To what extent does the policy of Tony Blair's government reflect the traditional aspirations of social democracy? In macroeconomic policy the emphasis has been on stability, an understandable response to recent UK economic history, but one which has left sterling dangerously overvalued for an extended period. The strongest policy emphasis has been on a battery of measures aimed at increasing the incentive to work. Paradoxically, for a government which has often treated redistribution as old-fashioned and inappropriate, the greatest impact of these measures has been to redistribute income towards low-income families which already have family members working. Effects on the labour supply appear to be modest, and a particular weakness has been the denial of a strong regional dimension to joblessness. The decision to stick with Conservative spending plans for the government's first two years brought a squeeze on the public services, and even the rapid growth in health and education spending planned for the next few years is predicated on very slow growth in social security spending rather than increased taxation. Labour's policies on training and on industrial relations imply greater responsibility for individuals and employers, rather than the state, and private sector solutions with regard to investment in and management of industry and services - even traditionally public services - are instinctively preferred.