Introduction

New Labour promised to be a radical government – a government that would chart a ‘third way’ between ‘old left’ and ‘New Right’; a government that would ‘think the unthinkable’ on welfare reform. New Labour has never been short of political ambition. But where have these ambitions taken the Labour government over two terms in power? Is this a government of neo-liberals or neo-social democrats? This chapter will argue that the Labour government has taken welfare beyond Thatcherism. It has put egalitarian policy making back on the political agenda, and the debate around choice and diversity in the public services marks an attempt to re-think collective public services within the social democratic tradition.

Welfare and the making of New Labour

Social policy has been at the heart of much of what might be thought of as new about New Labour. During the party's policy review after 1987, it was clear that Labour modernisers had little ambition to defend the welfare state status quo. This was partly about politics. While voters wanted good schools and hospitals, they did not appear to like voting for a party with a reputation for taxing and spending. In the run-up to the 1992 General Election, Labour's leaders endlessly repeated the mantra that a Labour government would only spend what it earned – a foretaste of Labour's strategy during the 1997 campaign. Unfortunately in 1992, the party's fiscal message was blown apart by ‘Labour's tax bombshell’: raising taxes to pay for higher pensions and child benefit. This was not a mistake that New Labour would make.

Tony Blair, when Shadow Home Secretary, had done his bit to shift public perceptions. Labour: soft on crime? Not a chance. But behind the hard sell was some hard thinking on what a government of the left should do about the welfare state. Blair, as party leader, enthusiastically endorsed the final report from the Commission on Social Justice, set up by his predecessor, John Smith, which called for a radical change in centre-left social policy.

The central theme of this new direction was that a Labour government should use the welfare state to promote work not welfare. This demanded reforms to social administration, as well as to the rights and responsibilities of citizens to welfare entitlements.