Jonathan Black is currently UK G7/G20 Sherpa, Director General – Cabinet Office. He worked in the Treasury during the establishment of the Regional Development Agencies under the Labour Government and later under the Coalition Government with the development of the Northern Powerhouse agenda.
This interview was conducted on 13 May 2022.
Q: Can you tell us about the roles you’ve played in growth and regional policy since 1979?
I think there were two points during that period where I had a role in regional policy. The first one was around 2001, 2002 when I was a junior official involved in the Labour Government’s regional policy agenda. I helped to set up the Regional Development Agencies (‘RDAs’), when Ed [Balls] was the Chief Economic Adviser to the Treasury. The second point was more indirect. I was George Osborne’s press spokesperson in the Treasury between 2011 and 2015. That was at the point when he developed his Northern Powerhouse agenda. I wasn’t the policy lead on that, but I was quite involved in his thinking and decision on how we communicated that piece of work.
Q: What is your overall assessment of the UK’s successes or failure in regional local economic policy?
I think that if you step back overall and you just look at the stats, the UK has struggled to address its regional disparities. That’s what’s gone on to inform this government’s Levelling Up agenda in one sense. Other governments before it have made their own efforts. I think that is the backdrop.
The underlying but not confronted question was not just about policy, but was about power. The RDAs principally were an attempt to bring some more coherence and focus on policy. The Labour government at that point had its agenda on the regional assemblies. I think during that time there was the referendum in the North East that then wasn’t won. In one sense, the Northern Powerhouse agenda was a combination of policy and power with the city deals and all that went with it. But that has always been the thread, all the way through this. Whether the emphasis was on policy, or where power lies, or both.
Q: When you were first working with the RDAs, how would you describe the philosophy underpinning the RDA approach?
When that Labour government came in, having an emphasis on regional policy was not necessarily new because previous governments had had it, but it was a very much renewed emphasis. It was also one that was led by the Treasury as well.
There are a few new things about the RDAs. One is the requirement to create new institutions, with a set of agencies based around the government office regions. We hadn’t had that type of agency structure at that level before. This was underpinned by the ‘single pot’ concept which attempted to bring money together. We put quite a lot of emphasis on the idea of these agencies having some form of private sector focus and leadership. Some of those things had already been done. Government has already dabbled in the merger of money across boundaries. The role of the private sector was already in some of the urban development corporations (‘UDCs’) that Thatcher set up. I think that was quite new, and certainly the regional emphasis with it based around the nine regions, of England, was new.
Previous government had been operating at more of a sub-regional level. If you think about the things that they’d done into the enterprise zones and the economic development corporations (‘EDCs’), they were very much based in more local areas. The region I’m from is the North East. The emphasis is more around Teesside, rather than the North East as a region. So there were some new elements. Certainly as a junior official, it felt like you were doing new policy.
Q: Tell us a bit more about the decision to move to the single pot?
Going back to what I said at the beginning, this was my first job in the civil service. I was a junior official in the Treasury, it was the first time I’ve worked in government. I’d been given this as a project to do, and it was fun and interesting because we were doing something new and pushing an agenda forward. I didn’t know any better in the sense that I hadn’t worked in government before. But certainly the people I worked for further up the chain did feel that this was a new agenda.
It was an attempt to create a genuinely single budget that cut across a set of departmental silos. There had been previous attempts, and attempts since, but it was quite a full throated attempt. It was quite hard work, and it wasn’t anything like as easy as I thought it would be. The idea was to merge some budgets. That sounds quite sensible and quite straightforward. It wasn’t, it was incredibly complicated, and it certainly relied on the authority of the Chancellor to push through that concept, with a set of departments who broadly still wanted, institutionally, to keep their own funding streams.
Q: To what extent is the caricature that Whitehall is always against handing over power, and the Treasury is more against handing over power than any other department, accurate?
I think it is quite nuanced or quite complex because there’s certainly some part of that which is true, in terms of the Treasury’s relationship with departments. We kept quite a close control of the RDA agenda. What actually wasn’t true was the idea that the Treasury was not comfortable with devolving power, to either, RDAs or later, with George Osborne’s city deals to the city regions. Treasury did end up having to push quite hard, actually, and be the institution pushing for the devolution in Whitehall.
Q: Why was that? Was that simply because of the Chancellor’s view? Or was that also reflecting a view of how the economy worked?
No, I think it does rely on the political leaders, it did rely on the political leadership of both chancellors and their teams at the time. But it is quite common in the Treasury, in the sense that it was a political policy. Therefore, quite reasonably, it was for the politicians to decide they wanted to do it.
Q: When you look across the range of different government departments, and how easy it was to deal with them, on the single pot or then later, over the city deals. Which departments found devolving easier and which found it harder?
Now that’s a good question. The Office of the Deputy Prime Minister, was a sort of super department that picked up quite a bit of Defra [Department for Environment and Rural Affairs] and a bit of DCMS [Department for Culture Media and Sport]. It quite a lot of what you would see as being the bits of the system that were interested in regional policy. The challenges came actually with what was then I think called DFES, the Education Department, the bit of the system that was responsible for adult skills. Also bits of the Home Office as well, that sort of did some of the community spending end. Those were the bits that were most difficult, probably for different reasons.
I think the thinking on adult skills caused the problem. I’ve not been close to this over the years since. It evolved quite a lot in terms of the role of the local leadership and the role of business. It was under both governments, quite traditional about the delivery of further education. So that was the bit that we pushed and that was tough. The Home Office end is obviously really hard. That was caught up in a whole load of other things, including policing, so the politics of that end is just much more complicated.
Q: What do you remember about trying to get DFES to put post-18 non-university adult skills into the single pot?
I can’t quite remember what happened. But maybe them not wanting to. We ended up with a single pot that was not that single. If you see what I mean. We had quite a lot of stuff within it, and there were, even within ODPM [Office of the Deputy Prime Minister], there was still quite a lot of pots within the pot. It didn’t go anywhere near as far as we would have liked when we drew it up in the Treasury.
Q: When you go to the second period and the city deals, how was that in terms of the Whitehall configuration?
It was a bit different by then because the way in which we did adult skills had moved on quite a lot, for different reasons, and it was already a bit more devolved. As well as it being led heavily from the Treasury. You also had strong leadership from the Communities department. I think Greg Clark was the Secretary of State. You had quite strong political leadership in the same place.
The other difference was that there was a negotiation to be had with local authority leaders, which we didn’t have in the same way in relation to the RDAs. Because we were creating an agency of central government in the first time around. We were doing it at a time of pretty rapid spending growth. So most of the single pot ended up just being new money. We sort of solved the boundary problem. Whereas at the time of doing the city deal stuff, we were doing at a time of spending reductions. We need to do it in the context of either spending more, or cutting tax. So in one sense you’re not making it zero sum. I suspect the fact that we were doing it in the time of fiscal constraint actually created the incentives to try and do this, because there was a lot of interest, for the local areas in terms of being willing to cut across their boundaries. It gave them more control over a more scarce resource. Ironically, it’s probably the case that a more fiscally constrained time helped rather than hindered.
Q: How important was the change of accountability between the two periods?
I think it was very important in the end, especially in a fiscally-constrained time. Local consent would have mattered more, as you weren’t able to try and achieve more of what you wanted just by spending more money from central government. So it mattered in that sense. The concept of the Northern Powerhouse-style changes were different to what Labour was doing with the RDAs. We moved the RDAs out of the communities, as a department, into the business department. We wanted to be a deliberately business led, semi-independent agency. There was a much more conscious choice that this was a political process when it came to the city deals. You can argue about the pros and cons of it, but it was a consciously different thing.
I think it’s also worth us remembering that the Scottish Parliament had only just been established. Devolution as a concept in the UK was much more nascent. The coalition government were doing the city deals in a world where we had devolution for 15 years, in large parts of the country including critically, in London. It was the experience of having the London Mayor, I think which set the ground more for having the devolved administrations. It was the London Mayor structure that made you think ‘there’s more you can do’.
Q: What was your assessment of the capability of the regional leaders over the time period?
I don’t think I can really answer that question because I just wasn’t involved in the second period in the negotiation of the policy. In the first, I was quite a junior official. So it is hard to have a historical perspective.
As a junior person I remember being quite struck by two things, in terms of the local engagement. One was the variability of it, and I suspect this has changed as well. But in the North East, you had a very organised, pretty developed sense of what, regionally, they as a group of Local Authorities wanted. You didn’t have that in more southern bits of England where there was less pre-arranged, regional coordination and cooperation between the Local Authorities. That was really clear. Even though this was a central government agency, it wasn’t one that was adopted to local structures. There was a lot of goodwill for the RDAs, at least at the beginning. Maybe that’s because they saw money coming through them. But that was there as well. So that was my observation at the time.
Q: What do you think of comprehensive versus evolutionary and voluntary devolution? Is it a problem when you have places who are on the outside?
That’s quite a political question, and still quite a live political question. I think that the Labour government made an explicit decision that this was a regional, not a local policy. The other thing we did a lot of in the Treasury at the time, was analysis arguing about the importance of the regional tier in terms of economic policy. As an official, I spent more of my time doing that work than doing the negotiations with individuals, because that was done by the departments.
Now actually, the coalition government went on to reject that analysis, and the RDAs were disbanded. It was a conscious decision to make this more local, not completely local. The insight came from trying to group together at a slightly higher. I am not enough of a regional policy expert to know which one is right.
Q: Do you think there is continuity therefore between the RDAs and the city deals?
I think there is also the point about whether it matters that there’s a sort of a different patchwork now? If you’re the nice government official what you like to do is have a map that’s nice and orderly. It was a conscious choice in a context of a world where the fiscal environment meant that the relationship with local authorities was at best complicated. That trying to impose a set of, a uniform solutions across the country was not going to work, and it was better that we wanted to do it bit by bit.
George Osborne would probably say that was also a conscious choice, let’s prove the concept by doing, and others will follow. Of course, it’s not the first time that we’ve ended up with a slightly mixed economy at local government level. If you think back to the unitary authority, to the Tory government in the 90s, you’ve got the small authorities that you’ve still got today in Berkshire, with the bigger, single ones like we’ve got in Wiltshire or Cumbria. I think one of the questions that we’re going to need to come to is what do you do with the bits of the system that don’t have? And of course, just last week, one area rolled back on its local democracy stuff, in terms of what Bristol voted on. So I think it’ll be interesting to see how that goes.
Q: When you think about the kind of analytic frame for the productivity chapter in the budget documents, and the productivity documents which we did. How would you describe it? What was the analytic framework? What was the view of how the economy worked, which we were trying to pursue?
Well, we had these things which involved the ‘Five Drivers of Productivity’, those were the five elements. They were thematic around skills and things like that. Interestingly, one of them wasn’t infrastructure investment, which was always a thing that I think was interesting. That came much later as a concept. Maybe come back to that point. Because it was probably a gap in our analytical framework, I think, and our analytics. But we sort of relentlessly pursued those five drivers for a long time. It was a strong organising device, both in terms of national policy, and how we went on to construct the RDA structure, in terms of the single pot. The bit that we haven’t talked about here is that we put in place heavy targets on the RDAs in terms of what they had to deliver, all of which were structured around that sort of analytical framework.
Q: Do you think that the goal changed, or has there been consistency in the objective?
Broadly yes. I mean, what was sort of interesting is that there was quite a lot of agonising around the extent to which we set a very overall objective. Are you trying to narrow the gap? We didn’t quite do it. We actually moved into a next level down and say we’ve got a set of objectives, but it’s a bit silent on the fact that we just want productivity to go up in these regions. So we didn’t quite fully confront that.
Q: What was the thinking around London at the time? Was London a help or a hindrance to this agenda?
We had in parallel the creation of the GLA [Greater London Authority]. We also still had the Government Office for London. All the central government structures were there as well. We had the London Development Agency, which was the London version of the RDAs. What was is interesting about the setting up of the London architecture is it happened alongside all the rest of it. The democratic structures followed a little bit later. The first election was in 2000, wasn’t it? So it must have been set up by then. My memory’s a bit hazy on it, to be honest.
Q: I think that the LDA was the only RDA which had an overarching accountability tier contiguous with its area.
Well, it was, because there was no other authority over the area had a single local authority.
Q: In general how do you think London has impacted upon the wider UK economy? One argument says it sucks up all the signed spending, the civil servants, the best graduates. The other argument says all the regions of the UK benefit from London’s success. And the third argument says you should think less about London, and more about why other cities in England haven’t been London-like in their impact upon their regions.
In one sense all three are true in different, to some degree. I mean, when we were working on the RDAs we ended up ignoring London. Or at least we separated London out, because it skewed everything so disproportionately, it made it really hard to look at the rest of the country. Thinking about the other areas of growth. In those days that wasn’t an area of thinking. The role of Oxford and Cambridge as being the closest you get to two cities near London, that could be a bit London-like. Having them as RDAs, latched onto those two cities in their two regions, this was a bit of a policy of your third kind, by the way.
Q: To what extent – is the right focus on cities as the agglomerating force or did the regional agenda mean there was less focus on cities than there should have been?
Well, I’m not quite sure it’s as simple as that. Certainly in quite a few regions we don’t quite have in this country sort of city regions of the kind where you have a big, single city that’s dominant. But there are enough regions, with big urban areas. That’s the case in the North East and in the West Midlands, to a certain extent in the North West. Yorkshire and these bits are a bit more complicated because they’ve got quite a lot of places of similar size.
It’s not the case that our regions are completely unrelated to what you’d regard as a more economical city region of the areas that we’ve got. I mean the interesting economics of it, which has played through, is one the role of the biggest urban areas in their region as catalysts for the region. That was certainly the case in the North East, which was the region I was closest to. Then there’s lots of local politics about what that meant between Newcastle and Gateshead, and Tyneside and Teesside. But broadly, people that are focusing on the role of the biggest: Tyneside and Teesside. The smaller towns around the edge of these cities. That led to quite a lot of the politics pushing back against some of the regional policy, which was seen as being a bit too city focused if anything.
Q: In a way that goes back to the point you made about infrastructure and transport and where you focus transport spend. In London there’s a big focus on the travel to work footprint, but maybe less so around those agglomerating cities outside.
I can’t quite remember what all of the five pillars of productivity were, but infrastructure wasn’t one of them. One of them was investment in terms of private investment. But there wasn’t one around what you’d regard as physical infrastructure. I think it was skills and innovation. Whereas, in quite a lot of the ones that follow, as time’s gone by, the infrastructure bit has become very important. Certainly when George Osborne was doing the Northern Powerhouse it was a infrastructure heavy concept.
Q: When you look back now, are there areas which we should have focused on more?
I think my main reflection is that there was a genuine attempt and effort to make the RDAs a private sector influenced set of institutions. You [Ed] were one of the politicians that consciously chose for them not to be put into the local democratic structures, so that they were a business led thing. What that meant was that you didn’t have an active industrial policy sitting alongside and underneath them.
We’re getting now a bit more into the microeconomics principles of the government at the time, which you’re better placed to comment on than me. I’d be interested in your view on it. But it ironically meant that with the RDAs, you didn’t have a heavy, locally, democratically driven agenda or a very strong government political agenda imposed on them either. So they developed their own. I remember the consequences – you’d go around these RDAs, and they’d all broadly talk about each of them becoming the UK hub for the same thing. I remember thinking, well, you can’t all do that. There is a lesson there and it’s a lesson all the way through British economic history. It is about much a government should have an active economic policy. We made a conscious decision with the RDAs and the productivity framework to be agnostic beyond the themes.
Q: What is the one thing which really worked over the period? And what’s the one thing where you think you learned that it wasn’t right, we could’ve done that better?
So, I think the thing that we did get right, and all of them have got right but have attempted to do it in slightly different ways, is that you need to streamline down the structures and the mechanisms, so that whoever is put in charge of them can be in charge. That’s been a theme all the way through.
Q: Maybe the frustration is your investment point.
I think for all the spending that went on we didn’t tie government capital investment that heavily, to this agenda in that early RDA phase. It was incredibly tied in the 2014 one. That was the difference. The only bit of spending that was growing in the early part of the coalition was on the capital investment side. Back in early 2001, lots of spending was growing and I think resource spending, a great more deal of capital in some of these areas as well. So that would then be a difference. I mean the other bit I think that we learned, probably from the RDAs, is that they weren’t institutionally strong enough or capable enough really, to deliver on the mandate set.
Q: And in respect of the successes and failures, what was the role of the Treasury?
On both occasions, the Treasury, with a slightly different group of allies around it drove the agenda. But it drove a very specific view of the agenda, in a sense where there were some quite different models. There were some similarities, but quite different approaches. On both occasions, they were quite the Treasury version of it.
Q: How important is it that Number 10 and the Treasury align? And were they in the two periods?
On everything it is quite important that they are aligned.
On both occasions there were initiatives heavily led by the Treasury, with limited actual direct engagement from Number 10. Obviously, the relationship between Blair and Brown, even those earlier days, was very different to the relationship between Cameron and Osborne. On both occasions. Number 10 was not a very big player in both of those times. I think Cameron, certainly the sort of Number 10 in the coalition actually, the quad was quite important in getting it going because there was quite a political bit with the Liberal Democrats as well. I don’t remember really engaging very much with Number 10 on the RDA stuff. There was loads with DTI [Department for Trade and Industry], Patricia Hewitt’s department, John Prescott’s department and those lot, but not so much with Number 10.
We’ve covered the key point which is that the Single Pot was quite innovative. In the end, the institutions, for lots of reasons, never really quite delivered on their promise.
Q: You’re right. The problem is that if you go comprehensive, the institutions don’t really have a legitimate underpinning. And if you are driven by the local politics, you end up with Newcastle and Gateshead, refusing to work together, and that is a dilemma.
And, exactly. You ended up with a set of business leaders who weren’t deep enough in the local politics, but nor were they sufficiently credible with local business either. We haven’t talked here about the leadership bit. The process of appointing the heads of these RDAs was pretty complicated, should we say. I think there’s quite a lot sitting in that as well.
ENDS