Maggie Thatcher's Been Long Gone, But Has Tony Blair Really Reinvented Government?

Malcolm Dean, in the Guardian (Sept. 15, 2004):

It was easier 25 years ago to predict the future. As the first extract in this 25th anniversary edition of Society demonstrates (see page 2), we got our first projection right. For the first time since the welfare state was established after the second world war, it was no longer possible in 1979 to forecast that society was going to continue getting better following the election of Margaret Thatcher.

For millions of poor people this proved true. No other developed state except New Zealand suffered such a brutal reversal of rising prosperity for all. In the space of two decades, the numbers of children living below the poverty line almost trebled with one in three (a staggering 4.5 million all told) stuck there when Labour returned in 1997.

Thatcher ducked and weaved throughout the 1979 election avoiding revealing what was already apparent, that she was going to take an axe to social policy spending particularly social security. The first sentence of her first white paper summed it up: "Public expenditure is at the heart of Britain's present economic difficulties." Ironically, public expenditure increased as a proportion of GDP with the huge increase in unemployment in the 1980s, but drastic squeezes were applied to social security and social services.

By the time New Labour saw the light - two years in from its 1997 victory - all public services were financially impoverished and deeply demoralised. Throughout Thatcher's reign public services were derided for the way they spent money rather than made it. Even the people's priorities - health and education - were denied the resources needed.

The extent of the squeeze was dramatically documented in December 2001, in the devastating interim report from Derek Wanless, former head of the NatWest bank, who, in his independent review of spending on health for the Treasury, concluded that the cumulative underspend on health services in Britain, compared with the European average over the previous 30 years, had reached an unbelievable £267bn.

The public turning point came earlier when in November 2000, at a special Downing Street press conference in pre-election mood, Tony Blair declared: "Who can seriously doubt that Britain has been chronically underinvested in for over 20 years? We have the fourth biggest economy in the world. Yet we do not have the fourth best public services. I lay the blame for that firmly at the door of underinvestment."

Confirmation of how Labour has changed the public spending agenda came in June this year when the first of its five five-year plans was published, continuing a record investment in health. The NHS budget is already twice what it was in 1997 in cash terms (£67bn as against £33bn) and is due to rise to £90bn by 2008. Not to be outdone - and to the fury of the Daily Telegraph, which wanted to know what had happened to Tory tax cuts - Michael Howard promised to spend even more.

Future predictions in 2004 are more difficult. Social historians will undoubtedly pay handsome tributes to Labour's social policy goals. Its boldest remains its bid to abolish child poverty within 20 years, which now has a second vaguer aspiration, ending pensioner poverty, attached. Most independent experts believe it will meet its first target - lifting a million children above the poverty line by next year. The subsequent three million are going to be more difficult, with many of the first million having been "low hanging fruit" just below the poverty line. Current plans to end pensioner poverty face similar challenges. About a third of the two million pensioners below the poverty line are failing to take up the means-tested benefits that would lift them out of their deprivation....