New Statesman & Society, leader 12 January 1996

The idea of a “stakeholder society”, as advanced by Tony Blair in his speech in Singapore this week, is an excellent one. But what would it mean in practice?

Tony Blair’s speech on the “stakeholder economy” and the “stakeholder welfare system” in Singapore this week was one of the most significant he has made as Labour leader. It contained nothing in the way of detailed policy. But for the first time Blair articulated an overarching ideological theme for what he hopes will be a long spell in office.

So what’s the big idea? Essentially, that the central aim of all economic and social policy must be to encourage the involvement and participation of all citizens in economic activity and welfare provision, within the broad framework of a market economy. “It is a stakeholder economy in which opportunity is available to all, advancement is through merit and from which no group or class is set apart or excluded,” said Blair. If we fail to create such an economy, “we waste talent, squander potential wealth-creating potential and deny the basis of trust upon which a cohesive society, One Nation, is built”. “The development of an underclass of people, cut off from society’s mainstream, living often in poverty, the black economy, crime and family instability,” he went on, “is a moral and economic evil.”

None of which is particularly controversial or even novel, one has to admit. But Blair went on to discuss what the imperative of discouraging exclusion means in practice – and in doing so gave a tantalising glimpse of what could be an extensive and genuinely radical programme for government.

Most attention has been given to what he said about a “stakeholder welfare system” – which is not altogether surprising. Blair was in Singapore, after all, and Singapore has a welfare system very different from our own, one feature of which is a compulsory savings scheme to provide pensions and other benefits.

It is no secret that Labour is looking very closely at this idea, and so it should: it is in essence a genuine national insurance scheme along the lines recommended by William Beveridge in his 1943 report but only imperfectly implemented after 1945, and, as Frank Field and others have argued, a version of it could serve Britain well. Of course, the devil is in the detail with anything like this, and the value of a compulsory savings scheme would depend crucially on its size, the extent of any compensatory tax cuts, what happens to non-contributory benefits and a whole lot besides. But the principle is sound enough, and it would be foolish for the left to dismiss it out-of-hand because of lack of familiarity or because other elements of Singapore’s welfare system are deeply unattractive.

Welfare reform, however, is just one part of the “stakeholder” idea. Blair also talked of guaranteeing that education serves “all our people, not an elite”, and of ensuring that new technologies “are harnessed and dispersed among all our people”.

More interestingly, he went on to suggest that far-reaching change is needed not just in the relationship between business and government, but in the whole British business culture. “We cannot by legislation guarantee that a company will behave in a way conducive to trust and long-term commitment. But it is surely time to assess how we shift the emphasis in corporate ethos, from the company being a mere vehicle for the capital market, to be traded, bought and sold as a commodity, towards a vision of the company as a community or partnership in which each employee has a stake, and where a company’s responsibilities are more clearly delineated.”

Once again, the devil is in the detail here. If all that a Labour government does is exhort companies to be nice to their workers and to resist the temptations of takeovers, it won’t have very much effect. What is exciting is the prospect that it would do a lot more – from legislation to make takeovers and asset-stripping more difficult to the introduction of incentives for the creation of worker co-operatives. A Labour government that is really serious about tackling the domination of the British economy by what Will Hutton calls “stock-market capitalism” would be a novelty indeed.

Of course, there are plenty of problems with Blair’s approach, the biggest of which is that it relies on Labour’s ability to make rapid and massive reductions in unemployment. That would be difficult enough at the best of times: as Blair and shadow chancellor Gordon Brown have argued consistently in recent years, the globalisation of the economy means that a Keynesian “dash for growth” is no longer a feasible option for a medium-sized country like Britain. It will be even more difficult if Britain is struggling under self-imposed austerity to meet the conditions laid down in the Maastricht treaty for economic and monetary union. What price stakes when the chips are down?

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