Mark Gibson was chief executive of The Whitehall & Industry Group (WIG). Prior to joining WIG in 2009, Mark was a civil servant and his career included roles in the Department of Trade and Industry, HM Treasury and the Cabinet Office.
This interview was conducted on 16 December 2021.
Q: Could you tell us about your role in regional policy?
I was involved in Michael Heseltine’s Competitiveness Unit in the early 1990s. This involved a lot of thought about how the poorer areas of the UK could raise their wealth. Then later under the Labour Government I was the senior official responsible for the performance of the Regional Development Agencies (‘RDAs’) for several years.
I’m now on the board of the Centre for Process Innovation (‘CPI’), which is based in the North East, a successful not-for-profit organisation and one of constituent parts of the UK’s High Value Manufacturing Catapult. It was originally set up by the North East RDA to help move the industrial base of the region towards technologies of the future. CPI has been able to persuade both Whitehall and business that it should become the UK innovation centre for chemistry and biology-based activities, helping new companies in these scientific areas to grow. We now employ roughly 550 people, mainly scientists and engineers, so a success story for regional policy.
Q: In your work with Michael Heseltine, what you were trying to achieve?
It was about national competitiveness. Lord Heseltine had a long standing belief that successive UK governments of all political persuasions hadn’t grasped what was needed to improve national competitiveness. He insisted that Competitiveness Unit travel widely throughout the UK and internationally, looking at best practice the UK could learn from. This included examples of regional policy.
Q: Did you think that the work could be successful in improving the competitiveness of the poorer regions of the country beyond London and the South East?
We thought it would lead to some improvements but it wasn’t the biggest focus. We were thinking about national competitiveness. We were looking all the time at how government and business working together could improve productivity and economic performance, which seems to happen a lot more readily and easily in all the UK’s major competitors.
Q: Was this interventionist approach radically different from the 1980s philosophy and its emphasis on inward investment?
No and yes. Lord Heseltine fully understood the importance of competitive markets driving improvements in firm performance. He just thought that national competitiveness was something more complicated than that. After he resigned from the Cabinet after Westland he travelled around the world, doing his own personal research on other governments’ policies on improving competitiveness and, just as importantly, why companies in other countries had been successful. He was really struck at the levels of deep thinking inside other governments – Japan, Germany, France, everywhere he went – about how to improve their national competitiveness through government and business interaction.
Q: Did you take particular industries or sectors as a primary focus?
If you look at where governments throughout the world intervene, there are some obvious ones like aerospace and vehicles, but actually a wide range of technology-based industries. And the services sector as well, where you see other governments like India and China and keeping out successful British services like our legal and accountancy firms. Even the United States which many consider to be a champion of the free market is a strong supporter of US companies such as Boeing and its airlines.
Q: How would you describe the philosophical shift in 1997? Were there tensions between the establishment of RDAs under John Prescott, and the Department of Trade and Industry’s emphasis on national competitiveness?
Not really. The RDAs were based on a belief that state intervention through business-led organisations, would result in higher productivity regionally and nationally. Secretaries of State at Trade and Industry like Peter Mandelson focussed on national competitiveness but were not in any way hostile to the RDAs.
Q: By the mid-2000s, DTI seems to have become more comfortable about regional intervention and regions, for example in the aftermath of the Longbridge auto crisis?
I never believed the DTI thought in terms of ‘national versus regional’. As a Director General I was responsible for both national sectoral (aerospace, chemicals etc) policy and regional policy. Some sectors are concentrated in regions, like chemicals in the North East, cars in the West Midlands and aerospace in the North West and South West. So why would we see a conflict? Once the RDAs were up and running, the department was very committed to them in my view. It was a ‘both, and’ approach, not ‘either or’.
And we did see that the RDAs could handle some industrial change very well, particularly difficult closures. You rightly point out the Longbridge one. We also saw that they had made some good interventions in poorer parts of the country. I remember the South East RDA doing some fantastic work on coastal towns, Hastings, for example. The South West RDA did some great work in Cornwall encouraging British Telecom to invest early in fibre in the region.
Q: Are you overall surprised that the gap between regions has grown rather than narrowed?
No. We have one of the most centralised economies in the world. There was never any really major transfer of power or resources to the regions. The RDAs had budgets, but the Treasury kept a grip on how they spent their money, with just about every unusual or sizeable innovation having to go back to the Treasury for approval. The RDAs were good coordinators of public and private sector but no more than that and in many ways local authorities had greater authority because they controlled key drivers of business decisions through their delegated powers in areas like planning.
RDAs were business-led, and we had some outstanding business people who led them. Sadly, they didn’t work as well as they should with local authorities, at least in some regions. Where they worked together, the effect was very powerful, but maybe there was just a bit too much business arrogance on the one hand and resentment at the lack of democratic accountability on the other.
Q: What was your assessment of the capability of local government and the RDAs?
There were some outstanding RDA chairs. The typical RDA chair was someone who had got to the late forties or early fifties and had a lot of success in the private sector and then wanted to put something back to their regions – and they all worked incredibly hard to do it. The problem with business leadership – not all business leadership, but some of it – is that businesspeople quite reasonably they like to make decisions in a black-and-white world. You make decisions, implement them and make money. Politics tends to be a lot greyer and can be frankly frustrating to businesspeople.
There was also some outstanding local government leadership, mainly in the large urban metropolitan cities – Manchester, Leeds spring to mind. They absolutely valued the private sector and knew how to work with business to achieve regeneration and growth. We never got the link between local authorities in the region and the RDAs quite right, despite the bigger local authorities being on the boards of the RDAs. It never worked as well as it should have done.
I think another problem is that in most regions there is actually stronger identity with cities or sub regions than regions. Just think of the North East – Teeside and Newcastle, or the North West – Liverpool and Manchester, or the West Midlands and the Black Country.
Q: What could have assisted with improving collaboration among city-regions?
I think time would have helped. This is one of the problems in the UK. If you look at other countries – Germany, France – you have stability in regional organisations. German regional government has been there for a very long time. The French regional structures do change but essentially they’ve bought into the fact that you have to have some level of governance below Paris. In the UK, we keep changing it and everyone just waits for the change.
Q: How effective was scrutiny and accountability at the regional level?
The RDAs reported into Government ministers. There were regular meetings with Ministers. The RDAs valued those meetings, and obviously they had to appear before Select Committees. So there was real accountability. But not electoral or political accountability in the sense that local authorities have. In this country, we like political accountability. We like chucking out our politicians and electing new ones. Some would say that’s a good thing, but it does not necessarily make for consistent policy.
Q: Did you end up thinking that we just have to put the local authorities in control, or is there another way?
If we had been more successful at persuading the RDAs and local authorities to work better together then there could have been a chance. The Greater Manchester model has elements of this. But it’s not easy to do it without local authorities, the smaller ones in particular, feeling threatened. So yes, I was coming round to the view that local authorities or another directly elected authority like the Metropolitan Mayors were the key players
At CPI, we work with all levels of Government, local regional and national, as well as the private sector. We are good at bringing all these different funders together because we recognise that they’ve all come from their different angles. You just need to get on with it and yes, it can be very time consuming.
Q: What do you think works to drive regional growth?
There’s no doubt that some interventions by successive governments of different political persuasions have helped. The growth of new and successful universities throughout the country has helped the poorer regions. The innovation intermediaries known as Catapults are another success story in many poorer areas. CPI, a Catapult, speaks for itself, funded initially by RDA money, and now earning substantial commercial income as well.
I think it would really help if Whitehall had a much deeper understanding of the regions. The number of Whitehall policy makers who are based in the regions or travel regularly to them is just too few.
Q: What would better Whitehall capacity look like in practice?
It means both more people working in the regions and also visiting the regions. More secondments to business and greater movement between public and private sectors would help. More scientists having senior positions in Whitehall would also help; numeracy and an evidenced-based approach to policy making really matters. Kate Bingham, the Head of the Vaccine Taskforce, had it absolutely right: Whitehall has too little understanding of how business works and how science works.
One of the great things about Lord Heseltine’s competitiveness work was that he never wanted to see us in the office. He wanted to hear that we were out in different parts of the country. If you look at the way businesses operate, the top management of the best companies, they’re looking all the time at how their operations work, understanding how products are delivered. You cannot deliver good Government policy without understanding how the policy will impact the world outside Whitehall. That only comes from sustained engagement with the real world throughout the country.
Q: Did regional growth get the right balance between skills, infrastructure, and building business clusters in the 2000s?
Well, I don’t think I think it’s got any better since. After I left Whitehall, I became the chief executive of the Whitehall and Industry Group, which is a charity trying to promote better understanding between business and Whitehall. We developed a course for Directors General with their counterparts in business so they could spend time with each other and learn from each other. We found some Directors General having little understanding of the challenges faced by their business counterparts and the calibre of people needed to meet those challenges. Why, for example, the positioning of a mirror on a Jaguar Land Rover really was important for customers, just like the detail of a Government policy for the people it impacts.
Writing and announcing a Government policy is just 5 per cent of the challenge; delivering it is the other 95 per cent. We absolutely need to get policymakers away from their desks in Whitehall. That would do more for regional growth than anything else.
Q: Other than spending time in the regions, what else can Whitehall do understand whether policy is working?
Good regional leadership matters hugely. Some civil servants in the old Government Offices were outstanding and some of the directly elected Mayors seem to be doing a good job at the moment. It seems to have little to do with politics in the sense of Labour or Conservative. There is a definite skillset about bringing public and private sector together and being really determined to make change happen.
Q: How did you find working with other teams across Whitehall on regional growth?
Not easy and despite the importance Lord Heseltine and Labour Secretaries of State attached to it, we never got very far. I never thought the Treasury bought into regional growth policies, seeing every intervention or delegation of budgets or power as liable to result in distortions of the free market. In other departments like Defra or Education there was just scepticism. No 10 and Treasury backing is vital to break down these barriers.
You have to have a national government approach to make success of it. There is a difference between the UK and other countries. In other European countries like France it’s deep in the psyche that you have a national French approach to competitiveness. France comes first, always. And even in Germany which has strong regional government, it’s regarded as important to have a national approach in key sectors like cars, aerospace or in science and innovation policy.
Q: Do you think London has been a help or a hindrance to the rest of the country’s economic development?
That’s not an easy one. I’m not going to argue that we should stop investing in transport improvements like Crossrail and great universities in Oxford, Cambridge and London, It’s no surprise that Oxford developed the Covid vaccine because in medical science it is world-class and thank goodness from the UK’s point of view.
I see all the arguments that say where you’ve got success, you need to be as concerned about maintaining that success as you do about trying to level up across the country. Again, it shouldn’t be one or the other – why can’t we do both? Initiatives that have encouraged the South Eastern universities to work with others around the country have been a good development, as well as simply investing more in science and innovation across the whole country.
If you look at the strength of our financial services sector in London, it derives from global competitiveness, working for clients around the world. I would say that its vital the Government supports this sector to maintain world competitiveness just as much as it should support strong regional clusters in other sectors. That’s absolutely how my European opposite numbers would have thought.
Q: What is the most important lesson for us to take away from the experience of the last 30 years?
We need both to understand our national strengths and back them, as well as thinking about how we can grow new strengths. Call it industrial strategy if you like. We need to push more power and money into the regions, for which they are accountable, because too much decision making is Whitehall driven. This is not an alternative to maintaining and growing national assets – I repeat, it’s ‘both and’, not ‘either or’. And we need Whitehall to have a much deeper understanding of the world outside the South East, and of business and science, from which economic growth comes.
ENDS