Giulia Fabritius Churchill College

Under new labour Britain is witnessing a new era of neo-liberal consensus on economic and social policy. Discuss
Labours 1992 election defeat marked the longest period that Labour had been out of office, since the 1820s. The response was to transform Labour to take account of the shift in society and values, which had become bourgeois and individualistic. Defining consensus as a convergence in policies of both parties, we can detect a market driven, neo-liberal consensus in Britain starting in the mid 1990s, driven especially by changes in policies of the Labour party. I will demonstrate the neoliberal consensus in social policy by looking at changes in education, training and the welfare reform and in economic policy by looking at labour market regulation, economic and industrial policy. It was when Tony Blair became Party leader in 1994, that the thrust of the Labour modernization project was resumed. Blairs main achievement was to redefine the ethos of the Labour Party, taking into account the changing values and social and economic conditions. He rewrote the party constitutions Clause 4, working towards a dynamic economy, increased competition and enterprise of the market. Above all, Blair was concerned to identify Labour with the aspirations of the majority of voters, meaning the middle and prosperous working classes. This is also why Blair moved Labour onto Liberal ground, paying tribute to the founders of the pre-1914 New Liberals, so that by 1995 the Liberal Democrats were cooperating informally with Labour in Parliament, to reach beyond Labours declining core vote. Furthermore New Labour moved gradually to the right, following the Conservative Party, to reach the median voter. New Labour accepted the case for substantially lower marginal rates of income tax, low inflation, and low public spending and borrowing. This is why from 1992 onwards, continuing after 1997 when Labour was in power, Britain experienced a new post-Thatcherite, neo-liberal consensus. The education and training policies have been significant in reflecting the emerging neo-liberal social policy consensus. Firstly New Labour joined the Conservatives in placing an ever-growing emphasis upon the individuals civic duty to avail himself of existing training opportunities, instead of seeing training as a primary responsibility of the state. New Labour also abandoned the proposal of a national training fund based on a 0.5% payroll tax and started placing a greater emphasis on local initiatives for training, rather than a national strategy. In addition New Labour, although still committed to reductions in primary-school class sizes, now only targeted 5 to 7 year olds. New Labour also accepted the principle of selection at eleven, decided no to remove grammar schools unless the majority of parents vote for such an action and stressed the need to assemble private-public partnerships for school maintenance. New Labour also abandoned previous proposals to introduce VAT on school fees and instead allowed grant-maintained schools and city technology colleges to become hybrid foundation schools. Thus, the evidence would suggest a neo-liberal consensus on education and training, an area which had previously been more adversarial than most.

Concerning welfare as another part of social policy, the quasi-markets introduced in health, education and housing seemed likely to continue. In addition New Labour converged its policies to the Conservative ones. By 1997 welfare expenditure was conceived as a drain on the competitive economy that simply could no longer be afforded at the levels of the post-war period, which is why convergence in policy is referred to as a welfare retrenchment consensus. New Labour accepted the Conservatives price-indexation formula and the price-linked public pensions and declared its preference of private pension schemes over public ones. In family policy New Labour replaced child benefit by a means test allowance for 16 to 18 year olds in full time education. With respect to the NHS New Labour remained committed to the reform of inefficient bureaucracy by redeploying 1.5bn pounds to cut waiting lists, but proposed that all local health services will manage their own accounts instead of district health authorities (DHAs). Finally New Labour advocated the replacement of blanket benefits with career development plans, proposing the introduction of welfare-to-work schemes. This meant that 18 to 25 year olds claiming benefits for 6 months would loose 40% of their benefit of they refused to accept a welfare-workfare option of the state. Clearly neo-liberal retrenchment consensus prevailed under New Labour, as it adopted market driven, neo-liberal policies like the Conservatives in the area of social policy. Arguably the most significant modifications to Labours proposals since 1992 have come in the area of economic policy, including industrial policy and the labour market. The labour market, including trade union reform and employment policy, experienced considerable convergence between the Conservatives and New Labour, which supports the idea of consensus on economic policy. The Labour election manifesto of 1992 Its time to get Britain working again already indicated a trade union reform and by 1997 New Labour proclaimed that there will be no return to flying pickets, secondary action, strikes with no ballets or trade union law of the 1970s. By 1997 New Labour based trade union recognition on a majority workplace vote, saw secondary picketing as illegal and accepted individual rights to be independent of trade union membership. New Labour also proposed to outlaw strike action in essential public areas in favour of binding arbitration and abolished the right to trade union representation concerning the employees charter. Clearly there was striking policy convergence between the New Labour and the Conservatives, underlining a neo-liberal consensus in the labour market. Concerning industrial policy New Labour proposed to expand the role of the Treasury subordinating the Department of Trade and Industry (DTI). In addition New Labour withdrew the proposal for a National Investment Bank, providing investment capital, and for Regional Investment Banks. Consensus is also reflected in New Labours commitments on privatization and the public sector. Whereas Labours priority had been to renationalize all essential services, by 1997 New Labour could only commit to increase the public accountability of such services within the private sector and a windfall tax on the profits of privatized utilities. Clearly New Labour converged with the Conservatives, representing a neo-liberal consensus in industrial policy. Looking at macro-economic policy both New Labour and Conservatives pursued the control of inflation and macro-economic stability using strict monetary and fiscal discipline. Regarding taxation New Labour targeted a bottom rate of taxation of 15pence in the pound, instead of an increase to 50pence proposed in 1994, and did not put an end to the national insurance ceiling, as proposed in 1994. In 1997

Gordon Brown announced that Labour would not increase the top rate of tax and accepted the Conservative plans for public spending for the next two years. Most importantly New Labour ceded the responsibility of setting interest rates to the Bank of England. We see that the policy changes made by New Labour reaffirm a neoliberal consensus in economic and industrial policy. Concluding I agree that Britain experienced an era of neo-liberal consensus under New Labour in social and economic policy. In broad terms both major parties accepted the growing role of the state as contractor, regulator and enabler. Labour has undergone a comprehensive review in policy in almost all areas, as a response to shifts in society and values, trying to reach the median voter. Arguably there is no alternative to neo-liberalism in an era of heightened capital mobility and financial liberalization, and Labour must accommodate the perceived interest of labour-market flexibility, low taxation, privatization and welfare retrenchment.