‘Neoliberalism’ was good enough for Blair

Wednesday, 22 July 2026

OPINION: In January 1993 Will Marshall of the Progressive Policy Institute took a meeting with two British politicians eager to learn about how Bill Clinton had revived the American left. One of them was Gordon Brown, earnest and engaged, the other seemed very nice, although afterwards Marshall couldn't for the life of him remember his name.

Formally, the Progressive Policy Institute (PPI) was the think tank of the Democratic Leadership Council. Informally, it was the intellectual resource of a group known as the New Democrats, primarily southern governors and politicians who had reset their party after the Republicans had held the White House for more than a decade. Clinton had become their candidate, captured the party nomination and in 1992 won the presidency.

Shortly before Clinton achieved this victory, Labour had lost its fourth election in a row. By the time it got a chance to try again it would have been out of power for 18 years. So naturally its leading figures were keen to learn all they could about Clinton's campaigning techniques - rapid rebuttal, a war room - but also about the policy and positioning of the New Democrats. It was the latter that had brought Brown and his friend to Marshall's office.

Marshall drew attention to three particular areas of policy. The first was welfare reform, insisting on work in return for benefits. The second was to become tough on crime and not just on the so-called causes of crime. But the third was the biggest, a new approach to the state and public services.

David Osborne, a senior fellow of Marshall's think tank, had (with Ted Gaebler) just published a book called Reinventing Government. It had accompanied Clinton on the campaign trail and he had made frequent reference to it. The New Democrats did not agree with small-state conservatism, they believed there was a role for government. But they wanted government to be more effective. They wanted to deliver more for less. And the subtitle of Reinventing Government explained How the Entrepreneurial Spirit is Transforming the Public Sector.

Osborne and Gaebler argued that the provision of monopoly state services by unchallenged public bureaucracies was outdated and failing. Instead the state should 'steer, not row'. In other words, it should ensure provision and set standards, but it need not itself be the provider. This was the era of consumer choice. Public provision should allow entrepreneurs to innovate and consumers to guide. Money should follow the choices of those using the services.

Government provision was failing, but the answer, the New Democrats argued, was not to abandon the effort. Conservatives were wrong, they believed, to think that such services were unnecessary. The answer was reinvention. Freeing services from unions, interest group capture, bureaucracy, lack of imagination and inertia.

Within two years of the PPI meeting, Brown's friend, the one whose name Marshall couldn't recall at the time, had become leader of the Labour Party. Tony Blair became as much a proponent of the reinventing government idea as Clinton. When he became prime minister he fought some of his toughest political battles in the cause of public service reform. He said the fight had left scars on his back.

So when Andy Burnham talks of reversing more than 40 years of neoliberalism and championing a policy of bringing public provision back under state ownership and control, he is not just turning his back on Thatcherism. He is turning his back on a crucial part of his own party's modern history.

Blair did not just adopt this position on public services because he didn't want to reverse Tory changes. He adopted it because he found the Reinventing Government idea compelling. Osborne and Gaebler weren't merely politically convenient. They were correct.

Until relatively late in their 18 years, the Tories had been quite weak on reform of public services, and Blair thought this was because the right didn't really believe in such services at all. He wanted to do better because otherwise Labour would fail in its objective of improving public provision. Failure on this front would be problematic for a government of conservatives, but for one of the left it would be a disaster. It would mean Labour asking for more tax money yet not being able to provide better services in return.

In other words, Labour didn't merely surrender to a political consensus established by someone else. It self-confidently shaped that consensus. It recognised that competition, consumer choice and entrepreneurship made private provision better and had the capacity to do that to state provision too.

Now Burnham has made perfectly clear, in his public statements and in his cabinet appointments, that he doesn't believe this. He thinks the state should row as well as steer. He promised - he literally did - a return of the Labour people 'once knew': 'We will be that version of Labour again.'

Who does he mean? The Labour of Neil Kinnock and Roy Hattersley? The Labour of Jim Callaghan and the winter of discontent? And don't say Clement Attlee. If you voted for the 1945 government you are about to turn 100. He's got to mean someone since then. A union boss, perhaps. Jack Jones? Ron Todd?

It was a spectacular remark because people didn't want the Labour they once knew. And they were right not to want it, because it was failing. It failed electorally because its policies had failed and promised further failure. And its policies promised that failure for predictable reasons.

The provision of monopoly services by monopoly providers is bound to be more expensive, less efficient and captured by union interests. It is bound to stagnate, rejecting innovation that satisfies users but is seen by employees as merely a threat.

Public service and utility provision needs more not less competition, a stronger consumer voice and better regulation. Better steering not more rowing. Abandoning the reinventing government approach is a hidden tax increase, providing taxpayers with less in return for the same amount of money.

And who actually voted for this outside of Makerfield? All the people who won the last election have departed or been fired or (Wes Streeting) been moved somewhere they are in no danger of doing what Keir Starmer promised.

There is, however, one small sliver of hope. The authors of Reinventing Government did not talk of how the entrepreneurial spirit could transform government. Instead they talked of how it is transforming it. That is because they treated the states and local government as what they called 'laboratories of democracy'. They cited local experiments as evidence of the efficacy of their approach.

So, given that Burnham says he believes in local power, perhaps he can be prevailed upon not to inflict his promise of less efficient, less entrepreneurial public provision absolutely everywhere.