BLAIR’S BRITAIN, 1997–2007
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populated the Square Mile and Canary Wharf in London’s former dockland. Under a lightly regulatory regime, less onerous for capitalists than
in the United States, Britain’s capital took on an iconic status as the
world’s super-rich flocked to do business within its boundaries and
pursue ostentatious lifestyles with a speculative explosion in property
prices and conspicuous consumption. The relentless tidal wave of corporate mergers and acquisitions, the growth of private equity companies,
hedge funds and venture capital firms were startling features of the Blair
years. So was the upsurge in boardroom remuneration with mega pay
rises and benefits, generous severance packages and lucrative share
options, as London came to resemble the world of greed and power portrayed so vividly by Tom Wolfe in his Bonfire of the Vanities about New
York in the 1990s. The inflow of Russian oligarchs who did so well out of
the collapse of communism, Arab potentates and the assorted winners of
international capitalism created what amounted to a new plutocratic
class in Blair’s Britain. The annual Sunday Times survey of the wealthy,
argued that the 1997–2007 period was a golden age for the rich, rarely
seen in modern British history. It estimated that when Blair came to
power the wealth of the country’s richest thousand people stood at £98.99
billion, while ten years later their wealth had climbed by an extraordinary
263% to £359,943 billion.
The Prime Minister never criticised those new ‘masters of the universe’
for their excesses, and the widening gap of wealth and income between
themselves and the rest of the workforce that resulted. On the contrary,
he himself sought their adulation and some were well rewarded with
honours, perks and status. A hundred years earlier the Labour Party that
Blair led had been created as an idealistic alliance of socialist societies and
trade unions to challenge and seek to replace the global capitalism of that
time with a socialist commonwealth based on the principles of solidarity
and equality and the common ownership of the means of production,
distribution and exchange.
Between 1997 and 2007 New Labour embraced the neo-liberal capitalist order, not in a defensively apologetic way but with a real sense of
pride and swagger. Blair’s concept of the state was for it to act as a handmaiden in the establishment of a new economic and social order, reminiscent of the one that flourished towards the end of the nineteenth
century.
‘The character of this new age is one of individual empowerment’,
Blair insisted in his 2007 Manchester lecture. It meant people at work
now wanted both the state and society to ‘support’ and not ‘control’
them: ‘They want to be in control.’ In the Prime Minister’s words, ‘New
Labour meant a release from the old fashioned view of the labour
market.’ ‘Job protection through regulation was becoming out-dated’, he
added. The challenge facing government was now ‘to make employees
powerful, not in conflict with their employer but in terms of their marketability in the modern workforce’. The state’s primary function was ‘to
equip the employee to survive, prosper and develop in markets’. The Blair
approach to this new world of paid work could be summed up in two
words – ‘employee empowerment’.
In his Manchester lecture the Prime Minister insisted that his New
Labour government – from its first day in office in May 1997 – had always
sought not merely to accommodate but to embrace the underlying forces
of change, fuelled by increasingly dynamic global markets. Its aim was to
adapt and assist in the development of a knowledge economy in Britain
through encouraging the wide use of information technology by employees and businesses. New Labour recognised the old age of manufacturing
for the UK was drawing to a close, as a dramatic transformation was
taking place in the world economy through the global integration of
goods and services in increasingly open markets. During his ten years in
10 Downing Street Blair proclaimed that his intention was to help to
govern by moving with the current of such turbulent trends so that
Britain could become one of the world’s leading countries in the new
international economic order, open to foreign investment, deregulated
and flexible, and committed to private wealth creation. By 2007 the UK
,
had grown comparable in its attractions for foreign capital, according to
the International Monetary Fund, to tax havens such as the Seychelles
and the Cayman Islands.
Blair argued in his Manchester lecture that what he regarded as New
Labour’s radically distinctive approach to labour markets and employment relations had been clearly defined from his first days as party leader
in 1994, and it reflected his hard-nosed recognition of contemporary
realities. There was much truth in his assertion. Nobody could deny that
the Blair attitude to capital and labour represented a definitive break with
his party’s ideology, ethos and traditions. In a special general election
manifesto produced in April 1997 and directed at the business community, Blair set out how he intended to work closely with capital once in
government. In that crucial document he made a strenuous effort both to
convince as well as reassure the business community that his New Labour
project, which had been jointly designed by himself and his Chancellorto-be Gordon Brown, would not involve any return to an Old Labourstyle policy agenda like that of the 1970s. It was not to concern itself with
the restoration of lost trade union powers and influence. Nor was it even
prepared to re-establish a strong and exclusively bilateral relationship
between the state and the trade unions in the management of the political
economy. Instead Blair/Brown wanted to stimulate the creation of a
friendly, informal and strategic alliance with business that would aim to
help boost corporate competitiveness, stimulate company investment
strategies and focus on research, innovation and creativity. Blair and
Brown told the business community in 1997 that a New Labour government would not make any attempt to second-guess the way they ran their
affairs. This did not mean the state would remove itself entirely from the
management of the political economy, but now its functions were to liberate private companies from excessive regulation and help to create the
kind of competitive framework that would help them to flourish in the
global economy. ‘It is business not government that creates lasting prosperity’, Brown’s preface to the 1997 business manifesto declared. ‘The job
of government is not to tell people how to run their businesses but to do
what it can to create the conditions in which business can thrive and
opportunities for all can flourish.’2 This was a New Labour language of
‘positive engagement’ with employers which had not been heard quite so
bluntly before in a Labour Party document. It reflected a distinctively
12 Draft article by John Edmonds, ‘Positioning Labour Closer to the Employers’, for
Historical Studies i
n Industrial Relations, November 2006.
different approach by the Labour Party to the state’s future relations with
capital and labour that was upheld consistently during Blair’s years in
Downing Street.
But if New Labour’s business mission for the political economy was
already apparent from the project’s very inception around Blair’s kitchen
table in his Islington home to those who chose to look, this was not
widely appreciated or even recognised by many at the time, especially
inside the trade unions. When elected Labour leader in July 1994, Blair
was not entirely free to draw up the kind of uninhibited pro-business
labour market and employment relations strategy from scratch that he
would have liked to do. He felt himself constrained then by the existence
of what seemed to be formidable political barriers that stood in his path.
He was compelled to accept much of the public policy agenda that
had been bequeathed to him by his Labour predecessors Neil Kinnock
and John Smith, even if he was often to do so with some reluctance.
Later, as Prime Minister, he came to regret his earlier caution, although
his successful abolition of Labour’s Clause 4 from its 1918 constitution
early in his leadership in 1995 had removed whatever lingering ideological commitment his party retained to the public ownership of private
companies.
Most of the substantial labour market and employment relations
commitments that Blair inherited had been drawn up by Labour in close
collective liaison with the party’s trade union allies. The promise to introduce a statutory national minimum wage to eradicate poverty pay was
already contained in Labour’s 1992 general election manifesto, even if the
precise administrative details of how this was to be achieved had not yet
been worked out. Labour had also been committed since 1992 to end the
country’s opt-out from the Social Chapter of the European Union’s
Maastricht Treaty, secured by Conservative Prime Minister John Major.
This move might suggest that Britain under Blair was willing to embrace
a range of new legally enforceable workplace rights that were commonplace in the rest of continental Europe. It is true New Labour’s 1997 business manifesto did its best to minimise what the impact of the ending of
the opt-out might mean to private companies. As it explained,
We understand business concerns that in the future costly legislation could
be imposed on Britain through the social chapter. But we have made it clear
that in government we will not agree to extend qualified majority voting to
social security or co-determination in the boardroom. We will keep
matters concerning pay and the right to strike outside the scope of the
social chapter.
,
In addition, Blair promised employers privately that he would make sure
that their anxieties over threats to their competitiveness and to employability would receive the highest priority before any further steps were
taken to introduce more EU social legislation.
Labour’s commitment in 1997 to introduce legislation to make it easier
for trade unions to negotiate formal recognition agreements from companies for collective bargaining purposes had been made by Blair’s predecessor John Smith, but even in 1992 the Labour Party manifesto had
promised to promote the right to union membership and representation,
as well as new worker rights for consultation and information from companies. Blair swallowed all of this, but he made it clear to employers that
such legislation was not going to be designed to advance trade union
power in the name of social justice. Instead, it would be introduced in a
cautious manner so that it would neither disrupt nor harm their business
activities. Blair was to argue that such reforms could only be justified in
what they achieved if they helped private firms to grow. Whatever fairness
for workers might result from Labour’s proposals, they were to be implemented in order to meet the needs of private capital and were not designed
primarily to bridge any representation gap or strengthen workers’ collective voice for its own sake.
Moreover Blair made it clear before the 1997 general election that a
Labour government under his leadership would not give back to the trade
unions all the so-called freedoms and rights they claimed to have enjoyed
before the passage of eight separate pieces of legislation since 1980 under
Margaret Thatcher and John Major, which had weakened their collective
powers of bargaining and marginalised their influence on government.
Perhaps even more importantly, Blair rejected any suggestion that New
Labour would establish a close working arrangement with the Trades
Union Congress, such as the Social Contract which had so dominated
government–trade union relations during the 1970s. On the contrary, he
told trade union leaders on many occasions, in public as well as in private,
that he was determined to eradicate what he regarded as the destructive
and debilitating culture of the Old Labour movement where trade unions
used their financing of the party and their block votes at the annual conference to dictate what Labour should carry out when in government.
Under his leadership the ‘contentious’ alliance of party and trade unions
was no longer even going to pretend to be a formal partnership of equals.
Union leaders were to be treated with politeness: at best they would enjoy
a minimum respect and some informal access to Downing Street, as well
as relevant government departments. But this did not mean they would
be able to negotiate any special bilateral deals to their sectionalist advantage at the expense of capital. The TUC’s modernising general secretary
John Monks was later famously to liken the trade union presence in New
Labour circles to that of ‘embarrassing elderly relatives at a family
reunion’. There was to be no question of creating new tripartite institutions – as was done in the 1960s and 1970s – to further a public policy
agenda that would be concerned to offer the trade unions any form of comanagement of the political economy. Britain between 1997 and 2007
was to remain the only country in the European Union that deliberately
rejected the use of institutional partnerships or social dialogues between
the state, capital and labour at national, regional or company level. Blair
regarded such tripartite arrangements as corporatist, inefficient and one
of the primary reasons why continental Europe’s variety of social market
models had grown so sclerotic in the new age of globalisation and technological change.
Moreover, in his introduction to the 1997 Labour election manifesto
Blair also emphasised that if he was elected he would not repeal the antitrade union laws of the Thatcher era: ‘We make it clear that there will be
no return to flying pickets, secondary action, strikes with no ballots or the
trade union laws of the 1970s’.3 Instead a framework of basic minimum
rights for the individual employee in the workplace was promised in
order to establish ‘partnership not conflict between emp
loyers and
employees’. It is true that Blair’s determination not to bow the knee to
trade union demands and pressures for any return to the kind of industrial relations arrangements of the 1970s was not as drastic a rupture
from the views of his immediate predecessors as he might like to have
implied. In 1992 Neil Kinnock had also emphasised he would not repeal
Margaret Thatcher’s anti-union laws.
A broad continuity of outlook with past Labour commitments also
seemed apparent in Blair’s initial approach to the development of labour
market strategy. New Labour came into government in May 1997 with a
precise and clear programme of action to deal with unemployment under
the stirring slogan ‘Employment opportunities for all’. It was called
the New Deal – with an unacknowledged tribute to President Franklin
D. Roosevelt’s efforts to end the Great Depression during the 1930s in the
United States. As Lord Richard Layard of the London School of
Economics, and one of its main architects, recalled, the conception of this
pro-active approach to Britain’s unemployment problem won early
3 Labour Party General Election Manifestos 1900–1997 (London: Politco’s, 2000), p. 347.
,
enthusiasm from Blair, even if the details were worked out and implemented by Brown and his Treasury team. The concept of rights and
responsibilities, of putting an end to the dependency culture of the
unemployed and socially excluded, appealed instinctively to Blair’s
moralistic conception of what was right and wrong. But the focus on
policies that would energise those who wanted to work through options
of training, job subsidies, or joining environmental task forces could be
traced in Labour policy thinking back to the 1980s and perhaps even
earlier.
What was distinctively New Labour in labour market policy, however,
was that Blair brought a harsher, more moralising edge to what needed
to be done. This signalled a genuine break with past practice which
amounted to much more than the rhetoric of tough language. Blair was
always keen to identify himself with the purposes of the New Deal, which
reflected his own instinctive conviction that nobody should be able to