Ruth Kelly is a former British Labour Party politician who served as the Member of Parliament for Bolton West from 1997 until 2010. She was appointed Secretary of State for Communities and Local Government in 2006 to 2007 and Secretary of State for Transport from 2007 until 2008.
This interview was conducted on 6 September 2023.
Q: By way of an introduction, could you tell us about your roles in government over the past few decades?
Yeah. My first relevant role was Treasury Minister although I never had responsibility for productivity or growth. I was on the savings and investment side, but that imbued me with the Treasury ethos in some sense. I then spent time as education secretary, where I was first exposed to the devolution argument in government. I then became Secretary of State for Communities and Local Government and published the White Paper on local government reform, after which I became transport secretary, where my decisions on transport were influenced by the thinking in the previous two or three roles.
Q: When you look over the period that you were in office, what stands out as the primary success of policy with respect to regional growth?
The two key successes were first how the London mayor has become so established with a key role in transport. The second is that the Metro mayor in Manchester has also become established and has led to some significant improvements in performance in the north, and beyond that, the development f the metro mayors.
Q: What stands out as an abiding frustration or an area where policy maybe hasn’t developed as much as you would have hoped?
I would have liked change to go a lot faster. I would have liked local areas to embrace the governance reforms. Not only did we find them very difficult to implement in the first place, but we found quite a strong reaction by local government against the reform proposals, particularly on mayors. They weren’t embraced wholeheartedly by the local government community for very understandable reasons. The devolution of powers has been a lot less fast than I would have liked. And I suppose my main frustration is there’s been no devolution on the fiscal side at all – when I was back in government, we were anticipating that there might be.
Q: Do you think governance or leadership and institutional change is the main driver for regional economic renewal?
I led to the local government White Paper, which was about governance. So clearly, that was my sort of locus in the debate at that time. Later on, I suppose in transport, there was a much bigger debate as to whether on the economic side, transport investment should be concentrated in cities or, particularly London, or diverted to less prosperous areas to help them grow as it were, central transport investment. I was transport secretary at the time that Crossrail, now the Elizabeth line, was agreed, which had been knocking around as an idea for 10, 15 years or so before. It was the chancellor, Alistair Darling, who backed it and got it off the ground. That was very much influenced by Treasury thinking and the commissioning of the report by Rod Eddington on how you should use transport investment to spur economic growth. His report concluded, at the risk of gross simplification, you should invest in success rather than in places you wanted to be successful. It was done on a very sort of clear cost benefit analysis. His argument was that small marginal investments in congested parts of the network et cetera, were vital to encourage economic growth. And the Crossrail debate fell into that sort of argument, that cities needed to be encouraged as drivers of economic growth, and the congestion in London was a huge problem. So there was that sort of economic angle coming into it too and particularly given that report on transport investment which had been jointly commissioned between the transport fund, before my time, and the Treasury.
Q: Do you think that the conclusions of the Eddington report were fully accepted by ministers and officials?
It seemed to be, particularly the Treasury which was always looking to keep costs down. There wasn’t much appetite at the time for high speed rail, which Rod Eddington specifically said he was very sceptical of. He also said that if you build a classic line, and I’m not quoting verbatim in any sense, but if you build a road or a transport link to a left behind town, they’re more likely to leave it than for economic prosperity to be gained by that town. So you needed to be very careful about where you invested and what you thought would come of it. I guess that was quite influential in the economic growth debate and I certainly didn’t have any pushback on the types of transport investment we were making at that point.
Q: Regarding your time as transport secretary and the current pivot towards HS2 and larger infrastructure projects. Was that thinking starting to surface in your time as transport secretary?
No, it wasn’t really. And the HS2 debate which was around lobbying by politicians in particular parts of the country and by local councillors, et cetera, et cetera wasn’t the same. The argument was re framed in terms of capacity. Rod Eddington was about investing in success, and he talked about cities, and he talked about interconnectivity between cities. There was a massive congestion issue on some of these main intercity routes, and that needed to be tackled. To tackle it and to deal with some of the freight issues, then it might as well be high speed that you invested in, because there were other benefits that would flow from that. But the thinking was quite skeptical, although there was a realisation that the capacity issue would need to be dealt with, specifically between London and Birmingham..
Q: How would you characterise the “Treasury mindset”?
That there were the five drivers of productivity, skills, innovation and R&D and so forth. Those were quite national in nature. I don’t think the Treasury had a spatial mindset, particularly, at that time. I think the Chancellor, Gordon Brown, was quite worried about towns, and Ed probably was as well as his special advisor, but that didn’t really demonstrate itself very clearly, apart from, the innate scepticism of Mayors. I can only guess that there was a lot of politics behind that as well.
Q: Do you think it was intentional and more widely understood that the benefits of that type of thinking would flow to London and the South East?
I think it was pretty intentional that there was no spatial dimension to the drivers of economic growth, productivity, had that impact and I’m sure that was understood. Rod Eddington made it extremely clear explicitly that would be the effect in the report that he wrote.
Q: Were you thinking as a minister about this challenge of what do you do about the other places?
There were measures to try and tackle some of these issues. For instance, there were economic development zones. There were areas where stamp duty was cut, enterprise was stimulated to get the markets working to try and tackle specific drivers in places where there were market failures. That was supported. At the time, I did think about the politics of it, but we had such a commanding majority that the party-political politics of it wasn’t such a big issue. You know, thinking about the country aspect. I think there was a lack of analysis at the time on the spatial dimension. I think the levelling up White Paper was quite good in bringing some rigorous thought to how some spatial dynamics play out in practice. That’s been driven by politics in a way. There wasn’t the same imperative back then, I won’t say it’s lazy, but it was maybe slightly complacent.
Q: How would you characterise London’s role in the UK wide economy over that period?
I see London as a net positive. It’s difficult to remember how I thought about it at the time, compared to how I think about it now, but London is a global city and performs at global levels of productivity and has been a huge driver of economic growth in the South East. What we wanted to do through the governance reforms was to enable people in their own city regions, travel to work areas, clearly economic zones to have that same level of ambition and the tools necessary to try to make the interventions necessary. So in my view, that was the real way of trying to help stimulate regional economic growth.
Q: The lack of a spatial analysis you experienced at the Treasury, did you feel the same in the Department for Education too?
We started the academy programme. That was a very big initiative when I was Education Secretary. It had been started before my time because it was expanded and the trust schools, as they were then, were a precursor to free schools. That was a national policy and academies were targeted towards the most deprived schools. While, arguably, it wasn’t explicitly geographic, it had geographic implications that weren’t entirely London-centric. My main interface with this argument was with David Miliband, who was Local Government minister at the Department for Communities and he had done the preliminary work for the local government White Paper and was trying to set up local area agreements where local areas were able to set more on their own objectives and so forth. I 100 per cent backed that in intent. So they were the main ways this manifested itself to me.
Q: Did you find in education that there was much pushback to the idea of increasing local government autonomy or discretion over education policy?
Yeah, there was a massive split down the middle of the cabinet on this. I was on one side of the argument. I was in favour of letting go as much as possible from the centre and allowing the government to set its own targets, reducing the number of targets massively and giving them more, longer-term funding settlements with more discretion about how to spend. David Miliband was clearly in that position and I seem to remember Charles Clark, my predecessor, was as well. I can’t remember who was on the other side of the argument, I’m afraid, but I do remember there was a big split.
Q: Could you tell us what were your main objectives in the local government reform white paper?
It was based on the idea that we should give local people more control over their own lives. We had much more globalisation. We wanted much more ability at the local level for people to create their own destinies, establish their own identities and have a say over the forces that were affecting them in daily life. We are one of the most centralised nations in the world, and clearly we were at an extreme end of the argument as to how we did things in the UK. There was the Scottish and Welsh dimension as well. How do you deal with the whole notion that England was underrepresented in national debates. They were all background context to the argument, and to the fact that London was doing so well in establishing a high profile entity able to take tough decisions. We felt local government was not taking tough decisions because it didn’t have required level of transparency and accountability to local people and central government wouldn’t trust it unless it had very competent people, the people below them knew who they were and what their policies were, so they had some say in the sorts of decisions that were taken. That was the overall background. The idea was to devolve as much as possible. David Miliband talked about double devolution, which is something I agreed with, that you would devolve not just to the local level, but then you would devolve beyond that to communities as far as possible. And you would create forces within communities that could request things, community budgets or to take over a bit of land or an asset or whatever. So, yeah, double devolution, as low as possible, as far as made sense, was the idea behind the white paper.
Q: How did you deal with competing interests?
So John Prescott, my predecessor at CLG, communities and local government, had been one of the massive champions of RDAs and regional government, regional assemblies and so forth in government. By the time I got there, they’d been considered a failure, and that was because of the North East referendum and the fact that even in the North East, at least, with the strongest regional identities that they hadn’t managed to win a referendum, and therefore there wasn’t much hope for anywhere else. And the idea that you couldn’t really go back and ask them to go through the referendum again. I mean, they’d said no. RDAs in themselves were an incredibly useful thing, I think. They’ve been slightly reinvented under the levelling up White Paper, because clearly there is a role that is necessary in the regions, to help navigate government and deal with local issues. There were still anomalies when I was at Communities. The regional fire service was being set up.
Everything had been being moved to a regional model, but the issue we were confronted with was the fact that clearly national identity was not strong enough at regional level, that we were trying to find a solution to the Scotland and Welsh issues. Who did people actually identify with? We concluded that they were far more likely to identify with their city, as Londoners or Mancunians or Liverpudlians, than they were with the Northwest, or, you know, whatever it might be. So if we had a chance of establishing a multipolar English balance, that was the mechanism for doing it. It had the added economic effect too. These were large travel to work areas, which were important from an economic point of view. Where comparative analysis shows that non-London cities in England were significantly underperforming against European equivalents, there was arguably a real need to act. So those two things went hand in hand.
Q: The act that enabled the emergence of combined authorities with mayoralties afterwards, and the trajectory that has led to the emergence of the Greater Manchester model. When you look back now on those reforms that you were pursuing, how successful do you think that they were?
There are very few mayoral models adopted in local council areas, and the ones that were, are successful. I completely agree with the combined authorities, with significant size and stature where they attract someone of real calibre to lead them. I have quite a lot of sympathy with that. They didn’t work particularly well at a local council level.
Q: What was your analysis at the time of how local government capability varied across the country?
Capability varied enormously. I think there’s still a really big issue about capability in local government. Added to which you’ve now got the abolition of the audit commission, which did a very valuable job in holding local authorities to account and informing politicians and the public about what was happening. It’s a real issue. You’ll see incredibly talented people obviously attracted to Greater Manchester and to West Midlands and so forth, and others to some of the other big mayoralties. But, both at official and at councillor level, I think there needs to be an awful lot more emphasis on encouraging people to go down that route, doing secondments from national government, for instance. MPs perhaps choosing to spend some time outside parliament or coming back etcetera, etcetera. I do think there’s a real issue.
Q: How did the varying quality in local government affect the decisions you were making or could make as a national minister?
I wanted to take the political risk because if you don’t give local government anything to do, you’re never going to get good people doing it. There is a transition to go through, and maybe the lesson that it would have been good to have thought about before is, just start with the big combined authorities, and then that influence will spread over time, rather than taking so much risk in each council area. I just think when you get a real job to do, competent people will be interested.
Q: What was your experience of working across Whitehall?
I think it depended quite a lot on the minister, actually, which is interesting because not everyone might come to that conclusion. Where there were strongly devolutionist ministers, the civil service tended to support that, and they may have been pleased about that or not pleased about that, I don’t know, but they did support it. And probably conversely, when you got centralist ministers, they probably did that too. So I don’t think there was a Whitehall mindset. I do think there were a variety of strongly held views around the cabinet table in discussing these issues.
Q: Were there any particular examples you can think of policy areas that should have been devolved, but wasn’t?
We had long debates in education about precisely what we could devolve and what we couldn’t devolve. And what needed to be set centrally, what targets needed to be set centrally and where you could let go. It was very, very cautious at the beginning, and it became more ambitious as time went on. And the concept proved itself.
Q: Most people we talk to say that education stands out as relatively culturally centralising. But every former education secretary we’ve spoken to disputes that and says that it’s a caricature that has emerged more strongly over the past 13 years than during the New Labour era.
That’s very interesting, because I definitely wasn’t centralising as an education secretary. If anybody took the time to reread the White Paper on schools that was published, the big split between myself and Downing Street on that White Paper was the role of local government because I saw a very strong role of local government in maintaining standards and commissioning new schools and working with civil society in order to make sure schools were in the right place, serving the needs of the entire communities.
Q: What was Downing Street’s reluctance in that debate Ruth?
It didn’t trust local government whatsoever.
Q: Do you think that that was because of the political view within Downing Street?
Yes, that’s very true. And later you saw academies being set up in my tenure, but we were quite worried about the fact that these would be run centrally. Held, not run, held to account centrally. I argued that he’d be recreating a QUANGO to run these schools, and you’d replace the local government with something else. There is a real need at local level to coordinate and champion and hold schools to account. And that was absolutely ingrained, ran with the grain of education officials at the time.
Q: Are there big breaks that you see in 2010 in regional policy around this area?
Mainly the massive expansion of academies so that they no longer became ways of dealing with disadvantage, but became mainstream and free schools, and so cutting out local government entirely in schools management. That was a big break in policy. It was presented almost as continuity, but it wasn’t actually, it was a significant break in policy. On this stuff, clearly, they went down the sort of gradualist route on combined authorities. It seemed pretty much a continuation of where it had been, more slowly than I would have expected. I think the red wall debate had huge implications for allocation of investment under the Boris Johnson regime. But in my view, it was quite ill-thought-out how that should be done. I don’t think there was very much evidence of it in practice. So a lot of rhetoric, less evidence in practice, and I think the levelling up White Paper was a serious contribution to the debate.
Q: What made the difference, when you look back, for the institutions and policies that succeeded and survived and the ones that failed or fell away, what was the determining factor of that success?
Well, that is interesting. I was responsible for setting up a scheme called the Child Trust Fund, which, to this day, breaks my heart whenever I think about it, because it was abolished in the first coalition government. I thought that would be there long enough to be established as part of the institutional framework, but it just shows you that you need quite long providence for these things to really embed themselves. So, independence of the Bank of England that was adopted and stayed, part of the accepted framework of economic governance. The London mayor and the role of the mayoralties were accepted. What made the difference there? I think that people feel some sort of identity with them, possibly. They make sense to people, basically.
Q: What would your advice be to any future reforming government that wanted to learn the lessons from these histories to improve regional growth performance in the future?
Devolve. Take a risk, give areas some power and allow them fiscal devolution. It’s a one way bet at the moment. Andy Burnham can stand up to government and say – ‘We haven’t got enough money. We haven’t got enough money.’ There is no downside, because arguably he hasn’t got enough money to do what he wants. If he had to raise that money, he’d be making a completely different argument to local people. And that’s when the maturity comes into those relationships.
Q: You mentioned business rates reform, why did it fail to gain traction in the 2000s?
I think it was Gordon [Brown]’s caution. Michael Lyons produced two reports on local government. The first was about place shaping. That was really important to this whole agenda on local government reform. The second to consider fiscal devolution. He just avoided it, and we were all half expecting it to be in the report, and then the Treasury said, ‘No, not yet’. Whether it’s ducked in the report, I just can’t remember what it was exactly. That was a really missed moment.
ENDS