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The Government of “New Labour”


British elections that took place in 1997 have been considered as an important turning point for British government and Britain’s economic activities. This is because of the emergence of New Labour that replaced conservative rule leading to increased inequality levels through social division especially in public administration as well as welfare. Previously, the state exercised reforms on welfare through promises where taxation was restrained as well as public expenditure. However, New Labour rejected those redistributive strategies and employed new ways of reducing dependency levels on welfare.


According to (Gardiner, 2000), Britain elected new government in 1997 which made changes on the manner in which labour market operated. This introduction of changes made the new government to be referred to as the government of “New Labour”. The new government represented a diversion of events from previous administrations of Thatcher. These included ways in which Thatcher departed from the consensus that was agreed upon after the Second World War. Another event involved the support given by “New Labour” to market operations as well as their relationship with the labour unions. New labour is comprised of aspects that make it different from Thatcher’s administrations but it still has similarities.

Description of Post-War Consensus, How Thatcher Broke With the Post-War Consensus

(Rory, 2000), found that, the aspects that were agreed upon after the Second World War were primarily directed to reviving of Britain’s economy which had been suppressed by war. These aspects included the maintenance of Keynesian techniques where ministers were supposed to revive Britain’s economy through increasing state spending and cutting on the amount of taxes. Another consensus event was the involvement of trade unions in economic activities where the government was to consult them on various economic policies as well as workplace relations. The consensus considered mixed economy as a solution to the suppressed economy where the state would hold the possession of utilities such as railways, electricity and gas. The state would also intervene as well as control most of the economic operations regarding those utilities.

The consensus also documented the need for a welfare state where the system of national insurance together with Health services would provide citizens with adequate income levels as well as free health care. These were to be provided only when families had economic instabilities due to unemployment, sickness, death and old age of breadwinner. The government was to engage in emphasizing on equalization which was to be achieved through various aspects of social engineering like progressive taxation, regional policies, welfare spending in a more redistributive manner and comprehensive schooling. The consensus was supposed to be implemented by the conservatives in conjunction with labour government but their policies differed greatly which led to elections where conservatives, who were led by Thatcher, won. (Francis, 2001)

In her reign, Thatcher digressed from most aspects that were agreed upon in the consensus and the areas she disagreed with were involvement of trade unions in the process of reviving the country’s economy. Contrary to former arrangements, trade unions were not given a chance to implement their policies in economic activities that were directed to reviving the economy. Another area was the point of mixed economy where control by the government was supposed to bring a balance in the distribution of the country’s major utilities. Thatcher’s government exercised privatization of the country’s major utilities where electricity, air and rail ways as well as gas were controlled by private companies rather than the government. Council houses that were supposed to be occupied by civil servants were also sold to tenants. The situation where the government was supposed to ensure that citizens were fully employed was abandoned and that responsibility was left to employees and their employers. Instead of dealing with employment, Thatcher’s government focused on lowering inflation levels. The benefits of welfare were redistributed as earlier agreed but means-testing was applied on them. Thatcher’s government also broke out from the consensus arrangements where the government was to be the universal provider and instead decided to share the responsibility of providing to citizens with self help groups, market and other volunteer group that would be willing to help. (Henk, 1993)

Ways in which new labour supports the market

(Francis, 2001), argues that, New labour did support the market in a number of ways where some important policies were accepted and integrated in the process of reviving the economy. Among them was the decentralization of control of major utilities where New Labour decided to have cheap shares sold out to private companies which allowed utilities to be produced in a more competitive manner and high quality. Higher production levels of major utilities by private companies increased revenue for the government which contributed to economic stability.

Another way in which New Labour showed support for the market was through direct cuts on taxes which allowed citizens to have more money to spend which in turn contributed to increased cash flow in the economy. New Labour made some reformations on the agreement on trade unions which were made to operate in tight framework of law during Thatcher’s reign. New Labour supported the market through prioritizing on policies that focused on stabilizing the economy which included maintaining low levels of inflation.This was to be achieved through reducing the rates at which citizens borrowed money from banks and other institutions that gave out loans, so as to increase on the value of the country’s currency.

What Thatcher Did To Curb Trade Union Power

Thatcher made trade unions to operate in legal frameworks that were tighter where they were made to bring their rule of “closed shop” to an end. “Closed shop” rule required workers to join trade unions before securing employment with certain industries but Thatcher ordered trade unions to stop imposing the tough rule on workers. Thatcher also regulated trade unions’ operations by making them liable for any loses and damages that would be incurred during strikes that were illegal. This is because; trade unions would lead workers into illegal strikes as they demanded increased payments from the government. Therefore, the harsh rules imposed on trade unions made the relationship between them and Thatcher’s government worse and as a result they were hardly involved in government operations. (Francis, 2001)

‘New Labours’ Relationship with Trade Unions

Trade unions had kept a very good relationship between them and labour party and had helped them win the 1997 elections. “New labour” loosened the tight regulations that had been imposed on trade unions and incorporated them in the process of reviving the economy. So new labour had no choice but to give trade unions some space in the government where they consulted with them in several areas for example; workplace relations, inflation control and other economic policies that would help revive the economy in a more regulated manner. However, trade unions have not lacked a few areas where they have disagreed with trade unions like in the area where trade unions have been found to demand Labour party to account for the assistance they have been providing to them. (John, 1999)

Differences and Similarities between Thatcher’s Policies and New Labour

(John, 1999) argues that, aspects that were upheld by New Labour had many similarities with Thatcher policies and few differences. Among the areas where New Labour agreed with Thatcher are the privatizations of the country’s major utilities where the government no longer had an ultimate control on the ways in which those utilities were produced and later distributed to citizens. This brought in some level of democracy since the ultimate control by the government meant that it also dictated on the areas that major utilities like railways and electricity were distributed. Another similarity was on the policies that controlled the levels in which trade unions were involved in economic activities and the levels that trade unions were allowed to control employment. However, there are a few areas where New Labour differs with Thatcher’s policies especially in government appending, since Thatcher’s policies registered low levels of investments in schools, roads and railways. This under-investment increased inequality levels as corporate sector received a larger share while the public received less.

In the assessment of New Labour, it occurs that, a lot has been achieved through adjustment of Thatcher’s policies which has led to a better situation of Britain’s economic activities. Inflation rates have been controlled as well as the negative effects that came as a result of excessive control of employment by trade unions. However, this has not been achieved without hitches as the conservative party still differs with Labour party on roles that should be held by the state. The roles that are mostly differed on include spending levels, regulation of economic activities as well as legislation. They also differ on roles that should be played by volunteers on areas regarding support to be accorded to citizens. (John, 1999)


Therefore, it is clear that the current situation of Britain came a long way from when aspects of the consensus were being implemented. These aspects were to some level effective in reviving the suppressed condition of Britain’s economy that was caused by the Second World War. Later on, Thatcher came up with other policies that could achieve better economic levels than the implementation of aspects of the consensus. Labour government decided to integrate some of Thatcher’s policies which resulted to New Labour that has achieved a lot in the implementation and management of Britain’s economic activities. (Alan, 1990)


Alan, S 1990, ‘post-war Britain’, Penguin Books, 234, pp47-49.

Francis, A 2001, ‘the rise of new labour’, Oxford University press, 195, pp44-47.

Gardiner, V 2000, ‘the changing geography of the United Kingdom’, Rutledge, 399, pp 23-25.

Henk, O 1993, ‘Restructuring Hegemony in the global political economy’, Rutledge, 324, pp66-70.

John, C1999, ‘The Thatcher Years’, BBC Books, 265, pp56-58.

Rory, O 2000, ‘Europe’s experimental union’, Rutledge, 433, pp12-15.


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