To What Extent Does New Labour Have a New and Distinctive Approach to Welfare

Student no. 04974761

To What Extent Does New Labour Have a New and Distinctive Approach to Welfare?

In this essay I am going to examine New Labour’s welfare policies from 1997, when they last came into power, to the present day. I will look at the extent to which their approaches are new and distinctive compared with past approaches. I will start by providing a brief background of the welfare state in Britain.

Histories of the welfare state usually begin around 1945. The 1940 to 1950 period marks a significant stage in the history of welfare in Britain. In 1941 the most famous document in Social Policy history, the Beveridge Report, was commissioned. It was to be an examination of the social security system that had grown and developed since 1911, in order to determine what adjustments and changes could be made that could make the existing system work better and more comprehensively. The Beveridge Report, Social Insurance and Allied Services (Beveridge, 1942), proposed to crush the five ‘giants’ of want, ignorance, squalor, disease and idleness. He presented both a vision of a community in which everyone would be cared for, and the practical means by which his vision could be attained. Beveridge’s ideas were attractive to the Labour Party, who adopted his main principles and recommendations. This gave Labour a critical edge over the Conservatives in the 1945 election. It is important to remember, however, that although Beveridge’s plans were of great significance to the post-war Labour government; neither Beveridge nor the underlying principles of the social security system he devised had a particularly socialistic agenda. His blueprint for social security did not involve redistribution of wealth from the rich to the poor. Instead, it was intended to provide a system of support for everyone. It was a plan to not only guarantee the welfare of the sick, the elderly, the unemployed, and others, but also to enhance the wellbeing of Britain as a capitalist economy. Beveridge emphasised the limits to state responsibility and assumed that many people would turn to the private or voluntary sector to add to the coverage provided by the state. However, the reforms were a radical change, promoting tolerance of public ownership, universal welfare provision, and regulation, but all in the service of what was to remain an essentially capitalist society (Miller, 1999). From the years 1945-51, the main structure of Britain’s welfare system was built, based on Beveridge’s proposals. Clement Attlee’s Labour government introduced a number of schemes under the National Assistance Act 1946 and the National Assistance Act 1948, including: sickness and unemployment benefits, retirement pensions, maternity benefits, widows benefits and a death grant, and a National Assistance Board to replace the Poor Law.

From 1951 to 1964, a period of Conservative Government, Beveridge’s system was continued, with minor changes such as earnings-related contributions and benefits being introduced. This was because there were difficulties in funding the system from flat-rate contributions, as was previously done. In the late 60’s and early 70’s, under the Labour Government, the welfare system was extended to include a wide range of benefits and support for families, the unemployed and disabled and chronically ill people. Although there were clear differences in emphasis of the two main political parties, Conservative and Labour, the period up to 1979 can be seen as a time of consensus or agreement regarding welfare.

Throughout the 18 years of Conservative Government from 1979 to 1997, there was a

gradual erosion of the welfare state. Famously, the first Conservative White Paper on

public spending stated that “Public expenditure is at the heart of Britain’s present

economic difficulties.” (HM Treasury 1979: 1) This view implied that the welfare state

was a drain on the more productive parts of the economy. Four main themes stand out as

central to policies towards the welfare state at this time. These are attempts to control

public spending, privatisation, targeting and rising inequality (Hills, 1998). The

Conservatives’ first budget of 1979 reduced the top and standard rate of income tax. It

also announced the breaking of the link between pensions and earnings. Further reductions on public spending included a series of cuts in social security benefits, an attack on benefit fraud and a freeze in child benefit. These cuts failed to stop the rise of the social security bill, and a large increase in unemployment meant that the cost of unemployment benefit spiralled. In view of this, a review of social security was set up. The subsequent Green Paper stated that “To be blunt the British social security system has lost its way. Many of the Green Paper’s proposals involved the rebadging and retrenchment of benefits. The symbol of the ‘cradle to the grave’ welfare state which came following Beveridge was ended with the abolishment of maternity grants and death benefits. Other government reforms throughout the 1980’s and 1990’s changed the institutional arrangements of the welfare state by limiting the direct provision of welfare by state institutions. They did this by trying to separate purchasers of services from providers and by allowing schools and hospitals to manage themselves rather than be managed by local or health authorities. In effect, this introduced market-like reforms into some welfare provision, channelling public money into welfare services provided through an increasing number of private and voluntary organisations rather than by public institutions and local authorities as in the past.

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When Tony Blair became leader of the Labour Party in 1994, he began a thorough review of past policy priorities, which led to a rebranding of the party as New Labour and a rejection of many of the state welfare commitments of past Labour governments. Revulsion against the visible decline of the welfare state under the Conservative’s was part of the reason why millions voted Labour in May 1997. In his introduction to the 1997 manifesto, Tony Blair stated that ‘In each area of policy a new and distinctive approach has been mapped out, one that differs both from the solutions of the old left and those of the Conservative right’ (Labour Party, 1997). This approach is often referred to as the ‘Third Way’. Labour’s embrace of a third way was a product of a more realistic approach to policy making and service delivery, captured by the government slogan ‘what counts is what works’. Rather than assuming that services are best provided by the state (the Old Left) or the market (the New Right), the new government claimed to be concerned only with what was the most effective way to meet social needs.

The table overleaf presents a brief account of the dimensions of the third way as applied to welfare reform.

Dimension Old Left Third Way New Right

Approach Leveller Investor Deregulator

Outcome Equality Inclusion Inequality

Citizenship Rights Both Responsibilities

Mixed Economy State Public/Private; Private

of welfare civil society

Mode Command Co-operation/ Competition

and Control Partnership

Social Expenditure High Pragmatic Low

(Powell, 2000)

The traditional approach of the Old Labour – ‘The Levellers’ - government was concern with social justice through the distribution of wealth, but neglecting its production. On the other hand, the New Right – ‘The Deregulators’ - believe in achieving social justice through reducing public services and freeing the markets, which would deliver extremes of affluence and poverty. The idea behind New Labour’s new approach is rooted in the report of the Commission on Social Justice (1994). The report set out a preferred alternative to the traditional approaches, the ‘middle way’ of ‘Investor’s Britain’ (Powell, 2000). An Investor's welfare state is proactive, emphasising prevention, and stressing causes rather than effects: attacking the causes of poverty rather than its symptoms, preventing poverty through education and training rather than simply compensating people in poverty (DSS 1998), and preventing illness rather than merely curing it (DH 1999). The ‘Investors’ would combine the ethics of community with the dynamics of a market economy. A distinctive feature of New Labour’s approach to social policy has been a desire to move away from reliance on publicly provided services. It is argued that the public interest can often be better met by the involvement of the private sector as well as “mutuals, social enterprises, not-for-profit trusts and public benefit corporations”. (Giddens, 2002 p65)

The tone of New Labour’s election manifesto (Labour Party, 1997) suggests that, like the previous Conservative government, enhanced national economic performance is the new government’s overriding objective. The party has more or less abandoned the ideal of using social policy and the welfare state to redistribute opportunities and incomes. This is seen as part of an exhausted tradition of ‘tax and spend’. Labour’s victory in 1997 was largely down to its ability to distance itself from the idea that it was a high tax party with policies to help the poorer one-third of the population at the expense of the majority (Blakemore, 2003). Social policy under New Labour is to play a supportive role in creating a more competitive economy and an ‘active’ society with maximum ‘participation’, above all, in paid work. Rather than providing a ‘safety net’, the social security system is to be more of a ‘trampoline’, propelling the unemployed back into work. The overall strategy is to encourage a move ‘from welfare to work’. In the areas of education and social security especially, individuals are offered new educational, training and employment opportunities that are designed to enhance their employability. The ‘New Deal’ for the unemployed aims to get the unemployed into work as quickly as possible and has elements of coercion in the background. Those who fail to take up these offers face the withdrawal of state support. The government has taken on the Conservative idea that individuals should make provision for themselves. Like the previous Conservative government, Labour has also sought to target excessive expenditure in particular areas, for example the massive growth in the numbers of people claiming incapacity or disability benefit. During the years of Conservative administration, Norman Tebbit famously declared to the unemployed, “Get on your bike”. Gordon Brown updated this sentiment in 2000 by stating, “We will meet our responsibilities to ensure there are job opportunities. …You must now meet your responsibility – to earn a wage”. (In Fraser, 2000 p 113) In 2002, the JobCentre Plus was established, which merged the benefits agency and the employment service in order to provide a more concerted attack against unemployment and welfare fraud.

The third way rejects both the outcome of inequality associated with the New Right and the outcome of equality associated with the Old Left. Instead, they have adopted a new approach more concerned with social inclusion. In the 1996 John Smith Memorial Lecture, Gordon Brown argued that “the essence of equality is equality of opportunity” A few weeks later he claimed that “The search for equalities of outcome, and even to talk as if that is the aim of the Labour party, has led us up the wrong roads. The pursuit of equality of outcome is someone else’s nightmare about socialism rather than a genuine socialist dream. I would prefer to look at equality in terms of opportunity for all.” (Cited in Powell, 2002, p 23) Instead of equality and inequality, New Labour prefers to use the terms of inclusion and exclusion. The government has placed social exclusion at the very heart of its agenda for modernisation and reform. In his first speech after the election, Tony Blair promised that there would be ‘no more forgotten people, no one left out’. This was followed by the establishment of the Social Exclusion Unit (SEU), with a concern to ‘develop integrated and sustainable approaches to the problems of the worst housing estates, including crime, drugs, unemployment, community breakdown, and bad schools etc’ (SEU, 1997).

The commitment to equality of opportunity is not a new approach; both past Conservative and Labour administration have claimed to have this at the centre of their policies. However, the third way approach does seem to be new and distinctive. Right-wing governments have generally thought that providing universal services such as health visiting or compulsory schooling is sufficient enough to create a level playing field. They accept different outcomes in terms of income, health or educational attainment as inevitable. The Left on the other hand has traditionally concluded that these different outcomes were simply the result of exploitation or lack of funding or poverty. Their view was that inequalities were very little to do with the people adversely affected by them, who were viewed as passive victims. The Third Way differs from these analyses. There is a stronger recognition that equality of opportunity is denied to many and that this requires positive discrimination in the form of additional funding. Second there is a refusal to accept deprivation as an excuse for failing to provide that opportunity, so whether it is the absence of a GP’s surgery on a council estate or poor housing or failing schools the assumption is that the cycle of deprivation can be broken. The Third Way approach does not see socially excluded people as victims of exploitation. That excuse for not fulfilling their responsibilities is to be removed. New Labour promise to improve public services, but strongly emphasise that each individual is responsible for themselves.

This is a good example of how the right tended to stress the duties of citizens, whereas the left tended to stress the rights of citizens. The Third Way however, stresses both rights and responsibilities. New Labour’s ideas about responsibility and reciprocity, about the labour market as the basis for social inclusion and about the need for strict enforcement (‘tough love’) have become part of a new programme to modernise the welfare state, and replace the principles that underpinned previous regimes. In Tony Blair’s introduction to the 1997 election manifesto, he wrote of ‘our contract with the people’, and specifically with ‘the broad majority of the people who work hard, play by the rules (and) pay their dues’ (Labour Party 1997). As this implies, paid work is central to the relationship between the citizen and the state.

The Third Way takes a new approach to service provision. Where traditionally the Old Left were all for state provision of welfare, and the New Right leaned more towards the private sector, the third way ‘is about combining public and private provision in a new partnership for a new age’ (In Powell, 2000). The New Labours approach has no ideological commitment to public service provision. For example, for some applicants, social fund loans are only available if they have been unable to obtain help from charities. With benefits such as Statutory Sickness and Maternity Pay, the state minimum is increasingly paid for by the employer. The new government is also continuing the wide ranging privatisation of public services. For example, it is extending the Conservative ‘Private Finance Initiative’ (PFI), a scheme for the involvement of private sector capital and operating methods in the delivery of the public services. The crucial area in which the PFI is being implemented is in the National Health Service. At present, the bulk of new hospitals and schools being built will be privately owned and leased to the public sector: a historic shift in the boundary between the public and private sectors. This reflects the party’s transformation from ‘old’ to ‘new’ labour, from an insistence upon state provision of public services to a new willingness to cooperate with the private sector.

One of the most notable changes from Old Labour was in the area of taxation and public spending. One of the main aspects of New Labour’s new approach was an attempt to shed its ‘tax and spend’ image. A key manifesto pledge was not to increase taxation on basic and higher rates of income tax, in search for the Middle England vote (Powell and Hewitt (2002). New Labour rejects the traditional view of Old Labour that high social expenditure is a good thing. In terms of public spending, areas in which most of the electorate hold a stake, such as education and health are being prioritised. The Comprehensive Spending Review resulted in more new money for these departments than all other government departments combined (Blackman and Palmer, 1999). Money put into these services is seen as investment, and therefore seen as ‘good’ spending. However, part of the social security budget is ‘bad’. Blair explains that ‘part of the budget is spending on pensions, child benefit and people with disabilities: good, we like that. The other part is spending on unemployment and people on benefit when they should be at work: bad, we want to decrease that’ (In Powell, 2000).

In this essay I have attempted to examine the extent to which the Third Way is a new, distinctive approach to welfare provision. In some senses, I think the Third Way is simply a continuation of past approaches. Some areas of policy made by New Labour seem to be not very different from what Old Labour might have done, such as the setting up of the minimum wage, the abolition of the Conservative’s assisted places scheme in education and the restoring of free sight tests. On the other hand, there appears to be a significant degree of policy continuity with the Conservatives. For example a commitment to a low tax and a continuation of the Conservative’s Private Finance Initiative. There are some areas which do not seem particularly new, for example the ‘welfare to work’ theme is similar to the workhouse regime associated with the Poor Law of 1834. In many ways, however, the Third Way in its approach to welfare is new and distinctive. New Labour claims that the old left stressed equality, rights and the state, while the new right favoured inequality, responsibilities and the private sector. The third way focuses on inclusion, rights and responsibilities and public/private partnerships. Many argue that the Third Way has no ‘Big Idea’. It is more a series of little ideas all trying to work together. Tony Blair is keen for his government to be remembered as one of the great left of centre reforming governments of the 20th Century; however his critics liken him more to the right wing Conservatives of 1979. Due to the sometimes obscure nature of the Third Way, it is difficult to pin down exactly where on the left-right spectrum the New Labour’s policy lies.

(3,041 words)

References

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To What Extent Does New Labour Have a New and Distinctive Approach to Welfare

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