The modernisation process finally abandoned Keynesian demand management as a tool to achieve economic goals. Like the Thatcher and Major governments, the Labour Party now has a broadly neo-liberal approach to macro-economic management. Labour policy now echoes Conservative Party fears that interventionist governments generally harm the economy and that governments should generally leave market forces to rule the economy (Heffernan, 2003, 50). Therefore, since 1997, the Labour Government has done little to reverse the terminal decline of manufacturing in Britain (Fielding, 2003, 159). The Labour Party also does not only accept, but has extended, privatisation and the role of the private sector in public services through Public-Private Partnerships and Private Finance Initiatives (Hill, 2001, 85). Labour now embraces private business to the same extent Thatcher and Major governments did. For example, following the 1997 General Election, 29% of people on policy taskforces were from the business community compared to only 6% from trade unions (Coates, 2003, 105).
Gordon Brown’s macro-economic policy exemplifies how the Labour Party has embraced many of the changes brought about by the Thatcher and Major governments. It could even be said that he has even gone further than these government were willing to go. Brown has a preoccupation with keeping inflation low and stable, in order to achieve stable economic growth. This is the primary reason Brown devolved the power to set interest rates to the supposedly independent Monetary Policy Committee. He believed this would be an economically prudent move because it would reduce the political influence on the setting of interest rates that caused instability under the Thatcher and Major governments. Brown has also broadly adopted the principles of the Thatcher and Major governments towards tax-and-spend. Brown has vowed to keep tax low and stable. Labour’s 1997 Manifesto, even promised that there would be no rise in income tax during for first four years under a Labour government. Government spending was also only to be used for investment and kept at a steady level. Major’s government were shocked when Brown pledged to stick to current spending limits for the first two years under a Labour government, which were widely believed to be unworkable. It was as if the Conservative Party had been beaten at its own game (Hill, 2001, 158-9).
However, modernisation has not led the Labour Party to embrace the micro-economic policies of the Thatcher and Major governments. Labour policy rejects a laissez-faire approach and advocates strategic intervention because although markets generally work well they can be improved. This is because free markets do not provide a sufficient amount of education and training for the workforce, enough capital investment, or enough research and development. Therefore Labour policy is to intervene and provide incentives for education, training and investment so the economy will be more productive and grow (Wickham-Jones, 1995, 699).
Labour’s defeats promoted a modernisation of the structure and the nature of the party itself, which to a large degree mimicked the Conservative Party. Under the leadership of Thatcher and Major the Conservatives heralded a new dawn in British politics. The party had a successful electoral machine that the Labour Party could not compete with. In order to become a successful electoral machine, it was essential for the Labour Party to communicate a more coherent and united message to the electorate. This was a problem especially under the leadership of Foot because of the weakness of the party leadership. Modernisation addressed this problem by consolidating the power of the leadership through extensive structural reforms and by increasing party discipline so in-fighting became less acceptable (Heffernan, 2003, 54).
The Labour Party embraced the electoralism of the Conservative Party under the leadership a Thatcher and Major. Labour became less dogmatic and was willing to ‘preference accommodate.’ It was only during Kinnock’s spell as leader that the Labour Party began to be aware of the importance of advertising the party like a product, using opinion polls, manipulating the media and the usefulness of ‘spin-doctors.’ Before changes made by Thatcher and Major to British politics this kind of campaigning was seen as cynical and unacceptable. Under Blair, Labour has taken this kind of electoralism to an unprecedented level (Hill, 2001, 195).
The structural reforms included reducing the power of trade unions within the Labour Party. The link with the trade unions was an electoral liability for the Labour Party and so part modernisation involved converging with the Thatcher and Major governments on the issue of trade unions. A key part of this convergence was Labour’s acceptance of most of the Thatcher and Major governments’ industrial relations reforms. The link with the trade unions no longer gave Labour a ‘people’s party’ image. Often, trade unions did not even represent their own members, let alone the public, and membership was drastically falling partly due to the economic and industrial relations policy of the Thatcher and Major governments. Labour would never be a Downsian party that could get elected to government while it was seen to be closely linked with an unpopular minority. The ‘contentious alliance’ also gave the Conservative Party a huge amount of political capital over Labour. Even in the 1997 General Election campaign, the Conservatives said that if Labour was elected Britain could regress to the turmoil that characterised the 1970s. It was an easy and very effective way to attack and discredit the Labour Party (Gould, 1998, 352-3). In Labour’s first term in government following the modernisation, concessions that would be unthinkable under a Thatcher or Major government were made to the unions. However, they were concessions as opposed to the start of a new era of cooperation between government and the trade unions.
However, by no means has Labour modernisation resulted in the wholesale acceptance of changes made by the Thatcher and Major governments. For example, Labour are committed to a programme of constitutional reform, which is an area ignored under the Thatcher and Major governments. Labour also has a completely different attitude towards Europe (Heffernan, 2002, 49). During Labour’s first term in government following modernisation, there was some hostility to European influence over the British economy and publicly Labour has sometimes been apprehensive with regards to Europe because of the euro-scepticism of the electorate (Fielding, 2003, 156). However, Labour is willing to embrace Europe unlike Thatcher and Major governments. Many within the Labour Party want to place Britain at the heart of Europe and struggle to restrain their enthusiasm (Fielding, 2001, 190).
Despite the modernisation process the Labour Party has distinctly different social values and aims to the Thatcher and Major governments, which are reminiscent of the party’s social democratic past. Labour still have a firm commitment to fighting for social justice and against poverty by tackling social exclusion and extending opportunity. Labour intend to achieve their goals by getting people into work and ensuring that it is financially beneficial to work, and by providing cash benefits to the poorest in society.
Labour’s emphasis on education and training is not only an attempt to increase productivity in Britain, but an attempt to make people employable. For example, the New Deal was designed to equip young people, who had been unemployed for a long time, with the skills to find a job. The New Deal has been extended to many other groups that struggle with entry into the labour market. Labour is also keen to make it financially beneficial to work. For example, since 1997, the Labour Government has subsidised wages, introduced a minimum and made it easier for parents to go to work with a Working Family Tax Credit (WFTC) (Driver and Martell, 2002, 184).
Although, like the Thatcher and Major governments, Labour is against the idea of people living off state hand-outs, there is a commitment to raising minimum standards of living. This involves offering cash benefits to those worth off. Since 1997, this has involved the Labour Government reducing the lowest level of income tax, the introduction of Child Tax Credits (CTC), and a minimum income guarantee and winter fuel allowances for pensioners (Driver and Martell, 2002, 185).
The ‘quiet workplace revolution,’ that took place in the Labour Governments first term following the 1997 General Election, implemented long standing Labour pledges that had their roots in social democracy and would be unthinkable under a Thatcher or a Major government. The minimum wage represented a bold move to reduce poverty and promote social justice. The Social Chapter was adopted, which guaranteed certain working rights (Hill, 2001, 85). Major’s Government refused to adopt the Social Chapter on the grounds that it was too interventionist and would reduce the flexibility of Labour markets. Union recognition rights were also guaranteed in some instances so employers could no longer ignore popular collective action (Fielding, 2003, 156).
The modernisation of the Labour Party has led to a convergence with some of the policies of the Conservative governments led by Thatcher and Major. However, Labour still has a different stance on many issues, for example micro-economic policy, constitutional reform and Europe. Labour has also kept distinctly different social values and aims that have their roots in social democracy. Therefore I would agree with Wickham-Jones’ assessment that Labour has recast social democracy in the light of changes in the economy and society in the last twenty years (Wickham-Jones, 1995, 701). Labour’s heart is still in the same place however there has been a need to adapt to the new economic and political environment that has been heavily influence by Thatcher and Major governments. For example, Labour has been forced to accept neo-liberal macro-economic policy and Labour has had to transform into a modern electoral machine in order to get elected to government.
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