Blair built on Thatcher’s legacy. That’s a simple fact

In her maiden speech to the House of Commons, the new Labour MP for Coventry South, Zarah Sultana, said, “In 10 years’ time, at the start of the next decade, I want to look teenagers in the eye and say with pride: my generation faced 40 years of Thatcherism, and we ended it.”

Related: Stuart Hall: New Labour has picked up where Thatcherism left off

In failing to distinguish the previous Labour government’s tenure under Tony Blair and Gordon Brown from the Tory governments that preceded and followed it, Sultana raised a tediously inevitable stink. What about Sure Start? What about cutting rough sleeping? What about the minimum wage?

In 1997, to say that Blair built on the economic foundations of Thatcher’s economic reforms would have been neither a radical statement nor something with which either Thatcher or Blair would have disagreed. Blairism would not have been conceivable in 1979; by 1997 it seemed inevitable, and it was Thatcher’s reforms that made it so. So why is that now unsayable?

Thatcher reconfigured the British economy. The ultimate aim of the Tory government during the 1980s was to smash open the postwar consensus of unionised work and the welfare state, and place “the market” at the cornerstone of British governance.

Blair and Brown took this reconfigured economy and added a layer of income redistribution to blunt its harshest effects. As Peter Mandelson famously said, Labour was “intensely relaxed about people getting filthy rich, so long as they pay their taxes.” The fundamentals would not only remain unchanged; it was essential that they stay in place. The energised, aspirational, entrepreneurial economy was Thatcher’s gift to Blair – taming it to serve the common cause was the supposed genius of the third way.

To understand why pointing this out is reliably met with withering scorn, you have to look at why Labour lost – not just in 2019, but in 2010 and ever since. As Stuart Hall said, New Labour’s belief was that “no one any longer cares who owns, runs, controls or profits from healthcare [or other public services], providing the possessively-individual consumer’s personal need is satisfied.”

When the global financial crash happened, it turned out that ownership mattered a great deal. Just as Blairism based itself on Thatcherism, so the moral foundation of austerity was built in the Blair years. By redistributing income rather than wealth, Blairism left the country primed for a “makers v takers”, “strivers v skivers” attack. All those owners were suddenly asking: why am I paying for all this?

Through right to buy and the easy availability of finance capital, Thatcher’s Conservatives created a new layer of homeowning, aspirational middle-class Britons who at least felt richer, even if they were just overmortgaged against a housing bubble. Rather than replacing council houses to stymie rent growth, New Labour used housing benefit to effectively subsidise a new class of Laurence Llewelyn-Bowen-watching aspirational landlords. Housing was provided, people were getting filthy rich, taxes were paying for it, and everything was great until it wasn’t.

Whom to blame now that Brown’s vaunted end of boom-and-bust had itself come to an end? Reliably enough, both parties turned to the scapegoat of Those People – the benefits claimants, the foreign-looking, that suspiciously affluent next door neighbour you don’t like. Once the country was no longer thinking in terms of “entrepreneurial aspiration” but back to “keeping hold of what I’ve got”, the Tories were fighting on their home turf. Paying for public services turned neatly into unsustainable, wasteful spending.

As the mafia knows, the best way to cover up a crime is to make sure everyone is complicit. If I go down, you go down. How to challenge finance capital’s death-grip on the economy when doing so would knock the house prices that make your voters feel good? Ultimately, even Corbyn fought and lost on that battleground of “how will you pay for all this free stuff?”

You cannot rely purely on the material explanation, though, to explain the ferocity with which the centre-left rejects this plain reading of history. There is an element of ideological self-preservation here, even as they deny the existence of an ideology and appeal simply to common sense. If Blair had a choice, if we all had a choice, then there is some hard explaining to do.

The younger generation, clustered in cities, paying unsustainable rents while they seek precarious gig- economy work, are asking difficult questions of those who brought us here. Smashed as Corbynism is, its abortive groundswell happened for a reason. As climate catastrophe takes its toll, as Deliveroo riders cycle past rough sleepers knowing it could easily be them on the cardboard, they are asking if it really had to be this way. Was there, in all honesty, no alternative to this?

It is this question that so exercises the defenders of Blair’s legacy. There had to have been no choice, so nobody can be to blame for having made it. The alternative is simply unthinkable.

• Phil McDuff writes on economics and social policy