Interview: Sir Ian Wrigglesworth

“There was a time when the steelworks on Teesside employed 20 or 30 thousand people,” says Sir Ian Wrigglesworth (pictured above). Things are different now: the Indian company Tata employs fewer than 2,000 steelworkers there and Thai firm SSI, which recently bought Teesside’s huge, mothballed blast furnace, will reopen it with a workforce of about 1,700. The blast furnace’s ore yard, says Sir Ian, “runs as far as the eye can see, and mixes thousands of tonnes of iron ore and coke arriving on ships from different parts of the world – but it’s all run by one guy controlling the conveyer belts. When you had the mines, shipbuilding, steelworks, you had a large number of unskilled jobs that people could do. Those jobs just don’t exist now.”

Wrigglesworth has had a clear view of the North-East’s long industrial decline: elected a Labour MP on Teesside in 1974, he became a Liberal Democrat before losing his seat in 1987 and embarking on a career in business. He launched commercial property company UK Land Estates in 1995, just as the northern conurbations entered a renaissance that has, he says, “transformed” their city centres – but left their poor inner suburbs to rot.

“Go to the centre of Leeds or Liverpool and it’s all absolutely splendid, but around that you’ve still got a load of crap: derelict buildings, old factories being used by not very good companies or awaiting demolition, and lots of deprivation and unemployment,” he says. Over 20 or 30 years Newcastle has changed almost beyond recognition, he adds, but alongside the new developments “are all the same problems that have been there for 75 years and haven’t gone away: back to Jarrow and all that”.

Many northern cities have created thousands of private sector jobs in recent years, Wrigglesworth explains, but that hasn’t eliminated the “long tail of people who haven’t got qualifications or a background in modern industries”. In an attempt to boost northern economies, the government for decades concentrated public sector jobs and investment in these areas – “and that was the right thing to do”, he argues. “Public sector jobs are extremely good jobs to have. But it doesn’t help to develop a dynamic market economy if you’re too dominated by the public sector. If you want a bubbling, creative, energetic private sector creating wealth and jobs, it’s got to have a critical mass.”

The private sector recession, and the current rapid contraction in public sector jobs, are now wreaking havoc on the North’s parlous local economies. Is there any sign of a recovery in commercial property up there? “No, absolutely none,” Wrigglesworth replies. “It’s bobbing along on the bottom. And I think we’re beginning to see the impact of the cuts; I don’t think it’s come through before. Inevitably, it is hitting those regions that have got the largest public sectors.” Does he see a bitter irony in the fact that London, which spawned the credit crunch, is now in relatively robust economic health while the North and Midlands bear most of the pain? “It’s worse than an irony: it’s brutal,” he says with feeling. “And sometimes the people responsible for the crisis would do well to have a bit more humility than we sometimes see from them.”

So what to do?
Wrigglesworth is clearly frustrated by the predicament of parts of the North and Midlands – but he has, at least, been in a position to do something about the problem. In July 2010 he became deputy chairman – under regeneration veteran Michael Heseltine – of the advisory panel for the Regional Growth Fund (RGF): a £1.4bn pot allocated over the spending review period to, he says, “support sustainable, private sector jobs in areas that are over-dependent on the public sector”.

Accepting bids from private firms and public-private partnerships, the panel scrutinised applications and made recommendations to a small group of ministers chaired by the deputy prime minister. In April, the government announced that 50 bidders would share £450m allocated to the RGF’s first round; and on Monday, Nick Clegg named the second-round winners. “We’ve put virtually all the money into this second round – just under a billion – and whether we have enough left to justify having a third round, as was initially envisaged, I think is somewhat open to question,” Sir Ian comments.

Nearly 500 bidders applied for a chunk of the second-round cash, of whom 119 will (due diligence checks permitting) share the cash. The government has come under fire for taking its time to spend the money – Labour leader Ed Miliband recently complained in the Commons that only two first-round winners have so far received the cash promised them – and Wrigglesworth notes that the second spending round was beefed up “to bring the money up front as much as possible”. However, he dismisses opposition complaints that the government has been slow to write the cheques. “The fact that money hasn’t yet been paid out doesn’t stop firms from getting projects underway if they’re confident that they’ll get through the due diligence,” he says, adding that he’s seen round two winners putting in the foundations for new buildings while they await their grants. The due diligence procedures are essential “if you don’t want another DeLorean”, he adds. “It’s public money: you can’t just shower it around like confetti!”

Many of the round-two winners are, says Wrigglesworth, involved in “manufacturing, much of it high-technology, and a lot of it will be going to the export sector.” The banks Santander and HSBC have also received grants, he acknowledges – but the money, along with the banks’ own cash, will be invested in SMEs: “We’re using the banks’ expertise and branch networks to provide support for small businesses.”

With an eye on his audience, Sir Ian praises the interdepartmental team of civil servants supporting the advisory panel as “absolutely brilliant: they’ve worked immensely hard and with great ingenuity to ensure that the job is done as quickly as possible – but properly as well – and they’ve made it very easy for the panel”.

The quality of applications has also been good, he says: with the bids totalling £3.3bn, some deserving projects have missed out. However, asked about the quality of the emerging Local Enterprise Partnerships (LEPs) – the nascent sub-regional economic development bodies that bring together groups of councils and business leaders, and were invited to help organise RGF bids – Wrigglesworth is less enthusiastic.

“They are undoubtedly developing at varying rates,” he says. “Some areas have been very energetic and are working together, and have therefore run off down the track very rapidly. Others haven’t been able to get their act together – usually because of parochial issues that have caused conflict between councils – and they’ve gone much more slowly. It depends very much on the local leadership; but that’s what localism is about!”

The LEPs, which were formed just in time to play a role in the RGF’s second round, have therefore made a patchy contribution to the bids. “Some have been very energetic in helping to coordinate and support bids, and that has been very helpful: it’s some consolation to the panel if they know that a bid fits with the LEP’s strategy for an area”, says Wrigglesworth. “Others, we haven’t heard a dicky bird from.”

Sir Ian is relaxed about the abolition of the LEPs’ predecessors, the regional development agencies (RDAs). While they had an important role in managing strategic development planning at the sub-regional level, he says, “I don’t see any reason why the LEPs shouldn’t together be able to do that.”

However, he’s much less sanguine about communities secretary Eric Pickles’ abolition of the regional Government Offices. “I think it was a very short-sighted decision; I would have preferred them to have remained,” he says. “It was important to the regions to have people from central government there, and it was immensely helpful to ministers and departments in Whitehall. Almost as night follows day, they will reappear.” The business department, he points out, has already established a new network called BIS Local, while Pickles’ own communities department has regional offices administering the European Regional Development Fund.

None North East
Some of the RDAs’ other roles were useful, Wrigglesworth believes. “There were a number of RDAs that did outstandingly good work, in my view,” he says, naming Yorkshire Forward and One North East. However, “there were also some which gave them a bad name – not least down here [in London].” What’s more, he argues, much of the potential value of having autonomous regional bodies was lost because RDAs were used by Whitehall simply as delivery arms for national schemes: they were, Wrigglesworth believes, “operating overwhelmingly as agents for government departments, doing national government’s bidding and ticking boxes”.

So Sir Ian sees the RDAs’ spending as too centrally controlled. But isn’t the RGF, whose spending decisions have been made by ministers, still more centralised? No, he argues: it’s “very much a bottom-up approach, because it’s a bidding process, so the projects that come forward are determined by the people who put the applications in. The RGF isn’t prescriptive. It isn’t saying: ‘We’re only going to do manufacturing, or engineering, or aerospace, or any particular industry.’ It’s saying: ‘Bring it on. Give us your bids’.”

As to whether the RGF will be able to make a major contribution to rebalancing local economies away from the public sector and towards private enterprise – well, it should at least draw in a lot of investment cash. The bid criteria stipulate that entrants must submit projects that couldn’t go ahead without RGF funds, and the business department is claiming that the £950m second round will draw in nearly £6bn of private money.

On the other hand, the RGF – worth £1.4bn over three years – replaces RDA funding that peaked at £2.25bn in a single year (2008). And Wrigglesworth is under no illusions about either the scale of the challenge, or the strength of the negative economic forces pounding the UK’s economy.

Economy in double jeopardy
“The sad fact is that the euro crisis has massively damaged confidence, and is holding back investment and spending right across the board just at the time when the cuts are making an impact and it was hoped that the private sector would start creating the jobs,” he says; yet another reason for spending the RGF cash fast. “The disappointing thing is that this external factor – which the government has no influence over – has had a damaging effect on growth just at this time.”

There are positive signs out there, says Sir Ian, even in the toughest areas of the North. Manufacturers, ports and engineering firms are doing good business in export markets, and the RGF can help plug some of the skills gaps that – even in this time of high unemployment – still restrict their growth. The economic gap between England’s North and its South-East, though, has been growing for 75 years, creating separate economies that seem at times to have little in common. The RGF, it seems, will help ameliorate the pain of the North and Midlands; but there is little it can do about the fact that our nation is split into two quite different economies.

“I increasingly think that London almost operates as though it’s not part of the UK; it’s a global city,” comments Wrigglesworth. “In London you’re dealing with French and German people, Americans: extremely well-off, professional people whose work isn’t dependent on the wider UK economy. They’re here because of the City, the media business, the film industry, fashion. And what’s going on here has no bearing on what’s going on in Newcastle or Leeds or Sheffield; it’s another world.”

Given the capital’s unique and separate economy, Wrigglesworth says, “closing the gap between the Manchesters and Birminghams of this world and London will be an immensely difficult task. What we can do is promote a dynamic private sector in those northern cities and in the regions – and that’s what we’re trying to achieve with these investments.”