When the New Labour Party won the elections in May 1997, incoming Prime Minister Tony Blair promised to govern “as New Labour”, hinting to the public not to expect socialism. The years of Tony Blair’s premiership will probably be recorded as primarily the institutionalization of Thatcherism. During the years of New Labour in power, Margaret Thatcher’s rugged individualism and hotly contested disavowal of the social state have been an undebatable principle of state policy (Hassan 59). However, one finds after years of New Labor rule that the public has got is a combination of socialism and New Labor. While New Labor talked of markets, competition, and incentives in the realm of economics, they also combined it with elements of inclusion and compassion from socialism. It seemed that the new mixture was to be of Thatcherism spoken with a gentle voice – the voice of socialism. “I believe passionately that our government will fail if it sees its task as dismantling Thatcherism,” said the Labor leader, Tony Blair. “We can’t just switch the clock back to where we were or we will fail. Our task is to build and create those things that Thatcherism didn’t deal with” (Darnton 1).
Thatcherism is the name given to the laissez-faire policy of Margaret Thatcher British prime minister from 1979 to 1990. Margaret Thatcher summed up ‘Thatcherism’ as “freedom and free markets, limited government and a strong national defence” (Thatcher 1993: 15). There were four crucial aspects of Margaret Thatcher’s economic reform program: the defeat of inflation, the curbing of union power, the privatization of industry (and the introduction of an element of market competition into public services such as health and education that remained in the public sector), and the control of public spending to allow cuts indirect taxation (Minford 1988). Thatcherism is an economic program that outlines traditional laissez-faire or free-market program emphasizing the virtues of competition, individual incentives, and private ownership rather than state regulation, collective provision, and public ownership (Skidelsky 1988).
The Conservative and Labour governments in the UK have fought over the ideological concepts of socialist/laissez-faire or the left-right dimensions throughout the post-war period in Britain (Budge 1999). The two concepts differ in several aspects such as nationalization versus privatization of industry, government intervention and regulation of the economy versus the free market, collective responsibility, and provision versus individual responsibility for welfare. Historically, rival parties stood for these two different ideologies and hence voters were able to make their choices based on the characteristics of the two ideologies. Generally, working-class voters have tended to take more left-wing views while those in the salariat and the petite bourgeoisie have tended to favor the laissez-faire options (Heath et al 32).
Thatcherism supported supply-side economics and its policies included: reductions in tax; manipulation of the money supply to reduce inflation; privatization of public industry; reduction of trade union power; reduction of government’s role in the economy; and encouragement of people to save, work and buy property (Skidelsky 10). Thatcherism came under attack in 1983 when the anti-inflationary policies resulted in the worst unemployment figures since 1923. Her critics argue that she sacrificed Britain’s social well-being in the pursuit of her economic policy.
New Labour pledged itself during the campaigning that it would not repeal the privatizations of the earlier Thatcher administration or any of her labor union reforms, nor would it increase the basic rate of income tax. These elements of Thatcherism would be maintained to protect the “middle England” people who depended on the private sector for their livelihoods (Pirie 36). Margaret Thatcher felt that high rates of income tax acted as incentives and hence promoted low rates of direct taxation as a key adjunct to her strategy of increasing competitiveness. New Labour, though it continued with the low rates of direct income taxation, it placed more emphasis on the vote-losing aspects of high taxation. Moreover, there were promises of bringing back the excluded people into mainstream society. This referred to the unemployed, the single mothers, and criminals. There was also a promise to upgrade state services such as health and education and create a welfare-to-work program, to be financed by a one-time “excess profits” tax of $8.5 million on the privatized utility companies (Pirie 36). There were pledges to reduce class sizes in state schools and decrease waiting lists for beds in the state hospitals. However, there was no detailed blueprint for achieving these goals.
Tony Blair succeeded to the leadership and immediately set about his modernizing project. He made several changes in the course of his modernizing ‘project’- institutional, ideological, and image changes. On the ideological side, there were three main changes (Heath et al 115). The first change was the replacement of Clause IV of the Labour Party’s constitution and, as a corollary, the abandonment of plans to renationalize industries that the Conservatives had privatized. Secondly, the abandonment of a Keynesian, interventionist strategy designed to secure full employment and its replacement by a broad acceptance of market forces and a Thatcherism commitment to low inflation. Thirdly, the abandonment of Labour’s previous tax and spend commitments, which the modernizers believed had seriously damaged their electoral chances in 1992 (Sopel 1995: 246). In addition, Blair distanced the party from the unions by insisting that no special relationship with the unions should exist and by making no effort to woo trade union leaders; the trade unions would be consulted by a future Labour government only in the same way as other groups. Blair used every opportunity to make it clear that, if Labour came to power, the unions would receive ‘fairness not favours’ (speech to the TUC, Sept. 1995, quoted in Seyd 1998: 62) and the 1997 manifesto made it explicit that the key elements of Margaret Thatcher’s trade union reforms on ballots, picketing, and industrial action would not be repealed (Heath et al 113).
New Labour emphasized investment in education: ‘absolute priority to education and skills as the means both of enhancing opportunity and creating an efficient economy’ (Blair 1994: 6). There was also a radical program of constitutional change, in particular, devolution for Scotland and Wales, an elected mayor for London, reform of the House of Lords, a freedom of information Act, and proportional representation. Blair and the modernizers projected the New Labour Party as one committed to government intervention and full employment, public ownership, and universal social services funded through taxation. Blair talked of socialism, of social democracy, of left-of-center politics, but scarcely ever of socialism (Heath et al 113).
Labour’s governance has mainly been one of Thatcherism – there has been a focus on higher standards in schools and more tests by dealing with failing schools and failing teachers. This is similar to Thatcherism and is a bit odd coming from a Labour Party that is deeply involved with the teacher’s unions. On welfare, the Blair phrase was “compassion with a hard center”. This implies work is the best way out of poverty and people must be cajoled, tempted, and pushed if necessary out of welfare dependency and into work. Another surprising similarity between New Labour and Thatcherism is law enforcement and punishment. Labour was previously considered lenient on criminals, as they tried to explain crimes as outcomes of social deprivation and poverty. New Labour’s policy has been to be tough on both crime and the causes of crime. In short, the rhetoric is not new, but it is new for Britain’s Labour Party. These are some of the elements of the New Labour governance that might have suited Thatcher or Reagan though they would not have made it sound so caring and compassionate.
The period during which the Conservative Government from 1979 to 1997 was in office was characterized by attempts to control public spending, privatization, targeting, and rising inequality. Thatcherism tried to do away with Keynesian welfare-state social democracy and was grounded in a radical remodeling of state and economy and a new neo-liberal common sense. New Labour has adapted the fundamental neoliberal program to suit its conditions of governance – that of a social democratic government trying to govern in a neo-liberal direction while maintaining its traditional working-class and public sector middle-class support. The New Labour government is marked by the following characteristics: the decision to follow Conservative spending commitments, the renunciation of redistribution (“tax and spend”), and the historic commitment to equality, universality, and collective social provision (Hall 1). This is just Thatcherism mixed with elements of social conscience.
Under the New Labour, the role of the state has been to help individuals to provide for their social needs. Those who are unable to provide for themselves must be targeted, means-tested, and kept to a minimum of provision, lest the burden threatens “wealth creation”. New Labour is therefore difficult to characterize. It is a combination of economic neo-liberalism with a commitment to “active government”. Simplistically speaking, it is aligned with corporate capital and power on one side and with another program, of a more social-democratic kind, on the other side. On the neo-liberal side, New Labour has adopted Thatcherite policies on privatization, unemployment, taxation, and government spending. The social-democratic program involves a certain measure of indirect taxation and redistribution, reforms like the minimum wage, family tax credits, and inducements to return to work, and a substantial injection of public funds into health and education. The fact is that New Labour is a hybrid regime, composed of two strands: the neoliberal strand and the social-democratic strand of which the former dominates (Hall 1).
Blair has raised taxes, implemented redistributive policies, introduced a minimum wage and some new employment rights, introduced significant constitutional reforms, promoted new rights for gay people in the Civil Partnership Act 2004, and signed treaties integrating Britain more closely with the EU. He introduced substantial market-based reforms in the education and health sectors, introduced student tuition fees, sought to reduce certain categories of welfare payments, and introduced tough anti-terrorism and identity card legislation.
In the light of the above measures, it can be concluded that the New Labour party is a combination of Thatcherism and leftist policies of social democracy.
Works Cited
Blair, Tony (1992). Renewal. No. 4.
Darnton, John (1996). Labor Won’t Try to Undo Thatcherism, Chief Say. The New York Times. 2008. Web.
Hall, Stuart (2003). New Labour & Thatcherism. The Guardian.
Heath, F. Anthony; Jowell, M. Roger; Curtice, K. John (2001). The Rise of New Labour: Party Policies and Voter Choices. Oxford University Press.
Minford, P. (1988). Mrs Thatcher’s Economic Reform Programme. In Robert Skidelsky (ed.), Thatcherism. 93-106.
Pirie, Madsen (1999). New Labour Seems to Be a Subtle Mix of Thatcherism, Compassion and Concealed Taxes. World and I. Volume: 14. Issue: 5. Page Number: 36.
Seyd, P. (1998). Tony Blair and New Labour. In Anthony King, David Denver, Iain McLean, Pippa Norris, Philip Norton, David Sanders, and Patrick Seyd, New Labour Triumphs: Britain at the Polls. Chatham House. Chatham, NJ. 49-73.
Skidelsky, Robert (1989). Thatcherism. Chatto and Windus Publishers. Great Britain.
Sopel, J. (1995). Tony Blair: The Moderniser. Michael Joseph Publications. London.