Some Aspects of Social Policy under New Labour.
- Labour's Overall Approach to Social Policy.
In order to analyse Labour's overall social policies between 1997 and 2010 it is important to note the following general points.
- Labour's social policies would be influenced by the the overall development of the ideology of New Labour.
- Consequently one might not expect the Labour Party to prioritise significant overall distribution of income and wealth.
- Instead one would expect Labour to focus more on the alleviation of relative poverty and of Social Exclusion, a term which shall be discussed below. Also in practice Labour in 1999 announced fairly ambitious targets for the reduction of child poverty.
- It was hoped that both poverty and social exclusion could be reduced via the effective overall management of the economy leading to faster economic growth and high levels of employment and low level of unemployment. To this end Gordon Brown announced the independence of the Bank of England to determine interest rates as a means of controlling inflation and new fiscal rules which he claimed would result in the ending of the "boom and bust" associated with previous Conservative Governments.
- When Labour came to power unemployment stood at around 1.5 million and would remain relatively low until the onset of the serious economic recession of 2008. Brown believed that prior to 2008 UK unemployment was mainly of the non-Keynesian variety so that Keynesian methods to reduce unemployment at this time were in appropriate and potentially inflationary.
- Consequently non-Keynesian methods would be used to reduce unemployment and increase employment. These were the measures encapsulated in Labour's New Deal which were designed to "make work pay and included the Working Families' Tax Credit [subsequently subdivided into the Working Tax Credit and the Child Tax Credit] and the minimum wage.
- It would also be necessary to address the financial difficulties of pensioners above working age and of those were could not reasonably be expected to return to the labour market.
- Labour in opposition announced its intention to keep to Conservative public expenditure plans for the first two years of the coming Parliament [i.e. 1997-1999] but in 2001 embarked on a programme of substantial increases in Health and Education much greater than had occurred under previous Conservative governments 1979-1997. However Labour also relied to a considerable extent on the continued development of quasi -markets in Health and Education which had been introduced by previous Conservative governments. It was hoped that better health and education services would contribute both to increased economic efficiency and to higher levels of employment, reduced poverty and social exclusion.
- The combined effect of Labour's social policies could be seen as representing a shift towards what Labour considered to be an enabling state or an opportunity state. These terms are discussed below.
- Having discussed these policies it will then be necessary to analyse trends in income inequality, poverty and social exclusion under Labour Governments 1997-2010
- This will lead on to a consideration of the social policies of the Conservative- Liberal Democrat Coalition Government.
- Labour, Ideology and Social Policy
The Labour Party has often been described as a "broad church" encompassing radical socialists on its left wing and moderate democratic socialists or possibly social democrats on its right wing. For most of its history, the Labour Party has been dominated by its moderate wing from whom its leaders have mainly been drawn. The years 1979-1983 were a possible exception to this pattern such that Labour's 1983 General Election Manifesto contained several radical left wing policies, which, however did not prove popular with most of the electorate leading to massive electoral defeat in 1983. However the relative importance of the many factors contributing to Labour's 1983 defeat is difficult to determine with certainty and provokes disagreement even among acknowledged experts on voting behaviour.
Following the catastrophic General Election defeat of 1983, the Labour party moved steadily towards the Right under leaders Neil Kinnock, John Smith and, especially, under Tony Blair. As evidence of this, we may cite the redrafting of Clause 1v of the Labour Party constitution to exclude nationalisation, the failure to repeal Conservative industrial relations legislation (which limited the powers of trade unions)' the acceptance of the Conservative privatisation programme and Labour pledges to remain within Conservative spending limits for the first two years of government 1997-1999 and not to raise the higher and standard rates of income tax which had been much reduced by the Conservatives between 1979 and 1997.
Attitudes to New Labour have varied. It has been argued that Tony Blair simply took over the Thatcher-Major political agenda but this , however, is a claim that the Blairites rejected: they claimed to be steering a "Third Way" between the state oriented and corporatist principles of "Old Labour" and the market centered approach of the Thatcherite Conservatives and to be governing in accordance with the principles and values of social democracy but revising their actual policies to take account of the different political situation of the late 20th and early 21st Centuries.
| New Labour and the Third Way: some additional Information
It has been suggested that in practice New Labour policies have been heavily influenced by the ideology of the so-called Third Way as developed primarily by the famous Labour supporting Sociology professor Anthony Giddens who claimed that the Third Way "is an attempt to transcend both old style [or classical] Social Democracy and Neo-Liberalism”. In the ideology of the Third Way it was argued that centralised state economic control of both communist and social democratic types generated economic inefficiency but that Thatcherite neo-liberalism had increased economic efficiency. However it had done so at the expense of increased economic inequality and poverty, reduced equality of opportunity, community breakdown and social disorder. Furthermore in the globalised world economy countries with inadequate education and training systems would be unable to compete effectively leading to long term job losses and falling living standards. Giddens argued that in order to address these problems markets should still be allowed to operate according to neo-liberal principles but the role of the state should be extended and modified to deal with the problems created by neo-liberalism and globalisation. The Third Way state should be both a “competitive state” and an “enabling state”: it should take on especial responsibility for the provision of suitable education and training which would be necessary for the UK to compete effectively in the globalised economy while these skills would also enable individuals to improve their job security and develop their talents to the full. While the education system was to enhance equality of opportunity the social security system was to focus more on encouraging individuals into work rather than on the provision of unconditional benefits for the unemployed. In the words of Bill Clinton [who was an American supporter of the Third Way] individuals were to be given “a hand up rather than a hand out” although a range of social security benefits would still be available for those unable to work. However although in the ideology of the Third Way it was highly desirable to reduce relative poverty and to increase equality of opportunity it was recognised that it might be counter-productive to increase economic equality significantly because this would result in reduced financial incentives which would reduce economic efficiency and ultimately reduce the living standards of poorest rather than increase them. The concept of communitarianism also plays an important role in Third Way ideology. Individuals are seen as having the rights to a range of state services and benefits but they are seen also as having duties to act as responsible citizens if community strength and solidarity is to be increased. Parents have duties to raise their children so that they can benefit from educational opportunities; workers have rights to unemployment benefits but also duties to take work when it is available; and especially perhaps individuals have a duty to obey the law and can expect punishment from Labour governments if they do not. As Tony Blair expressed it Labour would be “tough on crime: tough on the causes of crime.” Tony Blair and his supporters have argued in relation to communitarianism that they are seeking to encourage the community spirit which has always been a major element of social democratic ideology but his critics have argued that he has adopted a rather conservative view of communitarianism in that responsibility for community solidarity is placed excessively on the individuals living in disadvantaged communities while Labour governments do not do enough themselves to alleviate the poverty and social disadvantage which are the ultimate causes of the decline of community spirit. There have difficult theoretical disputes s surrounding the precise nature of the Third Way. Nevertheless Labour governments did introduce a range of policies which reflected Third Way ideology in combining elements of neo-liberalism and modified social democracy as well as constitutional reforms traditionally associated with the Liberals/Liberal Democrats. Subsequently disputes have arisen among theorists who believe that New Labour has sought to retain its fundamental social democratic values modified to take account t of changing circumstances and those who believe that New Labour has been so committed to the principles of neo-liberalism that it has broken more or less completely with the ideology of social democracy. There follow some criticisms of the ideology of the Third Way In a detailed and rather critical article, left wing academic David Coates has said that "others on the Left find Blair's claims for radicalism and socialism vacuous, overdrawn or specious". Further, he quotes former deputy leader Roy Hattersley, himself once regarded as a moderate within the Labour Party as follows: "It is now hard to describe New Labour as a democratic socialist party or as a force for a more equal society". Similarly, Will Hutton who initially provided considerable theoretical underpinnings for the Blairite project in his book "The State We're In" is, if anything, even more dismissive........."British society will be more unequal at the end of this period of office than it was when they took power......The Tories are governing in a sense through their surrogates, New Labour."
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It is not possible to pursue the debate about the nature of New Labour in any more detail here but it should be borne in mind in the following outline of New Labour's social policies.
New Labour and the Nature of the State
"In the enabling state the emphasis in social security policy is on providing a "trampoline" not a "safety net". In other words the state is there to help people to help themselves and to exercise responsibility. The enabling state is an "active" welfare state which encourages "independence, initiative, and enterprise for all"; this is contrasted with the traditional "passive" welfare state which, it is claimed fosters dependency. Blair 1999 "Beveridge Revisited: A welfare state for the 21st Century" quoted in Understanding Theories and Concepts in Social Policy by Professor Ruth Lister 2010.
In the ideology of New Labour it was argued that the traditional emphasis of Social Democracy on Keynesian methods of demand management and on relative high levels of taxation to finance the state provision of Health, Education, Housing and Social Security was in need of some modification because Keynesian methods of demand management to reduce unemployment were potentially inflationary and less likely to be effective in the increasingly globalised world economy and because the high levels of income taxation necessary to sustain ever-increasing levels of government spending were both economically damaging and electorally unpopular and possibly toxic.
Thus under New Labour the State was to become both a competitive state and an enabling state . It would seek to control the rate of inflation and to retain relatively low rates of taxation and to improve the Health and Education services as a means of improving UK international economic competitiveness but the Health and Education Services were to be improved by the continued development of quasi markets in Health and Education which it was assumed would improve the overall efficiency of these services. Large increases in Health and Education spending in 2001 -05 certainly suggested that Labour had not totally turned its back on social democratic principles but the Blairites argued that it would be impossible for the NHS to respond to improved medical technologies, high drug costs and the effects on an ageing population without a substantial measure of internal NHS reform while the expansion of Higher Education was to necessitate significant increases in tuition fees.
New Labour were to preside over an enabling state in the sense that better Education and Health services would provide better opportunities for employment and improve social mobility while changes to employment and welfare benefits policies would enable individuals to lift themselves out of poverty and welfare dependency via much better access to paid employment.paid employment rather than reliance on The expansion of the NHS and State education system were to
New Labour, Income Inequality, Poverty and Social Exclusion.
As stated above New Labour accepted much of the Thatcherite agenda As evidence of this, we may cite the redrafting of Clause 1v of the Labour Party constitution to exclude nationalisation, the failure to repeal Conservative industrial relations legislation (which limited the powers of trade unions)' the acceptance of the Conservative privatisation programme and Labour pledges to remain within Conservative spending limits for the first two years of government 1997-1999 and not to raise the higher and standard rates of income tax which had been much reduced by the Conservatives
In particular Tony Blair and his supporters agreed with the Thatcherites that income inequality increased financial incentives to work hard and thereby promoted faster economic growth and rising living standards for all and that in a globalised economy redistributive income taxation in the UK would drive innovative entrepreneurs abroad leading to reduced living standards for all including those of the poorest. Consequently although some measures between 2001 and 2005 did result in a slight trend toward greater income equality overall income inequality as measured by the Gini Coefficient was greater in 2010 than in 1997 [although it is also probably true true that income equality in 2010 was greater than it would have been if the Conservatives had remained in power, a claim rejected of course by David Cameron's Conservatives.
However Labour certainly endorsed the concept of relative poverty and believed that it would be possible to reduce relative poverty without significantly undermining what they considered to be the the incentive effects of significantly increased equality. Individuals and families are said to be living in conditions of relative poverty if they receive incomes less than 60% of the median income received for equivalent households. The concept of Social Exclusion emphasises that the relative poverty defined solely in terms of lack of income may well be related to a range of other social disadvantages which result in lack of opportunity to participate fully and actively in social life.
Labour focussed also on the concept of Social Exclusion and set up the Social Exclusion Unit in 1997 to investigate the causes of Social Exclusion. The SEU defined Social Exclusion as " a short hand label for what can happen when individuals or areas suffer from a combination of linked problems such as unemployment, poor skills, low income, poor housing, high crime environments, bad health and family breakdown." Subsequently the New Policy Institute began in 1999 to publish an annual audit of the extent of Poverty and Social Exclusion entitled "Monitoring Poverty and Social Inclusion which actually combined about 50 possible indicators of Social Exclusion.
Meanwhile the SEU produced about 50 reports on various aspects of Social Exclusion including Truancy and School Exclusion: Rough Sleeping: Teenage Pregnancy: 16-18 year-old NEETS; Young Runaways ; Looked After Children. The principle organisation purpose of the SEU was to provide for the development and implemenation of "joined up" government policy responses which were to be more effective because they integrated the activities of different government departments involved in the management of particular social policy issues but , unfortunately , it now seems to be generally agreed that expectations as to the effectiveness of the SEU were over-optimistic .It was renamed the Social Exclusion Task Force when it was merged into the Prime Minister's Strategy Unit in 2006 and after further reorganisation under Labour , disbanded under the Coalition Government . Click here and here or some additional information.
In any case the concept of Social Exclusion has attracted considerable criticisms especially from theorists who are in general critical of the overall New Labour project. In summary form such criticisms may be listed as follows.
- Labour, Economic Growth and Unemployment
It was hoped that both poverty and social exclusion could be reduced via the effective overall management of the economy leading to faster economic growth and high levels of employment and low level of unemployment. To this end Gordon Brown announced the independence of the Bank of England to determine interest rates as a means of controlling inflation and new fiscal rules which he claimed would result in the ending of the "boom and bust" associated with previous Conservative Governments.
When Labour came to power unemployment stood at around 1.5 million and would remain relatively low until the onset of the serious economic recession of 2008. Brown believed that prior to 2008 UK unemployment was mainly of the non-Keynesian variety so that Keynesian methods to reduce unemployment at this time were in appropriate and potentially inflationary.
Consequently non-Keynesian methods would be used to reduce unemployment and increase employment. These were the measures encapsulated in Labour's New Deal which were designed to "make work pay and included the Working Families' Tax Credit [subsequently subdivided into the Working Tax Credit and the Child Tax Credit] and the minimum wage.
It would also be necessary to address the financial difficulties of pensioners above working age and of those were could not reasonably be expected to return to the labour market.
As is indicated in the following diagrams [from www.economicshelp.org] the UK economy experienced considerable instability ["Boom and Bust"] under the Conservatives in the 1980's and 199o's but it did recover following the UK exit from the ERM in September 1992 so that Labour appeared to inherit a relatively healthy economic situation from the Conservatives . However Labour's own record on economic growth, unemployment and inflation between 1997 and 2007 did appear to help to create the favourable underlying economic conditions for the reduction of poverty and social exclusion while the relatively low levels of unemployment would have confirmed Gordon Brown's view such employment as did exist could best be reduced by supply side measures rather than by Keynesian measures operating via fiscal and/or monetary policy upon aggregate monetary demand within the UK economy. [From the diagrams it is easy to see why the years of 1997 -2007 have been described as the "NICE" decade although it could be argued that the NICE trend began to emerge in 1993.]
Labour, the Social Security Budget and the Welfare to Work Programme.
As indicated above Labour were fairly successful in maintaining unemployment at a relatively low level until the onset of recession in 2008. However having been influenced to some extent by Clinton's programmes in the USA, Labour sought also to reorient employment and social security policy from what was seen as a relatively passive approach whereby the unemployed could expect to receive their benefits fairly automatically towards a more active approach whereby the unemployed would be encouraged more strongly to take up the increased employment and training opportunities which Labour would make available and risk loss of benefits if they did not.
This was the rationale for Labour's Welfare to Work Programme in which unemployed people were to be given "a hand up rather than a hand out." The programme introduced in the 1997 budget and financed by a one off tax of £5.2 Billion on the "excess profits " of privatised utility companies and topped up with funds from the National lottery] . It was to be was to be a 5 year programme which initially focused upon the young unemployed people under 25 who had been unemployed for 6 months or more and offered 6 month temporary employment with a private sector employer or in the voluntary sector or with an environmental task force or a place on a training course Subsequently there were New Deals for Lone Parents , Older workers and the Disabled.. It is important to note that in the case of both young and older unemployed workers refusal to comply with the scheme could lead to loss of benefits but this did not apply to lone parents and the disabled.
Increasing Labour's employment strategy was extended to apply not only to the unemployed but also to other groups who were defined not as unemployed but economically inactive: that is neither unemployed nor actively seeking work. In 2006 Labour published "A New Deal for Welfare" which focused on recipients of incapacity benefits. lone parents and older people with the aim of removing i million recipients of Incapacity benefit, 1 million older people and 300,000 lone parents from dependence on Social Security Benefits by encouraging them into employment. Clearly if successful this could have been expected to result in a significant overall reduction in Social Security spending.
The DWP then commissioned an independent review of the Welfare to Work Programme by David Feud which led to the publication of "In Work: Better Off: The Next Steps to Full Employment." In his report Freud concluded that the Welfare to Work Programme had generally worked well but that a greater effort was necessary to encourage "harder to reach groups" into work.Among other things he recommended an increased focus on claimants of Incapacity Benefit and increased use of private contractors for the delivery of services designed to get people off benefits with these contractors being paid by results.
Click here and here and here for useful data on the jobless as at 2008
It has been claimed that Freud's report had little initial impact on Labour Policy but that in 2008 Freud was invited by the then Secretary of State for Work and Pensions James Purnell to advise him on what was to become Labour's 2009 Welfare Reform Act and that this Act incorporated several of Freud's proposals :lone parents with children over the age of 7 now had to register fro work as a condition for receiving their Social Security Benefits and eligibility conditions were tightened for the receipt of Employment and Support Allowance [ a new benefit which had been introduced in 2008 to replace Incapacity Benefit which was gradually to be phased out. The Act also introduced piloted "workfare " schemes whereby some benefit claimants would be compelled to undertake temporary work placements as a condition of receiving their benefits. [David Freud was not actually a supporter of such schemes.]
By the time the 2009 Act passed into law David Freud had joined the Conservative Party, had been given Life Peerage and in 2010 he became Minister for Welfare Reform in the Coalition Government. In opposition the Conservatives claimed that Labour's 2009 Act represented a half-hearted attempt to address the issues of unemployment and low employment and that if elected they would address these issues more forcefully.
Click here for Labour's White Paper [which has clear similarities with subsequent Coalition Policy.