Many consider “New” Labour to be operating under a deceptive title due to the fact that the party has abandoned so many of the principles traditionally associated with Labour policies. The foundation of the long-established socialist principles, which formed the basis of “old” Labour policies, was clause IV of the 1918 Labour constitution. “Common ownership of the means of production, distribution and exchange” was the single socialist slogan which underpinned the ethos of old Labour; equality. Historically the party was broadly in favour of socialism as set out in Clause Four of the original party constitution and advocated socialist policies such as public ownership of key industries, government intervention in the economy, redistribution of wealth, increased rights for workers, the welfare state, publicly-funded healthcare and education. Beginning in the late-1980s under the leadership of Neil Kinnock, and subsequently that of John Smith and Tony Blair however the party moved away from socialist positions, adopting free market policies, leading many observers to describe the Labour Party as Social Democratic or Third Way rather than democratic socialist. Blairism has been viewed as a continuation of traditional social democracy, concealed by better marketing and a “modernized” image.
After 1918 the Party traditionally presented its policies as ‘socialist’, emphasizing the importance of a large state-controlled sector of the economy, relatively high levels of taxation, and comprehensive state-organized welfare provision. In office, the 1945-50 government of Clement Attlee is widely credited with successful radical reform which epitomized much of this progressive agenda. The Attlee Government created a mixed economy through the nationalization of a number of strategic industries and public utilities, as well as Keynesian ideas of economic management. A welfare state was established involving a commitment to full employment, universal social security, free universal state-funded health care and extensive state-funded social housing. Attlee also laid down a foreign and defence policy based on NATO, bilateral cooperation with the United States, and the development of nuclear weapons. Such approaches set the framework for government for the next twenty to thirty years.
The general picture, however, was that Labour governments were haunted by caution and failure. The inter-war minority governments lacked political power and were heavily influenced by the desire to show that they were fit to govern. Critics of the 1945 Attlee Government highlight that actually it should have gone a lot further in nationalization and in introducing greater industrial democracy. Post-war governments commonly were unable to develop state intervention as they were beset by economic crises. Both the 1945-50 and 1966-70 Labour governments were forced to devalue the pound. The Labour governments 1974-9 presided over the shock-waves from the oil crisis following the Arab-Israeli war and domestic industrial relations problems. Inflation rose to over 25 per cent and unemployment to over 1 million. Labour was forced to seek a loan from the International Monetary Fund in 1976, and left government 1979 tarnished by the image of the winter of discontent, 1978-9, when Britain was hit by a wave of strikes. Labour’s common experience was to enter office with big plans and high expectations, only to retreat a few years later overwhelmed by events.
Labour’s new leader, Michael Foot, belonged to the hard left wing of the party. He was not seen as a moderniser. Labour remained committed to a mixed economy and nuclear disarmament. Four top Labour Party figures, left to right: Bill Rodgers, Shirley Williams, Roy Jenkins and David Owen quit the Labour Party in 1981 to form the new centre party; the Social Democratic Party or SDP. Twenty eight other Labour MP’s also joined. The 1983 election was a disaster for Labour. Mrs Thatcher, buoyed up by her victory in the Falklands War of 1982, won a landslide victory with a 143 seat majority (compare this with a 178 majority for Blair in 1997). After the election, Neil Kinnock took over the leadership with a mission to modernise the party and make Labour electable again.He ditched the policy of nuclear disarmament and made it clear that Mrs Thatcher’s anti-strike laws would not be reversed.
The Blair ‘New Labour’ project was shaped by the party’s experience of eighteen frustrating years in opposition, during which time profound changes in the UK were brought about by the Thatcher and Major governments. Labour found itself having to adjust to, even accommodate Thatcherism, following four successive general election defeats. The party was also angered by what it saw as the deleterious effects of Conservative rule, in terms of widening inequality and deepening social division. The process of Labour party modernisation that began with Neil Kinnock in 1983 was driven by electoral imperatives that became stronger with each subsequent defeat.
As revised Clause 4 indicated, Labour had come to accept that the economy should be regulated by the market and not by the state. Blairism therefore built on Thatcherism and did not try to reverse it. This particularly applied in relation to the core elements of economic Thatcherism- privatization, union power, taxation and degulation. Beyond this, the first Blair government granted semi-independence to the Bank of England in the setting of interest rates.
A major distinction between Old Labour and New Labour was the latter’s enthusiasm for reforming the constitution. During Blair’s first government, 1997-2001, a bold series of constitutional reforms were introduced. These reflected a liberal desire to strengthen checks and balances by fragmenting government power and to bolster individual rights. However, many have argued that Labour’s conversion to constitutional liberalism was only partial. For example, plans to consider alternatives to the Westminster voting system were quickly dropped and enthusiasm for constitutional reform declined after 2001.
Blair’s approach to welfare was different from both the Thatcherite emphasis on “standing on your own two feet” and the social-democratic belief in “cradle to grave” support. This was reflected in unprecedented increases in health and education after 1999, the wider use of “targeted” benefits (as opposed to “universal” benefits), an emphasis on the idea of “welfare-to-work” and attempts to reform the public services. Blair’s belief in welfare was based on what has been called “social entrepreneurialism”, the idea that the public services should be more market-orientated and consumer responsive. Public-private partnerships, such as “private finance initiatives (PFIs), were also more widely used to, for example, build schools and hospitals.
A key Blairite belief has been the idea that rights should always be balanced against responsibilities. In this sense, Blairism was influenced communitarianism. The desire to strengthen social duty and moral responsibilities was reflected in the so-called “respect agenda”, under which new public order laws were introduced (introducing ASBOs), the prison population rose steeply and a series of new anti-terrorism laws were passed. This also led to allegations that New Labour had endangered a range of vital civil liberties.
Labour’s historical ‘core vote’ (industrial working class union members) has also been shrinking since 1970’s. The unions helped create the Labour Party. Blair has cast aside tradition in the quest for votes. Traditional ‘blue collar’ union membership has declined since 1970’s, whilst professional ‘white collar’ unions have grown. Labour now needed to attract more funding from rich donors. This has often led to accusations of corruption. Public perception of unions in 1980’s was negative. Union activity seen as militant by many. In 1997 it was revealed that Bernie Ecclestone had loaned Labour ?1m. It was believed that he had done so to ensure that a future Labour government would not ban tobacco sponsorship of Formula 1 racing. In 2002, Indian steel tycoon, Lakshmi Mittal gave Labour ?125,000, it was thought, in return for Tony Blair’s help in buying a Romanian steel company. From 2005-07 a criminal investigation probes whether ?14m of loans to Labour were given by wealthy businessmen in return for peerages (seats in the House of Lords)
Even now there is huge disagreement over where Labour stands ideologically, despite the insistence of both Blair and Brown that the emphasis has always been upon the restoration of traditional Labour values of fairness, justice and social inclusion. There had been an earlier attempt to update Labour’s ideology while in opposition in the 1950s, which had focused very heavily upon the need to bring about greater equality of outcome through the tax and benefit system.
In conclusion, there is little agreement over the extent to, and even the ways in which Labour has changed. ‘New’ Labour could be seen as bringing socialism up to date – the values haven’t changed (social justice, equality of opportunity, community, partnership, rights); instead, its policies acknowledge that society has changed. ‘New’ Labour is thus in the tradition of democratic socialism, but with a much reduced stress on unions, public ownership, state provision, and even redistribution. Alternatively ‘New Labour’ could be seen as a radical transformation, from democratic socialism to social democracy.