claim something for nothing in the world of the socially excluded, where
the focus should be on the restoration of the paid-work ethic.
From the start of the project, employment relations and labour market
strategy was always regarded inside New Labour circles as central to
Blair’s strong commitment to the creation of a modern open market
economy based on individual freedom and choice rather than on any
restoration of collective institutions, the pursuit of social justice or even
the promotion of the public interest.
It is true previous Labour governments had always accepted the existence of a mixed market economy despite their commitment to the state
ownership of specific industries and vague notions of socialist centralised
planning. Labour Prime Ministers before Blair were often high-minded
pragmatists, even if too often their apparent constructive interest in
ensuring private industry thrived had always proved cautious, timid and
defensive. Such an apologetic approach was now going to change fundamentally. ‘I want a country in which people get on, make a success of their
lives. I have no time for the politics of envy’, wrote Blair in his 1997
general election manifesto. He wanted to help to equip Britain so that it
could prosper ‘in a global economy of technological change’. The 1997
programme spoke enthusiastically of ‘healthy profits’ as ‘an essential
motor for a dynamic market economy’.
But Blair also appeared at that time to be concerned to use the state to
improve the quality of the labour supply. Not for the first time in modern
British politics, New Labour promised that it would tackle the country’s
skills problems by transforming its inadequate industrial training system
to meet the employment needs of the new economy. ‘We need to win on
higher quality, skills, innovation and reliability’, argued the 1997 election
manifesto. It spoke of creating individual learning accounts to encourage
people to improve their employability by upgrading their qualifications,
and the creation of a virtual University of Industry which it was promised
would bring ‘new opportunities to adults seeking to develop their potential’. Neither of those proposals proved to be effective in practice and
they were quietly buried. Similar promises of action on skills and training
had also been included in Labour’s 1992 programme. Here again, New
Labour did not signal as much of a radical break with the recent past as its
leading enthusiasts liked to suggest. However, the tone was now certainly
different. Tackling the country’s historic failure in training and skills
seemed to have become an integral part in the much more ambitious
grand narrative of Blair’s modernisation strategy to win the hearts and
minds of southern England, where his party had failed to make much
electoral headway for eighteen years, by appeals to the affluent and the
aspirational who had formed the political base of Thatcherism.
But of course 1997 was not really to be New Labour’s Year Zero. Blair
inherited the most promising labour market prospects ever enjoyed by
any Labour Prime Minister in British history. The two minority Labour
administrations under Ramsay MacDonald between the wars had fought
with little success to conquer mass unemployment in the face of an
orthodox Treasury belief in the sanctity of the gold standard, balanced
budgets, free trade and deflation. The second government ended up in
August 1931 divided over cutting the levels of state benefit to the unemployed. In 1945 Clement Attlee’s Labour government spent six years
heroically trying to build a New Jerusalem out of the ruins of the Second
World War, in a Britain that was virtually bankrupt, dependent on
massive American aid for its recovery, and faced with a crippling arms bill
after the onset of the Cold War. In October 1964 incoming Labour Prime
Minister Harold Wilson inherited a huge balance-of-payments deficit
and a currency that was dangerously vulnerable to international speculation. Ten years later he returned to office to lead a minority Labour government that inherited the worst economic conditions of the post-war
period, with a real fear of hyperinflation and rising mass unemployment,
and a trade union movement aware of its negative power to obstruct
change but unwilling to shoulder national responsibilities and exercise
collective restraint both in its own and the national interest.
By contrast, in May 1997 Blair and Brown were the fortunate beneficiaries of a British economic revival that had first begun under the
,
Conservatives in the autumn of 1992. ‘The incoming government will
inherit the most benevolent set of economic statistics since before the
First World War’, claimed the outgoing Prime Minister John Major, as he
left 10 Downing Street for the last time.4 Registered unemployment had
begun to fall from the early months of 1993, mainly due to the country’s
abrupt departure from the European Exchange Rate Mechanism in the
previous autumn. It continued to do so successively month after month
over the next eight years. The pace of the decline in unemployment was
actually faster during Major’s last three years as Prime Minister – from
9.3% in 1994 to 6.8% in 1997. Under Blair the unemployment figure
dropped from 6.1% in 1998 to 4.7% by 2004, before rising slightly. There
was also evidence in the later Major years of an improvement in the
perhaps more important indicator for the health of the labour market –
the employment rate. Under Blair that figure never returned to the high
rate achieved by Edward Heath’s government in 1973, even if he declared
the country’s employment rate target should be 80% by 2020, much
more ambitious than the one of 75% set by the European Union Lisbon
Summit in 2000.
In addition, the development of a more activist labour market strategy
was already proving a success under Major well before Blair’s arrival in
office. The introduction of the Job Seeker’s Allowance to replace unemployment benefit, with its greater emphasis on conditionality so that the
unemployed were to be encouraged to find work through a mixture of
incentives and sanctions, signalled a more focused approach. The technological modernisation of Job Centres, carried through in 1996, laid the
foundations that were to make the implementation of Labour’s New Deal
programme after January 1998 more effective than it might otherwise
have been. There appeared to be much more continuity than change in
labour market strategy, whatever the New Labour spin machine might
argue.
But by May 1997 trade union leaders and others on the left had convinced themselves that once New Labour was in government it would
move in a more progressive direction. Certainly at first Blair seemed prepared publicly to lean, at least tentatively, towards the European social
market model. Initially both he and his Chancellor were keen to take
Britain into a much closer relationship with Brussels and return the
14 For John Major see Robert Taylor, John Major (London: Haus Publish
ing, 2006), as well as
Major’s own memoirs, John Major: The Autobiography (London: HarperCollins, 1999),
and Anthony Seldon, Major, A Political Life (London: HarperCollins, 1997).
country to the mainstream of European democratic politics. The trade
unions through the TUC – who had changed their own official attitudes
to Europe six times in twenty years – had come to recognise the benefits
to them of the continental approach to employment affairs after a stirring
speech by EU president Jacques Delors to the 1988 Congress in support of
a workers’ Europe.
In the supposed competitive war between the varieties of capitalism,
Blair looked to establish a hybrid version of the social market economy
through a judicious mixture of rights and responsibilities for trade
unions and employees underpinned by a commitment to employment
opportunities for all. The Blair record in government belied much of such
wishful thinking. The trade unions deceived themselves if they had
thought otherwise. Increasingly both Blair and Brown were to draw far
more of their inspiration for the reform of Britain’s labour markets and
workplaces from the American neo-liberal model of deregulation, open
trade, privatisation and incentives for corporate capitalism. But this
was only part of the story. A potentially substantial range of employment
regulations, designed to provide employees with opportunities to claim
minimum legal rights, was passed into law during the Blair years.
Moreover, because it was framed with care to alleviate the anxieties of
business, the resulting regulation stood a much better chance that it
would take root and help to establish a new balance between capital and
labour to their mutual advantage. It is not surprising that the emerging
hybrid model reflected conflicting pressures, and as a result it encouraged
ambiguity, confusion and scepticism.
But by 2007, beneath the surface of an often deceptive culture of material contentment, workplace Britain had become much more stressful
and polarised. While most employees in work enjoyed real increases in
their earnings, the persistent long working hours culture brought with it
high rates of absenteeism and ill-health that was reflected in the rise in
invalidity benefits. While surveys found fewer employees were worried
about being made redundant, and there was lower labour turnover and
greater permanency of job tenure, more work intensification seemed
widespread. Strikes may have been less frequent than at any time for more
than twenty years, but this did not mean employees were more satisfied.
The Prime Minister’s unsettling adoration of corporate wealth seemed
at odds with any recognisable moral values and principles once associated
with the Labour movement. Both Blair and Brown were unwilling to challenge the excesses of boardroom sleaze, greed and corporate corruption.
Much more government concern was focused on how to deal with the
,
most socially vulnerable in the labour market – single mothers, the disabled, older male manual workers, and those millions of people who were
without any recognisable skills and who suffered from low levels of literacy and numeracy. Some observers were convinced that the New Labour
project was often little more than a ruthless continuation of Thatcherism
and did not herald a strategic retreat from the ideological certitudes of the
1980s, especially in its response to employment relations and labour
markets. Such criticism was an exaggeration. During his years as Prime
Minister Blair sought to bring about a recasting of the often uneasy relationship that existed between capital and labour. It may not have looked
particularly social democratic by European standards, but neither was it
simply a return to the master–servant relationships of nineteenthcentury sweatshop Britain. Out of the ruins of the once familiar voluntary
system of industrial relations, Blair was encouraging the formation of a
new hybrid to meet the challenges posed by an increasingly globalised
economy. Other European governments were both attracted and repelled
by the outcome. They liked to see falling unemployment and admired the
labour market strategy that Blair and Brown wrongly claimed they had
introduced to bring this about. But at the same time they disliked the
social disintegration and moral disorder that was also widespread with
rising crime, drug addiction, alcoholism and poverty that seemed to be an
integral but dark side of Britain’s hybrid model.
Goodbye to collectivism – hello to individualism
One of Margaret Thatcher’s lasting achievements as Prime Minister was
to weaken decisively trade union power and influence. She did this
through her ‘step by step’ strategy of restrictive legislation, firm resistance
to public sector trade union militancy exemplified by the crushing of the
miners in the 1984–5 national coal strike, and a willingness to tolerate
levels of unemployment not seen in Britain since the inter-war years that
had undermined trade union bargaining strengths. The results also owed
much to her readiness to champion employee individualism, as she
created a more enterprising economy based on low levels of personal taxation, deregulation and privatisation.
The authors of an authoritative study of the 1980–8 period of industrial relations explained what happened:
The Thatcher government’s aim – highly controversial at the time – was to
weaken the power of the trade unions, deregulate the labour market and
dismantle many of the tripartite institutions of corporatism in which trade
unions played a major part. Subduing inflation was to be given priority
over maintaining low unemployment. Reducing the role of government
and levels of public expenditure were policy goals. The free play of market
forces was to replace the search for consensus between government and the
‘two sides’ of industry.5
By 1997 Blair had accepted most of those changes. Outwardly he
promised as Prime Minister that he would provide the trade unions with
a minimal legal framework inside which opportunities would exist for
them to try and reverse their steep decline in membership and collective
bargaining coverage. He also indicated that he wanted the trade unions to
modernise themselves and become different kinds of voluntary collective
bodies through the adoption of new agendas that emphasised partnership with employers, individual empowerment, learning and skills.
Above all, he favoured a decisive reduction in the political role that the
trade unions played inside the Labour Party. What he sought was a cultural revolution in their ethos and ideology. In his first speech as party
leader to the 1994 TUC Conference Blair told the unions: ‘We will be the
government and we will govern for the whole nation not any vested interest in it.’ And he meant what he said.6
During his few years in active Labour politics as a young man Blair
came to despise much trade union behaviour, although as a barrister specialis
ing in employment law, he was at first broadly sympathetic. In articles in the New Statesman published in the early 1980s he even defended
the closed shop, supported secondary picketing and backed solidarity
strikes. This was perhaps the price any ambitious Labour politician like
him was forced to pay in order to further their political career at a time
when the trade unions were dominant in the party. But Blair was always
untouched by the sentimentalities associated with the Labour movement.
He even came to question whether it had been sensible for the trade
unions to create a party which was overwhelmingly rooted in the exclusive interests of organised manual workers.7 Moreover, Blair was opposed
to the politics of class, in which he feared too many trade unions were
trapped in a historic repository of resentments and antagonisms. To him
too many of them were the relics of a bygone age of cloth caps, mills
and pits, and exponents of an unattractive male macho culture that he
15 Neil Millward, Alex Bryson and John Firth, All Change at Work? 1980–1998 (London:
Routledge, 2000).
6 TUC, 2004 Report (London: TUC, 2004), p. 54.
17 Tony Blair, ‘New Britain; My Vision of a Young Country’, New Statesman pamphlet, 1996,
p. 25.
,
believed was irrelevant to the new world of work with its growth in the
importance of women employees, white-collar and private service occupations, and small private firms. His highly personalised picture of trade
unions could often seem lurid, simplistic and exaggerated. It reflected a
right-wing tabloid newspaper version of complex realities. Most unions
were modernising themselves in order to survive and prosper throughout
his years as Prime Minister. Many came to resent his populist and ignorant attitudes. But he was always doubtful about either their willingness
or capacity to reform themselves as organisations in structure and beliefs.
Such sceptical feelings came to shape his general attitude to those who
were still Labour’s principal pay-masters during his time in Downing
Street.
Moreover, by 1997 Blair recognised that the trade unions had grown
far weaker than at any time since the inter-war Depression. They were
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