The Political Economy of Public Sector Change

This chapter outlines developments in the size and scope of the British state and the breakdown, from the 1970s, of what has been called ‘the post-war settlement’. This was the economic, social and political consensus established after the Second World War between, according to Flynn (1990, p. 6), ‘the trade unions and especially the returning soldiers, the employers and governments’. It was the breakdown of the post-war settlement which opened the way for the ideas of the ‘New Right’ in domestic politics during the 1980s and 1990s. These ideas, and the governmental policies deriving from them, challenged the social democratic principles and values which had dominated British politics since 1945. Markets now became preferred to politics as means for allocating resources and distributing welfare in the new ‘enterprise culture’ of the 1980s and 1990s. The responsibility for providing public services and welfare shifted from largely monopolistic state provision to a mixture of public, private, self help, family and voluntary sources. The large impersonal and centralised state bureaucracies, created during the post-war period, came under political attack and were either privatised, or broken up, or decentralised and managerialised. Some of these changes had their origins in the period before 1979, but the effects of four successive Conservative governments elected in 1979, 1983, 1987 and 1992 were critical in their impact.