Blair led Britain to its worst result on inequality since 1929

Photograph: Steve (second from left) chairing a press conference given by Peter Mandelson on a visit to Wales in 1998 when many Labour supporters were still hopeful about what the Blair government would do with its huge majority.

 

When Keir Starmer was standing for Labour leader, he wouldn’t give Laura Kuenssberg a straight answer when she tried to press him on whether his ideas were closer to those of Tony Blair or Jeremy Corbyn.[i]

Eighteen months on, the question hardly needs asking: Corbyn is suspended from the parliamentary party, and Starmer has told the Financial Times that he wants Labour to be “very proud” of the Blair years.[ii]

This statement predictably prompted jubilation among Blair’s hardcore of cheerleaders, with many posting graphics on social media listing Labour ‘achievements’ from 1997 to 2010.

When you read through the items – and there are several versions – you have to wonder at the criteria used and who the authors thought they would impress.

For example, one list boasts of ‘a record number of students in higher education’ as if it would not instantly occur to most people that it came with the introduction of tuition fees.

Another has four entries for different NHS waiting times, which would be seen by many as multiple counting, and then abuses statistics by claiming that Labour ‘tripled NHS spending’, an exaggeration that detracts from the fact that the period did see annual increases in NHS spending in real terms that were larger than had occurred in previous decades but didn’t amount to a trebling.

These lists do, nevertheless, contain some clear-cut gains that aren’t to be scoffed at. Free prescriptions for cancer patients, free eye tests and bus passes for the over 60s, and free TV licences for the over 75s matter to the people Labour governments are elected to serve. Likewise, in the social field, it’s right to be proud of introducing civil partnerships, banning tobacco advertising and setting up the Disability Rights Commission.

The tragedy of the Blair years is not that there weren’t some achievements – often, it must be said, thanks to pressure from unions and campaign groups – but that those things were so disastrously over-shadowed by the bad stuff.

The worst of it was Blair taking Britain into endless wars in Iraq and Afghanistan, which have been so costly not only – and most importantly – in lives but also in sapping trust in Labour and alienating millions of existing and potential voters.

But let’s leave the wars out of the equation and judge this by the yardstick of one of the architects of New Labour. Peter Mandelson recently explained to students at King’s College in London that Blairites saw themselves as “revisionists” who believed in realising “timeless Labour values…through modern means”.[iii]

He said: “The conclusion that we reached was that there were elements of Thatcher’s settlement that were irreversible. Not because we were neo-liberals, but because some of these changes were necessary. Trade union reform, privatisation of old nationalised industries, and a change from the corporatism that had clearly failed by the end of the 1970s.”

It is perhaps stating the obvious, but neo-liberalism is an ideology, not a personality trait. You are therefore de facto a neo-liberal if you adopt those ideas, whether enthusiastically or only as ‘necessary’, whether you accept the label or not.

But New Labour went further than not reversing ‘Thatcher’s settlement’ on issues such as public ownership and trade union rights. The Blair government actually carried neo-liberalism forward with gusto:

• The period from 1997 to 2010 saw outsourced public sector spending double from under £150 billion to nearly £300 billion in real terms.[iv]
• New Labour changed the NHS from an integrated public service to a market of ‘purchasers’ and ‘providers’ and gave the private sector a big slice of the action.
• The Private Finance Initiative (PFI) was used extensively for funding the building of schools and hospitals – in effect, privatising through costly mortgages the assets of these services.

Mandelson’s argument is that these ‘modern’ methods – which, in fact, are based on the Victorian profit motive – should be judged by whether or not they deliver ‘timeless Labour values’.

So, did they? The short answer is ‘no’. But let’s look at four examples: housing, PFI’s impact on the NHS, inequality and child poverty – the latter two being issues most often cited by Blair himself as ones on which he made progress.

Taking child poverty first, Blair promised to end it within a generation and has recently claimed – more circumspectly – that his government “lifted over a million children out of poverty”[v], which is roughly one in four on most definitions of poverty. The data is a minefield, but all the sources I’ve found suggest Blair’s claim is an exaggeration. When the misinformation website Full Fact looked at it, they concluded: “The number fell by around 800,000 from 1997-98 to 2009-10, before housing costs are factored in, or by around 300,000 after accounting for housing costs.”[vi] Okay, so it’s better to have some progress than none at all, but the problem was that this partial success was largely achieved by spending an extra £18 billion annually on benefits for families with children[vii], which Alistair Darling then said he would cut “deeper and tougher” than Thatcher ahead of the 2010 election[viii].

If the Blair record on child poverty is a tale of the limitations of spending to mitigate the effects of capitalism, his approach to housing illustrates what happens when you let market forces rip. Mandelson has dismissed the 2017 manifesto as “retro 1970s”[ix] but even he might be nostalgic if he looked at the housebuilding figures in that decade. In 1976, the year Harold Wilson handed over to James Callaghan, local authorities and housing associations built 153,750 and 15,790 homes respectively towards a total of 324,770. In 2007, the best year under New Labour, only 223,590 homes were completed, of which local authorities and housing associations built 280 (that’s not a misprint) and 27,430 respectively[x]. Instead of resuming council housebuilding and ending Right To Buy, Blair thought cheap lending and profit driven developers could fix the housing crisis. The upshot was, of course, house prices escalating beyond most people’s reach and huge growth in Buy-To-Let, all of which came crashing down in the credit crunch of 2007, dragging numerous banks into bankruptcy a year later.

That naivety about the nature of capitalism is equally starkly illustrated by PFI. There is nothing wrong in principle with borrowing to fund capital spending, but – instead of using the traditional tool of bonds – the Blair government signed up to a series of deals that have done lasting damage to the NHS. In 2019, an IPPR study found that £13 billion of actual PFI investment in NHS England hospitals will end up costing £80 billion, with £55 billion still to pay. “The NHS will continue carry the burden of PFI for decades to come unless action is taken,” the IPPR said, while noting that the NHS has the lowest number of MRI and CT scanners per head amongst advanced OECD economies.[xi]

So, what about inequality? Blair claims that New Labour “made the UK more equal”. The trouble is, no one – apart from his most ardent admirers – seems to agree. Full Fact is relatively kind in quoting only the IFS, which says that, though there was some levelling between low and middle earners, “those right at the top saw their incomes increase very substantially”. Oxford professor Danny Dorling, author of Peak Inequality: Britain’s Ticking Time Bomb, is blunter: he calls Blair “the king of income inequality”.[xii]

In the dreaded 1970s, so unloved by the Blairites, Britain was one of the most equal countries in Europe. In 1978, equality peaked when the bottom 90% took home 72.2 per cent of all income that year. However, inequality rose with each year of Thatcher’s government, “stuttered” under John Major and then increased sharply under Blair. Dorling says: “We reached an inequality high point in 2007 when the bottom 90 per cent only took home 57.4 per cent of all income, the least they had taken since, tellingly, 1929, the year of the Wall Street crash that began the Great Depression.”

In parallel with this, wealth inequality was also increasing. In a report published in 2014, Credit Suisse said that since 2000 the number of people in Britain whose net worth was at least $50m had almost quadrupled to 4,660.[xiii]

Every time I look back at what happened in the Blair years, I become even more staggered at the scale of the missed opportunity. A huge majority, earned over 18 years by the hard work of Labour members, and a very favourable economic climate were squandered on wars and ill-conceived neo-liberal experiments. There were some outcomes – such as the temporary lifting of some children out of poverty – that would count as delivering timeless Labour values, but it’s surely best not to draw too much attention to most of it.

Starmer must know this. It can’t have escaped him that Blair has lower poll ratings than Corbyn, even though he’s given an easy ride by the media. He really should have spotted that Labour’s vote fell under Blair from 13.5m in 1997 to 9.5m in 2005. And he must also be aware that it did Rhodri Morgan no harm to establish ‘clear red water’ with New Labour, which has undoubtedly helped the party in Wales to hold onto power continuously since.

Starmer’s embrace of Blairism is clearly designed to send a signal, but to whom? Is he trying to woo wealthy backers? Is it to drive some members to despair? Is it, as my former LOTO colleague James Schneider said in a tweet, to tell “big business and the bankers that they’ve got their B team back”.

Whatever the main audience, it’s not something Labour leaders usually do. Wilson won four elections, but I don’t recall any of his successors ever saying the party should embrace his legacy. New leaders like to define their own ‘brand’ – as Blair himself did – and are wary of political baggage of any sort.

The tactic may eventually work electorally. At some point while Starmer’s still leader, the Tories could run out of rebrands, and the elite might turn to the B team. However, if that happens, no one should expect Starmer to deliver much that matches our ‘timeless Labour values’.

Steve Howell

 

Steve is the author of Game Changer, an insider’s account of Labour’s 2017 election campaign, and two novels – his latest, Collateral Damage, is a political thriller set mainly in the 1980s London that tells the story of a Palestinian woman’s search for the truth about the mysterious death of a fellow activist.

 

Order a paperback copy of Collateral Damage for the special price of £8.00 including UK post and packing. ORDER HERE

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This article was first published by Labour Outlook.

 

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[i] Interview with Laura Kuenssberg, BBC Political Editor, 16.1.2020.

[ii] George Parker, ‘Starmer urges Labour to embrace Blair’s legacy’, Financial Times, 6.9.2021.

[iii] As reported by John Rentoul, The Independent, 3.4.2021.

[iv] Institute of Government analysis of Office of National Statistics data (June 2019 prices).

[v] Tony Blair Institute posted a video on Twitter called ‘Setting the record straight’, 14.6.2019.

[vi] ‘Labour’s record on inequality and social mobility: 1997 to 2010’, Full fact, 17.6.2019

[vii] ‘Labour’s record on poverty and inequality’, Institute for Fiscal Studies, 6.6.2013.

[viii] BBC interview, as reported by Larry Elliot, Economic Editor, The Guardian, 25.3.2010.

[ix] Peter Mandelson, ‘Labour doesn’t need to go back to Blair – but it does still need to learn from him’, The Independent, 3.6.21.

[x] Housebuilding, permanent dwellings completed, UK, Office of National Statistics.

[xi] ‘The Make-do-and-Mend Service: Solving the NHS’ capital crisis’, report published by the Institute for Public Policy Research, 18.9.2019.

[xii] Danny Dorling, ‘Peak Inequality’, New Statesman, 4.7.2018.

[xiii] Jill Treanor and Sean Farrell, ‘UK only G7 country with wider inequality than at turn of century’, The Guardian, 14.10.2014.