Kitty Ussher was Special Adviser to Patricia Hewitt at the Department of Trade and Industry, 2001-04 and Member of Parliament for Burnley 2005-2010. She was Economic Secretary to the Treasury 2007-08, Minister for Work and Pensions 2008-09 and Exchequer Secretary to the Treasury 2009-10. She is currently Chief Economist at the Institute of Directors.
This interview was conducted on 14 January 2022.
Q: Could you tell us about your role in growth and regional policy up to 2015?
I was a junior researcher in Labour’s policy team in opposition in the run up to 1997. I worked for shadow ministers who were part of Margaret Beckett’s team: Adam Ingram, who was doing science; Kim Howells, who was doing competition policy. Also, Martin O Neill, who was doing energy policy.
I then worked outside as a macroeconomist at the Economist Intelligence Unit. I also worked on what was then the pro-Euro campaign. We did quite a lot of regional analysis.
The story really starts in 2001 when I became Patricia Hewitt’s Special Adviser from 2001 to 2004 when she was secretary of State for Trade and Industry. I covered all the broad economic and business policy and international trade, including regional policy and productivity from the DTI point of view.
I was then selected as Labour’s candidate in the North West constituency of Burnley and was a constituency MP working very closely with the RDAs [Regional Development Agencies]. Burnley was at the centre of the textile industry during the Industrial Revolution and then shifted to manufacturing and has had to think deeply about its economic role in more recent years. I stepped down in 2010. Since then, I’ve mainly worked in the private sector, both macroeconomic consultancy and general public policy research.
Q: What’s your overall assessment of policy for regional growth?
I would say a success is the RDAs – although they weren’t perfect – because it was a realisation that there was an institutional solution, and that different parts of the country needed different interventions at different times. You had to be quite close to the areas in question, to understand what the solutions were.
A good example that I saw in my constituency was the role that the North West RDA did in land assembly. There’s a brownfield site that had crumbling cotton mills and multiple fragmented ownership and the task was too great for the private sector. They slowly, over a period of years, the RDA either purchased when it came on the market or compulsorily purchased all the bits of land to turn it into more of a viable proposition. The process was very, very slow but now, 15 years later, it’s beginning to bear fruit.
Also, I think at a very high level, the realisation that there needed to be a very strong supply side response to major industrial negative event. When Thatcher closed the pits, there wasn’t a human supply side response, and I think by the time I was working in the DTI [Department for Trade and Industry] that was quite well understood. If there was a failure of a firm or withdrawal of a subsidy, then there would be a package of support. So the human side of it, I think, had got much better by the late 90s and early 2000s.
There are some obvious things about transport infrastructure. But probably the undeveloped train of policy thought is – I was going to say skills, but what I really mean is the lived experience of working. So if you’re quite well educated but are a single parent with two kids living somewhere where it takes an hour and a half to get to jobs that are commensurate with your potential, I don’t think we really understand fully the policy interventions that are needed there.
Q: At the DTI, what was the goal of regional policy?
I don’t think it went as far as the current levelling up agenda; I don’t think it was as explicit as that. I think it was probably about equality of opportunity and a desire to regenerate and not have areas fall behind due to things that were not the fault of the people concerned. I think that memory of the deindustrialisation of the 1980s was in our minds alongside a determination to correct or avoid that.
I nearly answered the question with the ‘five drivers of productivity’ approach, but I don’t remember that having a particular regional focus, though we really cared about the regions. We probably did the ‘five drivers of productivity – the regional dimension’ because we really thought the five drivers were correct. I think they are. We really cared about regions. We then, almost in a matrix, put the drivers together with the idea of regional regeneration.
I remember a conversation within the DTI, at a strategy away day thing that went something like this: what matters is GDP. GDP can be thought of –this stuck in my head ever since, has guided so much stuff I’ve done – as productivity times employment. So to maximise GDP you need to maximise both productivity and employment. It’s a very simple identity: output per hour or output per worker times number of workers.
So, if what you’re talking about is prosperity, sometimes the intervention is going to be getting more people into jobs, and sometimes the intervention is raising the quality of those jobs. That’s the productivity point. But fundamentally, if you’re trying to raise prosperity, you need to work out in different parts of the country, where you are. I remember Ed Balls saying to me: the first step to getting a good job is getting a job. That’s why I think productivity was a means to the end, which was prosperity, and that that was important for all parts of the UK. I think that’s how we would have characterised it at the time.
Q: Was there a particular example you looked at outside of the UK?
We were quite taken with Germany, but I don’t think we dwelt hugely on it. My view now is that the two economies, although roughly performing the same at a headline level, are structured so differently that you can’t really pick and choose bits and pieces of them. But I think at the time there was a sort of sense that the institutional regional structures in Germany perhaps had something we could learn from.
I don’t remember examples from elsewhere in the UK. I think we probably had the North in our minds. That could have been because our political networks were stronger there. I was probably influenced by East Lancashire because I was becoming more and more involved there and comparing and contrasting in my mind. I remember being particularly struck by incredibly low house prices in what then became my constituency [Burnley]. I remember when I went there and started listening to people’s stories about how they had nothing to leave to their children because the value of the family home had fallen; you could buy a terraced house for a few thousand pounds. I remember coming away feeling very motivated and thinking: this needs action, people in London should know this.
Q: What is the optimal scale for local economic interventions?
My experience of the RDAs is really positive. I think it’s particularly positive for the single borough constituencies with a strong sense of place that weren’t part of a bigger conglomeration because of the flexibility and nimbleness that the RDAs had. They had the autonomy to intervene where it actually made a difference. It’s been a bit of a disaster not to have them. So whether it needs to be the nine English geographic regions I don’t know, and I don’t think you can get that particularly right. I think the fact that it ‘wasn’t just cities’ was advantageous.
Q: Post-RDAs, places like Burnley and Blackburn are part of the greater Manchester economy but outside the combined authority footprint – how do you feel about that?
Burnley is 30 miles from Manchester. You’d think that should be commutable, but it takes an hour and a half, sometimes more, at rush hour, to get into Manchester. But Manchester doesn’t care about that. There’s nobody who’s going to really fight the case to speed up the train line or put a little bit of curve in the train line, which is what it needed.
Where does that voice come from when you’re a smaller community? I wouldn’t think of it in terms of what’s the optimal economic area. I’d have a far more place-based approach and say, ‘what does this town or this community or this place need to flourish? What’s the jigsaw piece that’s missing for that place?’.
That’s why I think the RDAs were really good, because they could say, ‘right, our strategic priorities of this year are to put these five jigsaw pieces in or these five places, and next year it will be that, next it will be that’, like you’re fixing your house. That goes, if you start to draw lines in a map and say ‘this is important so it needs its own leadership’ or something like that. That’s why RDAs were great for smaller places, because all you had to do is go to the RDA and say, ‘what we clearly need are these three things over the next three years’.
Q: How have places like Burnley fared post-RDA?
I think they’ve moved forward. While I haven’t been hugely involved, from the context I have had, they just need to rebuild the coalition for regeneration in a different way. They lost a whole lot of champions; they lost the institution they were working with. There are two things I tried to do when we were there, which was get a train line to Manchester and get a university campus. The campus involved a bid where we were successful – with the University of Central Lancashire. That worked, and that’s now growing and expanding and doing really well and has had a massive impact. The idea was part of the supportive coalition. The train line has made some progress. We managed to get it going, but it’s harder because of voice, who is fighting for that in government, if Manchester isn’t?
Q: Does Burnley feel politically disadvantaged compared to before?
That would be my instinct, having not been at the heart of it more recently. That would be my instinct. If the RDA says, ‘yes that’s a priority for Burnley’, that makes a big difference. But if what we’re talking about is people being able to commute, is that really going to help an organisation that has fundamentally been designed to get local businesspeople around the table -important, though that is? I’m probably not close enough to fully answer the question, but I think as a constituency MP it would have been more helpful to have the Northwest Regional Development Agency on your side when trying to get the attention of the Department of Transport, than having a local mayor on your side.
Q: What was the DTI view on the most important policy levers to address regional gaps?
Investment was there, and insofar as the expansion of universities was all about skills that was there. I’m sure we were talking about transport infrastructure – but I’m struggling to remember if it was one of our five drivers!
The thing that I think was totally missing is the idea that you need to create places where people want to live. That’s how you regenerate towns that are searching for identity. There’s stigma. There’s a branding thing. Why do people go to places? Well, in Burnley we created a situation where young people went to study. We were trying to create a situation where commuters felt they could go there because it’s got pretty hills around it and they could still get to Manchester. It’s about bringing spending power in. Locally, we understood that, to regenerate, you needed to get the private sector to go, ‘Yes, I could build a cinema and 25 cafes and turn it into Salford’. Someone needs to create a situation where that’s possible. I didn’t learn that from working at the DTI, I learnt it from working at a more grassroots level.
Fundamentally, it comes down to the desire of individuals to be there. That brings the money, and the initial observation I made as a young parliamentary hopeful was, ‘oh my goodness, house prices are really, really low’. That’s because people weren’t buying those houses because they didn’t want to live there. I think we missed that type of place-making completely, and I think that’s really powerful because actually the economy is full of individual economic actors. That’s what the economy is. We understand it nationally with the idea of consumer confidence and consumer demand, but I don’t think we understand it fully in a place-based way. But that’s all it’s about. That’s why people want tourists to come to their areas. They come and spend money. There was one programme, a lot of those houses which were eventually cleared and nice middle-class houses were built in some of the areas, which I suppose was an understanding of creating the places that people wanted to live. But that approach also relies on the middle classes wanting to live there – and be able to travel to work from there.
I think Labour instinctively gets it. I just don’t remember talking about place so much when we were talking about productivity. I think the five drivers framework was hugely helpful and is economically right at a macro level. But I felt, having worked on that in my early thirties, then becoming a constituency MP in my late thirties, I was talking a totally different language. With an economics background, I could see what was needed, but I wasn’t talking the language of the five drivers of productivity, I was talking the language of making a place desirable.
Q: Did you view the role of London as more of a help or a hindrance for places like Burnley?
London has a concentration of some very high productivity, high wage sectors of the economy, obviously not the whole economy. I suppose it was a hindrance in that it might lead to a brain drain. By the way, that’s what’s so exciting about all this remote working stuff. One of my friends from Burnley has now got a job in London whilst living in the outskirts of Burnley because she’s remote working. It’s really exciting.
Q: Was the brain drain for Burnley a London brain drain or a Leeds-Manchester brain drain?
I can only think in anecdotes, but I think it comes back to where you want to be. If your young son gets a job working in a bank in London, that’s seen as really successful. Those are the examples that would be paraded as the most high-status success. That was the epitome of brain drain, because you couldn’t really commute to Leeds or Manchester easily, as I said.
I think it’s tricky politically. I think we felt a ‘rising tide floats all boats’ and we wanted everywhere to succeed. I suppose, probably I would probably be slightly in favour of shifting bits of the civil service out of London. And we’re in favour of developing clusters elsewhere. I do remember a lot of conversation about the kind of Oxford Cambridge triangle and science — we were really, really into science park innovation spin out, university-based science stuff everywhere.
Q: Was the DTI a department that was enthusiastic about passing power and spending away from the centre for regional local decision making? And what was your experience of other departments?
We were the sponsor department for the RDAs. We were really invested in the RDAs. We spent a lot of time dealing with management issues and chairing meetings of all the RDA chairs and being their interface with the rest of Whitehall. We were big in favour, obviously, because they were ours. We were quite protective, and we audited them and all that type of thing. I don’t really recall further devolution of power being a massive issue, either for or against. We were big into development of clusters. We had responsibility for manufacturing policy, which is something that Patricia dug out of the depth of the DTI and really made a thing of. I’m actually quite in favour of more power to RDAs, if anything.
The DTI was structured by sector and the political decisions we were making was perhaps to give more emphasis to one sector over another sector and try and get them the right calibre of civil servant to be looking after the sectors we wanted to emphasise. Under Patricia, that led to much more prioritisation of manufacturing for lots of good reasons and some political reasons, which, of course, were also good! I don’t remember the DTI resisting further devolution of decision making. And I can’t think of a reason why at the ministerial level, we would have been hugely against that. Not least because if it went under the RDAs, it would come under our influence.
Q: How about the attitude of Treasury and Number 10?
There was nothing coming out of the Treasury that I disagreed with. With our link person in Number 10, there was probably more of an instinctively sectoral approach, so there was a difference in style more than anything else, or just in the intellectual framework for the conversation. I think that was probably all. That might lead Number 10 to get more into energy policy because it was a big sector, that kind of thing. Or maybe more interested in supporting Oxford and Cambridge over developing an entirely different new cluster somewhere else.
I remember some conversations about skills investment should be decided by the needs of local businesses, and the infrastructure for that. I remember some kind of analysis that I presume that we did about different levers for up-skilling within different locations, and demand side factors and supply side factors. I think our aim at that time was to try and marry the supply of qualified people with what the local labour market needed, which therefore required the input of local employers.
I think there were some examples of bad practice at that time – without naming names or incidents – but my view in general is that regeneration as a skill should be professionalised. I think we would all benefit from that. The people I found I was working with, I was having exactly the conversations that I wanted to be able to have and was slightly thrilled that the organisations existed. The problem is that sometimes locally elected councillors don’t actually know how to regenerate a local area, let alone even construct a survey to ask people what type of regeneration priorities they had. I’m all in favour of creating a career track of regeneration professionals there, and the RDA has had those types of people in them, even if they were of varying quality.
I think it’s exactly the type of skill that economies need, to have people who do this for a living as well as having a view and shouting about it. I really enjoyed my interactions with the RDA. I could have a conversation like this, as a policy wonk talking to somebody going, ‘What does it need? How do we find out? How do we build a coalition? What’s next? How can we get up your priority list? Why are you investing there rather than here? Don’t be a moron’, that kind of thing. You want to be able to have the conversation with regeneration as its focus.
Q: If you went to talk to the kind of people who work around the Mayors, would you be able to have these kinds of conversations?
Well, I haven’t worked with the Mayors, but yes. And there are economics capabilities within some of the metro mayors, of course, because they’re relatively big. But then it comes back to the question, what about the places that don’t have that?
Q: Some people say the RDAs always had an accountability deficit?
They had Regional Assemblies of stakeholders. I don’t think there’s a democratic deficit any more than there’s a democratic deficit for any other quango. You might want to look at corporate governance for good decision making and have some sort of board or whatever, but I don’t why that means you need to have democratic elections, any more than you do for the Rivers Authority.
Q: The problem with that view would be that at the same time, there were devolution efforts in Wales, Scotland, Northern Ireland, and for other reasons in London?
Those referendums were granted because a different form of democratic mandate was required for deep seated community reasons in those areas. It came from the people in all cases.
Q: What do you think of the Metro Mayor type model?
I think it’s quite cool, but I don’t think just because it works in the big cities that it needs to be rolled out across the shires. I think people’s sense of place is different in different parts of the country. It is not a clean thing.
Q: How do you think about Burnley, Metro Mayor wise – you don’t want an East Lancashire Metro Mayor?
Q: The current government’s view is, we will only devolve resources and power to those people who are willing to come together in large enough areas for that to be workable. Does that mean that it’s okay for the small town which doesn’t want to ally itself to have less local agency?
Well, that comes back to my earlier point about the RDA. You need a place-based organisation with a budget that can fill in the gaps that need to be filled. Maybe the RDA covers the areas without democratic elections — the areas that don’t have a Metro Mayor. You have to start from what you’ve got. If you’ve got a place with a really strong sense of identity and pride, then why do you get punished for that by not wanting to go with someone else and therefore not getting any money? It seems crazy. You’ve already got something really good which is the sense of local place and pride. Does it mean that the MP has to, because they are representing one place as opposed to a suburb, have more of a responsibility, I suppose, because they actually represent a place that thinks itself as a place?
What does an area need and how do they get that voice amplified? I’m quite liking the idea of an RDA alongside the metro model. My instinct is that it should be the areas not covered by the metro model. If they were an agency for bits of a region that don’t have a metro mayor, and were full of star civil servants, regeneration specialists and were told, ‘your mandate is to eliminate poverty’, then you would presumably get some really interesting interventions.
Q: When you ask champions of the Greater Manchester model about the Burnley, Blackpool question, in general they say they’ll benefit anyway, and that they can come to some of the meetings.
Oh, how lovely. It’s so kind of them to let smaller areas pick up the crumbs from under the table. Yes, I remember going to some of the meetings, and it was very clear that the Greater Manchester transport boundary stopped at wherever it stopped. So therefore us wanting to commute in was completely irrelevant.
Q: But surely the Greater Manchester economy will want to draw upon those labour resources and therefore it would be cutting off the nose to spite their face, to stop the boundary at the boundary?
That’s wonderful. But it also needs a little thing there and a little thing there and this thing doing here and half a million to move that building because it’s in the wrong place.
Q: What’s the biggest success in local-regional economic policy over the last 30 years, and the biggest frustration?
When I think about the future it actually has nothing to do with policy. It’s about the effect that remote working is going to have on all this, which I think could be extraordinary. I think that’s the question to think about, because the fundamental problem is that the high wages are not accessible all over the country. I’m in Hebden Bridge right now. Did you know that? I’m doing all my meetings from here today. Of the blockages that have been experienced in the last 30 years, how many of them can be undone by remote working because it removes the place constraint?
In terms of major successes, taking the 30-year perspective, there has to be faster rail. And in that sense that the trains have been fixed. We have got further to go, but you couldn’t even get it from London to Manchester in two hours, 30 years ago. But we’re behind other countries.
If you’re taking a 30-year perspective, I think it’s a success in that we’ve got far more people staying in education for longer, further and higher education. I think the problem is that people are underemployed because their lives are too complicated. You might get people who didn’t do that badly at school or even graduates who can’t get that level of job, because of practical constraints. I think the failure is affordable childcare and the ability to be able to commute to where the jobs are, part time promotion, the ability to — so my main point is a human point. The ability to have the time to retrain as an accountant if you’re currently working a shop shift between 9:30 and 3. You haven’t got the time, and you haven’t got the money. So how do you access a higher productivity job? I think that’s absolutely fundamental.
I did a consultancy project a few years ago, a segmentation analysis of retail workers, trying to work out where the issues were. Lots of people working retail at college and we can ignore them because they’ve got a different future. The interesting ones are the ones that said they work in retail because they said they needed to work near to where they live and work part time. A lot of those had kids, some of them just thought they weren’t able to work full time, for their own perceptions of their own health, real or otherwise. And then you ask them, do you feel overqualified for the work that you do? And – yes. So if you’re talking about productivity, getting that enormous cadre of people to be able to perform to a higher level, you’ve got to take away the constraint that they can only work near where they live, and they can only work part time. Or rather, you don’t take away the constraint that they can only work part time, you have part time jobs available. So this is all labour supply side. That is the massive failure.
Q: Presumably, that doesn’t vary that much across the country as a whole, although, if you could fix the problem, it would proportionately lift the productivity more in places that were more dependent on retail?
No, it hugely varies. And that’s the other point about London, is that if you’re in that situation and you live in Brixton, then you can just about jump on the tube and get a high paid job. Whereas if you live, I don’t know, in Ed’s former constituency or my former constituency, there’s just absolutely no way you can do that. So that’s the big thing that we haven’t properly talked about, and I don’t know whether it’s because it’s being perceived as a feminist issue or we haven’t done the data or we haven’t looked at it from a human point of view in an ‘unleashing potential’ way, that type of supply side thing. All supply side stuff seems to always talk about trains.
ENDS