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Was Brownomics Socially Correct?

Catherine Coron


On Monday 26 January 2009, the Guardian published the results of a poll entitled “Who led us down the Road to Ruin – Twenty-five people at the heart of the meltdown”. The economic crisis was evoked as being “not a natural phenomenon but a man-made disaster in which we all played a part”. This paper will try in a first part to question the hypothesis whether this recession was either a “natural phenomenon” or a “man-made disaster”. It will thus make an attempt at measuring the collective, individual, national, international and supra-national responsibilities in the British slump. The United Kingdom’s economy and economic policy from 1997 to 2010 will be put under close scrutiny in order to encompass the role of the different actors.
The second question will be about the social impact of the economic crisis in the United Kingdom. This paper will first try to define the term “brownomics” analyzing the main features of Brown’s social policy from 1997 to 2010. Then, issues such as the job crisis, skill shortages, over-indebtedness and finally social and salary discrepancies will be examined to find out about what has become of the British economic model which fluctuates between liberalism and neo-Keynesianism.

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  • 1  Finch, F., 2009.
  • 2  Coates, D., 2008.

1On Monday 26 January 2009, the Guardian published the results of a poll entitled “Who led us down the Road to Ruin – Twenty-five people at the heart of the meltdown”1. Among the four politicians mentioned Gordon Brown was the only British, the others being Bill Clinton, George Bush, and the American Senator Phil Gramm. In this article deregulation was mainly designated as the main culprit, the only one responsible for the dramatic state of the British economy. The economic crisis was evoked as being “not a natural phenomenon but a man-made disaster in which we all played a part”. Yet, Gordon Brown’s role in the British economic policy appeared as rather essential, as David Coates, the author of an article entitled “’Darling, It is Entirely My Fault!’ Gordon Brown’s Legacy to Alistair and Himself”, thinks we should consider him as “the architect of the domestic dimensions of the ‘third way’ project”2.

2This paper will try to question the social impact of the economic crisis in the United Kingdom. In Iceland, in early 2009, and later in Latvia, governments were destabilized because of the impact of the economic crisis. In 2010 in France, Nicolas Sarkozy’s party also lost the regional elections. Whether it was due to the aftermath of the recession is still very difficult to determine. The final result of the General Elections in the UK in 2010 may be interpreted as a political sanction for the management of the economic slump. Time has probably come to examine the major features of the economic policy initiated by Gordon Brown from 1997 to 2010 in so far as they bore social consequences for the British people.


  • 3  Esping-Andersen, G., 1990, p. 17.

3This paper aims at defining the main economic measures which had a social impact in the United Kingdom between 1997 and 2010. The scope of the study will be reduced to the economic policy affecting the labour market, and more particularly workfares as they were defined by Gosta Esping-Andersen as tools which might enable us to distinguish a social model within each model of capitalism. For him, “The welfare state represents an essential institution in the edification of the different models of post-war capitalism”3. What’s more, these workfare and training policies are designed to decrease social inequalities so they can be regarded as major economic tools to bring social correctness if needed.   The analysis will be carried out thanks to a close scrutiny of Gordon Brown’s and Mervyn King’s speeches, New Labour manifestos on the period, and more particularly all the elements referring to economic and social measures. The New Deal and the OECD’s websites were also very helpful so as to find the major characteristics of the active labour market employment policy as well as its new aspects.

4The central question will be to find out whether Brownomics was sociallycorrect between 1997 and 2010 and whether it matched the economic and social creed of the Third Way. In order to answer this question we need first to define Brownomics by analyzing the main features of Gordon Brown’s economic and social policy from 1997 to 2010. We will thus examine Gordon Brown’s 1997-2010 economic workfare and major economic policies in the light the Third Way while also accounting for both the perspectives of the economic crisis and the 2010 British General Elections so as to be able to perform an economic and political assessment of this particular scope of study.

An Attempt at Defining Brownomics: Brownomics and the Third Way

5We will now examine Gordon Brown’s 1997-2010 major economic policy features which will be referred to in this article as Brownomics in the light of the Third Way.

Main Economic Features of the Third Way

  • 4  Whyman, P. W., 2006, p. 2.
  • 5  Blair, T., 2001, p. 2.
  • 6  Whyman, P. W., Third Way Economics, 2006, title.

6The Third Way was first an ideology which was designed to help the Labour Party win the General Elections in 19974. It was defined by Tony Blair himself in 2001 as “a work in progress”5 and so corresponds more to an economic practice than a theory. If we focus more particularly on the economic policies which had an impact on social welfare we find the following characteristics which will be illustrated by some examples of economic practices over the period. In order to see whether Brownomics can be equated with ‘Third Way Economics’6 we will try to mention all its characteristics which match the Third Way’s approach.

  • 7  Labour Party Manifesto, 2005.

7Brownomics’ first main economic feature in agreement with the Third Way is a belief in ‘Neo-liberalism’ which was illustrated by the refusal of any type of government intervention apart from fiscal policy. However, there were public spending devoted to improving education, health and transport from 2001 to 20107, as well as some type of neo-Keynesianist measures due to inflationary threats.

Table 1: Government Capital Investments in Financial Institutions (US$ bn.)



























Source: Bloomberg, February 2, 2009.

  • 8  Gould, P., 1998, p. xii.

8Moreover, neo-Keynesianism under the form of recovery plans and the rescue of the financial system was a sign that the hands-off characteristic of Brownomics was abandoned in 20088. Table 1 shows that in Europe, the United-Kingdom was the country where government capital investments in financial institutions were the greatest - but we may also notice that they remained far less important than what they were in the United-States.

9The second major characteristic of Brownomics was the creation of a “dynamic capitalism” which could improve the conditions of living of all the citizens9. This may appear as a modern version of Jeremy Bentham’s (1748-1832) “greatest happiness for the greatest number”, where the “greatest number” has been extended to “all” the citizens. The best example of this characteristic can be found in the very title of New Labour’s manifesto in 2010: A Future Fair for All10. In the 2001 manifesto Ambition for Britain, there was a whole section entitled “Prosperity for all11, and in the 1997 manifesto New Labour because Britain Deserves Better, an entire section was called “We will promote personal prosperity for all12. However here the words “personal” and “all” are contradictory and we may wonder how the Labour Party intended to manage this political form of oxymoron. It may probably translate the will to reconcile two British values which are utilitarianism on the one hand, and a liberal creed in individualism on the other. Two sections of the 2005 manifesto entitled Britain forward not back13 also referred to this notion: “Our NHS: Free to all, personal to each”/ “Quality of life: Excellence for all”.  We may notice that this characteristic appeared in 2010 in the title whereas it had been only in one of the sections in the manifestos of 2001 and 1997. It may be the sign that the Labour Party wanted to emphasize this aspect of the Third Way. It could also be the sign that they had not achieved this goal previously. However, it has appeared as a constant goal in the Labour manifestos since 1997.

  • 14  Activation programmes can be defined as a ‘workfare’ based on the obligations, as opposed to ‘righ (...)
  • 15  Green, R., and Wilson, A., 2000, p. 428.
  • 16  Pierson, C., 2001, p. 127.
  • 17  Lewis, G., Gewirtz, S., Clarke, J., 2000, p. 174.

10The third element was the role of the State in promoting flexibility and liberalism. Gordon Brown implemented a reform of the welfare state which appeared under the form of activation programmes14 dedicated to promoting employability rather than unemployment benefits15 so as to decrease public spending. This policy had been inherited from the US via policy transfer. Some studies even mentioned the word “Clintonization” to refer to this process. For instance, the New Deal Programme was created in 1997 to improve the flexibility of the workforce on the labour market. It led to ‘a state implementing a Shumpeterian type of workfare’16. Such a type of workfare “tries to promote permanent innovation and flexibility in relatively open economies by acting on the supply side and to strengthen as far as possible their competitiveness”17.

  • 18  Giddens, A., 1998, p. 11.
  • 19  Metcalf, D., December 2006.
  • 20  Coates, D., 2008.

11Next feature was “a presumption in a ‘self-generated’ social solidarity mechanism.’18. This may account for the fact that Gordon Brown believed in the positive social impact an increase of economic growth would automatically generate. Yet, after 13 years, economic practice showed that social inequalities increased instead of decreasing, as we will see further on, despite an unprecedented period of economic growth until the financial crisis. The phenomenon also occurred in spite of the creation of the National Minimum Wage (NMW) in 1999, which was a major electoral element of the Labour Party Manifesto in 199719. It had an effect on low wages but was probably not settled at a level high enough to lower wage inequalities20.

  • 21  Giddens, A., 2000, p. 7.

12Eventually, the last characteristic was a freeze or even reduction in State expenditures thanks to a decrease in the ratio of public expenditures to GDP21. This decrease was decided in spite of important public spending in the fields of health, education, training and transport.

Table 2: UK Public Spending (1997-2010) - Historical Series of Government Expenditure

Public sector current

expenditure £ billion

Public sector current

expenditure % of GDP































+ 8.2

Source: 2010 Budget Report, Public Finance (chapter C/Documents),, retrieved on April 4, 2010.

13In practice, if we take for instance the example of Higher education, this public spending went together with the setting up of fees which kept on increasing over the period. The impact of the crisis on the Anglo-Saxon model in the UK may be measured in table 2.

14Table 3 shows that the UK was below the level of total spending in UE25 and thus confirms Brownomics liberal bias. Apart from Order and Public Security as well as Defense, all the other items are far below UK’s major European counterparts.

Table 3: Public Spending in 2003: A European Comparison



UE 25





Social Protection







General Public Services





















Economic Affairs





















Leisure, Culture and Religion







Order and Public Security





















Source: Eurostat; Insee, comptes nationaux base 2000,​fr/​ffc/​ipweb/​ip1102/​ip1102.pdf, retrieved in July, 2010.

Macro-Economic Strategy

  • 22  Giddens, A., 2006, p. 15.
  • 23  Whyman, P., 2006, p. 15.

15Macro-economic strategy was another element which may help us define Brownomics’ nature as having the Third Way as a source of inspiration. It was mostly characterized by two main specific points. The first was a “marked preference to discuss targets of ‘high’ rather than full employment”22. Giddens suggested that this might be a consequence of the fact that global capitalism no longer generated sufficient work to accommodate a full employment strategy. This process could thus explain the ‘replacement of full employment by low inflation as the principle goal of macro-economic strategy’23. Actually, inflation remained the main economic target in the United-Kingdom and its control represented one of Brownomics’ major achievements. That is probably the reason why the serious increase in employment which followed the financial crisis had less impact than the decrease in GDP.

16To conclude this first part, we can say that Brownomics may be equated to the Third Way as far as its characteristics still favoured neo-liberalization and flexibility on the labour markets. Yet, as far as the role of the state was concerned, we may notice that there were gaps between the Third Way theory and economic practice, between Gordon Brown’s speeches and the reality of his governments’ economic policies.

The Social Impact of Brownomics before and after the Crisis

17The discrepancies mentioned above are the reasons why we will now examine in a second part some aspects of Brownomics from 1997 to 2010 in order to try to find meaningful elements to answer the central question: Was Brownomics socially correct?

  • 24  Brown, G., “Budget Speech”, 1997, p. 4.

18On July 2nd 1997, Gordon Brown gave his first budget speech where he defined the four weaknesses that had held the UK economy back until 1997. These four weaknesses were: “instability, under-investment, unemployment and the waste of talent”24. In order to address the last three weaknesses he launched the New Deal programme.

Unemployment (1997-2007) and the New Deal

19Table 3 shows the evolution of the unemployment rates of workers under 25 from 1990 to 2008. We may notice that the New Deal did not succeed in lowering the youth unemployment rate as the latter kept on increasing from roughly 10% in 1990 to 14% in 2008, whereas the total unemployment rate decreased and remained stable at around 5% over the period.

Table 4: Unemployment Rate of Young Workers in the United Kingdom Compared to Total Unemployment Rate (1990-2008)

In %






Unemployment rate of under 25






Total unemployment rate






Source: Author’s own computation after OECD Employment Outlook, 2004, pp. 293 and 299; and 2009, pp. 251 and 257.

20In October 2009, a new “Flexible” New Deal (FND), which was to be extended to the whole country by 2010, started addressing long-term unemployed workers more particularly, as one was eligible if only they had been getting Jobseeker’s Allowance for 12 months (or six months in some cases). This FND programme was first implemented in the following areas for a start:


  • Central London, Lambeth, Southwark and Wandsworth

  • Devon and Cornwall

  • East Midlands

  • Greater Manchester

  • Kent, Surrey and Sussex

  • Norfolk, Cambridgeshire and Suffolk

  • North, East and South Yorkshire and the Humber

  • Tees Valley

  • West Midlands


  • Ayrshire, Dumfries, Galloway and Inverclyde

  • Edinburgh, Lothian and Borders

  • Lanarkshire and East Dunbartonshire


  • 26  “Providers are professional organisations who will offer you support that’s tailored to meet your (...)

24Actually, this programme appeared as more dissuasive than socially encouraging the unemployed. For instance, the sentence “If you do have to take part and refuse, you may lose benefits” was repeated in the explanatory document of this programme. This emphasizes the “active” characteristic of this workfare while other New Deal programmes addressing disabled people, lone parents, partners, people over 50 and... musicians are voluntary.  As we may see, FND is even more constraining than the former New Deal: expectations are higher, so the pressure on unemployed workers has increased. Even though the jobless are addressed to as “customers”, their duties are overemphasized and their rights negligible. The main innovation was the existence of job “providers”26 who reacted very positively and were numerous to supply jobs.

25So, from 1997 to 2010, the different New Deal programmes appeared as more and more active workfares illustrating both the government’s incapacity to lower youth unemployment and its liberal economic choices.

Wealth Inequalities and the Issue of “Fairness”

  • 27  This point may be illustrated for example by the fact that child benefits were universal.
  • 28  Financial Times, November 6, 2006, quoted in Coates, D., 2008.
  • 29  The Guardian, August 17, 2006 and October 3, 2006, quoted in Coates, D., 2008.

26However, the field where Brownomics was socially less correct remains wealth inequalities. More than ten years of Brown as a Chancellor of the Exchequer and Prime Minister could not tackle wage inequality. This feature of Brownomics is linked to that of wealth inequalities and the issue of “fairness” which is a very different notion than what French people understand as “equality”. Fairness implies a universal type of social help27 whereas equality aims at redistributing wealth so as to decrease the gap between the rich and the poor. And since 1997, fairness has been invoked more than often to justify Labour social policy, the best example being the very title of its 2010 manifesto: A Future Fair for All. One of the most important issues was how the British government tackled wage inequality. For instance, the ratio of top pay to average wages in the United Kingdom was 25 to 1 (25:1) in the mid-1980s. It was 100 to 1 (100:1) in 200628. Another example can be found in directors’ salaries which rose by 28% in the FTSE 100 in 2005 while average earnings rose only by 3.7%. Bonuses in the City that year rose by 16%29. According to R. Dickens in his article “The evolution of individual male earnings in Great Britain: 1975-95”, published in 2000 in The Economic Journal:

  • 30  Dickens, R., 2000, p .27.

…possibly the most striking phenomenon in the British Labour market over the last couple of decades has been the massive rise in wage inequality. Wage differentials have risen to a degree that pay inequality is now higher than any time over the last century30.

  • 31  OECD, 2008.

27The OECD, in a report published in October 2008, confirmed the fact that in the United Kingdom, as well as the United States, high income inequality and social mobility were too low31. These elements seem to confirm the negative impact of the crisis and the liberal economic policy on the British social system.

28Last but not least let’s end with some comments on the meaning of the word “fairness” which comes back again and again in Gordon Brown’s speech, not to mention the title of the 2010 Labour manifesto, A Future Fair for All. Fairness seems very difficult to explain and illustrate. Indeed, fairness was Brown’s speeches main target. Yet, the result of his policies was an increase in wage inequalities, as well as poverty, within the 1997-2008 period, which can be considered as one of the most favourable for the economy if we simply focus on growth.


29If we try an attempt at defining Brownomics: Brownomics did meet the Third Way vision of the economy in its speech but was not totally socially correct in the implementation of its social workfare.

30Actually, the New Deal programme did not succeed to curb youth unemployment rate and labour flexibility appears as a constant feature of Brownomics as far as workfares are concerned over the period, in spite of the crisis and the increase of long-term unemployment, which cannot be understood as socially correct in the long term.

31Brownomics did not really change after the financial crisis. We may say that workfares under the form of the new flexible New Deal became even more liberal in so far as it tried to increase even further labour flexibility. Neo-Keynesianism under the form of financial recovery plans only applied to the financial markets.

32Who has to be blamed for this increase in unemployment which seems to last endlessly? Is it globalization (as far as this was a “global crisis”)? Is it Brownomics which tended to rely too much on the neo-liberal policies of The Third Way in terms of workfare? The result of the General Elections clearly showed that Gordon Brown’s economic policy had been seen as politically guilty and responsible for the crisis.

  • 32  Fletcher, R., “Can George Osborne and Mervyn King prevent another financial crisis ?”, The Telegra (...)

33Due to the huge size of budget deficit, the Conservatives are now trying to find ways to reduce expenses and focus on austerity in terms of social expenses. This process will automatically have a negative social impact which might even darken the picture of the British economy drawn by both the global crisis and more than ten years of Brownomics. Finally, if we adapt Richard Fletcher’s views from the Telegraph we might conclude by wondering whether George Osborne and Mervyn King can prevent a political and social crisis32.

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1  Finch, F., 2009.

2  Coates, D., 2008.

3  Esping-Andersen, G., 1990, p. 17.

4  Whyman, P. W., 2006, p. 2.

5  Blair, T., 2001, p. 2.

6  Whyman, P. W., Third Way Economics, 2006, title.

7  Labour Party Manifesto, 2005.

8  Gould, P., 1998, p. xii.

9  Rustin, M., 2001, p. 15.

10, retrieved on April 5, 2010.

11, retrieved on April 5, 2010.

12, retrieved on April 5, 2010.

13, retrieved on April 6, 2010.

14  Activation programmes can be defined as a ‘workfare’ based on the obligations, as opposed to ‘rights’ within a Keynesian workfare, of workers to support themselves as far as possible. In other words it means promoting work rather than passive receipt of benefit transfers.

15  Green, R., and Wilson, A., 2000, p. 428.

16  Pierson, C., 2001, p. 127.

17  Lewis, G., Gewirtz, S., Clarke, J., 2000, p. 174.

18  Giddens, A., 1998, p. 11.

19  Metcalf, D., December 2006.

20  Coates, D., 2008.

21  Giddens, A., 2000, p. 7.

22  Giddens, A., 2006, p. 15.

23  Whyman, P., 2006, p. 15.

24  Brown, G., “Budget Speech”, 1997, p. 4.

25, retrieved on April 6, 2010.

26  “Providers are professional organisations who will offer you support that’s tailored to meet your needs. They will ensure that your time with them is a positive and helpful one.”, retrieved on April 6, 2010.

27  This point may be illustrated for example by the fact that child benefits were universal.

28  Financial Times, November 6, 2006, quoted in Coates, D., 2008.

29  The Guardian, August 17, 2006 and October 3, 2006, quoted in Coates, D., 2008.

30  Dickens, R., 2000, p .27.

31  OECD, 2008.

32  Fletcher, R., “Can George Osborne and Mervyn King prevent another financial crisis ?”, The Telegraph, May 29, 2011.

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Catherine Coron, « Was Brownomics Socially Correct?  », Observatoire de la société britannique [En ligne], 10 | 2011, mis en ligne le 01 mai 2012, consulté le 17 janvier 2017. URL : ; DOI : 10.4000/osb.1107

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Catherine Coron

Maître de Conférences à l'Université de Panthéon-Assas Paris 2

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