This thesis is a study of housing policy and regional economic policy under Tony Blair and Gordon Brown, which uses interviews, archives, and public documents to explore the spatial dimension within New Labour’s wider political economy. It focusses particularly on the work of John Prescott’s Department of the Environment, Transport and the Regions (DETR)—which became the Department for Transport, Local Government and the Regions (2001-2) and the Office of the Deputy Prime Minister (2002-6)—and represents the first serious attempt to assess Prescott’s substantive impact on policymaking. The thesis argues that key New Labour figures thought about their political economic project as being more statist, interventionist, and Keynesian than political scientists or political economy ‘Anglo-liberal growth model’ scholars have contested. Support is lent to Jim Tomlinson and Ben Clift’s ‘New Keynesian’ description of New Labour’s broad political economic project. However, I push back against Tomlinson’s argument that delivering economic support for struggling regional economies was not deliberate or even articulated by New Labour. Rather, I demonstrate that John Prescott (1999) considered his super-departments, the Department for the Environment, Transport and the Regions and the Office of the Deputy Prime Minister, “very important economic department[s] […] massive deliverer[s], particularly when we have decided public expenditure is there to uphold the economy in the traditional Keynesian way”. Prescott used these departments to run a regionally selective economic strategy that enacted policies and realised institutions that Prescott had designed in 1982 as part of Labour’s ‘Alternative Economic Strategy’. Specifically, analysis of case studies such as the Regional Development Agencies and the Housing Market Renewal Pathfinders shows that these institutions were designed to provide swift intervention in both the supply and demand side of regional economies, while bypassing the complex and electorally sensitive issue of local government governance and spending. In addition, the findings demonstrate that for Brown and Balls, this regional economic policy part formed an important theoretical part of their ‘constrained discretion’ macroeconomic policy. Interviews, archival analysis, and lesser studied command papers and grey literature analysis reveal that Brown and Balls endorsed Prescott’s regional economic project as the regional component of the state’s arsenal in operating a discretionary monetary, fiscal, and interventionist policy. This policy, I argue, was explicitly intended to reduce rising regional inequalities and shelter the UK economy from the dangers of the vicissitudes of global financial markets and the “straitjacket” of the European Monetary Union and the EU’s regional policy.