outside financial services has become more concentrated in the South East at the level of decision making and the high value added jobs. This is in part to do with that squeeze on manufacturing. The west of Scotland was still a significant manufacturing centre in the late 1960s and 1970s with significant businesses headquarters in Glasgow. There’s no significant business headquarters in Glasgow anymore. There are branch offices of the likes of Santander, and there are call centres.
Q: What’s your theory of why that’s the case?
I think we are unlike Germany, we are like France. London has always been a big city in a small-ish country. The economic success of that big city in a small-ish country has varied at times, but it has always been a big city in much the same way that Paris is. I think that always tends to be a draw.
You’ve had other phenomena. The rise of the multinational company has meant more concentration in sectors. I think the tendency will be – as they become more concentrated, more multinational – they will move headquarters to being close to a big manufacturing centre. You’ve also had this with the privatisations of the 1980s. This began a process of sucking away decision-making from the regions, because organisations like regional electricity companies were significant organisations. You’ve now got utilities which are on the whole national. A lot of them are headquartered in London and the South East; or like Scottish Power and SSD with quite a lot of office functions in Perth or in Glasgow respectively, but actually the CEO, the finance director, etc. all working in some office in central London, most of the time.
Q: Is this about economic logic, or about economic powers drifting towards political power in London?
It’s funny to have 1,000 people working in a big office building in Manchester if the top layer of movers and shakers are based in London. You’re probably going to get less economic value. At a straightforward level, the people who are going to be on the £500,000+ a year plus salaries will all be in the South East, with those multiplier effects.
It’s going to shape decision-making processes. We live in a world of consultancy and advisory: your legal services, your investment bankers, your marketeers, your political consultants … these people all gravitate fundamentally towards the key decision makers, who tend to be in London in the South East. So, you get this incredible multiplier.
The thing about London and the South East is that it has a very high concentration of people who are on high salaries (when you look at the income tax figures as GVA [gross value added], but you can question how much GVA all these characters are really adding).
Q: And this is linked to the brain drain of graduates to London and the South East?
You’ve got that. Fifty per cent going into higher education is a very great thing, but you have institutionalised this process of people moving away at 18. You’ve also got occupational change. I’m of an age where, when you went to university in 1976, eight per cent of the population was going. In my sixth form, a majority of the sixth form were not going to go to university. This was in a grammar school. A large number of those people were going to go and work in the local bank and become a trainee or at a local accountant firm. It’s now a comprehensive school, sixty per cent are going to go to university and sixty per cent of them are going to go and move away. The pathway is just very different.
Q: How have your views on what works to regenerate and enable regions to thrive developed over your time?
One of the things we did think was that regional policy was basically about winning big investment projects. The search was always on for the next Nissan. One of the things that emerged quite early in 1997 was a feeling that, actually, that era had passed.
In part, that was because of the relative decline in manufacturing. You weren’t going to get these relatively geographically footloose, big projects. What I suspect we didn’t see – and this was possible more a phenomenon post-2010 – was the rise of ICT … the Amazons of this world. By Amazon I’m not meaning those warehouses. Amazon employs thousands of people in Central London. These are quite footloose things, but we weren’t focusing on those. We were heavily focusing on manufacturing, but we then lost confidence in that.
Q: Is there anything policy could have done to encourage firms like Amazon to locate elsewhere in the UK?
I don’t think these jobs are as mobile as finance professionals. If you look at finance and professional services, for London it’s a combination of sucking in the brightest and best from the UK, and from the rest of Europe. That’s the London story. Going back to Amazon, I think policymakers were slow on the uptake about the emergence of Big Tech. One of the problems with Big Tech was that it’s not actually a great big employer. Notoriously, it’s mobility is not about being able to attract bright people; its mobility is to find locations where it plays governments off against each other. That was the phenomenon. Thinking about it, even if you’re a particularly brilliant ’anchester bidding, you were never going to beat Dubl’n on corporation tax. That clearly mattered for these people. These businesses were also talking about cities. In the 1980s, and to the extent of the 1990s, we were still worried about ‘the future of cities’.
Q: Were you influenced by the ideas around agglomeration economies?
It may well be that I am spectacularly wrong, but agglomeration as applied to cities is a pre-1997 phenomenon. My own view is that the cities outside London in the UK have actually got better. I know the data says that their productivity performance compares with some second-rate Polish city, but you simply physically go to these places: they are doing better. I think we were quite successful at throwing a lot of money at cities. The cocktail of influences – the decline in manufacturing, the rise in office employment – works quite well in cities, in a way that building a big factory in an inner city was an absurdity. We weren’t talking about building a new steel plant in downtown Moscow, but the modern equivalent in employment terms would be a modern steel plant employs 1,500-2,000 people. There are office developments in the centre of Glasgow that will have 1,500-2,000 people.
Q: When thinking about supporting the cities, was it your experience that Whitehall spoke with one voice, or were different departments orientated differently?
Prescott, throughout his period, was consistently getting money into cities: money for rundown housing estates; tweaking the rate support grant to be more favourable to northern cities. I suspect we rebuilt every courthouse in every city in Britain. We were putting a lot of money into cities.
The other phenomenon you begin to see through the Labour government, but not necessarily before 1997, is that as you massively expand higher education higher educational institutions suddenly become massively important economic institutions in cities.
If you’re looking at public expenditure trends in the United Kingdom over the last four decades, we have massively put money into the NHS. You can argue we should’ve put more, but we are spending one tenth of our GDP. A lot of that spending goes into cities, into big hospitals. We have put money, along with students through their student loans creating massive higher education institutions. If you go to most cities, the largest employer is the NHS and the higher education institutions. They are really important economic clients.
Q: How do you help smaller towns benefit from this rise of the cities? Is it primarily about transport infrastructure?
It clearly is about transport networks. There’s also a psychological difference, I suspect. In Greater Manchester, there clearly continues to be a disconnect. It seems to take an hour and a half to get from one part of Greater Manchester to another, which in this day and age seems quite odd. There is a difference between London and Greater Manchester, in that the likes of Rochdale would at some point not so far back have been relatively self-contained, serious towns. They had a manufacturing base, a set of institutions of their own. If you look then at London: suburbia, on the whole, has never been that self-contained. The whole network of orbits – the Guildfords – have not had a long history of being a great industrial centre. They’ve always been linked into London.
Q: But some of those areas – such as the Medway – have shared characteristics with parts of the North and Wales that also lack integration?
Exactly. North Kent/Medway looks to have been self-contained. Now, it looks to be isolated. I think that would be true in Greater Manchester’s case. You can overdo this: there was an article in the Guardian or something talking about whether or not just because you’ve got a mayor do you now think you live in Greater Manchester? I suspect the mayor will begin to shape this perception.
Q: When you were in government, what was your assessment of local government capability?
I will give you a Blair Number 10 perception of local government. Tony Blair was basing his view on his experience of Islington. e had bought entirely this notion that Labour and local government was nothing but a headache, and you certainly didn’t want to be too close to these people. He did a number of things, one of which is he felt a bit uneasy about associating himself with the achievements of Labour in local government. More substantively, it reinforced his New Public Management: ‘let’s go for quasi-markets, instead’. This leads you on to get rid of local education authorities, because what we’ll have is a network of grant-maintained schools.
Q: Did New Labour devolution shift this?
I would argue that you see under New Labour a disintermediation of local government from a number of things, of which schools is the big thing. You see it in housing for a variety of reasons too. Essentially we disintermediate local government because you hand it over to social housing. The way that you fund social housing shifts to housing benefit as opposed to subsidising rents. The net effect depends on what your localism is: is a self-governing school or a self-governing Further Education college more ‘localised’ than a Further Education college that’s accountable to a local education authority?
Q: Does this lead you to think that decentralisation or disintermediation could be a bad thing, creating frictions across public services that ought to work together?
That’s a very good point. If you take the example of the NHS and social care, and the fact that we’re going back to integrated care organisations, having effectively broken up the NHS into purchasers and providers of public sector managers. We’re now reintegrating them, because of course, reintegration is the modern thing where you capture all these externalities – in a way that splintered, fractured organisations are totally incapable of doing so. That’s a very good example where you can see integration benefits. The other thing is, you have to decide whether or not you think local authorities are important. It is important to people that they democratically self-govern.
Q: How important is that self-governing aspect?
There’s limited data. It’s unravelling. My politically formative years were the 1970s, and then we all got mugged by Mrs Thatcher and neoliberalism. We’re still living with the legacy of Mrs Thatcher and neoliberalism, in the sense that there’s a whole lot of stuff where she still shapes the intellectual capital of polite society. We are clearly moving into a new era.
The Blair-Brown governments … you can only explain those governments as the successors to Mrs Thatcher. They’re massively into New Public Management. It’s a fascinating thing, because it’s the perfect ideology for the transition from a Conservative government to a centre left social democratic government. Because what’s it doing? It’s talking about social things as opposed to privatising things. It’s an anti-privatisation approach. But it’s using a market mechanisms approach and the right can take solace from the using market mechanisms. The left of centre can take solace from the fact it’s not privatisation, and you have the emergence of technocratic social democrats. This is an incredibly rationalist way to plan people’s health needs.
Q: How did the Treasury apply these cost-benefit tools when thinking about regional policy?
The Green Book was a hidden garden to lots of ministers. We weren’t talking about this and the need to reform it. The underlying assumption is that the Treasury did not want to discriminate in favour of Canary Wharf but they simply say that the marginal pound should be spent at the place where the data tells. That is the economically rational way to do it. We never really had a great debate about that. These things disappeared into the level of officialdom, and ministers and their advisors don’t really get it.
Ministers under the Labour governments that I worked for, I think, would have been quite up for, ‘let’s not put that marginal pound into Canary Wharf, but let’s see what it can do elsewhere’. But it didn’t get framed in that way. A lot of this stuff from the Treasury comes back to you as simply being, ‘here’s what the number crunchers say’. This stuff was arcane and technical – for the political mind. You should never underestimate how that can work.
There was also this intellectual legacy that some interventions in the past – e.g. building a car plant in Lynwood, Scotland, far from any other car producer and spending a load of money transporting stuff – weren’t great. It was all politically driven. We’re building a Ravenscraig: rather than build one plant, build two. There was a big legacy of failure, where you override that Treasury position.
We’re now more in an era where the interesting thing is market failure. Before 1997, we were all working on intellectual stuff that focused on government failure. That was the way that you thought about those things. You don’t have to be a member of the Institute of Economic Affairs. It was just accepted stuff. The New Labour project was, after all, a desperate struggle for respectability and electability.
Q: Were there ideas or innovations overseas, or effectively executed in the UK, that you thought were really successful?
I’m not a great believer in silver bullet policies. I don’t think industrial policy can transform big trends. Part of our regional problem is that we have seen some big trends over two or three decades. Some of those big trends – decarbonisation – may actually work in favour of the regions. That’s an extremely interesting thing: what can industrial policy do to mitigate and accentuate those big trends? You can go with the grain that can speed up those transformations.
I continue to be interested in the local institutions question. It’s interesting that nobody has a good word for RDAs anymore. Were they a failure? My own experience of them was during the MG Rover collapse. The last big UK-owned car manufacturer went bankrupt on the eve of the 2005 general election. Working with the RDAs, you saw the ability of people that were locally networked and had their own stashes of money that they could spend on things. That was important in terms of handling the impacts of that closure. Those impacts were potentially huge in the West Midlands.
Q: Do you think RDAs could have survived if they had stronger local accountability and legitimacy?
My view is that RDAs didn’t need a regional assembly, and it’d be a bad thing for them. They needed to be well-networked, entrepreneurial, stakeholder organisations.
The geography of each RDA was simply whatever the Government Office was. These were relatively random: there was no such thing as the RDA economy. There was a West Midlands region, with an RDA in the West Midlands. But the West Midlands economy was a wider area. There was a problem that these weren’t about the economic character of a place. They weren’t. They weren’t based on travel to work zones.
The other thing – and this is a post-2010 point – is that we focus now on the cities. How would that fit in with RDAs? How would powerful cities and powerful city mayors fit in with a resurrected RDA? What’s the relative economics and agglomeration stuff? If the issue is having successful cities, which then spawn successful conurbations around them, then the focus on the cities might be more relevant than trying to resurrect the RDAs.
Take as an example the South West Regional Development Agency. When it existed, there was nothing that linked St Ives to Bristol in terms of economic interests. There was a massive geographical divide that took over. And yet you called this the South West. There is clearly a Bristol economic region, which the mayoral area now effectively begins to cover. From the economic point of view, this issue is whether, if you gave the mayor a bigger economic role, would he or she have sufficient size and scale to so run a serious programme to support the aerospace industry, which was quite a big thing for the South West Regional RDA.
ENDS