The promotion of social justice was sometimes confused with the imposition of equality of outcome. The result was a neglect of the importance of rewarding effort and responsibility, and the association of social democracy with conformity and mediocrity rather than the celebration of creativity, diversity and excellence. Work was burdened with ever higher costs.
The means of achieving social justice became identified with ever higher levels of public spending regardless of what they achieved or the impact of the taxes required to fund it on competitiveness, employment and living standards. Decent public services are a vital concern for social democrats, but social conscience cannot be measured by the level of public expenditure. The real test for society is how effectively this expenditure is used and how much it enables people to help themselves.
The belief that the state should address damaging market failures all too often led to a disproportionate expansion of the government’s reach and the bureaucracy that went with it. The balance between the individual and the collective was distorted. Values that are important to citizens, such as personal achievement and success, entrepreneurial spirit, individual responsibility and community spirit, were too often subordinated to universal social safeguards.
Too often rights were elevated above responsibilities, but the responsibility of the individual to his or her family, neighbourhood and society cannot be offloaded on to the state. lf the concept of mutual obligation is forgotten, this results in a decline in community spirit, lack of responsibility towards neighbours, rising crime and vandalism, and a legal system that cannot cope.
The ability of national governments to fine-tune the economy in order to secure growth and jobs has been exaggerated. The importance of individual and business enterprise to the creation of wealth has been undervalued. The weaknesses of markets have been overstated and their strengths underestimated.
In a world of ever more rapid globalisation and scientific changes we need to create the conditions in which existing businesses can prosper and adapt, and new businesses can be set up and grow.
New technologies radically change the nature of work and internationalise the organisation of production. With one hand they de-skill and make some businesses obsolete, with another they create new business and vocational opportunities. The most important task of modernisation is to invest in human capital : to make the individual and businesses fit for the knowledge-based economy of the future.
Having the same job for life is a thing of the past. Social democrats must accommodate the growing demands for flexibility - and at the same time maintain minimum social standards, help families to cope with change and open up fresh opportunities for those who are unable to keep pace.
We face an increasing challenge in reconciling environmental responsibility towards future generations with material progress for society at large. We must marry environmental responsibility with a modern market-based approach. In environmental protection, the most modern technologies consume fewer resources, open up new markets and create new jobs.
Public expenditure as a proportion of national income has more or less reached the limits of acceptability. Constraints on ‘tax and spend’ force radical modernisation of the public sector and reform of public services to achieve better value for money. The public sector must actually serve the citizen : we do not hesitate to promote the concepts of efficiency, competition and high performance.
Social security systems need to adapt to changes in life expectancy, family structures and the role of women. Social democrats need to find ways of combating the ever more pressing problems of crime, social disintegration and drug abuse. We need to take the lead in shaping a society with equal rights for women and men.
Crime is a vital political issue for modern social democrats. We consider safety on the street to be a civil right. A policy to make cities worth living in fosters community spirit, creates new jobs and makes residential areas safer.
Poverty remains a central concern, especially among families with children. We need specific measures for those who are most threatened by marginalisation and social exclusion.
The state should not row, but steer : not so much control, as challenge. Solutions to problems must be joined up.
Within the public sector bureaucracy at all levels must be reduced, performance targets and objectives formulated, the quality of public services rigorously monitored, and bad performance rooted out.
Modern social democrats solve problems where they can best be solved. Some problems can now only be tackled at European level: others, such as the recent financial crises, require increased international co-operation. But, as a general principle, power should be devolved to the lowest possible level.
For the new politics to succeed, it must promote a go-ahead mentality and a new entrepreneurial spirit at all levels of society. That requires :
a competent and well-trained workforce eager and ready to take on new responsibilities
a social security system that opens up new opportunities and encourages initiative, creativity and readiness to take on new challenges
a positive climate for entrepreneurial independence and initiative. Small businesses must become easier to set up and better able to survive
we want a society which celebrates successful entrepreneurs just as it does artists and footballers – and which values creativity in all spheres of life.
Our countries have different traditions in dealings between state, industry, trade unions and social groups, but we share a conviction that traditional conflicts at the workplace must be overcome.
Immediately upon taking office, the new Social Democratic government in Germany gathered the top representatives of the political sector, the business community and the unions around the table to forge an Alliance for Jobs, Training and Competitiveness.
We want to see real partnership at work, with employees having the opportunity of sharing the rewards of success with employers.
We support modern trade unions protecting individuals against arbitrary behaviour, and working in co-operation with employers to manage change and create long-term prosperity.
In Europe – under the umbrella of a European employment pact – we will strive to pursue an ongoing dialogue with the social partners that supports, not hinders, necessary economic change.
The EU should continue to act as a resolute force for liberalisation of world trade.
The EU should build on the achievements of the single market to strengthen an economic framework conducive to productivity growth.
The taxation of companies should be simplified and corporation tax rates cut, as they have been by New Labour in the UK and are planned by the federal government in Germany.
To ensure work pays and to improve the fairness of the tax system, the tax burden borne by working families and workers should be alleviated, as begun in Germany (through the Tax Relief Act) - and the introduction of lower starting rates of income tax and the working families tax credit in Britain.
The willingness and ability of enterprises – especially small and medium-sized enterprises – to invest should be enhanced, as intended by the Social Democratic government in Germany through the reform of the taxes on businesses and as shown by New Labour’s reform of capital gains and business taxes in Britain.
Overall, the taxation of hard work and enterprise should be reduced. The burden of taxation should be rebalanced, for example towards environmental ‘bads’. Germany, the UK and other European countries governed by social democrats will lead the way in this regard.
At EU level, tax policy should support tough action to combat unfair competition and fight tax evasion. This requires enhanced co-operation, not uniformity. We will not support measures leading to a higher tax burden and jeopardising competitiveness and jobs in the EU.
Successful Welfare to Work programmes raise incomes for those previously out of work as well as improve the supply of labour available to employers.
Modern economic policy aims to increase the after-tax income of workers and at the same time decrease the costs of labour to the employer. The reduction of non-wage labour costs through structural reform of social security systems and a more employment friendly tax and contribution structure that looks to the future is therefore of particular importance.
Companies must have room for manoeuvre to take advantage of improved economic conditions and seize new opportunities : they must not be gagged by rules and regulations.
Modern social democrats are not laissez-faire neo-liberals. Flexible markets must be combined with a newly defined role for an active state. The top priority must be investment in human and social capital.
Standards at all levels of schooling and for all abilities of pupils must be raised. Where there are problems of literacy and numeracy these must be addressed, otherwise we condemn unskilled individuals to lives of low pay, insecurity and unemployment.
We want all young people to have the opportunity to gain entry into the world of work by means of qualified vocational training. Together with local employers, trade unions and others, we must ensure that sufficient education and training opportunities are available to meet the requirements of the local labour market. In Germany, the political sector is supporting this endeavour with an immediate action programme for jobs and training that will enable 100,000 young people to find a new job or training place or to obtain qualifications. In Britain the Welfare to Work programme has already enabled 95,000 young people to find work.
We need to reform post-school education and raise its quality, at the same time modernising education and training programmes so as to promote adaptability and employability in later life. Government has a particular role in providing incentives for individuals to save in order to meet the costs of lifelong learning - and in widening access through the promotion of distance learning.
We should ensure that training plays a significant role in our active labour market policies for the unemployed and workless households.
A modern and efficient public infrastructure including a strong scientific base is also an essential feature of a job-generating economy. It is important to ensure that the composition of public expenditure is being directed at activities most beneficial to growth and fostering necessary structural change. Modern social democrats should be champions of small and medium-sized enterprise
Europe’s capital markets should be opened up so that growing firms and entrepreneurs can have ready access to finance. We intend to work together to ensure that growing high-tech firms enjoy the same access to the capital markets as their US rivals.
We should make it easy for individuals to set up businesses and for new companies to grow by lightening administrative burdens, exempting small businesses from onerous regulations and widening access to finance. We should make it easier for small businesses in particular to take on new staff: that means lowering the burden of regulation and non-wage labour costs.
The links between business and the science base should be strengthened to ensure more entrepreneurial ‘spin-offs’ from research and the promotion of ‘clusters’ of new high-tech industries.
In the past, social democrats have all too often been associated with the view that the best way to promote employment and growth is to increase government borrowing in order to finance higher government spending.
Make work pay for individuals and families. The biggest part of the income must remain in the pockets of those who worked for it.
Encourage employers to offer ‘entry’ jobs to the labour market by lowering the burden of tax and social security contributions on low-paid jobs. We must explore the scope to lower the burden of non-wage labour costs by environmental taxes.
Introduce targeted programmes for the long-term unemployed and other disadvantaged groups to give them the opportunity to reintegrate into the labour market on the principle of rights and responsibilities going together.
Assess all benefit recipients, including people of working age in the receipt of disability benefits, for their potential to earn, and reform state employment services to assist those capable of work to find appropriate work.
Support enterprise and setting up an own business as a viable route out of unemployment. Such decisions contain considerable risks for those who dare to make such a step. We must support those people by managing these risks.
The left’s supply-side agenda will hasten structural change. But it will also make that change easier to live with and manage.
First, there will be a series of ministerial meetings, supported by frequent contacts among their close staff.
We will seek discussion with political leaders in other European countries who wish to take forward with us modernising ideas for social democracy in their respective national contexts. We will start on this now.
We will establish a network of experts, farsighted thinkers, political fora and discussion meetings. We will thereby deepen and continually further develop the concept of the New Centre and the Third Way. This is the priority for us.
The aim of this declaration is to give impetus to modernisation. We invite all social democrats in Europe not to let this historic opportunity for renewal pass by.
