As each week passes, a new theory of Labour’s troubles emerges. It’s comms. values. Vipat. Policies. Leaflets. Tweets. TikToks. While there is some truth to these criticisms, they fail to explain why the party’s time in office has been so difficult. The problem is deeper – and further – than many in the party are willing to admit.
This begins with the party’s “problem statement,” to use the jargon of management consultants—who will tell you that every plan must begin with one, including office programs. Problem statements are by their nature time-limited: if you go to the doctor with an illness, they will always ask, “When did your symptoms start?”
For many in Labour, the answer is the financial crisis of 2007-08. Too often it is assumed that our politics were “normal” and the country was on a good course until the collapse. And after that, things got weird – leading to Brexit and other undesirable outcomes. But what if this diagnosis is wrong? What if the crisis did not create our problems, but merely accelerated them? What if the real turning point came with the continuation of Thatcherism under Blair?
ANTI John Bew in these pages recentlyThatcher’s revolution is the last “great break” Britain has seen – and no one, including the last Labor government, has touched it. That revolution had three key elements.
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First, deindustrialization. This destroyed strong working class communities and was followed with a vengeance by Thatcher. While this is a tale as old as time, New Labour’s industrial history receives less attention. like Rian Chad Whitton has debatedmuch more of our industrial decline occurred later than standard accounts consider: AFTER Thatcher’s time in office, from the millennium onwards, partly due to a sharp rise in industrial energy prices from 2004 onwards.
Second, privatization. In 1985 water, power, buses and trains were all under public control. However, roughly a decade later, they had all moved to the private sector. The massive national sell-off has eroded public confidence in the system, making them pay more for less, like Common Wealth have recently shown. These changes were largely abandoned by New Labour.
Third, globalization. As David Edgerton has argued, the opening of the UK economy to global forces was the essence of Thatcherism. This meant a large sale of British assets, often under the guise of “foreign direct investment”. International ownership of UK-listed companies has risen from less than 5 per cent in the early 1980s to more than 50 per cent in 2022. This is a remarkable change, meaning we are sending billions of pounds of profits overseas that could have gone to British workers. While such forces were set in motion during the 1980s, New Labor did little to stop the creation of this “vassal state”.
The longevity of Thatcher’s economic reforms explains why politics today is much more like the politics of the 1990s and 2000s than people usually expect, and why they are less forged by the financial crisis than people generally believe.
Take populism. If the financial crisis were the real turning point, we would expect populism to increase only after 2008, but the departure from mainstream politics was already underway. During the 1990s and 2000s, far-right and far-left parties made increasing gains. The BNP made gains across post-industrial countries, gaining ground from Bradford to Barking. On the populist far left, George Galloway was rampant, winning councilors in East London, Birmingham and – again – Bradford. Geography is no coincidence—these countries tend to have been more exposed to the new political economy of the 1980s, particularly their exposure to deindustrialization.
Of course these parties remained relatively separate – they never ran a council and barely had parliamentary representation. However, a new form of politics was emerging, not least in the rise of mainstream Euroscepticism. It is easy to claim that Reform is a post-collapse phenomenon, but this is when Ukip came third in the European elections (2004) and won more than half a million votes in the general election (2005).
But what about migration? A common Westminster shorthand is that if the punch bowl hadn’t been taken away from the party, in the form of the North Rock collapse and all that followed, then concerns about migration would have remained low. However, consider this scenario: a Labor government faces a record number of asylum applications and a public backlash as a result, with many arriving illegally across the channel from a camp in Calais. Her response? To consider radical action at the ECtHR to deal with an extraordinary number of asylum applications – including Australia’s external processing review.
Sound familiar? Of course – but that was Blair’s government in 2003, not Starmer’s. In the following archival publications in 2023we now know that his government was considering many measures similar to this, while in many cases going much further, including the consideration of a prison camp on the Isle of Mull. As Dr Peter Walsh of the Migration Observatory set when viewing the release“Gosh, that’s a lot like the debate we’re having right now.”
Similarly, consider trust in the political class. Recently, this has become something of a Westminster obsession; it’s hard to scroll for podcasts, essays, or pieces like this one about falling faith. The simple answer generally goes something like “the crash of 2008, plus the spending scandal” as an explanation. However, the data suggests otherwise: trust in politics has been declining for decadeswith growing support for the idea that politicians are only out for themselves.
But what about our economy – wasn’t it doing well? It’s common to see a common graph at Westminster – GDP is steadily increasing every year until – poof! – the financial crisis. As a result, the task is to return Britain to “pre-crash” status. Hence the calls from “boosters” and Yimbies to magically return to our pre-crash growth rate. And in the most respected corners, such as the Resolution Foundation, an attempt to change “lost decade” seen since the crash.
But what happens if we lift the lid a bit? We now know that, yes of course, wages slowed after the financial crisis, but wage growth in the 1990s and 2000s was significantly poorer than during the post-war consensus decades. like LSE’s Stephen Machin writes“In the 1960s, 1970s, 1980s, real wage growth was healthy at 3.0, 5.5 and 4.4 percent a year. The 1990s slowed to 1.6 percent and a similar 1.7 percent in the 2000s.”
The closer you look, the more the “great moderation” of the 1990s and 2000s appears. Instead, you see the fault lines central to our so-called post-army politics: populism, declining trust in politics, migration center stage. Which may all be rooted in Thatcher’s disastrous economic program and legacy.
Certainly, the financial crisis intensified the momentum behind these forces in our politics. And so are the policy choices that followed the crash, particularly the austerity measures – from which we know academic research increasing support for Brexit, for example. But they are continuations of trends that already existed; not a break from an earlier paradigm, as is typically presented.
Indeed, while much of the political class took their eye off the ball, to those paying attention it was clear. I think this partly explains why the best analysts of the 1990s and 2000s wrote books that sound remarkably similar to those written in the so-called “post-crash” era. of John Grey Post-Liberalism was published not in the wake of Brexit, but in 1996. The Age of Uncertainty by Larry Elliot was written more than two decades before the expression was used by the Prime Minister. Why is Labor still acting as if their job is to return us to the stability and moderation of the 2000s?
One obvious reason is that the party was in office for most of this period. Can she be proud of her record? There are many ways to square this circle. The simplest is to admit that New Labor successfully ameliorated the symptoms of Thatcher’s flawed political economy. The New Deal for the Communities brought life back to some of the countries most exposed to deindustrialisation. The Regional Development Agencies where they worked brought public sector employment to improve living standards in the regions. Policies such as Sure Start helped the least.
But the proof was in the pudding – if New Labor had shifted our economy away from an over-reliance on services, in particular financial services, we would have been less exposed to the banking crisis. After all, we were one of the hardest hit economies in the world, with a knock-on effect from which we have never recovered.
If this all sounds like too bitter a pill to swallow, consider this. One of Farage’s weaknesses is that he admires the politician – Thatcher – who has done the most damage to Britain in modern times. If Labor could shift the blame to the long-term and deep economic changes the Tories launched and which were then doubled down by austerity, the party would be in a better position.
It may also provide some solace to those scratching their heads as to why the “change” offered by Labour’s manifesto has been so difficult to deliver. Simply put, our problems have been allowed to fester for nearly 50 years. The repair work will take some time. Undoing the conservative mistakes of the last 15 years is sadly insufficient.
Instinctively, I think the public understands that – the sense that we’ve been on the wrong track for some time is palpable. This explains the deep nostalgia of our country; or latest poll by Ipsos found that the public think the Britain of 1975 outperforms that of 2025 on almost every metric, a remarkable finding and one that places us among the most nostalgic countries in the world.
Labor must channel this nostalgia to build a new Britain. When asked to choose between the social democracy of the post-war consensus and the hyper-individualism of modern Britain, it is clear which side the public is on. At the same time, we must describe our adversaries as stuck in the past – as those tied to outdated methods and practices that we have tried for half a century, with increasingly poor results. Starmer has always been allergic to defining his project, but here’s a name for it: progressive nostalgia.
Not only can the nostalgia for the 1990s and 2000s we’ve seen return, but it had many undesirable features that – critically – are plaguing us today. But for the stability, security and prosperity of the working class of the time, before Thatcher broke that Britain up. Progressive not because we are associated with a particular body of liberal internationalism that was forged by the fall of the Berlin Wall. But because we are calling time on the outdated conservatism of the last 50 years: of deindustrialization, privatization and globalization, which produced the political discontent that plagues our country.
(Further reading: Karl Turner’s suspension exposes the confusion of Labor whips)
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