Pat Ritchie is a former Chair of the Government Property Agency and Chief Executive of Newcastle City Council for over eight year. She is a former Chief Executive of Homes and Communities Agency (now Homes England) and former Deputy Chief Executive of One NorthEast Regional Development Agency (‘RDA’).
This interview took place on 18 October 2021.
Q: What was your role in growth and regional policy and what were the key successes and key frustrations?
I’ve probably been involved in most variants of regional economic policy over the course of my career. Early on I was seconded to City Challenge while working in local government. I suppose my biggest involvement was as Director of Strategy at the regional development agency One Northeast. I became deputy chief executive at One Northeast before moving to national government, the Homes and Communities Agency (‘HCA’), where I collaborated with combined authorities and regional partnerships. I then became Chief Executive of Newcastle, for eight and a half years ago until last Friday. During that time, I’ve worked with Local Economic Partnerships: I was at the HCA when the RDAs were being disbanded, and the HCA took on the land and assets of the RDAs as part of the changes that were happening at that time during the coalition government. In my role in Newcastle, I led on the negotiations for a combined authority deal for the seven local authorities in the North East outside of the Tees Valley, a deal which collapsed and then led to the formation of the combined authority in the North of Tyne. Regional economic policy and devolution, which I think are interlinked, have been a theme throughout my career.
On particular successes or frustrations, a few things that stand out. First, we must be one of the few countries in the world that have made so many changes to our regional economic policy, even just the range of different ways in which we’ve structured it. The big restructurings that have gone on, or even abolition in the case of the RDAs: you need a stable system to take a long-term view on the economy, and to develop the skills and expertise to really work with economic structures and places, and we have an obsession with changing that on a regular basis. The other part of that narrative, part of the reason that the RDAs disappeared, was the North East voting against an elected assembly. So there was no kind of political control over the Regional Development Agencies, and that left them vulnerable. I think we need a strong, clear economic structure that lasts and that is linked to political structures that are clear across England: don’t muck about with the system and make it politically accountable.
If I really think about the things that have worked, I would say that the Regional Development Agencies, particularly in the north, worked really well both at a pan-northern level and a northern regional level. That was because we had significant resources but, also, we were able to develop that resource around a regional economic strategy, with a kind of clear set of levers to pull, associated with delivery of that strategy, with the strategy being different in different places. Although I don’t think that the Regional Development Agencies had all the levers that they needed: they didn’t have housing, they didn’t have transport. And they had a limited sort of impact on skills, all of which are needed to really drive successful economic regeneration. But I think we got caught up in the frustration with the RDAs in the south.
Q: How did you find the different parts of Whitehall interacted with RDAs and local government, with places and economies at this time?
I think that when economic policy has been more successful, from a Whitehall perspective, it’s been when the agenda has been driven by one powerful department, usually the Treasury, that can corral others. The deals that were done around mayoral combined authorities, and de facto sponsorship role of the Treasury for the RDAs, were able to drive and bring other departments behind a place-based approach. That’s been weaker when it’s been left to the Communities and Local Government department. I think that you need an extraordinarily strong, central, economic policy driver from one of the big departments of state.
The current arrangements, the Treasury working with the Department for Levelling Up, might work if you get those dots joined properly, but there has to be a driver. As the chief executive of a national agency, the HCA, we didn’t devolve housing. What we did was deals with places to align housing investment to their structures and their strategies. There was a fair bit of hiding behind national programmes, in that if you’re an accounting officer in Whitehall, you can’t devolve your authority. That is a challenge to devolution if you do have local accountability. We did quite a bit work, when I started in Newcastle, looking at how you would devolve accountability to local or, regional select committees, taking national programmes but accounting for them at a local level. There are bits of the Whitehall system that need to be looked at if you’re going to have a coherent system of regional economic policy and the devolution that needs to go with that.
Q: How much did you see Whitehall as having a cohesive view and how much did you see differences of view in departmental attitudes?
There were definitely differences in emphasis across different Whitehall departments. The Department for Transport was relatively willing to look at regional infrastructure and to devolve some element of decision-making within the national system. But on education and skills, the ‘people’ driver of productivity, there was no real interest from Whitehall departments in charge of skills training, education and the work and pensions aspect of driving economic policy. Resistance, in fact. Alack of willingness to even be part of the discussion. Whereas I think that Treasury l bought the need to invest in regional economic growth, although less so recently. I think there is still a lot of officials in Treasury that buy the agglomeration, ‘city-region’ approach. But their position is a bit weakened. I’m not entirely sure where Number 10 are, we have to wait and see. But generally, on the big things that drive productivity from a people perspective, there’s been a huge reluctance to devolve and really align.
Q: Would you include health in that?
Yes, definitely. There are nuances obviously.
Q: How about the business department?
Business departments are quite interested in big economic plays at a regional level and will get behind those. Companies like Nissan become really important to the regional economy and therefore the Business Department will work to try and broker the maintenance and development of supply chains and all that goes with that. I don’t think Health has really recognised place at all, apart from at the local level. There are some quite powerful local structures, working at a place-based level, looking at joint commissioning, moving investment towards prevention, and linking health and the economy. But that isn’t particularly supported by the national Department for Health. ICS’s [integrated care systems] are an attempt to do that. It’s still early days to see whether we will end up with a system where local and national government are working together on health inequalities. There have been some big moves in Manchester and Leeds and Newcastle, almost despite the system.
Q: On the RDAs, you said that if it were up to you, they would have been more devolution on housing, transport and skills, in terms of controlling the levers. Were there moments where you thought that might happen?
Transport was with the regional assemblies and there was an alignment that you could get through that through the local transport plans. But the northern RDAs would have liked greater leverage over decisions about rail, road infrastructure and other things that supported development. It became quite cumbersome to line up all of those things but there was a kind of interest. Housing was again aligned through the government offices and local housing boards, but with no great traction over the Housing Corporation’s big national programmes. If you’re really going to drive growth and change in places like the North East, you need to connect up places like Newcastle and Blythe and Ashington and that’s about housing, transport and skills, a comprehensive programme. We could do quite a bit, the North East is a relatively small place, so people knew each other and would kind of align. But the structures didn’t really facilitate that particularly effectively. And skills, in particular, was one of the more difficult things because you had the national Learning and Skills Agency, who again made noises towards the regional economic strategy but didn’t strongly align the funding as might have been the case if it had sat within one responsibility, through the Regional Development Agencies.
The biggest thing about the RDAs was their ability to move money around, the ‘single pot’ approach that allowed us to manage programmes over the long term and mix capital and revenue. Although it was largely capital. If we’d been able to draw in skills revenue in a targeted way, to link to the growth areas in the regional economic strategy. I think we could have done far more. But the way things were aligned, with large national agencies, the Housing Corporation at that time and the Learning and Skills Council, meant the regional traction on those big programmes was not as strong as it needed to be to drive the ‘people’ element of the regional economic strategy.
I remember going to see the Department for Work and Pensions when we wrote the regional economic strategy for the North-East. We had the highest levels of unemployment in any region, and I went to see the director of strategy at the DWP. Apart from calling us ‘Newcastlians’ – I said ‘Well, Geordies is probably closer than Newcastlians’ – he just did not want to know, there was a complete lack of interest. And we tried to push to be a pilot to look at greater flexibility around skills and employment programmes, a whole range of stuff linking up fragmented programmes around people. There was no traction or interest there. They’re the big areas and it is a regret. You see in the mayoral combined authorities a bit more traction over things like adult skills. But there’s a lot further to go. And the big lever, from my experience in Newcastle, is how you drive educational attainment from an early age. In the deal we negotiated in the North of Tyne, we had something called an education challenge which was going to mirror the London Challenge in the North East. It never came to fruition because, although it was in the deal, the funding never flowed behind it. That whole area of early intervention, attainment, support for education, long-term skills, is missing from most of the regional or economic conversations, even in the bigger combined authorities such as Manchester and others. There’s not the leverage around people and skills and health. Health is a big part of it now. If the pandemic has taught anything, it’s that the interaction between poor health and economic performance is something real, recognised. And it will be exacerbated by the way the pandemic’s played out in more deprived communities. In the future, levelling up will not work unless there is real impact on people, whether they live in the West End of Newcastle or whether they live in Consett or Blythe. It’s not a cities or towns thing, for me, it’s about investment in skills and productivity and people.
Q: On accountability, how do you give that assurance to national officials, to assure them that their accountability officer obligations are being met more broadly on accountability, what do you think has worked from different attempts to resolve it?
On RDAs, had there been democratic accountability, I think there was a real possibility of something making a big difference. But if I think about the time I’ve been in Newcastle, where we’ve had LEPs, we’ve had mayoral combined authority, and a range of other interventions, the thing that has made the biggest difference to the regional economy was probably our city deal. That was a negotiated process with the council and Greg Clark at the time was able to corral across government. The big game-changer there was that we got one of, I think, the two tax increment finance schemes in any city deal. We did a deal which allowed us to borrow to regenerate large-scale sites within the city on the basis of then retaining the business rates to repay that borrowing. That unlocked the Newcastle Brewery site, which is now the Helix. We’ve got a deal with Legal and General. It’s an innovation district second to none, a huge site in the city. It also unlocked Pilgrim Street, which we’re now bringing forward in partnership with the Reuben Brothers. Without that mechanism, I don’t think we would have been able to bring all that forward. We also had a skills element in the city deal, around employment and young people, which was also positive. We also included a number of Gateshead and Newcastle sites, which allowed Gateshead to bring forward some of the development on Gateshead Quays. What was interesting about that was it was done with local government, who are locally accountable to the electorate. But it was done in a way that was about place. And it’s of a negotiation about what would work in the long term for that place. I shudder at the thought of going back to public service agreements and, what was the other one, Total Place. It just became an exercise in making bureaucratic plans that weren’t orientated towards actually doing things to make a difference. They became a bureaucratic process.
I think that the [goal] has got to be around a consistent form of devolution in England, probably linked to mayors, that goes further in terms of the powers to those individuals with combined authorities working with their individual authorities: mayors working in a combined way with each of the authorities, giving greater power to that system. It’s gone a bit awry with the introduction of county deals. We were on the verge of coming back as a seven and then Durham were offered a county deal and that’s made them think ‘Well would we do better that way.’ I’m not an advocate of top down, but I do think of something where you say ‘Those are those areas, we’re putting in place an accountable democratic system around those areas, and you can’t have one individual council going off and doing something different’ – because that’s what happened when the original deal collapsed. Sunderland and Gateshead, for different reasons, decided that they didn’t want to go ahead. We were making steps towards them coming back, and then there’s a slightly different offer to Durham. I think there’s something about consistency and an accountable political framework around which you devolve more powers. Do I think the government will do that? I’m not entirely sure. The jury’s out. I’m a bit of an optimist. I keep thinking that we will start to get a more coherent system. I’ve talked a bit to Neil O’Brien, people whose instincts are right. We need to design an English system that works alongside the devolved administrations in Scotland and Wales. You can devolve accountability so you can bring it with you to the table. On in health in Newcastle, we’ve got a committee where the accountable officer of the Hospital Trust, the accountable officer in the council, the CCG and the Mental Health Trust come together to agree how we are going to fund our jointly agreed plans. There are ways, I think, of individual political and officer accountability being devolved to the local level. I do think you need to do some kind of scrutiny associated with that to protect public money. Maybe a kind of Northern Public Accounts Committee. I’ve been to the Public Accounts Committee three or four times. It wasn’t the best experience but it does make you think about how you’re going to account when thinking about big national programmes. There must be some way of fitting that into a different geography in England. A while ago, Tom Riordon and I, both of whom had been in RDAs, did a paper on accountability.
Q: Why did only two places in the city deals process secure these tax increments, and why Newcastle in particular?
I don’t know, that’s an interesting question. I think it was that the Treasury didn’t want to do too many because they were worried about the impact on borrowing and whether they would be opening up wider public borrowing through local government. I think it was us and Bristol that got the two as part of our city deals. It was partly that we had a number of sites that had been languishing for a long time and needed unlocking. We made the case on the back of those. Also, because we were seen as councils that delivered. Newcastle’s got a strong track record of delivery. We needed the mechanism to be able to deal with those sites, particularly the Newcastle Brewery site. Also, we got on well with Greg Clarke and got him up here a lot. In fact, when we opened up first building on the site, he came up and took out his own personal phone and filmed all the site. He felt, I think, quite close to it. Sometimes that is what you need, political champions. People who are passionate about devolution and economic development, see it as something they’ve got a personal stake in; at a ministerial level, that makes a difference if you can get that.
One thing, linked to all of that, is that the city deals were more bespoke; but the combined authorities have not been bespoke. You get the similar powers that others have got. The difference in the North Tyne being that we did not get transport, because that had to be at the seven. But the gainshare-type funding, a bit of adult skills money, some devolution of investment in housing, brownfield land fund, they tend to be similar. And not all of the areas are similar. The RDAs did have more flexibility about how they used funding to meet the specific opportunities and priorities of individual regions. You can do that up to a point with the gainshare because you’ve got scope to then use that revenue in quite a flexible way. In the North of Tyne we got all revenue and no capital, which has meant we’ve been able to set up a lot of venture capital funds, a digital fund. We’ve had quite a bit of flexibility on how we’ve used that funding – although it’s not enough.
Q: How much did you feel there were people thinking, ‘We’re a ‘core city’, why can’t this just be Newcastle? Why do we have to bother with Gateshead, let alone, kind of Sunderland?’
Certainly, when I was at the RDA, the Newcastle Council, wanted to play both the core cities line. I was the lead for the RDAs to the core cities and there was a tussle between the two. I think that’s developed and changed a bit now, partly because of the progress that Greater Manchester have made in a broader area. I do think people see that there’s a broader city region connectivity. Newcastle is different because it’s a regional capital but it doesn’t have the same critical mass and, in fact, you’ve got a more polycentric region with Sunderland having a kind of gravitational pull as well as Newcastle that’s always caused a bit of difficulty in the North-East. We could have walked from devo, but we went for the North of Tyne, recognising that Newcastle was interrelated with Northumberland and Walls End and North Tyneside. Gateshead should be in because it all works as one region. But we’ve got to a position now where Newcastle thinks that it would be stronger in a bigger region. Partly it’s personalities, because the Sunderland leader was very anti-devo and that’s changed. There’s more accommodation and people get on. I think that most core cities recognise that they need to work within bigger geographies, at the heart of mayoral combined authorities with a broader reach. Apart from probably Bristol, the rest are in that space.
Q: At the beginning of the RDAs, the core cities really didn’t think that, did they?
I’d say that’s changed. There’s a greater pragmatism in the core cities about the need to collaborate with the broader combined authorities, but with a recognition that they are key drivers of broader economies. The bigger issue for core cities is this idea that it’s not about cities, it’s about towns. That is a real difficulty in terms of where resources have gone: levelling up and the Towns Fund funded things that, quite frankly, won’t make much difference to the economy of a region. There’s a big issue for core cities about how we demonstrate the benefits of collaboration with wider areas. It’s not about towns or cities, it’s both in a clear strategy. That has shifted core cities thinking – the core cities leaders aren’t getting the same access that they had to ministers previously, there’s almost a bit of avoidance of cities. That will change as the impact of some of these things starts to flow through. And the Treasury see cities as important. It will be interesting to see how Michael Gove positions the new department. There are noises about it being broader, cities and towns rather than either/or, which is positive. In Scotland, a lot of the levelling up money is going to cities. Partly because of the union, the government wants to engage directly with Scottish cities and yet they’re not engaging in the same way with English cities. There’s some strange dynamics going on for various political reasons.
Q: After the North East rejected an elected regional assembly, how much did you feel that the RDA’s accountability problem was a risk?
People in local government now talk about the RDA in the North East as if it was some marvellous halcyon thing that they all bought into. And they didn’t. There was always that criticism: they’re a quango, they’re not accountable to people. What happened with them made it more difficult to get local government on board, even though they were represented on the RDA board. They did not feel that they were at the heart of decision making. So, accountability did get in the in the way. Not so much accountability in terms of you’re the normal accounting officer type role. But political accountability did get in the way.
What we should have done, which other RDAs did, we should have created sub-regional funds that had flexibility at the sub-regional level. You know, kind of Sunderland and surrounding areas. Some did that. We didn’t do it in One NorthEast, we argued it was more about themes and sectors. But we could have created sub-regional pots within that kind of regional framework. As soon as there was an opportunity to do that, Tees Valley went on their own. We forget that Tees Valley was part of One NorthEast, and I think, I was the lead for Tees Valley. we should have given greater autonomy to Tees Valley for decision-making within that regional framework. Now they probably have the strongest mayor in Tees Valley, they’ve been able to really get traction around some quite innovative plans around reindustrialisation around some of their big sites. There was always an argument in the regional economic strategy as to whether Tees Valley Airport was on the same level as Newcastle Airport. Well, they’re not, but the mayor spotted that and stood on reinvigoration of the airport as an election pledge. How you get stuff closer to local decision-making was an issue in the North East and Tees Valley couldn’t wait to go their own way. Then the seven were left. And if you were really thinking about what geography you would design as a critical mass from a North East point of view, it would be bigger. But there’s not much in common between Newcastle and Tees Valley, so somehow you need to reflect sub-regional strategies. You always knew when you’d written a good regional economic strategy because you had managed to upset everybody, because you had to make difficult decisions.
Q: What’s your analysis of the role of London in England’s national economy?
I don’t buy this idea that the reason we’re all in the position we’re in is because of the growth in London. London is a global city within a relatively small country. The way we’ve tried to look at London from a core cities point of view is to collaborate with London and see it as part of the strength of the national economy. The pandemic might shift that a bit if people can work anywhere, if there’s a spread of the way that people hybrid work, then you there’s scope for some rebalancing with London. We’ve got some regional headquartered businesses in Newcastle that are thinking about having people based here, combined with working at home – a much better quality of life, cheaper housing. But I don’t think that London is a huge threat to the North. You know, the North-East’s got a lot of heavy industry. It’s got some real strengths in future sectors like renewables that London won’t have. So we just need to play to our strengths.
I think London’s mayoral system, however, and the devolution that’s gone to London and its maturity, is something to envy from a regional point of view. Having an integrated, subsidised travel system that doesn’t exist anywhere else. When I was at HCA, we transferred all the London programme to the mayor. Those are levers the others don’t have. There’s something about consistency of powers that I certainly think we need to learn from London on. But I worry as much about Manchester and how we get to a different, better collaboration across the North than I do about London. I do think we need to think about the way the North works together. There was some good work done on the Northern Way that was reinvigorated a bit through the Northern Powerhouse, but maybe didn’t have the same political traction: that ability to collaborate across the North and play to its strengths. Core cities have done some work around new and renewable energy, a Northern offer, not through all of the core cities but through the Northern core cities. There’s more that could be done to get collaboration around the northern combined authorities and the northern core cities, to play to some of our strengths.
Q: Universities were part of the Northern Way from the beginning – are they a contributor to regional economies beyond simply a spender of money and an employer of people?
That grouping of universities that formed during the Northern Way: the N9, still meets and they still collaborate around sharing research expertise across different sectors. Newcastle and Manchester work on ageing and life sciences. The universities are also a big part of the economic development in Newcastle and the broader city region. You’ve got the National Institute of Data on the Helix site, which is the former brewery site. The National Institute of Ageing are working closely with us on health and healthy ageing and using the Hospital Trust research to develop new treatments and ways that people can live longer, more healthily.
Q: In the RDA period, it was hard initially to get the universities to talk to the RDAs and be part of the economic broader plan because they were national, not regional or local – has that changed?
I would say that’s changed a lot. The universities in most of the core cities, and in the broader city regions, are part of the local growth strategy and key drivers doing stuff around venture capital, spinoffs, a whole range of stuff. Newcastle University particularly sees itself as a university for its place, and I think that’s true in Manchester, Leeds and others. That’s a strong legacy that comes from the RDAs and the Northern Way.
Q: How much is it a drain on the North-East economy that people go once they’ve graduated – how successful have you been at retaining graduates as part of the regional economy?
We have certainly increased the number of graduates that stay in Newcastle. Durham always exported, it doesn’t retain people. But in the North-East, in Newcastle, we’ve retained more graduates. That’s partly been around things like the digital economy where we’ve had the fastest growth in digital businesses outside of London. Digital graduates have stayed, they like the lifestyle, they like the city, cooler, edgier, smaller, they don’t want to go into big companies, they want to go into tech start-ups and growth companies. We’ve really benefited from that in Newcastle. We get a lot of returns that, people who maybe went to different places to develop their career but have returned. What the Northern Powerhouse tried to do was to make it so that, if you get the connections between Northern cities right, you could have your career and you might start in Leeds, you might work in Manchester, you might come to Newcastle. That probably works better in the Leeds, Sheffield, Manchester corridor. Newcastle’s slightly out on a limb. But we have always argued that if you strengthen the links and you can get quicker to Leeds, it’s easier to get to Edinburgh, you create a critical mass for graduates. I think that might get better after the pandemic.
Q: Looking across your career and your engagement in lots of different ways regional and local economic growth and productivity, is there one innovation that stands out as being particularly effective?
I think the innovation connectors, as we call them, that One NorthEast set up as institutions about innovation, it is now the Catapult in Blythe – the National Catapult Centre that was set up for new and renewable energy in Blythe. It’s been world-leading. We did the same around process industries in Tees Valley. The National Institute of Ageing which came out of Health and Life Sciences in Newcastle. Advanced manufacturing in Nissan. Bringing together geography, skills investment, really pushing innovation and putting seed corn money into developing those institutions that are still making a difference now and have a much broader reach. They were linked to physical development too. I think all that made a big difference.
Also, early years and public service reform means looking differently at how you deliver to people and families. It was started with Sure Start, linked to Troubled Families, not thinking about individual services, but joining-up, thinking about how you actually support young families to get better education outcomes. We’ve continued that in Newcastle, we have retained Sure Start, we’ve got family hubs with health and mental health, voluntary sector and others across the city. Despite funding cuts, we’ve retained that, it’s got to be built on and developed. In City Challenge, one of the things that made the biggest difference was childcare funding to women to go on training and get back to work. We did childcare vouchers, and that was transformational for a lot of families. You can’t talk about the North-East without the Passionate People, Passionate Places campaign, an international and national campaign about what makes the North-East great. People still talk about it. We really believed we needed to punch above our weight and really sell the place. That campaign was brilliant and people in the region loved it.
Q: And when you look over 30 years of engagement, what is your assessment of the successes and frustrations of regional and local economic policy?
Despite some of the big shifts in policy, people that have kept going with it on the ground and have found different ways to broker the system. That is a remarkable achievement. There are still people that were in RDAs doing great stuff who have kept that consistently going. The thing that frustrates me the most is the constant tinkering with different structures. You could have re-tasked the RDAs – don’t abolish them. It was ludicrous. Let’s have a system that can survive for a bit of time because this is long term stuff and that’s the frustration.
ENDS