Thatcherism, new Labour and the welfare state

This paper examines the extent to which the policies towards the welfare state pursued by the Labour Government in its first fifteen months represent a break with those of its Conservative predecessor and with earlier policies put forward by Labour in opposition. Four key parts of its inheritance from the Conservatives are identified: attempts to control public spending; privatisation (more in terms of welfare provision than of its financing); the growth of means-testing; and the growth of inequality. The paper summarises the main policy developments towards the welfare state since May 1997, and identifies four linking themes: the importance to Labour of shedding its “tax and spend” image leading to tight budget constraints, but with significant reallocation towards health and education; a strong focus on the promotion of paid work; a series of measures intended to reduce inequality and relative poverty, but with controversy over benefit levels; and the new dominance of the Treasury in making welfare and social policy. Some of these policies mark clear reversals from those of the Conservatives, but in others they continue an evolution which was already underway, despite the earlier Labour rhetoric about “thinking the unthinkable” on welfare reform