(London: TUC, 2004), and P. Davies and M. Freeland, Towards a Flexible Labour
Market (Oxford: Oxford University Press, 2007).
and paternity leave owed much to pressure from his wife Cherie.
Cridland admitted that the dramatic growth in worker rights was to cause
his own organisation some difficulties. Employers found it was relatively
easy to remain united in resistance to familiar trade union collectivist
demands, and to press Blair with considerable success in ensuring
employer interests were looked after through the dilution, delay or even
abandonment of much of what trade unions wanted. Downing Street was
always willing to listen and act over business complaints about the trade
union agenda. But such an approach was far less possible when it came to
resistance to the creation of individual employee rights, especially when
Blair argued that all he was doing was trying to help promote the emergence of civilised workplaces that would help to improve productivity
and corporate performance through a strategy of economic efficiency
and social justice, but framed on business terms.
For their part, many trade unions were often either hostile or ambivalent in their reaction to the individual rights agenda. Ideally they would
have preferred measures that were limited only to trade union members.
Now all employees would be covered by a framework of individual rights.
The real beneficiaries of Blair’s individualistic workplace agenda
were women, either in employment or seeking a paid job. Many of the
minimum rights sought to improve their work/life balance in the face of
increasing workplace stress and the feminisation of the labour force. By
continental European standards the new rights may have looked limited
and inadequate. But at least they seemed to recognise at last the persistence of workplace gender inequalities made worse by the growth of the
female labour force and the inadequacy of earlier equal pay and gender
discrimination laws, as well as the insatiable demands of companies that
were unmet by the traditional nine-to-five working time arrangements
and the need for part-time employees. The new emphasis on employment flexibility ensured there would be a much greater focus on women
and their needs at work.
Weaknesses of the hybrid model
Blair’s determination to introduce labour market and employment relations reforms in order to help capital maximise its potential was not
entirely consistent. Despite his well-meaning rhetoric as Prime Minister,
he surprisingly failed to devote much of his time to resolving the
country’s familiar intractable long-term supply-side problems, whose
tangled roots lay deep in its economic history. The most serious lack of
significant progress could be seen in failing to raise the quality of the
workforce at the lower end of the labour market. A succession of authoritative international reports between 2000 and 2007 revealed the extent of
the UK’s relatively poor skills performance during the Blair years. Among
advanced industrialised nations the country suffered from a particularly
chronic lack of workers equipped with recognisable and adaptable intermediate qualifications. In 2006 it was still estimated that as many as a
third of all adults of working age lacked any recognised skills at all, or
were at best low-skilled. This was a much higher proportion than could
be found in competitor countries such as France and Germany, which
were often the object of the Prime Minister’s scathing criticism for their
supposed labour market deficiencies. The Blair record on skills and training was depressingly similar to that of his predecessors. The apparent lack
of any urgent official concern for the plight of the country’s millions of
poorly qualified or unqualified workers remained a puzzle, especially as
Blair appeared to recognise that the country’s long-term prosperity lay
through the creation of a more highly skilled, highly motivated labour
force. A review commissioned by the government from Lord Leitch, and
published at the end of 2006, urgently emphasised that the government
needed to give a much greater priority to carrying through radical
reforms if it wanted the UK to compete successfully in the global
economy. It seemed New Labour’s creation of the Learning and Skills
Councils, as well as the Regional Development Agencies, had made little
,
significant impact on the problem. The Train to Gain programme, the
newly formed Centres for Vocational Excellence and government-funded
employer training schemes were further attempts to deal with skill weaknesses. But by the end of his premiership this was an area where Blair
could not point to much tangible advance. Hopes were pinned on the
restoration of apprenticeships as well as a national training programme
for employers to be launched in 2007, under which the government
offered to subsidise courses for their existing employees to be up-skilled.
But this seemed too little, too late. Leitch argued that despite the substantial promise of more investment and reform the UK could only expect to
run to stand still by 2020 in the skills of its labour force.
Many of Blair’s own advisers admitted the skills and training issue did
not receive the government attention that it deserved. Lord Layard
suggested it was Blair’s ‘greatest failure’ in his labour market strategy.10 But
as an official report pointed out in 2004, ‘Unless the UK has a requisite
stock of skills, including entrepreneurship, innovation, managerial
effectiveness and technical capability then the goal of achieving a high
value added high productivity economy will remain elusive. The extent of
the skills gap far exceeds recruitment problems.’11 The long tail of poorly
motivated and under-qualified workers, as well as inefficient and poorly
managed private sector companies, continued to place a serious questionmark over the country’s longer-term ability to secure a competitive
advantage in globalising markets. Moreover the skills failure was closely
related to other familiar weaknesses. As the 2004 government skills audit
pointed out, ‘Skills strategies go hand in hand with policies and strategies
to increase levels of capital investment within companies, develop new
products and processes and capture new markets.’
International comparisons did not suggest private companies were
allocating sufficient of their financial resources to research and development investment. ‘In recent years the aggregate amount of spending on
research and development in the UK has lagged behind that of our international competitors’, complained a 2004 study from the government’s
own Office of National Statistics. It spoke of a ‘comparative lack of entrepreneurial spirit’ among Britain’s employers compared with the United
States, and the poor quality of much of its management.12 In 1999 the
United States invested 25% more capital per hour worked than in this
10 Author’s interview with Lord Richard Layard, April 2007.
11 Department of Education and Skills, Skills Audit (London: TSO, 2004).
12 Craig Lindsay, Labour Productivity, Labour Mark
et Trends (London: Office of National
Statistics, November 2004), p. 47.
country, while France invested 60% more and Germany 32% more. In
2005 the pre-budget statement revealed that British business invested
1.24% of gross domestic product in research and development but this
compared with 1.37% in France, 1.73% in Germany and 1.87% in the
United States. The Treasury was compelled to admit that Britain ‘was less
effective at realising the commercial potential of research and business
expenditure and its current aggregate level was below the average of
OECD countries’. Nor was the UK impressive in its growth in innovation.
In 2000 innovation companies in the country represented 62% of
turnover and 54% of total employment. ‘In most other European
economies the shares were significantly higher’, wrote Ian Brinkley at the
Work Foundation.13
The country was rescued from such inadequacy with the dramatic
growth of inward migration by mainly young workers with adaptable
skills and drive from central and eastern Europe after their countries
entered the European Union as full members in January 2004. In addition, British employers in both the public and private sectors were compelled to travel through the developing world in search of people who
were willing to come and work in Britain in the health service and other
professions. Cherry-picking expeditions at the expense of the poorest in
the world were able to cover over some of the inadequacies of the
country’s indigenous labour force.
But Britain’s continuing supply-side problems helped to explain why it
still achieved relatively low levels of comparative labour productivity
during the Blair years. In an April 2005 assessment the National Institute
for Economic and Social Research (NIESR) concluded that there had
been ‘no obvious improvement’ in UK productivity performance since
1997. It is true that the country was no longer falling behind France and
other competitor European nations in the way it had done for the forty
years after the end of the Second World War, but the NIESR noted that it
was ‘not obviously closing the gap with France and we have stopped
closing the gap with the United States’.14 Official figures for 2005 showed
little productivity improvement either. Measured by gross domestic
product per worker, the UK figure was still 26% below that of the United
States and 10% less than France. The picture was little better when productivity performance was measured by gross domestic product per hour
13 Ian Brinkley, Defining the Information Economy (London: Work Foundation, July 2006).
14 National Institute for Economic and Social Research, in National Institute Economic
Review, no. 192, April 2005.
,
worked. Germany, France and the United States continued to be ahead of
the UK in that measurement.15
While the UK appeared to develop strongly as an information
economy under Blair, it did not look so impressive by international comparison. In 1994 the UK invested 3.5% of its gross domestic product in
knowledge activities, but by 2002 this had risen to 3.7%, only a modest
0.2% improvement over the period. The Organisation for Economic Cooperation and Development did not even classify the country as a highinvestment economy. That term was used to cover Sweden, the United
States, Finland, South Korea, Denmark, Japan and Canada.
A further profound weakness that persisted in the UK labour market
under Blair was the existence of intractable social inequalities. The
country’s workforce came to represent an hourglass, with a small number
of highly skilled winners at the top and a huge proportion at the bottom.
A devastating report, The Cost of Exclusion, published by the LSE’s Centre
for Economic Performance for the Prince’s Trust in April 2007, estimated
that as many as 20% of the young aged sixteen to twenty-four in 2005 –
nearly a million – were not in education, training or employment, with a
calculated loss to the economy of £10 million a day. It reported that this
finding showed there had been ‘little change since the mid 1990s’ when
Blair became Prime Minister.16 Clearly the UK had still a long way to go
before it could claim success in the reconciliation of economic efficiency
with social justice in a modern economy.
Back to the future? The hybrid model in perspective
Under Blair a new ill-defined hybrid market model began to emerge in
the UK which was exemplified in his policies towards capital and labour.
Whether the resulting mixed achievement – admired by right-wing
European politicians such as French President Nicolas Sarkozy, Italy’s
Silvio Berlusconi and Spain’s José Maria Aznar – could be copied by other
countries as an effective response to globalisation elsewhere was highly
debatable. Certainly evidence of any countervailing influence in the creation of an alternative political economy model was hard to find in the
UK by 2007.
A century earlier, in what came to be known as the progressive era in
the years leading up to the outbreak of the First World War in August
15 Office of National Statistics, press release, 21 February 2007.
16 LSE Centre for Economic Performance , The Cost of Exclusion (London: LSE, April 2007).
1914, the British Labour movement – among others – had sought to
create a new and better world for all, but especially the manual working
class. This had involved demanding the creation of regulated labour
markets through the actions of an increasingly paternalistic state to
protect the poor, old and vulnerable, and to eliminate the curses of
poverty and unemployment. The social policy agenda was coupled with
the emergence of trade unions which aimed to improve the material
needs of their members through the voluntarist system of industrial relations based on autonomous trade union bargaining with employers, and
the negotiation of non-legally binding collective agreements and joint
consultation. Now it seemed that the New Labour project under
Blair/Brown had made Britain safe for the triumph of global capitalism
through rebalancing the relations between capital and labour. This was
quite an achievement. Whether the results would turn out to prove stable,
permanent or morally defensible was, however, quite another matter.
Blair and Brown had moved Britain dramatically with the grain of market
forces as they consolidated and advanced Margaret Thatcher’s inheritance. They did not seriously seek to challenge any vested corporate interests outside the trade unions. Under them Labour abandoned any
pretence that its purpose was the creation of a more socially equitable
society rooted in the pursuit of left-wing values such as equality, liberty
and fraternity. In 2007 it was to be the forces of capital and not labour in
Britain who could now proclaim with a sense of triumph, ‘We are the
masters now.’
But the Blair effect on labour markets and employment relations was
to prove more transformati
onal than even this might suggest. During his
years as Prime Minister the Labour movement virtually ceased to exist as
a recognisable entity. Its institutions ossified and its social base collapsed,
partly due to the continuing decline of a skilled manual working class that
had provided so much of Labour’s organisational and moral strength in
the workplaces and in civil society during much of the last century. Rapid
occupational changes in society were mainly responsible for this profound transformation, which had gathered pace after the 1970s. It was
not due to the deliberate actions of Blair or anybody else in political life.
But perhaps he more than most of his contemporaries sensed intuitively
what was going on and responded to it by seeking to reflect the consequences of the new realities within his political project. There was more
than spin and hype to this phenomenon. Blair demonstrated why the UK
was unable to transform itself into a genuinely social democratic country
like those in northern Europe. The individualism of the country’s indus- ,
trial relations and employment system reflected what were always deep
and stubborn social forces that went back to the nineteenth century and
industrialisation. From Ramsay MacDonald to John Smith, the Labour
Party claimed that an important part of its moral purpose was to transform Britain into a classless society and to replace, or at least modify, the
workings of the market economy through the creation of an economic
model that was based on social justice and equity rather than profit
and competition. But even in the aftermath of the Second World War,
when T. H. Marshall’s concept of social citizenship was widely recognised
by the political class, most people seemed more concerned for their own
well-being within their own private family networks and the wider civil
society. Most regarded paid work as an instrumental means needed for
the pursuit of a better life and were deeply sceptical, even hostile, to the
role of an intrusive centralising state, however well-meaning it might be
in theory. The reports of the Mass Observation surveys suggest this
popular attitude was even prevalent in the age of Attlee in the 1940s.17
BLAIR’S BRITAIN, 1997–2007 Page 39