Introduction

Britain offers a startling counterpoint to the Danish story of social investment in low-skilled workers. Despite extravagant claims to the contrary, the Blair administration only marginally improved the plight and skills of lower-class Brits, and ultimately did little to attract business and labor to the cause. Even though Blair’s New Deal active labor market program to combat low skills and poverty was modestly social democratic, public investment actually declined and the income gap between rich and poor expanded. Employers participated in only a minimal way to enhance the human capital of low-skilled workers and few jobs for the long-term unemployed were created in the private sector by Blair’s labor market initiative – about 40,000 out of 540,000 new jobs in the early years of the program. There is a tendency to conclude “plus ca change, plus la meme chose” about this story, and why would we ever expect much in the way of support for a seemingly impenetrable underclass in this land of Hobbes and Dickens? In this vein, the Blair experiments have been explained by long-standing structural constraints.

Yet, Britain’s fate at the end of the twentieth century may not have been quite so inevitable. After nearly two decades of Tory rule, Blair assumed office with a mandate to strike a “New Deal” between state and society, business and labor, the haves and have-nots. The New Labour government made substantial investments in programs for the long-term unemployed; indeed, Britain and Denmark spent exactly the same percentage of the GDP on improving the public employment service. In addition, Blair’s promised renaissance may have come at an auspicious time. With the advent of services, jobs for blue-collar manufacturing workers with mid-range skills have greatly disappeared, vocational training programs are less important than general education programs for service workers, and general education is a more viable institution in the British liberal market economy. Blair’s substantial investments in education partly paid off: Britain had lagged 14 points behind Germany in its proportion of 19–21 year olds who attained Level 3, and by 2003 roughly the same percentage in each country had reached this educational level. Yet these gains did little to alter the economic circumstances of the long-term unemployed.