EXPLORING POLITICAL CHANGE THATCHERISM AND THE REMAKING OF THE LABOUR PARTY 1979-1997 RICHARD HEFFERNAN P hD THESIS LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE UNIVERSITY OF LONDON UMI Number: U61BB65 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U613365 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 ~L Z £ ^Saujouoog Abstract. The politics of Thatcherism reflects a political and economic project rooted in the ideology of the New Right. While subject to the interplay of opportunity and circumstance, chance and fortune, the Thatcher and Major governments of 1979-1997 did pursue and largely enact a coherent political agenda. Thatcherism is best understood as a process enacted over time. At its very heart was an anti-statist commitment to roll back the frontiers not of the state per se but of the pre­ existing ‘social democratic’ state. As a project simultaneously informed by an ideological doctrine and constrained by the dictates of statecraft, Thatcherism was an agent of political change, one which reconfigurated state and society at the same time it was responsive to political realities and electoral pressures. Rather than spring from nothing, Thatcherism was constructed over time and through experience. As a result, modem politics has seen a dramatic shift in favour of right- reformist neo-liberal politics at the expense of left-reformist social democratic politics. Through developing a theory of party competition driven party change this thesis explores the much remarked transformation of the Labour Party since 1983. It offers a theory of consensus politics that suggests consensus does not simply reflect a policy coincidence but implies a broad association on general principles which inform the policy decisions parties make. Policy is enacted within a consensual settlement reflecting implicit and unstated ‘guiding assumptions’ shared across parties, an ‘agreement’ existing in the form of a ‘framework’ and part of a prevailing political orthodoxy. Contemporary UK party politics are now enacted within a set of parameters enclosing a space on the centre right of politics: The political consequence of Thatcherism lie in a new political middle ground, a changed ideological space between Labour and the Conservatives, a process engendered by party competition driven party change. In programmatic terms, Labour has followed where Thatcherism has led. ‘Modernisation’ is a metaphor for the politics of Catch-Up, the process underpinning Labour's accommodation to (and adaption of) Thatcherism's neo-liberal political agenda. As an agency of change Thatcherism has helped recast mainstream ideological politics so influencing the prevailing political agenda to which Labour as an office seeking (and policy seeking) political agent has had to comply. Acknowledgments. This research was funded by the Economic and Social Research Council and I am immensely grateful for their sponsorship. The Government Department at LSE has proved an extremely stimulating place in which to work. Numerous debts were incurred during the writing of this study that will be hard to repay. Thanks to Alan Beattie for providing steadfast and reliable support and being willing to offer suggestions and telling criticisms in helpful measure. Andrew Gamble and John Barnes examined the thesis and I am very grateful to them. Thanks are also due to Patrick Dunleavy for innumerable kindnesses and generous assistance. I am also in the debt of a great many writers and commentators who have previously quarried this great subject; the bibliography is an indication of the extent of what I owe. A great many friends and colleagues offered various advice and insights: Thanks are due to them all. Special mention should go to Brian Brivati, Andy Chadwick, Mark Doyle, Andy Hindmoor, Oliver James and James Stanyer. As ever, the Rt Hon Tony Benn MP was extremely helpful not least in making available the Benn archive. Finally, especial thanks are due to Helen Barry for her invaluable friendship and support without which this work, as so much else, would have proved impossible. Naturally, no one bears any responsibility for the arguments that follow. Any inadequacies are mine alone. Richard Heffeman London October 1997. Contents. Abstract and Acknowledgments. Chapter 1. The Reordering of British Politics: Analysing Political Change. 1 1.1 Thatcherism and the Reordering of British Politics. 1 1.2 Shifting Paradigms in Contemporary History. 15 1.3 Actors, Agencies, Structures: Exploring Political Change. 25 Chapter 2. The Politics of Thatcherism. 35 2.1 Exploring Thatcherism. 3 5 2.2 Understanding Thatcherism: Leadership, Limitations and Constraints. 45 2.3 Categorising Thatcherism as a Political Process. 57 Chapter 3. The Privatisation ‘Revolution’. 65 3.1 Privatisation and British Politics. 65 3.2 Introducing Privatisation: Policy Enactment. 76 Chapter 4. The Politics of Thatcherism: Privatisation as Case Study. 86 4.1 Explaining Privatisation. 86 4.2 Thatcherism as Project and Process: Privatisation as Method. 95 4.3 Explaining Thatcherism: Objectives and Consequences. 105 Chapter 5. The Transformation of the Labour Party, 1979-1997. 117 5.1 Modernisation: The Extent of Labour’s Transformation. 117 5.2 Policy Re-Evaluation I: Abandoning Public Ownership. 127 5 .3 Policy Re-Evaluation II: Accepting Privatisation. 141 Chapter 6. A Study in Party Change: The Emergence of ‘New’ Labour. 156 6.1 From Realignment through Review: Modernisation and ‘New’ Labour. 156 6.2 Exploring Labour’s Modernisation: A Model of Party Change. 166 Chapter 7. Party Competition Driven Party Change: The Politics of Catch-Up. 182 7.1 A Theory of Party Competition Driven Party Change. 182 7.2 Defining the Political Middle Ground: Party Change and the Politics of Catch-Up. 193 7.3 Explaining Labour’s Transformation: Modernisation and the Politics of Catch-Up. 207 iii Chapter 8. Exploring Political Change: A Theory of Consensus Politics. 219 8.1 Understanding Consensus Politics. 219 8.2 Consensus as Constraint: Party Competition and the Shifting Political Middle Ground. 230 8.3 A New Consensus: Thatcherism and the Reinvention of the Labour Party. 238 Bibliography. 248 iv Chapter 1 The Reordering of British Politics: The Thatcher Decade and Bevond. 1.1 Thatcherism and Political Change. 1.2 Shifting Paradigms in Contemporary History. 1.3 Actors, Agency, Structure: Exploring Political Change. 1.1 Thatcherism and the Reordering of British Politics. Contemporary politics in the 1990s reflects the fact that the familiar landscape of British public policy has been fundamentally altered in recent years. In a phenomenon unconfined to the UK policy instruments such as public enterprise, established styles of business regulation, progressive income tax structures, corporate relations with trade unions and management, and traditional forms of public management have almost become things of the past; in the words of Christopher Hood they are ‘policy dinosaurs’, species of public policy replaced by new ‘life forms’ such as "deregulation, neo-classical economics, flatter taxes and new public management” l. The notion of a interventionist state imposing collective political decisions upon the system of economic market exchange is increasingly seen as outmoded and irrelevant to the real needs of the contemporary economy. Just as by the late 1950s the phrase laissez-faire conjured up such ghosts of the 1930s as unemployment, economic depression and slump, the late 1980s witnessed the systematic devaluation of many of the key policy approaches upon which post-war British politics had been based. While many normative assumptions prevail (the public benefits of state education, health and personal social services, the maintenance of law and order, defence, economic management and industrial regulation) previously dominant statist patterns of government intervention requiring the exercise of direct controls over enterprise and service provision have receded. The mixed economy, government demand management, full employment and the welfare state, the four pillars of post-war policy, have been called into question by the ‘political revolution’ of the 1970s and 1980s. Where the social democratic era presupposed that the role of the state was to directly regulate the market in a social interest, a revived neo-liberalism conceives the role of the state as ^Christopher Hood. Explaining Economic Policy Reversals. Buckingham: Open University Press 1 being to empower the market in an economic interest and (when possible) in a social interest. Its rise and consolidation as a dominant political ideology has brought about fundamental political change in practical politics characterised by privatisation, deregulation and commercialisation of the state sector based upon an acceptance of the primacy of market forces in the governance of the economy and state-centred activity2. Since 1975, the state has been recast in as close a neo-liberal (ie non-social democratic) guise as has proved politically