New Labour in the UK: Era of Neo-Liberal Consensus on Economic and Social Policy 
Dhruva Murugasu Christ’s College Part I Economics
“Under New Labour, Britain is witnessing a new era of neo-liberal consensus on economic and social policy.” Discuss
The election of Tony Blair in 1997, it is commonly said, brought about a new era in Britain’s Labour party, with the party moving to the centre of the political spectrum and adopting very similar policies to the preceding Conservative government. Tony Blair coined the term New Labour to distinguish his government from the more socialist ones of earlier Labour governments and adopted a largely neo-liberal stance, similar to that of Margaret Thatcher. This ideological shift was actually already in motion after Labour’s heavy defeat in 1983, which was due to their extreme-left manifesto which was later referred to as the longest political suicide note in history. The Labour party more or less accepted that the median voter had shifted to the right, as suggested by Knight, and responded to that by doing the same. In most senses, there was a neo-liberal consensus, especially outwardly, although this was not always true as close examination of Labour’s policies will reveal. I will approach this essay by first outlining the main characteristics of the Conservative policy during the Thatcher and Major administration and then proceed to point out the similarities and differences between these policies and those employed by New Labour. No particular effort will be taken to discuss the desirability or effectiveness of the policies implemented but rather whether or not there was a consensus and whether it was based on neoliberalism.
First, let me deal with economic policy, which can be divided into demand-side and supply-side policy. In terms of demand-side policy, there was a clear shift from Keynesian demand-management to Friedman’s monetarism with the coming to power of Thatcher. This also involved a shift in the focus of
“Under New Labour, Britain is witnessing a new era of neo-liberal consensus on economic and social policy.” Discuss
The election of Tony Blair in 1997, it is commonly said, brought about a new era in Britain’s Labour party, with the party moving to the centre of the political spectrum and adopting very similar policies to the preceding Conservative government. Tony Blair coined the term New Labour to distinguish his government from the more socialist ones of earlier Labour governments and adopted a largely neo-liberal stance, similar to that of Margaret Thatcher. This ideological shift was actually already in motion after Labour’s heavy defeat in 1983, which was due to their extreme-left manifesto which was later referred to as the longest political suicide note in history. The Labour party more or less accepted that the median voter had shifted to the right, as suggested by Knight, and responded to that by doing the same. In most senses, there was a neo-liberal consensus, especially outwardly, although this was not always true as close examination of Labour’s policies will reveal. I will approach this essay by first outlining the main characteristics of the Conservative policy during the Thatcher and Major administration and then proceed to point out the similarities and differences between these policies and those employed by New Labour. No particular effort will be taken to discuss the desirability or effectiveness of the policies implemented but rather whether or not there was a consensus and whether it was based on neoliberalism.
First, let me deal with economic policy, which can be divided into demand-side and supply-side policy. In terms of demand-side policy, there was a clear shift from Keynesian demand-management to Friedman’s monetarism with the coming to power of Thatcher. This also involved a shift in the focus of
Bibliography: Knight, Governing Britain since 1945, 2006 Fielding, The Labour Party; continuity and change in the making of ‘New’ Labour, 2003 Powell, New Labour, New Welfare State?, 1999