Sajid Javid has been the Member of Parliament for Bromsgrove since 2010. He served in the Cabinet from 2014, as Secretary of State for Culture, Media, and Sport [DCMS], for Business, Innovation and Skills [BIS], for Communities and Local Government [DCLG/DLUHC], as Home Secretary, Chancellor of the Exchequer, and Secretary of State for Health and Social Care.
This interview was conducted on 17 June 2022.
Q: Could you explain to us the different roles you’ve played, with respect to local economic policy and growth policy?
I think all departments have a role to play in regional and growth policy – obviously some more than others (Business, Innovation and Skills, the Department of Levelling Up, the Treasury, and so forth). One thing I’ve always believed in strongly is that this idea that – contrary to the idea there’s only a handful of key departments and that’s it – every department has a role.
For example, my first cabinet role was with DCMS. That wouldn’t naturally have been put in as one of the ‘regional growth departments’. But if you’re not getting broadband to key regions, it makes all the difference in terms of growth opportunities. You could see that in economic results. Cornwall has some of the best broadband in the country, versus, say, parts of Yorkshire, which face more challenges. You can see some of the differences in the types of businesses, the access for businesses, especially for service type businesses. So, I think all departments have had a role. I was at DCMS, then I was BIS, and before that at HM Treasury as a junior minister.
Q: What do you think is the main policy success over that period, and what has been the biggest frustration?
The success, if I had to think of one thing, is devolution: devolving key functional economic powers to what you call functional economic areas. It’s been obvious to me for a long time, even before I was local government secretary, that if you step back, we are centralised as a governing system and that would mean we want to put powers out to the regions. But the regions have been too fragmented: we’ve got the County Councils, the District Councils, the Town Councils and so forth. There are so many different decision-makers not joined up in an economic area.
Let’s take a present-day example: look at devolution of cities. If you looked at the West Midlands, an area that I know well, there were so many councils involved, so many layers. There was not a functional area to make decisions on things like local skills policy, local transport policy, local business policy, or big infrastructure investment. Therefore, you needed what we eventually went on to call the Combined Authorities, with an elected leader, to help make those decisions. I think devolution has been the most transformative policy.
What’s held things back? When you look at a particular area, you know that it needs improvements in skills, transport links, and so on. But governance of that local area is just far too fragmented for effective decision-making.
Q: What has been the Whitehall view of the opportunities, and the risks, of devolution?
I think the general view you get is that, in principle, devolution can be good. People see the benefits of that. When you make the argument that we’re too centralised but too fragmented locally, therefore we need to devolve but to bigger groupings, people respect that and sign up to that. In my experience, delivery was the hard thing.
You have the party politics at a local level. I’m not talking between parties, necessarily: I’m talking within the party. A good example of that: when I was local government secretary, I was keen on devolving power to as many functional economic areas as I could. An obvious one for me was the North East, and I worked with all the council leaders in the North East. They just couldn’t agree on the model about whether they were going to have a directly elected mayor or not, or what their priorities would be. The reason they couldn’t agree they were almost all Labour-led, but they were different wings of that same party. Equally, I can give you examples from Yorkshire, for example, where we want to do more but there are disagreements between parties. There are political practicalities of trying to get a local agreement.
Then there are institutional issues if you devolve power. One question that always comes up, whichever party is in power in Westminster, what if you devolve it and you get bad local leadership? If they elect the Mayor or Assembly, and they’re just not very good at making economic decisions? You’ve given this power away, and you can’t really take it back. That would be incredibly difficult, and you’ve just blown an opportunity. And so why take the risk?
Q: How would you characterise the different views of different departments?
There’s not a single Whitehall view. Clearly, within the departments, there are differences. I can give you another concrete examples of that: skills devolution. When I was business secretary, at that time I had an element of skills policy (apprenticeships, Higher Education, and Further Education) in the department. I remember every time it came up with the local government department about devolving some of those skills powers, the advice I got all the time was: ‘Don’t do it, because if you do it, you won’t be able to set national standards. You won’t be able to control the funding as you can now. You won’t be able to make rapid changes.’ I went against the advice.
If you asked me, ‘What’s the Whitehall view?’ The system will say: don’t devolve, even though that was the stated government policy. At the time, for example, what became known as the Northern Powerhouse was a big push by the Treasury, and by local government department. But that was the advice that you would get.
When I was the local government secretary under Theresa May, she moved Further Education and Higher Education out of BIS and moved it into the Department for Education. I had the same problem, but with DfE now. The same group of officials had moved over: a different department but same view – don’t devolve.
Transport was the same, Health broadly the same, I’d say. With Health, there was less pressure when it comes to devolution. It’s not that it’s not a driver of economic success, but compared to skills, transport, general business support…it’s lower down on the priority list.
Q: In the business department, did you see a tension between parts seeking to focus on national or sectoral strategies, and those seeking to devolve to regions?
All the time. When I came into the business department, it had what we called sector councils. I think my predecessor, Vince Cable, had set them up. I like them now. I thought it made sense to have a forum where you could meet regularly with the aerospace sector, the automobile sector and so forth. But then, when you listen to the sectors and what they want, often it wouldn’t fit in with the different regions. You might get the automobile sector saying, ‘We need to invest in a certain type of technology, can you help us?’ But we obviously then had to pick a place to do it. That might mean consolidating resources in that area, which then had an impact on regional policy.
That happened, but I think it’s just a feature of the system. It’s just reality. I never thought it was something that you can design away or have a different policy approach towards. I didn’t think you had to choose between the sectoral- or place-based. You couldn’t have the ideal outcome in both, but I always felt that you could have a set of sensible compromises in most cases.
Of course, there were trade-offs between the two, but to me, it never felt that you have to give up on one or the other. You could have a degree of success in both. When there were trade-offs, I thought you just had to be honest that it’s a trade-off. For certain policy issues, you might have to choose. It didn’t mean that you were giving up completely on one or the other.
Q: How would you characterise the Treasury’s role in those debates?
I would say it changed. Up to 2016 it was all George Osborne. He was as the man in charge, running the Treasury, and he was very supportive of devolution overall. He wanted to kick off with a few big, meaningful changes – starting with Manchester, for example, but also very keen on the West Midlands and other places.
I started out in the Treasury working with him and his team, including a few people that work in regional policy. I started to take much more interest and built understanding early on, and I took that with me to the business department. What made a big difference practically was that relationship: being in the business department and having that relationship with the Chancellor and his team, that level of trust in each other. I know it sounds obvious, but not every department has a good relationship with each other. It made it much smoother and much easier. My predecessor in business was Vince Cable and I always thought, ‘You’re a really nice guy to work with, very talented’, but one thing you couldn’t get away from is: he was in a different political party and we all knew there was going to be a general election down the line. There’s only so far you could go in terms of trust. That evaporated after 2015 election, and I was like-minded with the Treasury. That made things a lot easier and a lot smoother.
I think Philip Hammond was a lot less keen on devolution, but when I got there, I think the Treasury suddenly remembered my history and they were very quick to adapt and dance to the tune of their new master.
Q: You mentioned local government division. Is there any more you would like to say about the capability of local government and combined authorities to rise to the challenge of devolution?
It was really mixed, the quality. And that is why one of the reasons I always thought you should really try to have a Mayoral Combined Authority. I thought it had to be a big enough, attractive enough job to attract the very best talent. If you want your Andy Streets, Andy Burnhams, you must make it an attractive enough job – like the Mayor of London job was, whether with Boris or with Sadiq now. You must make it attractive enough. London, obviously, is a bit easier. Everyone knows London is much bigger, with broader powers, and so forth. But if you’re going to do that in other parts – the West Midlands, North East, North West – you had to make it a Mayoral Combined Authority. It needed to be a big enough area, and a functional area.
Size is important, because it feeds to whether it’s a functional economic area with that critical mass. But also, it had to be an area that represents that how the local people, local businesses, see themselves and live their lives. Some people, for example, would approach me and say, ‘We should have devolution for the whole of Yorkshire.’ Yorkshire is a great place, and there’s lots of cultural and historical links throughout Yorkshire, but functionally the economic areas, how people live, were different, depending on the area: West Yorkshire, South Yorkshire. I think it’s important to represent that.
Q: Is it reasonable to accept that the voluntary approach to mayoral combined authorities means there would be some places which end up on the outside, or do you need to get to a point where every part of England is covered?
I think you want to broaden this as much as possible. I think having a policy where you’re trying to win support of every council that might be involved in the combined authority is important if you can, but my view is I don’t think you should. If there’s one area that should absolutely be in a combined authority for all the right economic reasons, it shouldn’t be able to veto it for the others.
There are some parallels around having new unitary authorities. Those areas that often want it, do so for big economic reasons by having more joined-up policy in these key areas, rather than across multiple local authorities. There’s been on the Statute Books for a while, I think Greg Clark put it there, something called the Cities Act, that allows the Secretary of State to overrule a local authority if it doesn’t agree to enter a unitary authority. I used that, I think, in Dorset, when there was a local authority that didn’t want to enter a new unitary authority with the others. It was the right decision, against some local will. It was the right decision in the interests of the wider area.
Q: How important is effective accountability for devolution to work? One of the criticisms of the Regional Development Agencies was that they didn’t have democratic legitimacy. Is that important?
I think it is. If you want devolution that’s going to have budgets go with it – like the gainshare funding, the huge amount of funding that went to the mayors, and obviously more flexibility on what was before central government funding – I think you have to have accountability for that. If someone is going to make those decisions for that local population, then they have to be democratically accountable for it. In the case of the biggest areas, we’re talking billions, and if you don’t have that accountability, I just think that you’re just more likely to end up with bad decisions. Someone will feel they’re not accountable for it in any way.
Q: Is the lack of tax-raising power a constraint on how much devolution can drive economic growth in a region?
I think that there’s a balance to be had. I think I’m right in saying that currently there are some with business rates. I think business rates, in my mind, were always this right sort of tax to devolve to give some flexibility. But do you go beyond that to wider tax bases? I think politically, in all parties, that will be quite tricky. I would keep the focus on business rates, see how that is working. But if you’re not going to let local authorities raise funding directly through regional tax changes, then they will still need some new funding for the kind of infrastructure projects that we need to do locally, and we should give them flexibility on that. That’s how we came up with the gainshare idea, with thirty years’ funding and giving them powers to borrow against it.
Q: Why have regional gaps been so persistent? Which levers haven’t we used enough, which could make the biggest difference?
There’s one obvious one: planning. Planning, whether it’s housing or commercial planning.
If you look at West Midlands – or I could pick any combined authority, the only exception would be London – then the mayor has no real say in planning, especially when it comes to business, commercial planning. That, I think, is one area where when you look at the economics, if you step back and think about what levers do, it’s the important one when it comes to promoting growth.
In London, it’s a bit more mixed. The borough councils have planning powers. The difference is that the London mayor position and the assembly’s role is that they can give more direction in that planning. For example, the London mayor can call in a planning decision in the same way the Secretary of State can. I’m not necessarily saying that’s the same model that should be followed, but because the mayor has more tools in the box, the local authorities were maybe incentivised a bit more to work together.
Q: Is it a problem that transport, infrastructure and skills spending has been so London-focused?
Is that part of the problem? I think it’s shifted a lot. If you’re looking historically, I think it would have been very South East-focused under successive governments. I think it was probably a reflection of the central problem devolution is trying to address decision making is all Westminster based, it’s all very centralised. It’s therefore overly dominated by people that are literally living and working in London area, the South East. That’s what they come to think about most. That’s one of the values of the devolution, trying to get away from that mindset.
Q: And has London’s overall been a help or a hindrance to the rest of the country?
I think it’s only benefit. Sometimes you hear some people say the only way other parts of the UK can grow more, grow better, is if somehow London does less well. I think you can have both. I think many countries have demonstrated that as well. If you look at other big European nations – look at Italy, it’s got Milan, it’s got Rome, it’s got big cities. Look at Spain, with Madrid or Barcelona. You can have more than one major engine for economic growth. What we have is that, historically, governments have over-concentrated on London and the South East – but London’s growth is not inhibiting growth in other parts of the country.
Q: Given London’s benefit to the wider South East, there is an argument made that we should focus on cities as dynamos of growth. There are others who say we should worry about towns and rural areas, so they are not ‘left out’. How do you think about that?
I don’t think you have to choose one or the other. If you’re a town that is around one of our great Northern cities, you want the city to do well. What you want is to see that the town is benefiting from that as well. So, for example, that means transport links into the town. One of the things London benefits from is that there are so many good transport links. Croydon’s not quite a town, but from Croydon into central London there are multiple trains an hour and they take 15 minutes. If you take Leigh outside Manchester, the same distance takes an hour. The growth of the city is great, but you’ve got to try and find the benefits for those towns out of it, and I think that can be done.
Q: Is there one thing which you would say that has been successful and we should really build upon? And is there one thing that has really held us back?
I think the one positive is the devolution policy, with the mayoral combined authorities. We need more of them, and the ones that exist to go deeper. Devolution mark two. You want to go wider: I think you want to give every area the opportunity to be in one, but there’s clearly some areas in terms of economic functional areas, and drivers of regional growth that will be more important. You want to go deeper: I’d point to infrastructure. I’m not just talking roads and rail, and bridges and things like that. I’m talking about the broadband infrastructure, for example, the social infrastructure, in terms of education.
One of the things I did as Chancellor was massively expanding – I think I tripled or quadrupled – the infrastructure fund for further education. I think, over that period, we were a bit too focused on higher education at the expense of technical colleges and further education-type education, vocational skills. That requires not just revenue spending; we never actually gave it enough capital spending. Small things have a big impact: if you want more young people to go to FE colleges, when they go and visit the college it needs to look good. Some of them haven’t been invested in for 30, 40 years. I think capital expenditure is still an area that we should focus on.
The negative, I think, is that during that period, we could have afforded to give even more infrastructure, capital investment to the regions. I think it would have paid off big time if we significantly increased that. We call it the gainshare, or whatever, but giving much more capital to those local areas, so they can do even more meaningful with those powers.
ENDS