Following defeat at the polls, now is a good time to take stock of the history of the New Labour movement and to address where the party might go in the future, writes Phil Ramsey.
The history of New Labour, and 13 years of government can best be summed up in one word: compromise.
Historically highly funded public services came at the expense of unfettered markets and light-touch regulation of banks, leading to the most spectacular financial crash of last eighty years.
The success of political reform through devolution to the nations and regions, leading to government and executives in Scotland, Wales and Northern Ireland, was diminished by the quashing of many civil liberties to deal with increased terrorism.
The establishment of a broad political consensus – leading to an unprecedented three terms in office – seemingly came at the expense of a crumbling of its traditional working class base and a near collapse in party membership.
And high levels of foreign aid and the cancelling of Third World debt pales into near insignificance alongside the legacy of two deeply unpopular wars in Iraq and Afghanistan.
The birth of a movement
The birth of ‘New Labour’ can be best located to 1994. Following the death of John Smith, who had led the party since 1992, Tony Blair and Gordon Brown came to the forefront, alongside Peter Mandelson, who had first started working for Labour in the 1980s. The fourth member of the New Labour ‘quartet’ – Alastair Campbell – was later recruited from the Daily Mirror.
These four men, more than any other, were the architects of this period in the history of Labour, and incredibly were reunited in Downing Street in the few hours before Gordon Brown left office (with Tony Blair joining by phone). This footnote in history goes to represent the incredible tribal unity that the project maintained, despite the well-documented acrimony and personal strife that existed between the four.
Fundamentally, New Labour is a political project crafted to come to terms with the economic policies of Thatcherism, and an electoral strategy to seek to end 18 years in opposition. Blair became convinced that to get Labour elected again required two major realignments: that of policy, and presentation. For Blair, both of these could be changed by amending Clause IV of the party’s constitution.
Standing unchanged since its establishment in 1918, Clause IV stated that workers ought to receive the “full fruits of their industry … upon the basis of the common ownership of the means of production, distribution and exchange”. In other words, profit ought to be socialised rather than privatised, and capital owned collectively.
Staking his leadership on the line, Tony Blair passed the amended Clause IV by two votes to one at a special conference in 1995. The clause now states: “by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few”.
Whilst rhetorically subtle, this change brought about the embrace of neoliberalism, at the expense of state socialism and nationalisation. Crucially for Blair, it allowed him to stamp his leadership style and authority on a party that still in part viewed him as an outsider, given his private school education. It set New Labour on a trajectory that fully embraced the free market. From this point, New Labour’s economic policy ran on the following premise: the party would be “intensely relaxed” about people becoming “filthy rich” – in the words of Peter Mandelson – as long as they paid their taxes.
New Labour enabled a long and sustained period of financial growth, during which the City of London rose to be the centre of the global finance economy, and tax revenues were ploughed into public services. As a result, an unprecedented 89,000 nurses were added to the NHS, and 3,500 Sure Start centres were opened, amongst many other spending projects that have altered the very fabric of the UK.
When in 2007 the storms of the global financial crisis began to batter Britain’s shores, the New Labour economic consensus broke down. Suddenly city tax revenues dried up, and New Labour had to pledge billions of pounds to stop the banking system collapsing. Perhaps history will remember the role of Gordon Brown and Alistair Darling during this period somewhat more favourably than they were received by the press at the time.
Despite furious mud-slinging from the opposition benches over the fiscal stimulus, the actions taken by them in the weekend of 12 October 2008 literally prevented cash machines in the UK from being shut down. The nationalisation of Northern Rock, and the bailouts of HBOS and RBS, led to Brown being hailed as the saviour of the global economy right around the developed world; except of course, in his own country.
However, following 10 years of being enthralled to the banks, New Labour was forced into a cul-de-sac. The party which had encouraged the worst excesses of the City, could now not criticise the failure of neo-liberalism. Yes, there was a temporary levy on bonuses, and the introduction of a 50p top rate of tax, but the party which was intensely relaxed about the rich found that its hands were tied when real action was required.
The future for Labour?
Firstly, a leadership election must open up for discussion many issues that have been closed for years, including a fundamental reordering of policies on civil liberties. Secondly, the lessons of the banking crisis and subsequent recession must be learnt, and the priorities of the party shifted accordingly. Given the parliamentary majority that Labour commanded in 1997, the social democratic moment could have truly arrived. However, markets failed, and it was once again strong government intervention that prevented a massive depression.
Likewise, on political reform, New Labour’s 1997 majority stalled the delivering of a progressive consensus being formed with the Liberal Democrats, based around electoral reform. Tony Blair, having courted Paddy Ashdown in the run up to the general election of that year, was persuaded to ditch the party’s progressive cousin, with which it shares far more in common that the Conservatives do. The Labour Party, however it is branded in the future, must sign up in opposition to fundamental political reform, so that in the days of coalition-building it is not forced into embarrassing retreats, and deathbed conversions.