In a YouGov poll conducted of labour party members in early 2020 Tony Blair was by far the most unpopular of those who have led the labour party since 1964. Only 37 per cent of labour party members had a favourable view of him as compared with 71 per cent for Jeremy Corbyn and 70 per cent for Ed Miliband.
At the time of the most recent labour
leadership election none of the candidates was willing to praise the record of
his government when compared with the Tories. A similar silence emanated under
Jeremy Corbyn at the last election. Surely the first time in democratic
politics in this country where a party has tried to get elected on the basis
that it was very bad last time but would do much better this time. It did not
work, which might well not be thought a surprise.
Now the issue that probably
dominates in the minds of labour party members is the Iraq war. A deeply
divisive and, even at the time, a very unpopular policy. But the critique is
wider than that. The argument is often heard that New Labour was simply a
continuation of the neo-liberal free market individualist policies instigated
by the Thatcher premiership. Indeed, it appears many members of the labour
party draw no distinction between the outcomes for the two periods in the area
of economic policy. There are those who argue for a more positive view of new
labour, for example:
www.theguardian.com/commentisfree/2018/nov/20/new-labour-neoliberal-left-tony-blair
but even those willing to defend
the Blair and Brown governments seem unaware that its economic policy
effectively reversed the pattern of income growth under the Thatcher
government.
To demonstrate this I present the
data for rises in average household incomes across the distribution for the
periods of the Thatcher and New Labour governments, the latter including Gordon
Brown’s premiership and thus the years of the financial crisis. In Figure 1 I
show the total increase based on the trend growth of income in the period.
While this captures what happens on average over the period it may mislead as
to the differences between the beginning and end points of the premierships. So,
in Figure 2 I compare the average incomes for the top and bottom decile at the
beginning and end points of the two premierships. In Figure 2 I also show how
the median household fared and the size of the gap in incomes between the top
and bottom deciles.
It would be little exaggeration to
say that the New Labour years were the exact opposite of those of the Thatcher
premiership. The grey line shows increases in market incomes, while the red
lines show increases in equivalised disposable income, both are total
percentage changes over the period of the respective premierships. For both you
can see how those increases differed across the distribution from the bottom
decile (that is the bottom 10 per cent) and the top decile (the top ten per
cent).
Figure 1 Thatcher and New Labour Compared
Market incomes are the wages of employees
and the self-employed that the market delivers. Disposable incomes are those
available to households after transfers and income taxes and national
insurance. Clearly how well off is a household depends on how many adults and
children there are in the households. What equivalised means is that an
adjustment has been made for such differences. Thus, equivalised disposable
incomes are our best means of comparing how households across the income
distribution have fared.
As Figure 1 shows for the Thatcher
years increases in disposable household incomes for the bottom 30 per cent of
the households were derisory, averaging about 6 per cent - that is a total
increase over eleven years. From the fourth to the top decile there is a steady
march up with the higher the household income the higher the percentage growth
rates.
The contrast with New Labour is
stark. The bottom 30 per cent of the household had increases that compare
favourably with those of the top 30 per cent for both market and equivalised disposable
incomes. Indeed, while the bottom 30 per cent of households under Thatcher saw
falls in their market incomes under New Labour they had massively larger
increases than those at the top of the distribution.
Percentage changes are a bit
abstract so what do these percentages means for actual incomes across the
distribution. Further what do they mean for the gap between the rich and the
poor across these years of Thatcher and New Labour economic policy. Those questions
are answered by the data in Figure 2 which shows the second way of presenting
the data.
Figure 2 Household Incomes across
the Distribution
Considering equivalised disposable
incomes under Thatcher incomes in the top decile increased from £ 36,150 to
£64,976, a rise of 80 per cent. In contrast incomes for the bottom decile
increased from £6,748 to £7,113, a rise of just over 5 per cent.
The comparable numbers for New
Labour are an increase from £68,452 to £89,596 for the top decile, a rise of 31
per cent. For the bottom decile the increase is from £7,681 to £10,256, a rise
33.5 per cent. This is less than that shown in Figure 1 as there was some
slowing of the growth rate for the bottom decile during the later New Labour
years. However, both approaches point to the reversal of the pattern shown
during the Thatcher years for the New Labour ones.
Clearly the bottom and top deciles
are the extremes of the distribution. In the top right I show the pattern for
the median households. For these the two period saw virtually identical
increases if we look at changes between the beginning and end points from
Figure 2. If we look at trends, as used in Figure 1, New Labour does slightly
better.
In the bottom right of Figure 2 we
show the gap between the top and bottom deciles. It is indeed this gap which
people often mean when they talk of increasing inequality. As the chart shows
it is true that the gap between the top and bottom deciles has been growing
both under both Thatcher and New Labour. But that reflects, not the failure of
New Labour, but the assault by the Conservative government on the poor such
that by1997 the level relative to the rich was so low that even the much better performance for the poor under New
Labour was insufficient to close the gap.
New labour represented a revolution
in the success of economic policy toward the poorest parts of society. It is
unsurprising that the Tories remain silent on this success. That they are
joined in this silence by members of the labour party is a tragedy for the
people that New Labour was so successful at helping.
Notes on
the data used in the charts:
The data is provided by the ONS.
The most recent data can be found at:
The data in the Figures is drawn
from past publications of this data which seeks to provide estimates of the
redistributive role of taxes and benefits on household income and inequality.
The data are from our Living Costs and Food Survey (LCF), a voluntary sample
survey of around 5,000 private households in the UK.
These statistics are produced at
the individual level meaning, for example, that income quintiles are derived by
ordering people, rather than households, on an equivalised household disposable
income basis. This method is consistent with the statistics reported in Average
household income, UK: financial year ending 2019 and Household income
inequality, UK: financial year ending 2019, and it ensures the variance in
household size across the income distribution is better accounted for.
My book – The Poor and the
Plutocrats (to be published by Oxford University Press on March 24 2021) - uses
this data source, presenting quintiles rather than deciles, to show how the US
compares with the UK in terms of how levels of income across the distribution have
changed. The book also provides more details on the data used.
