Thatcherism, New Labour and the Welfare State

This paper examines the extent to which the policies towards thewelfare state pursued by the Labour Government in its first fifteenmonths represent a break with those of its Conservativepredecessor and with earlier policies put forward by Labour inopposition. Four key parts of its inheritance from theConservatives are identified: attempts to control public spending;privatisation (more in terms of welfare provision than of itsfinancing); the growth of means-testing; and the growth ofinequality. The paper summarises the main policy developmentstowards the welfare state since May 1997, and identifies fourlinking themes: the importance to Labour of shedding its “tax andspend” image leading to tight budget constraints, but withsignificant reallocation towards health and education; a strongfocus on the promotion of paid work; a series of measuresintended to reduce inequality and relative poverty, but withcontroversy over benefit levels; and the new dominance of theTreasury in making welfare and social policy. Some of thesepolicies mark clear reversals from those of the Conservatives, butin others they continue an evolution which was already underway,despite the earlier Labour rhetoric about “thinking theunthinkable” on welfare reform.[...]