Desperately seeking a solution: Social democracy, thatcherism and the 'Third Way' in British welfare

New Labour's 'Third Way' and its innovations in employment and social policy can only be understood against the background of welfare state construction in Britain, the problems faced by all post-war governments in welfare policy and the nature of the institutional solution to those problems implemented by the Thatcher and Major governments. Several common assumptions concerning the past of British welfare need to be dispelled, including the concept of 'welfare consensus', the stability and invulnerability of the welfare state in the so-called 'Golden Age' and the idea that 'globalisation' is a recent phenomenon. The welfare state was the victim of Britain's relative economic decline from early on, constantly buffeted by currency and balance-of-payments crises, while the failure of British social democracy to institutionalise a consensus on the social wage contributed to the turbulence of the 'stop-go' cycle and economic mismanagement. The legacy of Thatcherism was an institutional 'fix' to these problems which heavily constrains New Labour The 'Third Way' is, in reality, an imaginative amalgam of modest and incremental innovations which seeks to build and improve on that legacy in the absence of any obvious available alternatives.