Labour Party after John Smith’s sudden death,
moved the party towards the centre, rejecting out-
worn socialist dogma. The modernisation of the
party, begun a decade earlier by Neil Kinnock, was
bearing fruit. Blair’s leadership revitalised Labour,
his promises not to be spendthrift making it elec-
table for the first time in years. The ‘enterprise’
economy was to be developed into the ‘stake-
holder’ economy, though the general public did
not know quite what that meant. Eighteen years
of Conservative rule had significantly changed
the economic scene, curbed trade union powers,
privatised subsidised state industries and made
Britain safe for a two- (or more) party system by
forcing Labour to drop old-style socialism and to
modernise. Britain had been plunged into reces-
sion earlier than the countries of continental
Europe, but was also the first to emerge after
painful readjustments and high unemployment.
Eighteen years of Conservative government came
to an end on 1 May 1997, when Labour won a
landslide victory, with 419 members of parliament
elected to the House of Commons of 659 seats.
John Major’s Conservatives suffered their worst
ever defeat, winning only 165 seats, and although
the Liberal Democrats, the third party, strength-
ened their position, Tony Blair, the new 44-year-
old prime minister, with a majority of 179, was
not dependent on them. After repeated Labour
electoral defeats, Blair, who had become leader of
the Labour Party in 1994, set about shedding the
last elements of the traditional socialist Labour
ideology: nationalisation and renationalisation
were dead; the redistribution of wealth by taxing
the rich and the middle-income groups who had
gained most under the Conservatives was rejected;
the Thatcherite market economy was accepted;
the earlier rights of the trade unions would not be
restored. This was ‘New Labour’. It was difficult
to define what was ‘Labour’ about it: the old ‘left’
and ‘right’ labels no longer fitted a party whose
key claim was to ‘modernise’. ‘New Labour’ came
to look like a pragmatic radical conservative alter-
native, a one-nation party bent on equality of
opportunity, determined like Thatcher to pro-
mote the work ethic and change welfare. Benefits
would no longer be provided indiscriminately; a
readiness to work would be rewarded; what was
saved on welfare would be spent on subsidies to
employers who took on the young unemployed.
Blair’s agenda for ‘New Labour’ had much in
common with Clinton’s ‘New Democrats’ and,
given their close links, this was no coincidence.
With such a small majority John Major had
done well to keep going at all until 1997; his
party was split on the issue of monetary union and
closer European integration and further damaged
by some high-profile cases of sleaze. However,
the radical Conservatives approach to the
economy, promoting privatisation and flexible
labour, had led to a dramatic turnaround:
Britain’s comparatively low direct and indirect
wage costs attracted inward investment from
Germany, the US, Japan and Korea; unemploy-
ment had fallen from a peak of over 3 million to
well under a million, inflation was low and the
new expansion was under control with a strong
pound. Britain, once the ‘sick man of Europe’,
was now the model for recovery.
Major’s one success was in Northern Ireland
where he sought peace through negotiation. His
initiative appeared to have failed when the IRA
resumed their bombing campaign in London and
Manchester. But the Conservatives started a
process which, after the elections, a Labour gov-
ernment was able to revive.That was the state of Britain inherited by ‘New
Labour’. With tight reins on government spend-
ing there were also large problem areas: educa-
tion had been neglected under the Conservatives
until very recently. Schools were underfunded,
teachers poorly paid and undervalued; the
National Health Service demanded ever increas-
ing resources and struggled to meet basic needs- waiting lists for operations extended to a year
or more as Britain spent less on health than com-
parable developed nations. New Labour had
promised fiscal prudence – a promise it fulfilled.
In 1999 Blair’s support remained high; old-style
socialism had been ditched. Blair urged moderni-
sation while building on previous Conservative
changes. On 22 May 1998 a momentous change
occurred when the Northern Ireland peace deal,
brokered in April, ‘the Good Friday Agreement’,
was approved by 71 per cent of the Northern