TCS Daily


The Still Emerging Blairite Legacy

By Matthew Sinclair - July 5, 2007 12:00 AM

With a new Prime Minister and a newly credible opposition it can seem hopeless to make predictions about the direction of British politics. Too many different changes are taking place at once. However, such an effort is not entirely in vain. It is becoming clear that some of the positions taken by Tony Blair during his ten years in office are unlikely to be imitated by his successor. In particular, the appointment of Sir Mark Malloch Brown as a Foreign Office minister in the Lords suggests a substantial shift in foreign policy to a sceptical attitude towards US leadership. In terms of domestic politics, however, Blair leaves behind serious changes that are unlikely to be reversed, not just by a new Labour Prime Minister but even by an entirely new government.

The 'Blairite' political movement that Tony Blair has been associated with may need to be renamed but is unlikely to die. Gordon Brown has been a key part of the Blairite project: an attempt to make the model of public services funded by general taxation politically sustainable. This political project has been highly successful. So successful that the opposition Conservative Party are now attempting to outdo Labour in the depth of their commitment to the funding of the National Health Service through general taxation. This is a recurring theme in healthcare proposals they set out recently. In primary and secondary education the situation is very similar. Most advocates of 'choice' accept that offering the public the choice to spend more or less on education - 'topping-up' with private funds - is a political non-starter. This near consensus is a relatively new thing. As recently as a few years ago the idea of encouraging more people to take up private health insurance, for example, was a central part of Conservative policy.

The Thatcherite legacy was based upon an understanding that there could be no return to the days of inexorable relative economic decline. The rewards of economic success were simply too large. They had created too large and influential a constituency dependent upon the new service industries. That constituency would not forgive an attack on its interests. The mainstream Left had to give up on nationalisation, openly soaking the rich and an uncontrolled excess of union power. However, the durability of the Blairite legacy is not based on a similar shift in performance.

There are minor improvements in some parts of the public sector and these are loudly trumpeted by the government but are a pretty scant return for massive increases in funding in recent years. In education a 2005 study found that Britain has the second highest level of low-skilled 25-34 year olds in the 30 countries of the OECD. This is twice the level in Germany and the US. Despite a doubling of healthcare funding, to broadly the OECD average, both the British Medical Journal and the European Union still rank the healthcare provided by the National Health Service as just about the worst of 19 developed country healthcare systems. The 2003 European Sourcebook of Crime found that England and Wales have the third highest crime rate of 39 peer countries worldwide.

Instead, the Blairite legacy is that a range of reforms have been deemed politically impossible. Public affection for the National Health Service is believed to be unchallengeable. Repeated Conservative election defeats are taken as proof that anyone whose policies are seen as helping the 'rich' opt-out will be defeated. Blair's legacy is not any particular practical achievement but that his electoral victories have made mainstream political figures unwilling to take the risk of advocating change that would have public services funded by anything other than general taxation.

The consequences of fixing on a particular model for financing public services could be truly dire. There is every reason to think that there is a popular desire for a substantial increase in spending on health, education and other services provided by government. As consumer demand for manufactures is increasingly sated and prices continue to fall there is a general move towards demanding more services which will include a rise in spending on services currently within the public sector. More spending on healthcare, in particular, is demanded by an ageing population looking to take advantage of expensive new treatments. More education is demanded by families hoping that their children can be on the right side of a growing skilled/unskilled divide. Across the developed world the percentage of income spent on health and education is on the rise. In the US this can be seen in rising healthcare costs. In Germany it is placing strain on the social insurance system. In the UK, if things do not change, it will mean a demand for radically more government spending.

There will be costs to this spending in the form of the damage that taxation does to an economy. It will also mean a drastic decline in individual freedom as more economic activity takes place in the sector of the economy under the control of the state. The costs of increasing spending combined with a continued failure of public services to demonstrate good value for money will occasionally put a break on the expansion of the state. However, these breaks will be temporary. We are currently going through such a slowdown. A famine for public services used to a feast. However, as the outgoing Health Secretary Patricia Hewitt confirmed at the LSE recently, the Labour leadership only expect this to be a temporary settlement. Pretty soon demand will build for another big increase in healthcare spending. Other services are likely to follow suit.

In the end, if this cycle is not broken it will lead to a crisis. To borrow George Gilder's metaphor a country can no more raise its revenue by increasing taxes than a company can increase its revenue by raising its prices. It may succeed in the short-term as there are transition costs to people moving their business somewhere that taxes them less onerously. However, in the medium to long term movement to countries with a smaller tax burden is certain. The recent row over how little private equity is taxed compared to ordinary people illustrates that it will not be possible to tax to pay for increased spending without hitting internationally mobile capital. A flight of capital and talent from the UK would mean a return to chronic relative economic decline. In the event of a loss of competitiveness leading to a crisis an opportunity would open for radical changes, for a new Thatcher. Decades of mounting economic failure is quite a price to pay for serious reform, though, and we could get a socialist instead of a Thatcher.

The challenge for right-wingers in the UK is to make the case now that healthcare, education and many other services currently provided by the state can be both provided and funded by the private sector. That such a change could lead to higher quality services and a more prosperous nation. Once a system of private funding is in place it should prove durable. A constituency of those who put private money in to give their children better chances in life or get themselves better treatment when they are ill would be created. It would respond angrily to any threat of those options being curtailed.

British right-wingers will struggle to stop the growth of the state, and maintain a healthy economy, without finding alternative means of financing public services.

The author is Policy Analyst, The TaxPayers' Alliance in London.


Categories:

4 Comments

It's already passé
Blair hasn't been gone two weeks and already his policies are being shovelled overboard with an earth mover. Even Blair's very favourite - multiculturalism - is being ditched by Gordon Brown. So is the kow-towing to Islam to further Blair's personal ambitions in the Middle East.

As to the so-called "health" service, Brown's people are also set to begin sorting out the nightmareish mess - and waste of billions of pounds - Blair's incompetent people and Blair himself caused to bring the NHS crashing down.

It's already passé
Blair hasn't been gone two weeks and already his policies are being shovelled overboard with an earth mover. Even Blair's very favourite - multiculturalism - is being ditched by Gordon Brown. So is the kow-towing to Islam to further Blair's personal ambitions in the Middle East.

As to the so-called "health" service, Brown's people are also set to begin sorting out the nightmareish mess - and waste of billions of pounds - Blair's incompetent people and Blair himself caused to bring the NHS crashing down.

multiculturalism is being ditched?
Is this the same Brown, who after last weeks failed terrorist attacks, instructed his ministers that they were not to mention Muslim and terrorists in the same breath?

crashing down?
Many of the statists on this forum don't think it came crashing down, but maintain the quaint notion that the NHS is really fine system that the US should emulated. But leftist hopless romantics are like that, they even love the Canadian dysfunctional system that is even worse than the NHS. But this new guy Brown was always said to be more left wing than Blair, so if true we can expect more backtracking, and Britain might again become the 'sick man of europe' like it was before the Thatcher time. Britain, the place where people think that the Nelson, on Nelson's column is 'Nelson Mandela'.

TCS Daily Archives