The week before the European Union summit in Amsterdam, Tony Blair delivered a Thatcher-style lecture at the Malmö gathering of European socialist parties. ‘As I said to the Labour Party a few years ago, we must modernize or die,’ he declared; there was no choice for the European Left but to adopt the New Labour cocktail of ‘labour market flexibility’ and ‘welfare reform’. Having effectively argued for the export of Thatcherism to the rest of Europe, and echoed the Bundesbank line that ‘emu cannot work if it is set up on the basis of a fudge’, it was not surprising that in Amsterdam Blair opposed any expansionary revision of the Dublin stability pact or any direct investment in job creation, and left the new French socialist government isolated.footnote1
Blair’s other ‘triumphs’ in Amsterdam were his retention of British control over borders, visas and immigration policy and his insistence that western European defence remain the preserve of nato. The championship of nato, and acquiescence in its perilous eastward expansion, is remarkable testament to the persistence of ‘Old Labour’ Atlanticism at the heart of the ‘New Labour’ government.footnote2 The forthcoming Defence Review, we are assured, will ‘not be Treasury led’, and has explicitly excluded Trident and the Eurofighter.
In contrast, the nhs spending review is to exclude nothing, including charges for gp visits, food and accommodation in hospitals, and prescriptions for pensioners. In his interim budget, Gordon Brown recommitted Labour to ‘fiscal responsibility’ and severe long-term restrictions in public spending, though to stave off a collapse in the health service, he
Similarly, recurring cash crises in schools, colleges and universities could well make the Prime Minister’s vaunted insistence on ‘education, education, education’ ring hollow. The money Brown has found from reserves and from the windfall tax will only arrest the rapid growth in class sizes, not reduce them, and will fund less than half the estimated backlog of capital repairs. A revival of the angry parent-teacher protests of 1995 is a real possibility, and would represent an awkward challenge to the Blair Government.
John Prescott’s plans to sell off a controlling stake in London Underground may have shocked Londoners, and contradicted Labour election pledges, but they reflect the new government’s priorities and philosophy, as well as its desire to please the cbi. Blair has packed his team with business and City figures, and has missed no chance to declare New Labour ‘the party of business’.footnote4 There was not a single line in the Queen’s Speech that promised to alter the imbalance of power in industrial relations created by eighteen years of Conservative rule. The right to union recognition where a majority of workers wish it, a long-standing promise, will reach the statute book, after consultation with employers, in two years at the earliest. There is no indication that the government will use its share in the Merseyside Docks and Harbour Corporation to help reinstate the locked out Liverpool dockers—this would be a potent symbol of support for workers’ rights, which is why it will not appeal to Blair. And there is no indication that the government will take any steps to redress ilo complaints about British trade union laws.footnote5 Blair is also opposed to extensions to Britain of a number of eu Social Chapter provisions such as works’ councils.footnote6 He is, at best, a lukewarm adherent to the minimum wage policy, and will want the Low Pay Commission to come up with a sufficiently derisory figure and a sufficiently qualified formula—through exemptions, regionalization, and so forth—to preserve ‘labour flexibility’.
The complement to ‘flexibility’ is ‘welfare reform’, and it is here that the Government’s plans cause most alarm. Blair has handed the ‘welfare reform’ brief to Frank Field, who believes that Britain’s welfare system generates ‘dependency’, ‘idleness’ and ‘dishonesty’ because it is not based on ‘a balanced view of human nature’. Members of the ‘underclass’ have failed to keep up with the pace of change and have priced themselves out of the labour market. Accordingly, ‘income support has to be changed from a safe long-term resting place into a launch pad back into the mainstream of Great Britain Limited.’footnote7 Field is also an admirer of privatized national pension schemes, such as that in Chile, and wants to see compulsory, ‘individually owned’, privately-managed pension entitlements running alongside a minimum state scheme.footnote8
For Field and Blair, the purpose of ‘welfare reform’ is twofold: to reduce state spending and to compel workers into the labour market on terms advantageous to employers—which is why it poses a threat to a much larger social segment than the ‘underclass’. The coercive approach to the ‘work-shy’ has already been displayed in the ‘welfare-to-work’ programme that was the centrepiece of Gordon Brown’s first budget. According to Larry Elliott in the Guardian, ‘Job subsidies and encouraging single parents back into the workplace will merely have the effect of driving down real wages unless the supply of jobs is expanded.’ Elliott goes on to argue that ‘the strong pound, high real interest rates and higher taxes will coalesce to reduce growth sharply next year.’footnote9 A future downturn and accompanying rise in unemployment would not only nullify any progress ‘welfare-to-work’ has made in cutting the figures for youth joblessness; it would bring an abrupt end to any lingering ‘honeymoon period’, especially within the trade unions and the Labour Party. Taken together, a further dose of ‘labour flexibility’, ‘welfare reform’ and cuts in public services will merely compound poverty, inequality and insecurity in a country which already boasts them in greater measure than nearly all other advanced economies.footnote10