Philip Rycroft joined the Scotland Office in 1989. He held a series of roles across Scottish government up to 2007, including in the Executive’s Policy Unit, as Head of Enterprise, Transport and Lifelong Learning Development, and finally as Director-General for Education. He also served in the Cabinet of Leon Brittan at the European Commission from 1995 to 1997. From 2009, Philip worked in Whitehall posts, as Director General for Business and Innovation, for the Deputy Prime Minister’s Office, and as Second Permanent Secretary and Head of the UK Governance Group at the Cabinet Office from 2015. From 2017-19 Philip Rycroft was Permanent Secretary of the Department for Exiting the European Union.
This interview was conducted on 22 June 2022.
Q: Could you tell us about your role in growth and regional policy over the past few decades?
I started my career in the Scottish Office back in 1989, when devolution was over the horizon. I was responsible for various policies through that time, some of which were related to economic development: agriculture, fisheries, and so on the rural economy. Then I was at the centre of the Scottish Office as it translated into the Scottish Executive post-devolution, with various other roles in the Scottish Executive afterwards, including one where I was the head of what was a Department for Enterprise, Transport and Lifelong learning.
I moved down South in 2009 to join what became the Department of Business, Innovation and Skills department, where I was responsible for enterprise. I also picked up the tail-end of the work on dismantling the Regional Development Agencies (‘RDAs’) and creating Local Enterprise Partnerships (‘LEPs’).
I left the Civil Service but came back in to run Nick Clegg’s office, where I was responsible for the Cities Unit and the emerging agenda on City Deals, the Regional Growth Fund and all of that. I was also responsible for devolution policy at that time, very close to the Scottish Independence referendum.
Then we set up the UK Governance Group, after the May 2015 election, with a big focus on devolution and the constitution. As part of that I was thinking about the economic coherence of the United Kingdom as a whole. I carried those responsibilities all the way through until I left the Civil Service at the end of March 2019. Even when I was dealing with Brexit in the in the in the Department for Exiting the EU, I was still responsible for the constitution and devolution.
Q: Let’s begin with your time in Scotland, and then move onto your time in Whitehall in the 2010s. Did the move to devolution in Scotland after 1997 feel like a genuine break, or more of a natural evolution in policy making?
It did not feel like a huge break. I think one of the misconceptions about devolution is that there was a big break in the policy framework. What was devolved was already administratively devolved to the Scottish Office. It was political oversight over that that was devolved to Scottish Parliament and ministers based in Scotland. There was a lot of continuity in the policy structures and policymaking.
You would be quite pressed, I think, to look for any radically different policymaking, certainly o-n economic development, in the early years – or perhaps even in the later years – of devolution. It’s not been the strongest feature of the way that devolution has been transacted in Scotland or, indeed, Wales or Northern Ireland. There was Scottish Enterprise and Highlands and Islands Enterprise, as the key agencies for supporting economic development. They continue operating to this day, with changes to their structure, mission and how they operate. Support for economic development, certainly in Scotland, has been, by and large, more generously funded than it has been in the regions of England.
What you’ve not seen from that is a dramatic break in terms of how people think about economic development. Part of the reason for that may well be that you know the constraints on what you can do in a devolved context. You can’t radically alter business tax structure, and you can’t radically alter employment law and so on. There are constraints from devolution settlements about how far you can remake your economic model.
Q: Did things feel different on an administrative and political level, if not on policy?
It felt very different. We were dealing with a very different sort of politics. We had a parliament to oversee the whole process. That engaged all sorts of different scrutiny mechanisms, with ministers based in Edinburgh or Glasgow, rather than running up and down from Edinburgh to London. It certainly felt very different.
This is now quite some time ago, but what I don’t recall is thinking “gosh, we’re into a radically different area here”, certainly not on economic policy. Devolution came at the end of many years of Conservative government, with New Labour coming in at the UK level. That was a big driver of change in government policy. You had a Labour-led coalition in Edinburgh. To some extent, the differences that might come through devolution were rather masked by the fact we were into a different dispensation anyway and different policies driven out of London. The Labour Party, certainly in Scotland, my recollection of it, were very receptive to the sort of dynamic that was being created by New Labour. There were quite a lot of the initiatives set in place by the new Labour government in Westminster that were influencing policy in Scotland.
Q: What were the economic policy goals of the Scottish government in the early 2000s?
We should refer to the Programmes of Government, as these were coalitions. There were two Programmes of Government which I was involved in helping to form. The political parties set out great long lists of policy specifics. My memory of those is that they provided most of the policy. Parts of those programmes were fairly predictable, in the non-economic sphere: more teachers; more nurses; more police; very input-driven and lots of aspirational stuff.
I may be doing myself and my former colleagues and the former ministers a disservice here, but what I don’t recall is thinking, “wow, this is a new, different approach”. It was just not the flavour of the time. It was more about ‘getting the institutions established, delivering’, and a big emphasis on more social policy, on legislation. Parliament was making its mark with a lot of what you might call ‘feel good’ legislation: on land reform; education. But there was no Scottish-based thinking that said, ‘You know what? We can do economic development with these powers differently to what has been driven out of London’, or the way that London conceives of it.
One of the disappointments of that time and indeed subsequently is that it hasn’t generated very different model of economic development at a sub-UK state level. The thinking was not radical from that point of view.
Q: Scotland has held its own relative to the UK economy, while other regions outside the South East of England have fallen back. Is that a policy success, or due to serendipity?
There are some strong, enduring attributes to the Scottish economy. The North Sea was doing extremely well in the early part of this period. You have strengths in the universities, which were helping to bring new tech-based industries into Scotland. You have the engineering tradition. You’ve got a strong financial services sector. Scotland has had those advantages which I think have helped underpin the performance of the Scottish economy.
Government’s impact is a really interesting question. I genuinely don’t know. Was it a positive effect, negative effect or a neutral effect?
One other thing that I’ve never seen are the numbers on the impact of the additional public expenditure in Scotland. If you factor in what is nowadays – roughly speaking – about £10 billion in subsidy from the rest of the UK, that is a considerable amount of extra additional expenditure in Scotland. That itself will have an economically generative effect.
In an ideal world, that extra expenditure would have led to far improved outcomes in education and skills, the supply side of Scottish economy. I was responsible for school policy for four years. In the early 2000s we were seeking to sustain what at that time was seen as an advantage for education in Scotland. Subsequently that advantage seems to have been somewhat drained away.
The numbers, as far as I can tell, do not demonstrate that Scotland – or Wales or Northern Ireland – have been able to get ahead substantially of equivalent English regions, which is interesting. I’m a big proponent of devolution. If you look at the work, for example, of Philip McCann and others, the correlation in OECD members between more devolved polities and more equitable outcomes across regions seems to be strong. I’m persuaded by that.
There is a question, then, about why devolution hasn’t, on the face of it, delivered stronger economic outcomes in the UK. It has been running now for 20 years, and this is a reasonable period of time to evaluate it. I suspect in Scotland’s case that part of the answer is the way in which other political issues have come to dominate. In the early years of devolution, the institutions, the politics, were finding their feet in this new world of Labour-led coalitions in Scotland. They were not without the capacity to seek differentiation in economic policy, as they had on social policy (like free personal care and so on). But the institution was not sufficiently mature by the time you get the shock of going into independence campaign to have developed a coherent and robust economic strategy that – within the devolution settlement – was capable of differentiating Scotland from the rest of the UK. But that thesis needs testing.
Q: How did that experience of Scottish governance shape your attitudes to reform when you joined Whitehall in the 2010s?
As a democrat, I think the government should be as close to the people as possible. You don’t have to justify devolution on economic outcomes alone, but also in terms of giving people a sense of political engagement and enfranchisement. It’s the right thing to do.
When I went down to Whitehall – as somebody who spent twenty years in the devolved public sector, with the European Commission and in industry – the contrast between the UK Civil Service and the devolved administrations was very striking. Whitehall, to my mind, felt very disconnected from the political process.
I was used to a context in Scotland where you would spend a lot of time with ministers, but also a lot of time with stakeholders. Post-devolution, you were also immersed in this local political culture. You were hearing directly from politicians as well as all the folks that you dealt with on a day-to-day basis, whatever the policy area. That was just missing in Whitehall. There were people in this big department [Business, Innovation and Skills] who were barely conscious of what was going on in the big house just down the road (the Westminster parliament) – a disconnect from the political process.
There was also a huge disconnect from what was going on across the country. When I went back in 2012 [to the Office of the Deputy Prime Minister], part of my responsibility was to try to educate Whitehall about devolution. It was shockingly ignorant about the impact of this massive change in UK governance. I can’t say it was a great success of mine, over seven years, because I think Whitehall remains pretty obtuse about the impact of devolution to this day. It doesn’t seek to engage in understanding the politics of devolution.
What’s true for these clearly identifiable, devolved entities is even more true – with some honourable exceptions – of the regional politics of England. That lack of proximity to what’s going on across England has been a huge failing of public policy over decades. It is not to Whitehall’s credit.
Q: What do you think the root of that culture is?
If you go far enough back, this tradition is one that came out of the UK as a global power with territories right across the world. Dealing with “the local” was never top of the agenda in the Whitehall tradition, and certainly not with the periphery of the United Kingdom. That was left to local elites. You didn’t bother yourself with that. It was external policy that really mattered and motivated people. I think that background radiation, that tradition, still seeps out of the walls of Whitehall. The centre of gravity is still tilted more towards the external and Britain’s place in the world – security, defence and so on – than towards domestic policy.
Allied with this tradition is a mentality, held across the political spectrum, of politicians who felt that the only way to deliver cross-UK benefits was by centralist policy making. The Treasury is still fundamentally reluctant to let go. If you look at the 1998 Scotland Act, for example, the pathetic tax-raising power included was, as I understand it, at the Treasury’s insistence that the fiscal devolution should be very limited. Look at the way that funding has been managed into the English regions over time – basically controlled out of Treasury ‘Challenge Funds’ and things I dealt with like the Regional Growth Fund. That’s been perpetuated all the way out to the Shared Prosperity Fund [replacement for EU Structural Funds].
This is a very centralist polity with very centralised thinking: ultimately, ‘Whitehall knows what’s good for the rest of the country.’ I have always felt there’s been a direct correlation between that and the regional inequalities that have grown, particularly in England.
Q: Have there been specific policies or personalities that have helped shift that centralising tendency over the past few decades?
I’ve painted a very generalised picture, and of course there is more nuance. There has been a recognition from all political parties of the problem. Every manifesto says, ‘We are going to devolve power and localism.’ But when they get into power, the will is not quite as strong as the promise.
The classic example of that was the New Labour government coming in with a strong commitment to regionalism. John Prescott really drove that hard. It all crashes and burns around the 2004 North East referendum, and the heat just seems to go out of it almost completely. That endeavour was about building a democratic infrastructure to support regional decision making. Without it, the Regional Development Agencies [RDAs] were essentially an administrative structure which never took root. There was no real connectivity between the RDAs and their localities. They were not institutions that commanded much public support. The way in which they operated was ultimately very tightly controlled by Whitehall. These were not autonomous regional bodies. These were an emanation of Whitehall.
Then the Coalition comes along, and – basically for ideological reasons, there is no political rationale for this – says, ‘Right, we’re going to get rid of the RDAs rather than reform them or turn them into genuinely regional bodies with real regional accountability.’ The job that I ended completing in the Business Department was administering the coup de grace to the RDAs.
What came in their stead was completely incoherent – Local Enterprise Partnerships (‘LEPs’). I remember in the early days we didn’t even know whether there would be a LEP for every part of England or whether it was for just where they wanted them. It was very clear early on that these were sub-optimal scale. The relationship between the LEPs and local government was not coherent.
This has strong constitutional implications. There are two things going on in British policy making (at least from 1997, but I suspect earlier). The first is really weak capacity at the centre to think about the constitutional construct within the United Kingdom; to see how all the disparate parts fit together to deliver coherent governance at every level. You can see that in the outcome of the various reform attempts from New Labour onwards. One striking example of this is devolution to Scotland, Wales, and Northern Ireland from 1997-99, and the weak infrastructure put in place to tie that together with the centre. The Joint Ministerial Council was set up and then barely used for the first few years.
The critical thing is the centre didn’t change at all. This is extraordinary. Whitehall has never really had that capability to think about the whole. There’s never been a centre of gravity within Whitehall that thinks, ‘How do we do this in a way that is coherent, sustainable, and delivers good change over time”.
Second, that is combined with an approach to constitutional change which essentially treats it much like any other policy issue. You can procure constitutional change just by having a majority in the House of Commons. Like most other policy issues, it becomes prey to partisan politics. That again breaks the sustainability of change. You have a new government coming in saying, ‘We’re going to do things our way. We will scrap what came before us.’ This is just crazy when you’re thinking about trying to build capability outside of London, and structures for regional economic development that will be coherent and endure.
This is a terrible approach, and the results of it is plain for all to see. It’s not just the economic inequality disparity between London, the South East and the rest of England, the rest of the United Kingdom. It is also the disenfranchisement. The fact that people in the North, Midlands, South West, wherever you go, feel that their voice is not heard. There’s a good reason for that. Their voice is not heard, to a sufficient degree, in the way that policy is made at the centre.
Q: Some argue that successful reforms in the UK have required incremental changes, creating institutions like the devolved administrations or Mayoral Combined Authorities that gradually build legitimacy over time. Is this ‘path of least resistance’ tactic right?
There is something in that argument, of course. The thing that’s held up constantly is: ‘You can’t regionalise England because England doesn’t want regions. It is about identity.’ Well, I grew up in Yorkshire, and I’d be very happy to have a Yorkshire government. I think that argument is overdone. Look at the comparators: look at regional government in France, for example. Look at the way that regional government has developed in other parts of Europe. It’s a way of ducking the issue. Clearly, it is wise to consult and to try and create institutions that will enjoy popular support. But sometimes, politicians have to work out what’s the right thing to do and seek to persuade people of that.
We have a brilliant example within the UK about how the creation of an institution can change the weather, on what people think and expect and want: the Welsh devolution settlement. It was subject to a referendum which crept over the line with just over 50% support for it. But if you look at opinion in Wales now, the centre ground is absolutely solid behind the devolved institutions – and indeed the extension of devolved powers. There are a few who say ‘abolish it all’, but rather more who say actually, we want to go the whole hog to independence. What you don’t have is a massive rejection of that institution. It has worked its way into the affections of the people of Wales.
There is a genuine debate to be had about the tactical approach to delivering more governance at a regional level – but the way it has been done hitherto has led to a system in England that has been a complete mess. If you think about all the different bodies and different configurations – unitary authorities, districts, counties, metro mayors, combined authorities, cities with mayors, cities without mayors – – it is just a shambles. It is so complicated and so difficult to get your head around the powers that have been devolved in England that I think it abnegates the potential of these different tiers of government.
At the margins, it should be achievable to give the cities and regions of England proper powers over their own governance. Let me just give you one example: education. I looked afterschool policy as a civil servant in Scotland for four years, covering a population of five million people. We covered everything: curriculum, exam system, teacher pay. The whole lot. Look at Finland, Denmark, Norway, Ireland. There are many, many countries across Europe that run perfectly competent education systems at that population level. Look at the responsibilities of the Laender in Germany. Why in England do you need to run schools out of one building in Whitehall? The same applies to skills. It’s just crazy that we think that is the best way of doing so. If you had a coherent geography of regional devolution in England, this is so obviously something that would fit into those structures very neatly, and ultimately the benefit of the people of England.
Q: If you want to see a coherent set of structures across England, or the UK, how far do you go in being prescriptive as a central government in order to deliver comprehensiveness? What if regional politics or personalities close the way to a voluntary solution?
I’m not denying there is a serious debate to be had about that. Everybody points to Greater Manchester as an example of how, through clever local politics, it has built up its reputation over time. It has had powerful leadership and now, with Andy Burnham, is able to take the opportunities to expand the range of responsibilities that it has.
If we were to wait for that to be the dominant model, we would be waiting for a very long time. I think there is maybe a middle ground that says, ’Fine, we won’t try and do everything at once – both in terms of what is devolved and where it’s devolved to – but we will make a serious attempt at proper devolution to those who appear to be ready for that now. We will put serious power into that. That requires accountability. That requires, at some point, a measure of democratic oversight. It requires powers, that would become legislative powers over time.’ See the evolution of Welsh settlement over time: this is serious, it is not playing at it.
This is not Whitehall saying, ‘You can manage this on our behalf’ – in a way, that approach absolves Whitehall of responsibility for the delivery of without giving sufficient power for the localities to make the changes to suit local circumstance that would allow them to improve the lot of local people.
Q: In practice, when you have been negotiating with Whitehall from Scotland, or with the English regions from Whitehall via ‘dealmaking’, how open have you found the system to reform?
It’s really difficult when you’re in that stewarding position to get perspective on ‘What are we doing here.’ I was dealing with the City Deals in the Coalition as part of my job running Nick Clegg’s office. We were dealing with everything, so the amount of attention that you could pay in terms of thinking through the model – how this might sequence over time; where it might go – was lacking. That’s the honest answer. There were very able people in the Cities Unit thinking hard, but they were absorbed in the negotiation of particular deals, and in the negotiation with Whitehall to try and attach funding to those deals.
I was an actor in this. This is not me observing this about other people. I’m observing this about myself as well: that lack of capacity to stand back and see how this thing was evolving over time, rather than being caught up in the political present. We had a job to do: deliver City Deals; deliver the Regional Growth Fund. That was what was preoccupying us.
Then, there was political circumstance that allowed the programme to grow. See, for example, Danny Alexander thinking it would be brilliant to get a City Deal in Glasgow because of the Scottish independence referendum campaign, as a good signal of the UK government’s support for the devolved nations. Suddenly there was the concept of Devolved Administration City Deals – that wasn’t part of any sort of preconceived plan. Then George Osborne gets religious about this stuff and you’ve got the Northern Powerhouse. He’s then in competition with the Lib Dems about getting credit for that. This is illustrative of my point about the way in which the politics of this operates on a day-to-day basis. Party politics was dominantly influential in the way in which things were taken forward.
The other side of that coin – and this becomes a big Whitehall game – is that the folk who are out there and are meant to be the beneficiaries of all of this – see it as a big Whitehall game too. They, to some extent, become clients rather than self-acting regional governments in their own right. They become clients of Whitehall, and all their behaviours are adapted to seek and optimise their negotiating position with Whitehall. This is a dependency culture.
This is my experience too. I was the Whitehall champion for the North East LEP. I was talking to them quite a lot over this time. That sort of behaviour is exactly what I saw. All of their behaviours were about how best to influence Whitehall to get the best deal (and then, of course, their hard work to deliver it). This was a dependency culture, and I think the aim of proper devolution is to break those dependencies.
Q: How much variation did you see in competence, capability, capacity at that local level or regional level?
I couldn’t give you a systematic evaluation of that. Clearly there were differences. There were different levels of what you might describe as local cohesion. The North East found it politically quite hard to hold the six local authorities in the same place. After my time, the Devolution Deal there fell over because Gateshead walked away from it, and there were always tussles between Sunderland and Newcastle.
This in a sense reinforces my point: they were dealing with the illusion of devolution. It slightly exempted them from the responsibility to get their act together to drive this forward to the benefit the people of the North East.
Clearly the Bernstein-Lees combo at Manchester was very powerful. Part of that power was about being able to persuade others to come with them. They were there for a long time, and they built that influence up over time. But even for them, they were spending a lot of time essentially negotiating with Whitehall, and having to do that alongside trying to manage their responsibilities within the Manchester context.
Q: Is this dependency culture something that could shift over time as relationships develop, or will it require a definite break in the way Whitehall operates?
It will require a break. With regard to Scotland, Wales and Northern Ireland, they had never been on the consciousness of Whitehall, because of administrative devolution. To Whitehall, this was the periphery and other people dealt with the periphery (again, with lots of honourable exceptions). Your average Whitehall official pre-devolution didn’t worry about Scotland, Wales and Northern Ireland. They happily took that lack of concern into the devolved era, with a bit more justification as ‘It’s devolved so I’m allowed to forget about it.’
There has been no substantive change in Whitehall’s instincts over these decades. They are still to grab and to hold. We have tested to destruction the notion that Whitehall itself, under whatever political leadership, will deliver a coherent scheme of devolution in England. It is not going to happen organically. It will only happen through a brave, consistent and very determined political leadership. The only way to break the lock of Whitehall on many policies is to take those policies out of Whitehall. For example, if you properly devolved school policy, the Department for Education is abolished. All you have is a small coordination ministry for dealing with international stuff or whatever it is. But Whitehall will not voluntarily let go. The worst offender in that regard is the Treasury.
Q: Turning to policy briefly, how have your views evolved on what it takes to successfully regenerate a regional economy?
I don’t claim to be an economist, and I don’t have a well-developed theoretical framework in my head. From my experience, the absolutely critical component is well-educated people, at every level of education, who intend to stay in that region. I think we have failed to deliver this in all parts of the UK, in different ways – failing to engage substantial sections of population; and failing on early years, primary and secondary education, through to skills policy failing to deliver good, robust vocational training, and failing to hook this all into high quality higher education.
You can turn that question on its head: what will it take to create vibrant local economies? We can see that the absolutely vital nature in this day and age of good institutions, with good universities a critical part of that. Hooking that together with devolved skills policy, going into the school system, would mean you generate capable, well-trained individuals. They would look at their options and say, ‘You know what, I quite like it here. I’ll run a business here, work for a business here.’ I think that has to be at the heart of it. We’ve lost something very critical: the dominant theme in skills policy has been central direction in a way that’s been very disempowering.
Q: What stands out as the major success and as the major frustration in growth and regional policies over your career?
The major success has to be having been the devolution journey in Scotland. It was democratically necessary, but I think also necessary for good governance of all sorts of policy.
My major frustration is the other side of that coin: in spite of some great some policy thinking – some of which we haven’t talked about, like Scotland Performs, the emergence of systems thinking, and so on – Scotland that has not yet delivered superior outcomes in social and economic policy. That, I think, is ultimately down to the maturity of the domestic politics in Scotland and the distraction of identity politics. I have every confidence it will come one day.
ENDS