CAN INSTITUTIONS ADAPT TO NEW MODELS OF ECONOMIC GOVERNANCE? Case studies in North East England and Tees Valley. Peter Morris June 2020 Submitted for the degree of Doctor of Philosophy Centre for Urban and Regional Development Studies Newcastle University i Abstract This thesis draws lessons for economic governance from two case studies of a model of local development introduced by the UK government in 2010. Its temporal context is the decision of the coalition government to abolish the regionalism introduced by the Labour government in 1997/98 and replace it with a model of localism based on functional economic areas (FEAs). Its spatial context is North East England, where the two case studies have been conducted to illustrate how localism is working in practice as a governance system. The thesis studies the governance of devolution in the North East Combined Authority (NECA) and in Tees Valley as a political, economic and institutional issue, analysing the responses of local leaderships to the new model and its formal institutional arrangements. It finds that informal institutions in the shape of identity, socio-cultural values and political traditions and practices can exert a powerful influence on local leadership groups and hence the establishment and operations of new formal institutions. The thesis discusses the different approaches taken by the new formal institutions to development, and the resulting economic outcomes. It concludes that governments intending to devolve powers for economic purposes must take full account of regional and/or local circumstances, including the political. Trying to impose an economic governance model on an unwilling locality does not work, and a bottom-up approach should be adopted. Economically, it finds that at this stage, and with so many spatially blind factors affecting the regional economy, it is impossible to say whether the transition from regionalism to localism is having any economic effect, though early signs are largely disappointing. The thesis also examines the accountability and inclusiveness of the new governance and finds problematic issues in relation to both. It concludes with recommendations for institutional reform. In what is the quite recent and continuously evolving institutional landscape of localism in England, the thesis makes a significant addition to a still under-researched field. i Acknowledgements I must have been a difficult student, so I must first of all acknowledge the patience of my supervisors, Professor Danny MacKinnon and Dr Alistair Clark, in putting up with my over-confidence and occasional grumpiness and keeping me on the academic straight and narrow. I also thank staff in the Faculty of Humanities and Social Sciences for the training they provided in research methods during the early stages of my study. This work could not have been carried out at all without the co-operation of the 43 people who agreed to be interviewed. All are busy people, and I am grateful for their time, but also what I believe was their frankness, without which the value of the work would have been very much diminished. They must remain anonymous, but they know who they are. Finally, I thank my family and friends, who had to put up with long periods when I was sitting in front of my computer or had my head buried in a book instead of participating in sociable activities. I also thank my great niece, Jemima Woodhouse, for using her digital skills to replicate the diagram of Hambleton’s framework for civic leadership, which is reproduced in Chapter 2. This has been a work of close personal interest to me. I spent my entire career observing my native North East England struggling in vain to lift its economic performance from the lower reaches of the UK league tables where it has languished for decades. I have worked in a variety of positions in all the region’s conurbations and want to see them and their hinterlands prosper. I would like to be able to offer a solution to their economic predicament but I can’t, and this thesis does not propose a panacea, though it does suggest ways of building a sense of common purpose, which is a necessary first step. This thesis is independent and funded by the author. ii Table of Contents Abstract ....................................................................................................................... i Acknowledgements .................................................................................................... ii Table of Contents ...................................................................................................... iii List of figures ........................................................................................................... viii List of tables ............................................................................................................ viii Acronyms .................................................................................................................. ix Introduction and methodology .................................................................. 1 1.1 The aims of the thesis ........................................................................................... 1 1.2 The wider devolution context: globalisation, regionalisation, localisation ........... 3 1.3 Key concepts ......................................................................................................... 8 1.3.1 Institutions ..................................................................................................... 8 1.3.2 Place and identity, agglomeration and dominance ...................................... 12 1.3.3 Leadership and accountability ..................................................................... 14 1.3.4 Path dependence ......................................................................................... 17 1.4 Methodology ...................................................................................................... 18 1.4.1 Philosophical approach ................................................................................ 21 1.4.2 The case studies ........................................................................................... 23 1.5 Methods of data collection and analysis ............................................................. 26 1.5.1 Documentary evidence ................................................................................ 27 iii 1.5.2 The interviews ............................................................................................. 29 1.5.3 Use of statistics ............................................................................................ 33 1.5.4 Ethical and reflexive considerations ............................................................ 33 1.6 Conclusion .......................................................................................................... 35 Literature Review: economic theories and political governance .............. 37 2.1 Theories of economic geography ........................................................................ 38 2.1.1 New economic geography ........................................................................... 38 2.1.2 Institutional economic geography ............................................................... 45 2.1.3 Evolutionary economic geography ............................................................... 46 2.2 Governance, the state and devolution................................................................ 49 2.2.1 The emerging role of governance ................................................................ 50 2.2.2 The continuing role of government ............................................................. 52 2.2.3 Economic governance and devolution in England ....................................... 53 2.2.4 Leadership, accountability and inclusion in local government ..................... 60 2.3 Conclusion .......................................................................................................... 67 The context of North East England: identity, culture and politics ............. 69 3.1 North East England’s framework for place-based leadership ............................. 70 3.1.1 Socio-cultural and political framing ............................................................. 70 3.1.2 Economic framing: the economic consequences of social values ................ 81 3.1.3 Government framing ................................................................................... 89 3.1.4 Environmental framing ................................................................................ 96 3.2 North East England’s administrative geography ................................................. 99 3.2.1 North East and North of Tyne ...................................................................... 99 iv 3.2.2 Tees Valley ................................................................................................. 102 3.3 Conclusion ........................................................................................................ 104 NECA: a failure of institutional adaptation ............................................ 106 4.1 From deal to no deal in 11 months ................................................................... 107 4.2 The role of the business leadership .................................................................. 115 4.3 The role of public professionals ........................................................................ 120 4.4 The Campaign for Real Devolution