To win elections henceforth, a left-of-center party had to reach a much wider set of voters, including those who had never endorsed the party in the past. Labour could no longer be a class-based party. In Tony Blair, not a Labour tribalist by any description, the party seemed to have found the perfect leader to help further this aim.
During its years in government, Labour’s policies evolved over time. Some core threads remained the same, however.
Economic prosperity, against the backdrop of the globalized marketplace, had to have primacy of place – it was seen as the precondition of effective social policy. An increasingly prosperous economy would generate the resources to fund public investment without the need to increase tax rates.
Labour sought to break away from its previous predilection for tax-and-spend. “Prudence” was Gordon Brown’s watchword as Chancellor of the Exchequer. Prudent economic management could generate the resources needed both for increasing levels of social justice and for rising welfare spending.
In each of these areas, Labour had to struggle against a disastrous inheritance from the Thatcher years. Inequality had increased more steeply in the UK during those years than in any industrial country save for New Zealand (which had also followed Thatcher-style policies). The welfare system had been starved of investment and was threadbare. Investment in public services, coupled to reforms designed to make them more flexible, geared to job creation, and more responsive to the needs of their clients, became a guiding thread. Labour should not be the party of the big state, but of the intelligent state, interacting creatively not only with markets but with civil society.