Ken Clarke was MP for Rushcliffe from 1970 until 2019, serving in the cabinets of both Margaret Thatcher and John Major. He was Home Secretary from 1992 to 1993 and then Chancellor of the Exchequer from 1993 to 1997. Since standing down as an MP, he has served as a Conservative Member of the House of Lords.
This interview was conducted on INSERT March 2022.
Q: Could you tell us about your role in growth and regional policy over the past few decades?
I was never the minister responsible for regional policy but I had involvement with regional economies and regional policy in every government I ever served. I was a junior minister at Transport, junior minister at Employment, DTI [Department for Trade and Industry] then I became Chancellor of the Exchequer. They were the principal times when I was involved. I was at DTI for a time, not long enough really. Margaret [Thatcher] appointed me to what she described as Inner Cities Minister, covering the subject of inner cities across the government. It was in response to the riots we had in the inner cities because of deprivation and racial tensions at the end of the 1980s. So I had some involvement and I’ve always been aware of it. But never, in my long, much reshuffled and diverse political career, was regional policy one of my direct responsibilities. So I’ve been on the edge of all this all the way through.
I was very keen on being the Cities Minister but my problem was that often you get reshuffled and I only did it for about 18 months. The other problem, when I was doing it, was that Nick Ridley at the Department of Environment was thoroughly, actively unhelpful. He thought that if there was going to be an inner cities policy, it should be his department who did it. And appointing somebody from DTI, he was going to be of no help whatsoever. He just thought regional policy involved Department of Environment knocking things down and building new buildings. I thought it was more about the people and training and all the rest of it. But he, at Environment, slightly encouraged the local authorities to be unhelpful.
Q: Are you surprised about the rise in regional inequality since the late 1970s?
I’m not surprised with hindsight – it’s quite obvious it was likely to happen. I don’t think we paid enough attention to it at first when it started to happen. We’ve always had disparities between the regions in this country, but they really began to develop and accelerate when we had the rapid structural changes of the 1980s, changes that were much overdue. We saw the death of the Victorian style of old manufacturing technologies. The collieries, the coal mines, the shipyards, the old foundries, the uncompetitive remains of 19th century industrial revolution.
That steadily died out and was closed in quite controversial circumstances. We shifted to becoming a much more modern economy, a more competitive economy. We stopped subsidising every loss-making big business in the country and we became increasingly a service economy. What happened was that produced an enormous shift of national economic activity from the North and parts of the Midlands down into the South, particularly the South East and London. There were quite a lot of small towns which were really single company or single industry towns where the whole economic basis from the town was wiped out. Mansfield, in my own county of Nottinghamshire, was a coal mining town. Hartlepool was shipyards and ship building. Once they closed, it had a dramatic effect on the economy there.
I think the wider economy actually thrived. It had to be done and it was much overdue. We were becoming an economic and industrial laughing stock, in my opinion, being left behind by the economies of France, Germany and our European neighbours with this old fashioned industrial base. But we assumed that the new economy would move into the same places as the old towns and replace the 19th century style manufacturing that they’d lost. Of course, that didn’t happen. And as it didn’t happen, the disparities grew wider, and more emphasis began to be put on regional policy, which might somehow enable these left-behind places to catch up.
The current government is using the slogan ‘Levelling Up’ for the left behind areas. Levelling Up is just the latest description of what successive governments have been unsuccessfully trying to do for most of the last 20 years. It is extremely difficult. And at times I have come to the sad conclusion, certainly my feeling now is, nobody has actually found a policy way of doing this. We keep shifting around, trying to find ways that will bring the new economy into the areas that were left behind when their old industrial base collapsed. The gap between regions at the moment is far too wide, and it’s one of the worst, if not the worst in Europe.
Q: Back in the 1970s and 80s there was a scepticism about Regional Selective Assistance and area-based regional policy. Do you recall those debates from that time?
I do. It hadn’t worked particularly well, and I don’t think anybody has solved this problem yet, exactly how to do it. It was mainly an argument about government grants and them going in different proportions to different places because they were comparatively deprived compared to the national average. It largely went to local authorities who spent it with more or less efficiency and with usually no terribly noticeable results.
Q: Do you remember a regional dimension to competitiveness policy during that period?
I don’t recall being involved, I’m sure that was done. It would have been quite obvious at the time. It would be desirable for them to move in. What happened was we opened up the economy generally, and we started welcoming foreign investment. We did start trying to find ways to encourage investment in new industries and new businesses, but the people making the investment tended to move to the thriving parts of the country, and the cities that were thriving and growing, most particularly London.
What I don’t think we ever managed to produce was incentives to get people to go to the places that were losing their old industrial base. My recollection, I don’t remember it clearly, is that Geoffrey Howe when he was chancellor had a go at freeports, which are being revived again now. We had a policy of tax relief in freeports dotted around the more deprived regions. But it didn’t really work. All it did was divert local investment, that was going on in the region anyway, a comparatively short distance into the freeport for the tax advantages. And it didn’t last very long. It didn’t work.
The present government’s about to try them again. I think. Whether they have anybody who remembers enough about the freeports to address the problems which we had before, I have no idea. There was a great deal of talk about all this because it was obvious that some societies in some places had been changed. In the cities, eventually, local economies did revive. Birmingham certainly bounced back from the change from the subsidised, loss-making, clapped-out old car industry into a more modern car industry, more modern engineering, and it began to thrive again. Places like Birmingham, Manchester, Leeds, Newcastle, they went through periods of decline, but now they’re thriving, modern cities. What has always defeated people is the small towns, particularly the ones that used to be single industry towns. I mentioned two of them in an earlier answer.
It’s the question, ‘How do you revive the economy of Barnsley?’ that continues to this day to defeat people. In the 1980s, after a bit, what it led to was a great enthusiasm for infrastructure and building roads. If you can’t think of anything else to do, give them a bypass or build a road. It’s very popular with politicians because it’s physical, you can show it. The locals all want new roads and nationally we all want to build roads, and it does make travelling around in those areas a little more convenient and a little faster. But I personally have always doubted that this has any direct effect on stimulating the local economy. It’s a debate that still goes on.
Q: In your various portfolios during the 1980s, did your thinking evolve as you grabbed a wider set of policy levers?
I don’t think it did sufficiently. Because of the roles I was playing, I learned that putting roads in was the easy thing to do. You could point to a specific thing. The roads were required, and the building of the M25, M1, and all the rest of it, was necessary. But it wasn’t just, at the time, my belief that somehow a road in itself revived the economy. I think that got ever stronger as time went on. I think the present government seems to believe it very strongly indeed. As do all the northern lobbyists trying to get them to put even more roads up there. In itself it doesn’t work.
I remember, when I was Cities Minister, this thought began to occur to me because by that time, Liverpool, which was a very depressed city, had a number of local motorways put in around the Merseyside area which were practically deserted and unused. People went over the top in riding roads to the satellite towns to Liverpool, which didn’t really even have much traffic on them when they were first built. So the roads thing, it’s a personal view, that I don’t think it’s ever actually worked.
I think we made the same mistake on a bigger scale, on a slightly related issue, in the 1990s. The 1990s and early 2000s we had a really successful period of economic policy. We thought we were going to create a globalised economy, a rules-based international order. We’d sorted out monetary and fiscal policy. We can achieve growth with low inflation. And indeed we did. The world economy was changing. The British economy was changing rapidly. We just assumed, this is with hindsight, sitting here now, we assumed that the benefits of that would trickle down to every section of the population.
What began to happen in the 2000s was disparities of income began to develop, and for a lot of the population, the ordinary population, their real living standards have not risen very significantly over the last 20 odd years. For the successful, for the chief executives of listed companies, they now earn ridiculous incomes and the gap between the rich and the poor, the successful and the normal working man or woman, has widened far too much. Again, the assumption being that the benefits of a successful economy would trickle down through society to every level of society and would similarly spread across the country and benefit every community. And as we can see, in the last quarter of a century, that has not happened at all.
Q: What is your view of the role of London during that period and its success in comparison to non-London cities?
The new economy, the service economy, the modern economy was London and the South East. At first they were hit by the blow of losing the huge subsidies to badly managed, old fashioned working practices in the car industry or the closure of the shipyards in Sunderland, if you count Sunderland as one of the cities. In Sheffield, all the more useless bits of steel production closed. They became very depressed as the old industrial base collapsed, and they sought to attract a new industrial base.
Now the cities have succeeded in reviving, and I’ve said there was a great dip, they were hit badly by the structural changes in the 80s at first, but nowadays Manchester and Leeds are thriving places. Obviously they’re still not doing as well as London, you could argue, but they’re doing all right. It was the old industrial communities, this is a Ken Clarke theory, that are very difficult to revive. Employers, when they are looking for somewhere to invest somewhere in Britain, they need somewhere where there’s plenty of land. They need somewhere that’s attractive for the people who are investing to live if they’re going to manage it. Above all, they need people with the relevant skills so they can hire the workforce they need. When they go to these towns, they’re run down, they’re obviously a bit depressed. Most of them have got an industrial estate set aside somewhere. And all the younger people who acquired any skills, any people who retain something in their education, all leave as soon as they can to go to London and the South to have a job and have a career.
Q: What conclusion do you draw from that about the role of London?
It’s a magnet, a successful magnet. What the other cities show is that there are attractions in investing where other people are investing. You’re also helped if you have a good university and the relationships between the university and local business are good, if the local authority is interested in y supporting business, getting close to business and all the rest of it. New investment attracts more new investment following it. This is all very broad brush stuff. That is, I think, basically what’s happened. Whereas looking at a rundown industrial town that’s lost its 19th century base, you’ve got to find a labour force to persuade to come there and so on and you can’t find the skills you need.
Q: What is your view on the role of urban regeneration, urban leadership, in turning around cities?
Michael [Heseltine] is amazingly successful. When Michael gets into things, he gets enthusiasm. But he was actually the minister for Liverpool, which was a big problem city, the port no longer providing all the work it used to, it wasn’t attracting investment, it was a difficult city socially. Michael got really dug into it and he had considerable success. He achieved a lot in Liverpool. But Liverpool still doesn’t do as well as Manchester, it hasn’t caught up.
When I was the Cities Minister in the late 1980s for far too brief a period, I had set up teams of civil servants in what we called taskforces in some of the little towns. We did very well in Handsworth – that’s because Handsworth was in the reviving city of Birmingham. We didn’t have to do much. We did try to get into training. I thought the people, and attracting the investment and the training of the people, and the linking up of investors with their new employees and getting proper cooperation with the council, was really important. That was possible in Birmingham, which was an enterprising city, always has been. If you went further North to Hartlepool, you had real difficulty with the locals because it was in the early 1980s, they were still adjusting to the amazing things that were happening, which they thought were terrible things. They just wanted you to reopen the old shipyard or to go back to subsidising the foundry. They weren’t interested in attracting new people.
The best we did, which wasn’t a triumph and I wasn’t responsible, was getting Nissan to build what has become one of the largest, most successful car plants in Europe in the North East, right in the area we were trying to attract people. Nissan thrived. But one of the things we had to do was overcome resistance to that. There were fierce opponents to the Japanese coming here building cars. In the North East, there wasn’t real resistance, it wasn’t quite the same, but you know, we don’t do car making. Nissan overcame all that. Indeed, they found it a positive advantage, in my opinion, compared with Birmingham. Birmingham was still trade unionised, obsessed with all the old demarcation disputes and working practices and so on. if you had to train people from scratch in the North East, you could build cars in a modern way. They would use the modern equipment properly.
Q: So it was an advantage that Nissan went to an area which wasn’t traditionally car manufacturing? Was that something the government was actually encouraging?
I wasn’t heavily involved in the decision. So I don’t know how far they were aware of that. I think the government was trying to encourage them and no doubt gave them financial support to go to a deprived region. And that was the principal enthusiasm of the government.
One of the things I remember drove me completely up the wall was that there was a difference, apparently, between North Bank and South Bank jobs and you couldn’t move them across the river. The people had to reserve this custom. I encountered plenty of things like this. We tried to get a new factory to take over the site of the old Tate and Lyle sugar refinery. It was a big factory in Liverpool. And the new investors we had got pulled out in the end because it was essential to investing in Liverpool that you agreed which trade union was going to represent your staff. A great negotiation was going on between the trade unions about which jobs in the new factory were going to be represented by one union and which jobs were another. And the different trade unions could not agree on which were their respective jobs that they were going to represent the people in. They hoped to be involved in recruiting the workforce.
When I went to Ravenscraig, the main thing they were all worried about was that the company, British Steel had, by mistake, appointed a Catholic foreman in a Protestant part of the factory. And you couldn’t do that. There were Protestant parts of the plant, and there were Catholic parts of the plant. And that was the main thing that most of the locals were most excited about on the day that I made my visit to Ravenscraig. Trying to make progress on how we can turn this loss making business around to give you the hope of survival didn’t seem to interest anybody very much, apart from a few of the managers.
Q: Can you tell us about debates in cabinet in the middle of the 1980s around Westland. There were definitely people, including the Prime Minister, who didn’t want Michael Heseltine anywhere near industrial policy or the DTI because it would lead to a more corporatist, interventionist industrial policy?
More interventionist, more European. What they were mainly worried about was that Margaret [Thatcher] was mad keen that Americans should buy it. Michael was mad keen than Europeans should buy it. They had agreed that the company would be sold to Americans. Michael had gone to great efforts to get a European consortium, which he plainly preferred and was trying to install in their place. Coupled with the bad relations anyway between Margaret Thatcher and Michael Heseltine, which was as much personal as political, this led to an absurd row. I was a new member of the Cabinet and I sat and listened to the extraordinary Cabinet meetings with them arguing and appealing to their colleagues to try and support them. I thought it was an extraordinary argument to be having about a not terribly important company. How much we were going to go out of our way to favour a European bid vis-a-vis an American bid that led to a slightly absurd argument.
Q: Was there also a philosophical difference between the Heseltine view and the Thatcher-Keith Joseph view?
Yes there was. Because Michael was, of course, intervening in a private deal. It did eventually just smoothly go ahead. I personally, believer in a globalised economy as I am, think the nationality of the purchaser didn’t matter tuppence as long as there was no security risk. Who was likely to make the best bid, who was likely to make the best job of building this company up?
Q: What was the Ken Clarke view?
I tend to go near Michael in his views on all these things. What he never converted me to was his belief in the virtues of devolved government on the scale he wanted to do. It’s fine so long as you can devolve these things to local authorities who have some competence. I used to tease him, saying that I can think of one or two council areas he should live in which might transform his view. He’s won the argument that the key thing is to devolve all the powers to the local authorities. And now we’re into mayors. The mayors are the current enthusiasm. I was never as keen on that. Interventionism and the government support and subsidy and investment in things that were desirable to be steered into regions, on that I admired Michael. I agreed with Michael 90 percent of the time on that sort of thing.
Q: If you think about the different levers which you might use to intervene – what do you think is most important?
I feel very strongly at the moment that skills and skills training and providing job opportunities and training opportunities, for younger people in particular, are absolutely crucial. It’s one of the areas where we’re weakest in this country, and I think the present government is being stirred a little into action, it has to be prompted to do more. It must do more. I took part in debates on the Skills Bill in the House of Lords. I’m not very active in the House of Lords, but I really got into all this. I had a defeat from the government with an amendment which was that we should do something about the failed apprenticeship levy.
I’ve always thought we should pay more attention to further education and stop neglecting the further education colleges and develop technical employment-linked opportunities for more people. Which we are slowly doing. There are slightly more degree apprenticeships. It’s only a few spectacular companies that can show you how to do it, like British Airways or Rolls Royce in Derby. They have fantastic degree apprentice courses and train their engineers. But at a lower level, on apprenticeships and skills of all kinds, businesses don’t train enough. The government has just announced it is going to address the failed apprenticeship levy and that they are going to do something about it. But they still won’t put the further education colleges onto the same financial footing as schools and universities. A school gets funded in response to demand and what it’s providing. Further education colleges are subject to strict cash limits and they often can’t provide courses, which local employers and local young people would want and would benefit from. The government is trying to localise skills training so that employers are more involved in deciding what is taught at further education colleges and elsewhere. All this needs to be addressed. It’s almost as high a priority as social care for the present government, in my opinion. And that’s what we’ve neglected. We could never really get it to take off in the past. We’ve always accepted that further education was being treated as a Cinderella of the education service. But my own mitigation is I wasn’t in education long enough to be able to get what I wanted to really put further education onto a fresh footing.
I always used to say it was the bit that really failed in the 1944 Education Act when we made our first efforts to make opportunities spread across the community. The academic bit worked. Although grammar schools was an imperfect model. But the third tier, the third type of school, the technical schools, never developed after the war. And if anything, the British record on technical education, apprenticeships and training, remains one of the worst in Europe and is one of our biggest weaknesses. And that particularly affects the sort of places we’re talking about.
Q: Do you have sympathy with the argument that the only way to make skills policy work is for decisions to be being made at the local level?
I have some sympathy and I think the present government is trying to address that. Every area has now got a skills and training board of some sort, which is meant to be employer-led. The aim is to get local employers to engage with the local authority and the local colleges and with the schools in order to actually make sure that, in that region or in that town or in that city, the training and skills being offered is training in the kind of skills that are needed by the local employers.
Q: Is that a shift in your thinking?
My experience in dealing with Local Authorities was as Inner Cities Minister and, at times, in my own part of the country in Nottinghamshire and Derbyshire. I learned that it all depends on the quality of the mayor, the quality of the Local Authority and the policies they adopt. My experience in the 1980s was that I found the Local Authority just wanted to press you to go back to where we used to be. To go back to subsidising the old shipyard. And they weren’t terribly interested in anything different coming because ‘We don’t do that sort of thing here in Hartlepool’ or wherever we were.
Q: When you were Chancellor of the Exchequer did you have a spatial vision for the UK economy in mind?
I was aware we had a regional problem. I don’t recall that I had any specific policy as Chancellor which addressed it. I did try to develop systems whereby we might give more tax incentives to people proposing to invest, which I think is quite an important thing to do, with the right kind of new business in the more deprived localities. But no, I didn’t. I think it’s slowly dawned on us as we’ve gone on that it isn’t going to correct itself and it’s becoming ever more of a problem. And it’s being tackled now more vigorously than it has been by any government.
I was mainly concentrating on the macro economy when creating economic policy. Achieving growth nationally, growth with low inflation. I think I made the assumption, which the majority of people of all political persuasions made in the 1990s, that this would quite naturally spread to all parts of the country – if you could achieve that kind of good, stable economic performance with sustained growth with low inflation. We really were growing. We were able to achieve 2.5 percent, 3 percent a year, and my inflation target was 2 percent and I was never very far from that. That combination of growth and low inflation and making sure we avoided at all costs a return to the boom and bust which had typified the British economy in the 60s and 70s, was what I was concentrating on. I must admit, I don’t think I did have a strong regional element in my economic policy making.
Q: What do you think now is the main reason that trickling down didn’t happen?
Because the thriving, growing, attractive parts of the country keep attracting all the investment. They are the places to go if you’ve got a new business. And the depressed, old fashioned, run down, left behind towns do not attract investors. Hence we produced our own version of Silicon Valley, an amazingly prosperous, remarkable development, in the belt between Oxford and Cambridge. It’s absolutely an ideal place to go if you have the right kind of modern, digital, technical-based business. And it thrives, it gets wealthier and wealthier, and its house prices get higher and higher because of demand to work and live there. Anybody with the right kind of business, looking at the choice, wants to invest there and isn’t persuaded that it might be a good idea to go to, for example, Rotherham instead.
It becomes self-perpetuating in today’s world, when the pace of technological change continues to speed up all the time. And you know, successful economies have a totally different base now to the one we had in the 1970. Indeed the national economy is a particularly service based economy rather than manufacturing economy nowadays. In broad brush terms, that in itself explains the shift to the areas of the country which look most attractive and look as though they’re booming to anybody contemplating siting a new development.
Q: What do you think are implications of that for towns?
We should be trying to get people to go to parts of the wider economy. Burnley, Oldham, Rochdale, all these places which have great difficulties, are best regarded as part of greater Manchester. They are greater Manchester, for all economic purposes. One of the advantages that places like Rotherham could eventually have is being part of Greater Sheffield. And Sheffield is making progress now, Sheffield is reviving.
Q: What’s your analysis of the current state of the East Midlands?
It’s not done too badly, the East Midlands is always in the middle. It’s not the most depressed but it’s not the most successful. I quite agree that its best to regard Derby, Leicester and Nottingham as a unit. My enthusiasm has always been to try to get closer links between the local councillors and the local authorities and the local employers. Some employers maintain good links, some don’t.
It is important to look for where you could spark a revival. Until I retired I was banging on about the area around East Midlands Airport, the site of the last coal-fired power station in the country, Ratcliffe-on-Soar. I was thinking about the interchange as a site for a high speed rail link, HS2. Now there’s a lot of attention being paid to making this a growth area and I’d like to see some tax advantages invested there that concentrate on building areas, industrial estates that attract modern industry. We’re helped by having good universities. The two Nottingham universities are excellent universities, are excellent at taking their own involvement in the local economy very seriously. Derby is not bad. So there is potential for getting the East Midlands a little further into the modern world. It’s not doing too badly.
Nottinghamshire is a funny shaped county, a medieval county, it doesn’t reflect modern reality. The northern part looks to Sheffield. Nottingham’s right at the southern end of the county. So the Nottingham, Derby, Leicester triangle, and the hinterland around it has potential, and of course you’d have some very good employers. Derby’s doing all right because it’s got Rolls Royce.
Q: Should the East Midlands have a plan with Nottingham, Derby and Leicester all coming together with an overarching mayor to drive that airport development?
I see no signs of any enthusiasm for having a mayor covering all three. It’s been fiercely resisted locally. Nor are we producing potential mayors who share a view of how they should actually track the economy. Local government has not been spectacularly high quality, particularly in Nottinghamshire, Derbyshire and Staffordshire. It happens next door as well.
Q: Do you think the East Midlands might follow Greater Manchester or South Yorkshire, West Yorkshire, London, Birmingham?
I do think that there is growing realisation in the East Midlands that we need to do as well as these cities. I do think there is genuine enthusiasm for having a hub which could stimulate a whole lot around it. I’m not satisfied that having a mayor for the whole area is going to make any particular contribution. It will all depend on the outlook and quality of the mayor that was elected.
Q: Do you think at any point central government should force areas to get together to drive regional local performance?
The present government is moving in that direction. If it happens to my part of the world in the East Midlands, I trust we would produce the quality of leadership required.
Liverpool hasn’t always succeeded in producing the quality of leadership required.
Q: Looking back, what do you think have been the key success of regional policy and growth policy in the UK, and what has been the key frustrations?
The key success has been the remarkable turnaround that one or two cities have achieved. Most spectacularly Birmingham, which was a real problem area in the early 1970s when the car industry had fallen into a dreadful state and showed no signs of reviving. The whole area was too dependent on the car industry. Birmingham has a tradition going all the way back to Joe Chamberlain of surging ahead eventually and becoming economically successful, a place where everybody is conscious of the need to attract industry and enterprise to the city. Leeds is, I think, a pretty remarkable success as well because they were a one-industry-town at one point and they’re much, much better and stronger now.
The biggest disappointment is that we’re still talking about the same problems of regional disparities that we were 40 years ago. It’s almost a bigger problem now than it was 40 years ago because nobody has found the actual secret. Here we are in talking about things that we were talking about 30, 40 years ago. We’ve become a much wealthier, more prosperous, country with a much more modern economy and much higher living standards but these disparities haven’t really got much less than they were 40 years ago.
ENDS