John Healey has served as Member of Parliament for Wentworth and Dearne since 1997. He served as a Treasury minister from 2002 to 2007, and Minister of State for Local Government, then Housing and Planning from 2007 to 2010. He was shadow Secretary of State for Housing through the late 2010s, and currently serves as Shadow Secretary of State for Defence.
This interview was conducted on 6 July 2021.
Q: Can you tell us about your role in regional growth policy? What do you think were your key successes and your key frustrations?
My involvement started when I became Parliamentary Private Secretary to Gordon Brown. In 1998 Ed Balls and I wrote our first joint publication, which was essentially a regional economic policy publication. It was designed to provide – arm’s length from government – a direction. We were able then, largely through Ed’s position as Gordon’s economic adviser, to get the government machine moving in that direction.
The legislative lead was with the business department and a minister called Richard Caborn who backed this. We were effective at lining up the alliances that were required to make the RDAs [Regional Development Agencies] – and ministers within government – work, but not necessarily at thinking about the next steps.
The central feature of that 13 years of Labour government was that the Treasury was the driving force. That was imperative to the qualified success that we had. Without that, we probably would have made very little headway. I went into the Treasury as a minister and had formal responsibility for the local and regional economic development brief – the single pot, the Spending Reviews, and productivity-related national government policies. The Treasury essentially drove performance reviews of the Regional Development Agencies, although they were formally done by the business department and the local government department. We had good, bright, young civil servants on it as well.
Q: When you were writing those papers in the late 1990s, how radical a break did you see it as being from the past? What was distinctive about it?
The distinctive element was an economic agency – the Regional Development Agencies – in England for the first time. That gave us an agency to deliver. In policy terms, what was distinctive was that we were trying to build up the metrics, policy, and investment measures that would make a difference at a local-regional level. As an economic ministry, the Treasury had never really taken that view before.
National government had tended to take a unitary view of its country. The business department was pretty resistant to doing anything on a geographical basis. It would deal with sectors, but largely as a sponsoring department. It very rarely had a strategic view about the government-industry sector partnership, particularly in the long term.
I think the other distinctive thing was that, through the Regional Development Agencies, we were able to encourage a level of local economic development through local authorities that had never happened before. In the early part of the 2000s, we fundamentally changed the way that local authorities looked at themselves and made their case to government – either directly or through the Regional Development Agencies. It was no longer an appeal based on degrees of deprivation, though that may have been part of the baseline case. Now, the case for investment, the case for backing, the case for policy attention or support, was based on potential. Economic potential, growth potential, human potential, regeneration potential.
It was radical. It was fundamental. What was interesting wasn’t just the conversation that we were encouraging local areas to have with us, but the way it transformed how they were thinking about themselves. It influenced and improved their relationship with business, because we encouraged them to have a forward-looking economic plan. We encouraged them to work with business for that. We encouraged them to look at what they could do and wanted to do rather than just emphasising what they couldn’t do because of their deprivation and their disadvantage.
The single pot – the financial flexibility devolved to Regional Development Agencies – was in turn a flexibility that they could use more locally and within their region. It encouraged much more creative thinking rather than ‘we’ve got an objective one or objective two funding programme here, with tight specifications set out by Brussels’.
Q: How did you develop your views on what worked? Were there specific theories, academics, examples either in the UK or elsewhere, that inspired you?
I felt there was a big gap in the policy and economic framework of the country which needed tackling. I don’t recall having a specific evidence base or exemplars, beyond a recognition that Scotland had a Scottish Enterprise Agency for some time. That was our proposition for England. We took a view that we wanted every part of England to have a Regional Development Agency. We took a view of mandating key performance indicators.
We wanted to be consistent across all of those, particularly when we brought in the single [integrated funding] pot, which unusually was more ambitious and driven from the Treasury, rather than being pressed upon us.
We encouraged RDAs to take local and subregional approaches – where appropriate – within their regions, so we didn’t lose the scale of the region or the connectivity within the region.
We resisted the idea that government at a national level should somehow favour cities, largely because that would have favoured a few. There may have been an economic agglomeration case in strict terms, but we were concerned about equality as well as the economics.
Q: Did you have a view within the Treasury about how much economic convergence across places was feasible?
We had a view, captured in the formal tasking frameworks. These were reviewed and overhauled every Spending Review. I’m not sure that we had a view of what was possible. What strikes me in comparison with where we are now is that we were properly rigorous. We were properly rational. One of the great losses of the abolition of the Regional Development Agencies in 2010 was the loss of regional observatories. Within each region we started to develop much more sophisticated data gathering and intelligence analysis, which is all gone. It started to tell us much more about how local and regional economies were performing or weren’t performing. We’ve lost a lot of that.
We made some headway on some of the criteria RDAs were tasked with – some of the Regional Development Agencies did an evaluation at the end of it. I cooked up something with Ed when he was Shadow Chancellor, in the run up to the 2015 election, which reviewed the experience and the evidence of Regional Development Agencies and the emerging experience of Local Enterprise Partnerships (‘LEPs’). It asked, ‘what would you do next with those had we got into government?’ We wanted to narrow the obvious regional gaps in levels of business investment, in productivity, in employment. Some of the skills-based stuff was a bit easier with the LEPs than with the RDAs.
With the RDAs, there was formal accountability and sponsorship from the Communities and Local Government and Business departments, but not from the Department for Education. We never really managed to force the issue where it was properly integrated. That led to a series of policy and delivery failures for that department, especially their original local learning enterprises under David Blunkett. He wouldn’t play with the RDAs. He kept his whole skills work separate. Then they became Local Learning and Skills Councils, and the National Learning and Skills Council flowed from the local ones. It was the forerunner of the Learning and Skills Councils, which we set up after 2000, separate from the RDAs. They were command and control; they were a huge, wasted opportunity – like the RDAs. Some significant business people were willing to really throw themselves into this, but then they found that they had no freedom, no flexibility, no funding decisions that they could take.
Everything with the Learning and Skills Councils was nationally defined programmes or small amounts of money they had to bid to the centre for. Within three or four years, they’d all walked away. Contrast that with the RDAs. The significant thing about the Regional Development Agencies was the degree of flexibility and freedom we gave from the centre. Unusual. Combined with the single pot funding, this meant they were making real decisions. I don’t know how conscious we were of this at the time, but there was a hegemony that we managed to establish amongst a lot of interest groups, because we created a system in which they could genuinely play. They threw themselves into playing a part.
Q: Was London an asset or a disadvantage when you thought about regional development?
London was finding its feet and finding its voice, because alongside this was the creation of a London mayoralty. London was the leader on productivity-per-head, business investment levels, levels of skills and qualification. It was the field leader, but it hadn’t yet established itself in the way that it has now – to the point of being almost a sort of case apart. We made sure it had a Regional Development Agency as well.
It was, in economic terms, first among equals rather than something that was separate at that stage. The London Development Agency got folded into the mayoralty. Combined with the period in the noughties of great success of the London financial centre, London became an international centre. Over that decade of a Labour government, London really became an international city in a way that it really wasn’t beforehand. It was less comparable, whichever way you wanted to cut it, with the regions or even the city regions in the rest of the country.
Q: Could you tell us more about your relationship with local government? What level of capability and capacity did you find outside national government?
We set up Regional Development Agencies as essentially business-led bodies – controversially – as this was important to their focus and their credibility. We made sure that every board had a trade unionist on it. You had an ability to take a range of stakeholders with you in the region.
We had one or two local government leaders. We were able to ensure that some of the better ones were picked, but it gave local government in general a feeling that they were part of something that was significant and new and important to their area. They were being treated seriously over economic and local planning, and, at a higher level, being treated seriously in a way they hadn’t been before.
We had a number of policies directly to reflect the role and importance we were giving to RDAs – like the local business growth incentive. They felt they were getting backing, in particular from the Treasury. They were taken seriously, and they took this agenda or challenge seriously, which I think was important.
How good were they? They were variable. I think it would be fair to say you had within the Regional Development Agencies quite significant expertise, and that they were able to help pull some of the weaker ones along. The better ones were first-movers for some of the programmes. They were first-movers for some of the sort of transformative investment that came along.
I think local government was largely on side with this. Even the Manchester chief executive knew that North West Regional Development Agency had something to offer them. They might have preferred a Greater Manchester model, which is what they’ve got now. Local government appreciate this as a confirmation that they had an economic role. It was an opportunity for them to do something in their area. They had to raise their game in order to draw the investment and support.
Q: How far did Whitehall speak with one voice on these issues to the regions?
Whitehall next to never speaks with one voice. Does that matter? Most of the time, it didn’t, because those involved in local or regional economic development knew the voice of the matter was the Treasury. With Gordon and [John] Prescott being jointly committed to regional economic development, stakeholders knew this was serious and they knew they had something they could work with.
The problems came where the alignment was ragged. The Business department had a period where it just wanted to sweep away planning and regulation. It had a co-sponsoring role, but it didn’t really take to the idea that regional economies mattered. Generally, that didn’t matter, because they had little funding to offer. They had little creative policy alternatives to offer.
The one consistent problem was the Department of Education, previously Education and Employment, then Education and Skills. Had we forced the issue and got skills properly integrated, I think we would have seen a really important transformation on that. But in the end, we had the absurdity of a regional economic strategy, and we had a regional framework for employment and skills being developed separately and in parallel.
I think we started to overload the Regional Development Agencies in the latter years, where we had this Whitehall-level conceptual cleanliness, which thought, ‘we can’t have regional economic strategies and regional spatial strategies’ (from the housing and planning part of the Communities and Local Government departments). That became a really difficult fit as we tried to work those together. Part of that was our problem in trying to bring regional and spatial planning into the Regional Development Agencies role after the failure of the 2004 referendum, because they never had, in the end, democratic accountability. You had then to either find a way of aggregating the local government accountability, or trying to do it without a sufficient democratic mandate.
RDAs did a great deal without Whitehall’s ‘being of one voice’ or that accountability, but in terms of skills particularly I think that lack of alignment was a weakness and a shame.
I think we gave Regional Development Agencies quite a lot of firepower. I think that we were missing, in the end, financial instruments. The Treasury retained, despite its commitment to RDAs, a basic belief that investment markets are national, not regional. We never really developed financial instruments or financial policies that worked at a regional level. We dabbled a bit, but never quite got into things like regional development bonds or tax incremental financing or local flexibility on business rates. If you really were going to give them a bit more firepower, the financial and fiscal areas were two that we looked but we never really quite cracked – or were willing to take that step.
Could we have gone further? We probably could. Could we have built more boldly on a local government elected accountability? We probably could. Could we have done that selectively with the best? Yes, we probably could have done that. But we generally took a view that, whilst we weren’t going to have everything going at the pace of the slowest in the convoy, we were concerned to make sure that areas weren’t entirely left behind.
Q: In that decade, how would you categorise the views of Number 10?
The Regional Development Agencies proved their value in unexpected ways. They were there on the ground when the massive 2006 floods hit. Suddenly central government had an agency on the ground that, for instance, in Yorkshire Forward, within 24 hours had a very flexible, immediate £10,000 business recovery grant scheme application up and running. Within 48 hours they had made their first payment. The same came when we hit the economic crisis. You had agencies in place through which some of that immediate support could be offered. You’ve sort of seen the problem that in the COVID crisis, the Local Economic Partnerships have played no role in the economic response to COVID. It’s been central government schemes, led by HMRC, determined by a central government, or it’s been essentially local government with very tightly specified schemes that they can use and relatively little flexibility.
When the economic crisis hit, Number 10 was rightly just concerned at that point with pulling the country out of the deepest recession we’ve had for more than 100 years. It did a bloody good job on it. Previously, in the first 10 years of that Labour government in effect, there was a benign disinterest from Number 10. Did that matter? No, because the Chancellor and the Deputy Prime Minister were so strongly behind it.
Had Number 10 properly thrown its weight behind it, then you could genuinely then have had an integrated government drive behind it. Had you had Number 10 playing the role it should have done, then you wouldn’t have had DTI, contributing so little, for instance, on support for Small Medium Enterprises. I think that was an underplayed part of the regional and local economic development. You would never have had the Department for Education and Skills being able to get away with continuing to run their own programmes. It was actually an important missing ingredient.
Q: Do you think that some of the reforms that have taken place since 2010 have been a step forward in those problems that you’re outlining?
I would want to be fair minded about this, but 2010 onwards was a desperate period. Those first five years saw deep cuts and a withdrawal of active government. That was a period of huge retrenchment and with no commitments to local economies, or any sort of economic development.
They’re essentially a post box. It wasn’t just a retrenchment. There was almost a wilful rejection of the lessons that could have been learned from the 13 years of the previous experience of Regional Development Agencies. We’ve reverted very quickly to a system of nationally defined specified schemes and grant programmes, which invited local interests and local bids, routed through local agencies that had no real discretion and decision-making power, into Whitehall desks where the decisions were made. It was a reversion to some of the worst characteristics of what has been an over-centralised country for far too long. It was a willful rejection of the lessons, good and bad I think, that were to be drawn from that previous period.
There has been zero interest in local and regional economic development and serious economic transformation – and I’m including in the Osborne-Cameron-May period in this. There is relatively little policy interest in it. It is entirely driven by politics, which has become even more extreme, and exposed with this Levelling Up agenda.
City Deals and the metro mayors were, I’m afraid, primarily about creating a position that could return Conservative politicians in largely Labour areas. If they were serious in any way about even the economic and social development of the city regions, they were giving these metro mayors to – then the decision powers, the funding streams, the policy instruments, would have been put in place, and they’re not. That’s before you can get to the quite proper arguments about, ‘well it’s fine if you’re in Greater Manchester but it’s the areas around it that get left out’. Our approach – with a regional base – at least ensured that didn’t happen.
Then take Levelling Up. It’s no coincidence that really there are no metrics for this. There are no serious policies attached to this. There are centrally devised funding programmes for small scale bids, and it’s essentially entirely about messaging and the politics. Now, I think we got the policy in our period 80% right, and we neglected the politics. Actually, we failed on the politics when you look at the North East vote for the regional assembly. With Levelling Up, it’s a frustration for me that people are taking this seriously as a principled or policy programme or a declaration of serious intent from the government. It’s, in my view, entirely specious, and it’s about political signalling.
Q: Do you think that city region mayors are an exception to that overall characterisation?
Not really. If you scratch below the surface of the powers or the impact that city region mayors have, it’s fairly limited. They’ve got a positional power, which allows them to develop a voice for their area. That’s very important. But in terms of economic impact – other than it being a sophisticated municipal public relations exercise that might bring business and investment interest in its wake – it is a focus for centrally-determined grant or programme allocations from national government. Very little has happened in the West Midlands that Andy Street has really led. Andy Street has been the post box for national government grant or policy initiatives. For instance, they’re trialing the Housing Association right to buy in the West Midlands mayoral area now. It’s not something that Andy Street has had anything to do with. I’m afraid I’m still quite a sceptic.
I think the city regional mayors have made a good fist of the position they’re in, and have a public profile which is not consistent with the powers that underpin their position. When you start to measure the devolution deals, they’re pathetic. It took two and a half years to learn the devolution deal for South Yorkshire: £30 million a year for 30 years, in aggregate £900 million. In the 2010-2011 budget under Labour, there was almost £300 million for Yorkshire Forward alone, which was axed overnight. £300 million for Yorkshire, compared to £30 million for South. You see the sort of scale. Never mind the restrictions that are there on scope.
I think any proper look at the funding, the powers, the flexibilities of mayors, leads me not to the conclusion that we just haven’t gone far enough, it leads me to conclusion that they weren’t really serious about it in the first place. Why is that? Because the principal purpose is essentially a political purpose. If there was a serious intent behind that, then we’d have said it was the first step. If there was serious, principled intent, then you’d have seen devolution two, three, rapidly putting in place some of the things that are lacking at the moment. In powers, in funding, in perhaps revenue raising. None of that’s there.
Q: Are there are any innovations or ideas that really worked?
I think you’d have to say that the 40 years of local and regional economic development in Britain has been pretty bleak. There have been some aspects where initiatives have had an impact, from the Scottish Enterprise Agency to a decade of Regional Development Agencies. What has been missing is an intellectual and long-term political policy commitment to greater local freedom and development, and the resources to match. We learned during that Labour decade some important, clear lessons that should have been scaled up, but were discontinued.
ENDS