Understanding the Mixed Economy of Welfare 9781447333258

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Edited by Martin Powell

Understanding the mixed economy of welfare 2nd edition

Understanding the mixed economy of welfare

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Understanding the mixed economy of welfare 2nd edition

Edited by Martin Powell

First edition published in 2007. Second edition published in Great Britain in 2019 by Policy Press North America office: University of Bristol Policy Press 1-9 Old Park Hill c/o The University of Chicago Press Bristol 1427 East 60th Street BS2 8BB Chicago, IL 60637, USA UK t: +1 773 702 7700 t: +44 (0)117 954 5940 f: +1 773-702-9756 [email protected] [email protected] www.policypress.co.uk www.press.uchicago.edu © Policy Press and the Social Policy Association 2019 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN 978-1-4473-3321-0 hardcover ISBN 978-1-4473-3322-7 paperback ISBN 978-1-4473-3323-4 ePub ISBN 978-1-4473-3324-1 Mobi ISBN 978-1-4473-3325-8 ePdf The right of Martin Powell to be identified as editor of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved: no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of Policy Press. The statements and opinions contained within this publication are solely those of the editor and contributors and not of the University of Bristol, Policy Press or the Social Policy Association. The University of Bristol, Policy Press and the Social Policy Association disclaim responsibility for any injury to persons or property resulting from any material published in this publication. Policy Press works to counter discrimination on grounds of gender, race, disability, age and sexuality. Cover design by Qube Design Associates, Bristol Front cover image: www.alamy.com Printed and bound in Great Britain by CMP, Poole Policy Press uses environmentally responsible print partners

This book is dedicated to Professor Norman Johnson (1936–2017), my former colleague at the University of Portsmouth, and pioneer of the study of the Mixed Economy of Welfare.

Contents Detailed contents List of boxes, figures and tables Notes on contributors

viii xii xiv

1

Introduction: the mixed economy of welfare and the social division of welfare Martin Powell

2

The mixed economy of welfare in historical context John Stewart

21

3

The state Brian Lund

41

4

Market welfare Robin Miller

65

5

Voluntary and community welfare Rob Macmillan and James Rees

91

6

Informal welfare Martin Powell

113

7

The benefits and inequalities of fiscal welfare Adrian Sinfield

135

8

Occupational welfare Edward Brunsdon and Margaret May

159

9

The mixed economy of welfare: a comparative perspective Michael Hill

183

10 Conclusion: analyses in the mixed economy of welfare and the social division of welfare Martin Powell

1

205

Index 225

vii

Detailed contents 1

Introduction: the mixed economy of welfare and the social division of welfare Overview Introduction Social policy and the welfare mix The social division of welfare Components of the mixed economy of welfare Dimensions of the mixed economy of welfare Conclusions Summary Questions for discussion Further reading Electronic resources References

1 1 1 4 7 9 10 14 15 15 15 15 16

2 The mixed economy of welfare in historical context Overview Introduction Thinking historically about the state and welfare Thinking historically about the family and welfare Thinking historically about the market and welfare Thinking historically about the voluntary/charitable sector and welfare Conclusion Summary Questions for discussion Further reading Electronic resources References

21 21 21 24 27 30 32

3 The state Overview Introduction: the state The welfare state: then and now The ‘welfare mix’ Welfare pluralism and local government: out and in the mix? The welfare mix, ‘the new managerialism’ and ‘joined up governance’ Devolution

41 41 42 44 46 49 51

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35 36 36 36 37 37

52

Detailed contents

The state and the distribution/redistribution of income Brexit and the 2017 general election Conclusion Summary Questions for discussion Further reading Electronic resources References

52 55 56 57 57 58 58 58

4 Market welfare Overview Introduction Private, public or market? Why privatise the welfare state? What are the concerns about privatisation? Market welfare: trends over time Market welfare and English health care in practice Privatisation in policy Impacts of privatisation policies in the English NHS Conclusion Summary Questions for discussion Further reading Electronic resources References

65 65 65 68 74 75 77 78 80 81 85 85 86 86 86 86

5 Voluntary and community welfare Overview Introduction: definitions Scope Historical development The broad policy context: from New Labour to Brexit Challenges Future prospects Summary Questions for discussion Further reading Electronic resources References

91 91 91 94 97 100 103 105 107 108 108 108 108

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Understanding the mixed economy of welfare (2nd edn)

6 Informal welfare Overview Introduction History of informal care The number and characteristics of carers Informal care after the Care Act 2014 Informal welfare in comparative context Conclusion Summary Questions for discussion Further reading Electronic resources References

113 113 113 115 121 123 123 127 129 129 129 129 130

7 The benefits and inequalities of fiscal welfare Overview Introduction: the forms and scale of fiscal welfare The move to tax credits Fiscal welfare for retirement Fiscal welfare and the welfare state Fiscal welfare in comparative perspective Conclusion Summary Questions for discussion Further reading Electronic resources References

135 135 136 140 143 147 149 150 151 152 152 152 153

8 Occupational welfare Overview Introduction What is occupational welfare? Key recent developments Case study 1: workplace pensions Case study 2: workplace healthcare Conclusion: occupational provision, the MEW and SDW Summary Questions for discussion Further reading Electronic resources References

159 159 159 160 168 172 175 179 179 180 180 180 180

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Detailed contents

9 The mixed economy of welfare: a comparative perspective Overview Introduction Regime theory Income maintenance Health care Social care Conclusions Summary Questions for discussion Further reading Electronic resources References

183 183 183 184 187 191 193 199 200 201 201 201 202

10

205

Conclusion: analyses in the mixed economy of welfare and the social division of welfare Overview Introduction The MEW and SDW over time and space The MEW and SDW under New Labour, Coalition and Conservative governments: from the ‘Third Way’ to the ‘Big Society’ The three-dimensional MEW Analysing the MEW ‘The ghost at the feast’: the MEW’s links to other debates The impact of the MEW and the SDW Conclusions Summary Questions for discussion Further reading Electronic resources References

205 205 206 209 212 215 216 218 220 221 221 221 221 222

xi

List of boxes, figures and tables Boxes 2.1 The mixed economy of welfare in action: Margaret (1950s) and Jane (1980s) 4.1 Examples of online comments regarding privatisation 4.2 Public sector markets 5.1 The voluntary and community sector in children and young people’s services 5.2 The voluntary and community sector in criminal justice 5.3 Public services and ‘Prime’ contracting 6.1 ‘Job advertisement’ for the post of ‘carer’ 6.2 Recognition of informal care 6.3 Recognition of the gendered nature of informal care 7.1 Key terms 7.2 Tax allowances and tax credits 7.3 Child Tax Credit 7.4 Working Tax Credit 7.5 Lifetime and annual allowances 10.1 Sidney Webb’s account of the importance of the state 10.2 Alternative account of the importance of non-state welfare 10.3 The modern MEW, stressing the importance of non-state welfare 10.4 Debates not linked to the MEW

23 76 84 95 97 101 118 120 121 136 137 141 142 144 206 207 212 216

Figures 4.1 Economic and political authority: example from education in England 4.2 Wheels of welfare

70 71

Tables 1.1 Three-dimensional MEW (provision, finance and regulation) 3.1 The changing profile of welfare expenditure: England, 1979/80 to 2013/14 3.2 The state and the redistribution of income (Gini coefficient) 4.1 Common examples of market–public mixes of welfare 7.1 Major tax and other reliefs related to social policy, UK, 1995–6, 2005–6 and 2017–18

xii

14 48 55 67 139

List of boxes, figures and tables

8.1 Mandatory and non-mandatory benefits and services in the UK (2018) 9.1 Components of the welfare mix 9.2 Public sector health spend as a percentage of total health spend 2015 9.3 A typology of systems highlighting alternative approaches to care 9.4 Logical alternative care patterns 10.1 Recent moves in the MEW

163 186 192 193 194 215

xiii

Notes on contributors Edward Brunsdon is an Honorary Research Fellow in the School of Social Policy at the University of Birmingham. He has taught a range of social policy, research methods and human resource management courses. His main areas of research include work-based welfare, pensions policy, executive reward and human resource management. Michael Hill is Emeritus Professor of Social Policy at the University of Newcastle and an Honorary Fellow of the School of School of Social Science at the University Brighton. He combines an interest in many aspects of social policy with a commitment to the study of the policy process. During much of his early career he researched on social security, employment and social care. His long-standing text The Public Policy Process has reached its seventh edition in a joint version with Frederic Varone of the University of Geneva. He is working with Zoë Irving on a comparative text on social policy. Brian Lund is a Visiting Lecturer at Manchester Metropolitan University and author of Understanding Housing Policy (2017, 3rd  edn, Bristol: Policy Press), Understanding State Welfare (2002, London: Sage) and Housing Politics in the United Kingdom: Power, Planning and Protest (2016, Bristol: Policy Press). Rob Macmillan is a Principal Research Fellow at CRESR, the Centre for Regional Economic and Social Research at Sheffield Hallam University. He has been researching aspects of the third sector for over twenty years, in collaboration with other academics and researchers, policy makers and funders, and with key third sector organisations. His main research interests are around the long-term qualitative dynamics of voluntary action, the application of field theory in the third sector, the relationships between markets and the third sector, and capacity building and third sector infrastructure. He is co-editor of Voluntary Sector Review, and is currently working on two ESRC-funded projects: ‘Change in the making: a dynamic and relational landscape of voluntary action’ (2016–20) and ‘Discourses of voluntary action at two “transformational moments” of the welfare state, the 1940s and 2010s’ (2017–19). Margaret May is an Honorary Research Fellow in the School of Social Policy at the University of Birmingham. She has taught across the span of both social policy and human resource management. Her research interests include employment policy, human resource management, work-based welfare and comparative social policy.

xiv

Notes on contributors

Robin Miller is an applied health and care researcher based at the Health Services Management Centre, University of Birmingham. He has particular interest in the transformation of health care systems, the levers that are available to implement an agreed policy vision and the barriers that can prevent sustainable change. He teaches, evaluates and writes widely on integration, primary care, commissioning, and the role of the voluntary and private sectors. He has published on privatisation in the NHS (with Martin Powell) in the Journal of Social Policy and the Journal of Health Politics, Policy and Law. Martin Powell is Professor of Health and Social Policy at the Health Services management Centre, University of Birmingham. His main research interest is in the British welfare state, especially the NHS. He has written or edited some 19 books, some of which have been translated into Chinese, Korean and Polish. He has written over 80 peer reviewed articles, and he is a former editor of the journal Social Policy and Administration. James Rees has been at the Open University since early 2016, where he directs the Centre for Voluntary Sector Leadership at the Open University Business School. Prior to that he was at the Third Sector Research Centre at the University of Birmingham. His research interests are interdisciplinary and span themes of third sector studies, public service reform, and governance, with a particular focus on the role of third sector organisations in delivering public services and the role of leadership. Current research projects examine the social value of small voluntary organisations, the impact of reforms in probation services, and the role of the voluntary sector in mental health crisis services. He is co-editor of Voluntary Sector Review and his jointly edited collection on The Third Sector Delivering Public Services was published by Policy Press in 2016. He has published widely in Policy and Politics, the Journal of Social Policy and Social Policy and Administration, among others. Adrian Sinfield is Professor Emeritus of Social Policy at the University of Edinburgh, where he has worked since 1979. He has written mainly on social security, poverty, unemployment and the social division of welfare. He has been both Chair and President of the Social Policy Association; a co-founder of the Unemployment Unit, which he chaired for its first ten years, and Vice-Chair of the Child Poverty Action Group. Publications include The Long-term Unemployed (OECD, 1968), What Unemployment Means (Martin Robertson, 1981), The Workless State (co-edited; Martin Robertson, 1981) and Comparing Tax Routes to Welfare in Denmark and the United Kingdom (co-authored; Danish National Institute for Social Research, 1996). John Stewart is Emeritus Professor of Health History, Glasgow Caledonian University. He has published extensively on welfare history, the history of

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Understanding the mixed economy of welfare (2nd edn)

childhood, and Scottish history. His current project is a biography of Richard Titmuss, sponsored by the Brian Abel-Smith Foundation Fund at the London School of Economics and to be published by Policy Press.

xvi

1 Introduction: the mixed economy of welfare and the social division of welfare Martin Powell

Overview This chapter introduces the mixed economy of welfare (MEW) and the social division of welfare (SDW). It points out that these have varied over time and space. It outlines the components of the MEW – state, market, voluntary and informal – and of the SDW – statutory, occupational and fiscal. While the MEW has largely been considered from a one-dimensional view (provision), it is vital to move to a three-dimensional view which also considers finance and regulation. Key concepts Mixed economy of welfare; welfare pluralism; social division of welfare; provision; finance; regulation

Introduction In Essays on ‘the Welfare State’, Richard Titmuss (1963, p 53; note the use of inverted commas) pointed to ‘three different systems of social services’ (social, fiscal and occupational welfare) which ‘are seen to operate as virtually distinct stratified systems’. The Labour politician and author, Frank Field (1981) pointed to Britain’s five welfare states: the traditional welfare state; the tax allowance welfare state; the company welfare state; the private market state; and the unearned income from inherited wealth. This text focuses on these wider welfare states, which tend to be less visible than traditional state or ‘social’ welfare. The distribution of welfare services through a range of social mechanisms beyond the state itself has been termed ‘one of the most important categories in the contemporary study of social policy’ (Spicker, 2008, p 136). However, there seems to be no broadly accepted

1

Understanding the mixed economy of welfare (2nd edn)

or dominant term to signal this welfare beyond the state. Different writers point to the mixed economy of welfare (MEW) (eg Murphy, 2006), welfare pluralism (eg Dahlberg, 2005), the welfare mix (eg Lee et al, 2016), the welfare triangle (Pestoff, 2014), the welfare diamond (eg Christensen, 2012) or the care diamond (eg Razavi, 2007). Most writers appear to use these terms broadly interchangeably (Johnson, 1999; Dahlberg, 2005). Moreover, the MEW and SDW tend to be invisible or hidden. Burchardt and Obolenskaya (2016, p 217) state that the ‘pure public’ (public provision, finance, and decision) segment is what we might consider to be the archetypal post-war British welfare state. Prasad (2016) points to the terms that have been used to describe the ‘indirect’ and ‘private’ American welfare state: hidden, divided, submerged, and invisible. Many mechanisms are ‘invisible’ to citizens in the sense that they are not considered part of government activity of the ‘welfare state’. For example, Mettler (2011) reports the results of surveys and experiments in the USA to show how citizens respond to policies (mostly but not exclusively tax expenditures) from which they benefit. She finds that 60% of respondents who benefit from the home mortgage interest deduction respond that they ‘have not used a government social program’. Similar numbers are found among users of tax-deferred savings plans, the lifetime learning tax credit, government-subsidised student loans, the child and dependent tax credit (CTC), and the earned income tax credit (EITC). It is ironic that this ‘invisible’ or ‘hidden’ welfare state is largely invisible or hidden in many social policy texts. For example, the terms MEW and SDW, and welfare mix and welfare pluralism, have limited discussion in some introductory texts (eg ; Blakemore and Griggs, 2007; Alcock, 2008; Bochel et al, 2009; Daly, 2011; Dean, 2012; Hudson et al, 2015). Similarly, there is limited material in recent ‘Handbooks’ on the welfare state. For example, Castles et al (2010) has no index entries, but has chapters on ‘public and private social welfare’ and ‘families versus state and market’, while Greve (2013) contains chapters on fiscal and occupational welfare. Fitzpatrick et  al (2010) includes discussions on occupational benefits (occupational welfare), SDW and the welfare mix. The most extended treatments appear in Spicker (2008), and Alcock et al (2016) where a section on ‘welfare production and provision’ has chapters on state, commercial, occupational, tax and voluntary and informal welfare, while Sinclair (2016) has the most extended treatment of the SDW. Since the first edition of this text in 2007, the MEW and SDW have lived in ‘interesting times’, having seen the terms of the ‘Third Way’ and the ‘Big Society’ largely come and go, but related issues such as privatisation (eg Powell and Miller, 2014) and personalisation (eg Lee et al, 2016) remain important (see other chapters for details). Giddens (1998) states that the Third Way involved replacing the ‘welfare state’ by a ‘welfare society’ and in which, for example, voluntary organisations are

2

Introduction

expected to have a more active role in the provision of welfare services. Ellison (2011) points out that although the ‘Big Society’ was introduced in a speech in 2009, some constituent elements such as the need to move from a ‘welfare state’ to a ‘welfare society’ had previously appeared. The ‘Big Society’ involves devolution of power towards private and voluntary sectors, and decentralised civil society (eg Bochel, 2011; Bochel and Powell, 2016). A number of accounts tend to examine the components of welfare in isolation (eg in separate discussions or chapters – see earlier discussion). Moreover, there are many texts that deal with individual components of the MEW such as the voluntary sector (Rees and Mullins, 2016), the market sector (Drakeford, 2000; Gingrich, 2011) and the community/ informal sectors (eg Deakin, 2001; Taylor, 2003). There are fewer texts that deal with the social division of welfare (SDW) and the occupational and fiscal sectors (Mann, 1989). However, these accounts tend to deal with the components in individual silos, and tend not to analyse the relationships between them. Moreover, they tend to focus on provision, rather than on the additional dimensions of finance and regulation (discussed later). In other words, the focus has been on the individual trees rather than on the wood. Put another way, while the individual pieces of the jigsaw have been described, there has been little attempt to piece them together in order to see the full picture. This means that, as concepts, the MEW and particularly the SDW have been neglected, and it is hardly surprising that this translates in student essays on the mixed economy and social divisions rather than on the MEW and SDW respectively. One of the few texts that focuses on the MEW remains the pioneering work of Johnson (1987; see also Johnson, 1999). This text takes a broader sense, examining the traditional sectors of the MEW of state, market, voluntary and informal sectors, but also the SDW of statutory, fiscal and occupational welfare. While much of the book focuses on the elements of the welfare mix, it also aims to stress two major points. First, the mix of the elements in the contemporary British welfare state is not the only or the best way of organising welfare, and the mix has varied over time and space. It has long been recognised that social policy extends far beyond the welfare state, and that the MEW varies significantly over different times, services and spaces. The ‘classic welfare state’ (from roughly the 1940s to the 1970s: see Powell and Hewitt, 2002) tends to be associated with étatiste perspectives, but at certain times commercial, voluntary and informal sectors may be more important (see Chapter Two). Before 1945, sectors other than the state were dominant, and their importance may be increasing again over recent years. While state provision in services such as health and education has been the norm since 1945, housing has been more in the realm of the market. In terms of variation over space, in some ways the UK experience of the dominance of the state in welfare is unusual compared with other countries, where voluntary and commercial agencies assume much greater importance. For

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Understanding the mixed economy of welfare (2nd edn)

example, at its peak ‘council housing’ in the UK accounted for about a third of all houses, but ‘welfare housing’ in the USA has always been a much more residual service accounting for about 2% of houses. The ‘welfare mix’ is an integral but largely unexplored component in welfare regimes (Esping-Andersen, 1990, 1999; O’Connor et al, 1999; see Chapter Nine). Powell and Barrientos (2004, p 87) argue that ‘the welfare mix constitutes the centre of gravity of welfare regimes’. Second, while it is important to examine the welfare mix in terms of provision, it is necessary to move beyond this ‘one-dimensional’ account and to examine the other dimensions of finance and regulation. State ownership or provision is not the only or necessarily the best method of state intervention. The state can finance or subsidise non-state providers to ensure that users have access to goods or services at zero or reduced price. For example, many people in private residential homes have their fees partly or fully met by the state. Many charities providing services for groups such as homeless people are funded by local or central government. Finally, the state can intervene without ownership or finance by using its legal authority to regulate prices or standards. For example, private residential homes are subject to inspection. For many years the government, through rent control, set maximum rents for private landlords letting out property. A full picture of the MEW can, therefore, only be achieved by a ‘three-dimensional’ view involving provision, finance and regulation.

Social policy and the welfare mix Some discussions differentiate between the descriptive and prescriptive uses of the terms MEW and welfare pluralism (Beresford and Croft, 1984). More recently, Heuer et al (2016) state that, from a conceptual perspective, it is useful to distinguish three uses of the term ‘welfare mix’ in social policy research: analytical (which highlights actors and their constellations in welfare provision); comparative (which examines actor constellations in order to identify institutional arrangements of welfare regimes or policy fields); and normative (which argues for an ideal constellation of actors). In the descriptive or neutral sense, it is pointed out that there are four components of the MEW, which can vary over time (eg Finlayson, 1994) and space (eg Johnson, 1999; Ascoli and Ranci, 2002) and between sectors (eg Burchardt and Obolenskaya, 2016). For example, some British historians and social policy analysts point out the importance of non-state welfare (see Stewart, Chapter Two). According to Harris (1992, p 116), legislation after the Second World War created in Britain one of the most uniform, centralised, bureaucratic and ‘public’ welfare systems in Europe, and indeed in the modern world. Yet a social analyst of a hundred years ago would have observed and predicted the exact opposite: that the provision of social welfare in Britain was and would continue to be highly

4

Introduction

localised, amateur, voluntaristic and intimate in scale by comparison with the more coercive and étatiste schemes of her continental neighbours (in particular imperial Germany). According to Lewis (1995, p 3), it may be necessary to rethink the nature of the ‘welfare state’ as, rather than seeing the story of the modern welfare state as a simple increase in state intervention, it is more accurate to see Britain as always having had a mixed economy of welfare, in which the voluntary sector, the family and the market have played different parts at different times. The place of welfare pluralism in the ‘classic welfare state’ remains unclear (eg Finlayson, 1994; Hewitt and Powell, 1998; Powell and Hewitt, 1998). At one level, the comparative literature reflects the descriptive sense, pointing out that analytically simply focusing on state provision misses much of the picture. Gilbert and Gilbert (1989) write that the ‘direct public expenditure model’ is an important part of the picture, but conveys a somewhat distorted view of welfare benefits and beneficiaries, within a narrow frame of reference. Klein (1985) asks us to consider a mythical country whose government decides to keep public expenditure below 25% of gross national product. Instead of introducing a social security scheme or a national health service, it makes it mandatory for every firm to insure its employees and their families. Instead of building motorways, it offers generous tax concessions to turnpike trusts. Instead of subsidising jobs to prevent unemployment, it offers legislation forbidding companies to dismiss anyone. Instead of spending money on pollution control, it compels the private companies to clean up the polluted air and rivers they have created. This country has virtually no welfare spending as measured by the conventional public expenditure statistics. Klein goes on to say that the country is mythical, but the instances are actual, reflecting Japan, France, Italy and Sweden respectively. Similarly, Prasad (2011) consider, two fictional states of ‘Exemptia’ and ‘Welfaria’ that provide education through preferences and welfare spending, respectively. Hills (2011) points out that the balance between the provision, finance, and control varies between the five service areas of the ‘classic welfare state’ in the UK. For education, health care, and income maintenance, the ‘pure public’ sector still represented more than half of total activity in 2007–8, but for personal care it was two fifths, and for housing less than a tenth. Conversely, the ‘pure private’ sector was a fifth or less of activity in four of the areas, but was dominant – three quarters of the total – in housing. He concludes that it is evident that the housing sector very different from the other four. The distinction between descriptive and prescriptive perspectives is neatly summed up in the arguments that welfare agencies outside the state ‘could not cope’ and ‘should not cope’ (Finlayson, 1994). There has been a reaction to the ‘whig account of welfare’ history, where greater state intervention is seen as inevitable (eg Finlayson, 1994; Green, 1996). Thane (1996, p 277) has protested that ‘although this was once the ruling paradigm of welfare state histories in the optimistic 1950s and 1960s … in the mid-1990s it is difficult to think of a

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Understanding the mixed economy of welfare (2nd edn)

serious historian who has written in this mode for at least twenty years’. She is correct to point out that since the Conservative government of 1979 greater state intervention is no longer seen as inevitable. However, many writers – implicitly or explicitly – regard it as desirable. The prescriptive sense suggests a change to the mix, such as ‘rolling back the state’ or ‘privatisation’ (Powell and Miller, 2014). This distinction hangs on whether the different parts of the mix are viewed as equal. On the one hand, Rose and Shiratori (1986) argue that ‘total welfare’ is the sum of state, market, voluntary and informal sources. They go on to say that the welfare mix varies between countries, which means that an étatiste definition of welfare – which assumed that the only welfare in society was that produced by the state – is misleading. On the other hand, Mishra (1990, pp 110–14) claims that a focus on ‘total welfare’ is not simply the ‘sum of the parts’. The mix in the ‘mixed economy of welfare’ cannot be ignored as they ‘cannot simply be regarded as functionally equivalents’ as they are based on different principles and they differ in scope. It is important to distinguish between means and ends. For example, a transfer from state to informal (read: female) care leads to increasing gender inequality, and ignores entitlement (citizenship) as no ‘right’ to charity exists. In short, it is more than a ‘mere rearranging of furniture in the drawing room’. Similarly, Esping-Andersen (1999, p 36) writes that the claim that the welfare pillars are functional equivalents and therefore mutually substitutable is a hazardous assumption. The prescriptive use of the term shows that different welfare ideologies favour different welfare mixes. Spicker (2008, pp  143–4) neatly sums up that there are three arguments for welfare pluralism: diversity; the welfare society; and the recognition of reality, but two reservations: comprehensiveness, and equity and social justice. Very broadly, the political left has tended to favour a large role for the state in welfare, with little or no place for the market (eg Titmuss, 1963, 1968, 1970; Beresford and Croft, 1984). For example, Pinker (2006) regards Titmuss (1970) as providing a passionate indictment of the corrupting influence of competitive markets across the whole field of social policy. Titmuss was a ‘uncompromising unitarist’ who was convinced that the statutory social services, in general, and the voluntary giving of blood, in particular, fostered social integration and encouraged the growth of altruism more effectively than any other system of welfare provision. However, Pinker finds Titmuss’s analysis of the moral qualities that underpin exchange relationships deeply unconvincing, and became increasingly disenchanted with Titmuss’s unitary model of social welfare or, to use his own terminology, ‘the institutional Redistributive model of Social Policy’. On the other hand, the political right has tended to favour commercial, voluntary and informal solutions over state solutions, advocating a welfare society rather than a welfare state (eg Marsland, 1996). Seldon (1996) argues that welfare should be re-privatised after the ‘lost century’ of state control. This is due to reasons

6

Introduction

of economic efficiency and morality. It is claimed that the state is an inefficient producer and that extensive state responsibility leads to welfare dependency. The right tends to be more relaxed about occupational and fiscal welfare, although some supporters of the market argue against fiscal measures such as mortgage tax relief as this distorts the market. Some parts of the comparative literature tend to be more (if not always explicitly) prescriptive. Different models or regimes of welfare have been presented by Wilensky and Lebeaux (1965), Titmuss (1974) and Esping-Andersen (1990, 1999), and it is clear that the authors favour institutionalist or social democratic rather than residual or liberal models (see Chapter Nine).

The social division of welfare The SDW was developed by Richard Titmuss in a lecture in 1956, and has been seen as ‘enormously influential’ in broadening the definition and understanding of social policy (Spicker, 2008, p  135). It was written as a response to those who were arguing that the welfare state was associated with excessive taxation of the rich and the indiscriminate and excessive delivery of benefits to the poor. Titmuss (1963) pointed out that welfare was delivered by fiscal and occupational mechanisms in addition to the more familiar ‘social services’. Fiscal welfare refers to benefits delivered through the taxation system such as tax relief on mortgages, and later on private pensions and health insurance. Occupational welfare refers to the ‘fringe benefits’ of employment such as subsidised pensions, health insurance, mortgages and company cars. Titmuss argued that fiscal and occupational welfare were clearly regressive in nature in that they gave most to those with the higher incomes. In other words, critics of excessive redistribution focused on the ‘narrow’ welfare state of social welfare, and ignored the wider picture that also included fiscal and occupational welfare. The SDW has not featured heavily in analyses of social policy (Sinfield, 1978; Mann, 1989, 2009). With these exceptions, few studies have taken the analytical framework of the SDW seriously (a comment that also seems appropriate to the MEW). It is remarkable that the analytic potential of the essay has not attracted more attention (Mann, 2009). As state/statutory, occupational and fiscal welfare are the subjects of Chapters Three, Seven and Eight, they are only briefly mentioned here. Statutory welfare Social or public welfare refers to publicly provided goods and services. It may be better, following Sinfield (1978) to refer to social welfare as public welfare. This is the visible part of the welfare state as opposed to the ‘hidden welfare state’.

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Understanding the mixed economy of welfare (2nd edn)

Occupational welfare Despite the fact that Titmuss identified occupational welfare in 1956, surprisingly limited attention has been paid to it since (Johnson, 1999; Farnsworth, 2004; Natali and Pavolini, 2014; but see Mann, 1989; Shalev, 1996; Greve, 2007). Natali and Pavolini (2014) point to a range of terms such as occupational welfare, corporate welfare, contract welfare, and enterprise-based welfare, and state that different scholars use these concepts in different ways. Farnsworth (2004) points out that definitions have tended to be extremely broad and have gone beyond what we would ordinarily include under the social policy umbrella. However, the scale of occupational welfare is substantial. For example, Farnsworth (2004) estimates that the value of employer contributions to total social protection receipts was around 7% of GDP in 2000, with statutory provision equalling around 3.8% and voluntary provision worth around 3%. By contrast, employees contributed around 6% of GDP through their national insurance contributions, and central government contributed around 13% from general taxation. Fiscal welfare There are a number of overlapping terms in the literature, such as indirect and direct social spending (Faricy, 2011), and tax expenditures for social purposes (STEs) (Stebbing and Spies-Butcher, 2010; Morel et  al, 2016). As with occupational welfare, relatively little has been written about fiscal welfare. Sinfield (2016) points out that although fiscal welfare has a very long but largely neglected history (dating from 1799 in the UK), evidence on the extent, form and workings of fiscal welfare is still remarkably limited. According to Morel et al (2016), STEs have remained a blind spot in much of the welfare state literature. While US scholars have highlighted the importance of tax expenditures in the American welfare state, in Europe STEs still lie in a largely uncharted territory. Tax benefits have been termed ‘upside down benefits’. While many studies highlight the regressive character of tax expenditures (Howard, 1997, Mann, 2009; Stebbing and Spies-Butcher, 2010; Prasad, 2011, 2016; Morel et al, 2016; Sinfield, 2016), tax credits can be progressive (Mann, 2009; Morel et al, 2016; Sinfield, 2016). The hidden welfare state is described as substantial in liberal nations such as the Australia (Stebbing and Spies-Butcher, 2010), the USA (Prasad, 2011, 2016) and the UK (Sinfield, 2016). For example, by far the largest element of fiscal welfare in the UK, and many other countries, has long been the relief for nonstate pensions, with the cost officially estimated at some £21bn net of income tax being paid on pensions in payment (Sinfield, 2016). Prasad (2011, 2016) states that the concept of tax preferences equalling welfare state spending has become extremely popular, particularly in analyses of American political development, and has been cited in hundreds of books and articles, across disciplines, and has begun

8

Introduction

to anchor a revisionist interpretation of the American welfare state. However, she argues that in most situations, tax preferences should not be equated with welfare state spending as they are its exact opposite, the reprivatisation of risks that had previously been met collectively, and the waning of state capacity, and as a form of tax cut, not as a form of welfare state spending. While Sinfield (2016) argues that fiscal welfare is not a hidden part of the welfare state and public spending but outside it, Stebbing and Spies-Butcher (2010) regard STEs as forming a second institutional layer of a dual welfare state in which higher-income earners access benefits through the tax system and private welfare providers, and consider their dual welfare state concept a vindication of Titmuss’s classic thesis.

Components of the mixed economy of welfare The components of the MEW will be discussed further in Chapters Three to Six, and will only be briefly outlined here. State Of all the elements of the MEW it is obviously the ‘state’ that is most clearly associated with the ‘welfare state’. Many on the left argue that ‘public service’ should be ‘public’, pointing to ‘market failure’ and providing arguments favouring the state (eg Johnson, 1987, 1999). However, some of these accounts fail to give sufficient detail whether the state should be national or local, or differentiate between arguments for state production, finance or regulation (see later discussion, and Chapter Ten). Market Conversely, advocates of a greater role for the market (eg Marsland, 1996; Seldon, 1996) point to ‘state failure’. They argue that the ‘market’ is more efficient than the state, but this hides a range of possible policies, from contracting out through quasi-markets and vouchers to privatising major parts of the welfare state. Voluntary Although the voluntary sector tends to be the dominant term within the MEW literature, it is sometimes termed the independent, non-profit, non-governmental organisation (NGO), ‘économie sociale’, ‘shadow state’ or simply the ‘third sector’ (Johnson, 1999; Deakin, 2001). It is seen as a ‘loose and baggy monster’, but is normally divided into philanthropic and mutual elements (Beveridge, 1948). The former tends to be associated with hierarchical rich-to-poor charity, while

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Understanding the mixed economy of welfare (2nd edn)

the latter refers to horizontal self-help activities. There has been also a revival of interest in mutual or civil society solutions (Deakin, 2001; Taylor, 2003). From a broadly left perspective, Hirst (1994) suggests associative democracy, Giddens (1998) argues for an expansion of welfare rooted in civil society and Field (2000) puts forward stakeholder pensions operated through approved welfare suppliers. From the right, Green (1996) proposes reinventing the old mutual organisations that were destroyed by the state. More recently, there has been discussion of social enterprise, which is defined in terms of the primacy of social aims, the centrality of trading, and the degree of democratic control and ownership (eg Defourny and Nyssens, 2008; Teasdale, 2012) and faith-based welfare (eg Chapman, 2012; Hiilamo, 2012; Jawad, 2012). Informal While supporters of mutual solutions encompass both left and right, in general those favouring informal welfare – family, friends and neighbours – are largely located on the political right. Such views have been criticised by feminists who claim that this view of the ‘traditional’ family and ‘male breadwinner model’ reinforces the ‘sexual division of welfare’ (Land, 1978; Rose, 1981; Ungerson, 1987). Ungerson (1987) claims that the watershed came with Finch and Groves (1980, p 494), who produced the ‘double equation’ that ‘in practice community care equals care by the family, and in practice care by the family equals care by women’.

Dimensions of the mixed economy of welfare Many accounts of the MEW can be termed one-dimensional in that they focus on the single issue of provision, or on ‘sources’ of welfare. The assumption here appears to be that ownership matters: a place in a private residential home is different to a place in a public residential home (whoever finances it). However, a one-dimensional move ‘from state to market’ does not differentiate between the dimensions of production, finance and regulation. Similarly, a move from state to market fails to distinguish between very different strategies such as charging, contracting out, quasi-markets, vouchers and so on. A two-dimensional account examines provision and finance. This means that a state-to-market movement can take place through different routes. First, it can involve private finance, charging or ‘commodification’. For example, a free service can become a ‘fee’ (or paid) service. Second, it can enforce market competition on state producers through quasi or internal markets. Third, it can transfer state provision to commercial producers in an external market (but with state finance so that users still have free access to services). Fourth, it can change production

10

Introduction

and finance, suggesting that citizens who used to have free services from the state now become market consumers who consume a purchased service from a choice of private providers. Spicker (2008, p  143) provides a two-dimensional framework, with axes of provision (public, private, voluntary, mutual and informal) and finance (public, private corporate, charges to consumers, mutualist; voluntary), giving 25 cells. IPPR (2001) reasserts the case for publicly funded universal services, but distinguishes clearly between the funding and provision of public services. It differentiates means and ends: the case for public services needs to be made in terms of values and outcomes rather than particular forms of delivery. The founding principles of the National Health Service (NHS) were that it should be free, universal and comprehensive, not that it should be provided through a particular structure, process, or set of employees. It rejects the blind alleys of the ‘privatisers’ – private good, public bad – and the ‘monopolists’ – public good, private bad. It sets out four models of public management: command and control; networks and trust; purchase and provide; privatise and regulate. There are two different versions of three-dimensional accounts, with the third dimension being choice or regulation. A three-dimensional framework of provision, finance and decision is presented by Burchardt (1997), Burchardt et al (1999) Smithies (2005), Edmiston (2011), Hills (2011) and Burchardt and Obolenskaya (2016). The third element, in addition to provision and finance, is ‘decision’: can individuals choose for themselves the provider used or the amount of service, or are these decided for them by the state? This typology generates eight possible combinations, which are shown diagramatically in the form of concentric circles. The polar types are the ‘pure public sector’, with public finance, provision and decision such as Child Benefit and the ‘pure public’ sector, with private finance, provision and control such as unassisted places at private schools. While choice is important in other social policy debates, it does not seem to be as directly relevant to the MEW debate as regulation (but see Burchardt and Obolenskaya, 2016), and so this text focuses on the dominant framework of provision, finance and regulation (Johnson, 1999). Regulation is not new, with price controls and controls over production for social purposes able to be traced back at least to Roman times (Moran, 2003, p  38). Unlike other disciplines (eg Hood et al, 1999; Moran, 2003), the social policy literature has tended to ignore regulation (but see Powell and Hewitt, 2002; Powell and Miller, 2014). This is despite the long history of inspection and regulation in sectors such as health, education and housing. Moran (2003, pp  41–2, 49–50) points to the Victorian regulatory state which included the Factory Inspectors; the Poor Law Commissioners; the Prison Inspectorate; the Lunacy Commission; the General Board of Health; the Charity Commission, and professional regulation such as the Medical Act of 1858 that set up the General Medical Council. Rent control

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Understanding the mixed economy of welfare (2nd edn)

pre-dates the welfare state, and its partial repeal in the 1957 Rent Act was one of the most bitter debates in the history of the welfare state. The Keynesian welfare state was based more on regulating employment than on direct employment in nationalised industries. One of the main points of Crosland’s revisionist The Future of Socialism (Crosland, 1964 [1956]) was that Labour governments did not need the ‘Clause four’-style nationalisation in the Labour Party’s constitution in order to control the economy. The Labour Secretary of State for Social Services, Richard Crossman, set up the Hospitals Advisory Service as an inspectorate after a series of scandals at long-stay hospitals. The recent rise in importance of regulation and inspection has made a two-dimensional view untenable, with commentators claiming that we live in an ‘Audit Society’ (Power, 1997) and a ‘regulatory State’ (Hood et al, 1999; Moran, 2003). Hood et al (1999, p 3) write that regulation is a ‘much used word rarely defined with precision’. However, one basic distinction is between governments regulating business, especially the privatised utilities, and regulating itself. As Hood et al (1999, p 4) put it, just as a business firm is exposed to a different set of regulators – auditors, inspectors, licensing bodies, competition and fair-trading authorities – so a typical public organisation faces a collection of waste-watchers, quality police, sleaze-busters and other ‘regulators’. There are a number of problems in representing the MEW in tabular form as in Table 1.1. First, it is sometimes difficult to place phenomena into categories as boundaries may be blurred. According to Miller (2004, p 62), the traditional distinctions between four sectors of the state, market, voluntary and informal sectors no longer adequately describe what is a much more complex and graded set of arrangements. Some scholars have pointed to processes of hybridisation (eg  Evers, 2005; Pestoff, 2014; Seibel, 2015). For example, while some commentators argue that foundation hospitals are still part of the state, and so treatment in a foundation hospital would be placed in cell 1, others claim that foundation hospitals are mutual organisations with some independence from the state, resulting in treatment in one being placed in cell 3. Second, it does not deal with choice or decision (cf Burchardt, 1997). For example, cell 1 – public provision/public finance does not discriminate between the traditional NHS and quasi-markets based on the purchaser/provider split. If NHS trusts are classified as ‘state’ or public agencies (Glennerster, 2009), then they remain in cell 1 – public provision and public finance, despite the very different hierarchical ‘command and control’ versus competitive mechanisms. Similarly, cell 1 includes both third-party and individual decisions about hospital treatment. An individual choice of public hospital using public money is equivalent to the decision being made on individual’s behalf by paternalistic NHS managers. Third, the regulation dimension is more problematic than provision or finance. Provision can be measured in rough and ready terms by ownership of resources. For example, the state might own 90% of all school places but only 50% of all places in residential homes. Similarly, finance can be measured by

12

Introduction

monetary terms: such as how much of the income of a residential home came from state sources. However, measuring ‘regulation’ is more difficult. Regulation is associated with some level of control or power in the form of shaping behaviour in desired ways. Bozeman (1987) claims that some organisations are governmental, but that all organisations are public. He suggests a measure of ‘publicness’, which is defined as the degree to which an organisation is affected by political authority. He argues that some governmental organisations are more public than others; some business organisations are more public than others; and that some business organisations are more public in some respects than some government organisations. However, his empirical measure of ‘publicness’ is the proportion of funding from government sources. This is clearly an unsatisfactory measure as control cannot be equated to resource inputs. In simple terms, our three dimensions relate to different types of control. Ownership is associated with hierarchical command and control structures. Finance is related to financial control. Regulation is associated with political authority. It is not clear that any type of control is stronger than the others in all contexts. It has been claimed that despite financing a high proportion of the budgets of some voluntary organisations, governments may not control them (eg  Macmillan, 2010). In rent control, governments were better able to control rent levels in the private sector than they were in the public sector. Fourth, it is far from clear that the same categories should be used for the regulation axis. It is difficult to envisage regulation by actors in the market, voluntary or informal sectors. As regulation is aligned with legal authority, governments are the most obvious source of regulation. There are examples of government regulation (rent control). However, much regulation is carried out by agencies that have some degree of independence from government such as OFSTED (Office for Standards in Education, the education regulator) and CHAI (Commission for Healthcare Audit and Inspection). There is an unresolved debate about the degree to which these organisations are governmental/ public (eg Hood et al, 1999), whether control and accountability is direct or indirect, and the strength of regulation. Moreover, there is a further phenomenon of professional self-regulation, which is most obvious in services such as health care. For example, the General Medical Council (GMC) and the Royal Colleges have considerable power over many issues in health care. Instead of a three-dimensional cube with 64 cells, Table 1.1 is based on a simple and crude division of the 16 cells into high and low regulation, with ‘a’ as high regulation and ‘b’ as low regulation. While, to paraphrase Bozeman (1987), all organisations are regulated, to paraphrase George Orwell, some organisations are regulated more than others. For example, while much Complementary and Alternative Medicine would be placed in cell 6b, rent control would be placed in cell 6a. We shall examine Table 1.1 again in a dynamic context, analysing moves from origin to destination cells in Chapter Ten.

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Understanding the mixed economy of welfare (2nd edn)

Table 1.1: Three-dimensional MEW (provision, finance and regulation) Provision

Finance

State

Market

Voluntary

Informal

State

1a (high reg.) 1b (low reg.)

2a 2b

3a 3b

4a 4b

Market

5a 5b

6a 6b

7a 7b

8a 8b

Voluntary

9a 9b

10a 10b

11a 11b

12a 12b

Informal

13a 13b

14a 14b

15a 15b

16a 16b

Conclusions The components of the MEW – state, market, voluntary and informal welfare – and the SDW – statutory, fiscal and occupational welfare – will be examined in greater detail in the following chapters, as will discussions of how the MEW and SDW vary over time and space. The main aim of this chapter has been to provide a broad macro-level survey of the territory. It has set out two broad arguments. Despite this profusion of terms and invisibility associated with the MEW and SDW, they are a vital, but relatively neglected, part of social policy. As EspingAndersen (1999, pp 33–4) puts it, social policy pre-dates welfare states, and social policy can exist without welfare states, but not the other way around. Studying just the welfare state leaves a huge ‘welfare residual’ unaccounted for. Similarly, Finlayson (1990, p 184) points to ‘the overwhelming tendency to attach welfare to the state’. However, across much of time and space, the attachment between ‘welfare’ and the ‘state’ has been rather loose. Second, a one-dimensional view of provision alone is inadequate, and it is necessary to also examine the dimensions of finance and regulation. It is only by examining the wider MEW and SDW rather than the narrow ‘welfare state’, and by exposing the hidden or invisible elements that the full picture of the boundaries between public and private (Burchardt, 1997), the moving frontier (Finlayson, 1990, 1994; Beveridge, 1948) and the changing architecture of the UK welfare state (Hills, 2011) emerges.

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Introduction

Summary

• • • •

The mixed economy of welfare (MEW) and the social division of welfare (SDW) are important, but relatively neglected, parts of social policy. Social policy goes beyond a focus on ‘the welfare state’ and it is necessary to examine the other elements of the MEW (private, voluntary and informal) and the SDW (occupational and fiscal). The MEW and SDW vary over time and space. It is necessary to go beyond a ‘one-dimensional account’ of provision to a ‘threedimensional account’ that examines provision, finance and regulation.

Questions for discussion

• • •

Why are the MEW and the SDW the forgotten and invisible dimensions in social policy? Think of the different elements of welfare from the MEW and SDW that affect your family. Should the state provide all welfare goods and services to its citizens?

Further reading The most comprehensive account of the MEW, although it is now dated, remains Johnson (1987). Finlayson (1994) examines the welfare mix over time, while Ascoli and Ranci (2002) examine it over space. Individual components are discussed in Taylor (2003), Toynbee and Walker (2017), Gingrich (2011), and Rees and Mullins (2016). Although it does not use the terms of the MEW, a broad argument favouring private, voluntary and informal sectors over the state sector is provided by Bartholomew (2015), while the opposite is broadly argued by Alcock (2016). The SDW was introduced in Titmuss (1963), and discussed in Sinfield (1978) and Spicker (1983).

Electronic resources http://www.spicker.uk/ has information on the SDW and on the provision of welfare. http://www.britac.ac.uk/digitising-mixed-economy-welfare-britain focuses on the role of the voluntary sector in the MEW.

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Power, M. (1997) The Audit Society, Oxford: Clarendon Press. Prasad, M. (2011) ‘Tax expenditures and welfare states: a critique’, Journal of Policy History, vol 23, no 2, pp 251–66. Prasad, M. (2016) ‘American exceptionalism and the welfare state: the revisionist literature’, Annual Review of Political Science, vol 19, pp 187–203. Razavi, S. (2007) The Political and Social Economy of Care in a Development Context. Programme on Gender and Development, Paper No 3. Geneva: UNRISD. Rees, J. and Mullins, D. (eds) (2016) The Third Sector Delivering Public Services, Bristol: Policy Press. Rose, H. (1981) ‘Rereading Titmuss: the sexual division of welfare’, Journal of Social Policy, vol 10, no 4, pp 477–502. Rose, R. and Shiratori, R. (1986) ‘Introduction’, in R. Rose and R. Shiratori (eds) The Welfare State East and West, Oxford: Oxford University Press. Seibel, W. (2015) ‘Welfare mixes and hybridity’, Voluntas, vol 26, pp 1759–68. Seldon, A. (ed) (1996) Re-Privatising Welfare, London: IEA. Shalev, M. (ed) 1996) The Privatization of Social Policy? Occupational Welfare and the Welfare State in America, Scandinavia and Japan, Basingstoke: Macmillan. Sinclair, S. (2016) Introduction to Social Policy Analysis, Bristol: Policy Press. Sinfield, A. (1978) ‘Analyses in the social division of welfare’, Journal of Social Policy, vol 7, no 2, pp 129–56. Sinfield, A. (2016) ‘Tax benefits and their impact on the social division of welfare’, paper presented at Fiscal Welfare in Europe conference, Paris, 26–7 May. Smithies, R. (2005) Public and Private Welfare Activity in the United Kingdom, 1979 to 1999, CASE paper 93, London: LSE. Spicker, P. (2008) Social Policy, 2nd edn, Bristol: Policy Press. Stebbing, A. and Spies-Butcher, B. (2010) ‘Universal welfare by “other means”? Social tax expenditures and the Australian dual welfare state’, Journal of Social Policy, vol 39, no 4, pp 585–606. Taylor, M. (2003) Public Policy in the Community, Basingstoke: Palgrave. Teasdale, S. (2012) ‘What’s in a name? Making sense of social enterprise discourses’, Public Policy and Administration, vol 27, no 2, pp 99–119. Thane, P. (1996) Foundations of the Welfare State, 2nd edn, Harlow: Longman. Titmuss, R. (1963) Essays on ‘the Welfare State’, 2nd edn, London: George Allen and Unwin. Titmuss, R. (1968) Commitment to Welfare, London: George Allen and Unwin. Titmuss, R. (1970) The Gift Relationship, London: George Allen and Unwin. Titmuss, R. (1974) Social Policy, London: George Allen and Unwin. Toynbee, P. and Walker, D. (2017) Dismembered. How the Attack on the State Harms Us All, London: Guardian Books. Ungerson, C. (1987) Policy is Personal, London: Tavistock. Wilensky, H. and Lebeaux, C. (1965) Industrial Society and Social Welfare, New York: The Free Press.

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2 The mixed economy of welfare in historical context John Stewart

Overview In the past, historians had a view of welfare provision, particularly in the 20th century, which we now recognise over-emphasised the role of the state. While state-provided services are, and have been, important, it is now more generally acknowledged that we need to see the broader picture. The family has always been a key provider of welfare and will continue to be so, although the degree to which the state or voluntary agencies have sought to support or intervene in family life fluctuates according to circumstances. The role of the market has been seen as especially important since the 1970s, but historically it too has been an important supplier of welfare and not least in the form of paid labour. And the voluntary/charitable sector also has played a long-standing part in meeting welfare needs whether through, for instance, supplying particular services or campaigning for disadvantaged groups within society. Key concepts Changes in welfare providers; changes in the relationship between providers; the family; the market; the state; the voluntary/charitable sector

Introduction It is a cliché, but a truism, that historical analyses reflect the times in which they are produced. This is as true of writing about the history of social welfare as any other form of historical enquiry. Much of the material produced during the era of the ‘classic welfare state’, that is from the end of the Second World War down to the early 1970s (Lowe, 2005), consequently focused almost exclusively on the role of the state. Texts such as those by Bruce (1961) and Fraser (1973) told, in a ‘Whig’ version of welfare history, a story of almost constant progress and achievement, the realisation of the post-war settlement and the attainment

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by Britons of ‘social’ rights and citizenship. The last was, of course, famously articulated by T.H. Marshall (1950). For the most part, then, there was in these accounts little attention to forms of provision, or influence, which did not centre on state activities, and predominantly those of the central state. However, even before the upheavals of the 1970s and subsequent decades there were signs that this narrative was problematic. Richard Titmuss, Britain’s leading authority on social policy from the 1950s until his death in 1973, constantly challenged the idea that the ‘welfare state’ was a complete or finished product, one reason he always put the phrase in inverted commas (Titmuss, 1958). The ‘rediscovery of poverty’ of the 1960s suggested that all was not well with state provision of welfare and hence that the history of the ‘welfare state’ was not one of unequivocal progress. It is notable that much of the campaigning about such issues was undertaken by voluntary bodies such as the Child Poverty Action Group (CPAG). The onset of socioeconomic and political instability in the 1970s prompted further questioning of the nature of the ‘welfare state’. Feminist scholars, for example, pointed to the ‘gendered’ nature of welfare provision and consumption with, for instance, many women undertaking unpaid welfare work by way of the family (for an early example, see Rose, 1981). More recently, it has been suggested that the nation state is not the only organisational prism through which welfare can be viewed: the sub-national and the transnational are also important analytical tools (Stewart, 2014). For present purposes, however, what historians increasingly came to acknowledge was that welfare had been, still was, and almost certainly will be in the future delivered by a range of agencies and institutions. Attention was increasingly paid to the market, to families (the ‘informal’ sector) and to voluntary/charitable bodies (the ‘third’ sector). Much of the pioneering work here was done by Finlayson, who pointed to the ‘moving frontier’ in welfare between state and non-state sectors. The boundaries between them were porous and subject to change over time, and nor were the agencies and institutions which delivered welfare fixed entities – they too changed over time (Finlayson, 1990; also, Finlayson, 1994). As Lewis pointed out shortly afterwards (1999, p 249), all this might have been ‘more obvious earlier had British historians and social policy analysts engaged in more European comparative research’ – a reminder that the mixed economy of welfare is not an exclusively British phenomenon (see Chapter Nine). More recently, Gorsky (2014, pp 32–4) points to the trend since the 1980s for political appeals to the third sector to help reduce the role of the state in welfare provision and the admiration, on both the political left and political right, for voluntary schemes such as mutual aid (the contrast here being with state ‘dependency’). Such developments have led, he suggests, to a ‘new welfare history’ which pays appropriate attention to non-state activities and as evidence of this he cites the activities of the Voluntary Action History Society. As one of this society’s leading figures notes, in a volume devoted to voluntarism and welfare, his organisation

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was formed in 1992 ‘by a small group of historians and practitioners who were scandalized by the voluntary sector’s neglect of its own history and the lack of a historical dimension to the discussion of its role and its contribution to society’ (Rochester, 2011, p 4). The aim of this chapter is thus to suggest to readers the usefulness of seeing the mixed economy of welfare from an historical perspective while acknowledging that the society in which it exists is in a constant state of change. The rest of the chapter is organised as follows. First, we use fictional example to show the mixed economy of welfare in action at two different periods (Box 2.1). Second, we examine the state, the family, the market and the voluntary/charitable sectors in their historic relationship to welfare. Third, we note the shifting relationship between these components of the mixed economy of welfare and in so doing draw some conclusions about it in the light of historical change.

Box 2.1: The mixed economy of welfare in action: Margaret (1950s) and Jane (1980s) Margaret is a teenage girl living with her mother and father in early 1950s Britain. Her father is in regular employment (the British economy is doing well) so her mother stays at home to look after the household. Margaret and her parents have recently moved into one of the new local authority houses built as part of the post-war housing programme where the rent they pay is below the market rate. Margaret is educated at her local Roman Catholic school. This is part of the state system but while the state provides the bulk of the funding, the Church also has a financial and administrative as well as an educational role. Such arrangements were part of the ‘compromise’ with the ‘voluntary’ – that is, religious – schools introduced by the Education Act 1944. At school she, like the rest of her classmates, also benefits from the school medical and meals services (including free milk), among the ‘welfare’ components of the 1944 act. Should she fall ill, Margaret will be treated at no cost and without question by the newly inaugurated National Health Service (NHS), just as her parents would be. Although still at school, she supplements the family income by weekly baby-sitting for a neighbour. Unfortunately, Margaret’s parents’ relationship is undergoing strains, but counselling at the recently created Marriage Guidance Council seems to have improved matters. Margaret’s father pays into a commercial insurance scheme to cover for unforeseen eventualities and to supplement his state pension when he retires. Margaret and her family are thus receiving ‘welfare’ through the state (in the form her accommodation, part of her education, and the NHS), the voluntary sector (the Marriage Guidance Council), and the market (her and her father’s employment, and his private insurance). Thirty-five years later, in the late 1980s, Margaret’s grown up daughter, Jane, is having a hard time. She is a single mother with a child, James, who has just started primary

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school. Because of her family situation Jane is unable to get a job, and in any event this is a time of high unemployment, so she is reliant on state benefits. James is receiving his primary education, this time from the local authority, and although the school meals and medical services have been cut back he is entitled to school meals because of his mother’s dependence on benefits. He finds this a bit embarrassing as it marks him out from many of his classmates who do not now even receive free milk. Jane and James live in accommodation rented from a private landlord because social housing is becoming less and less available with the selling-off of council houses and the collapse in local authority house construction. But at least they are not among the growing number of homeless people who have become reliant on charities even for their food. On a couple of occasions Jane’s benefits have been delayed or withheld, so she has had to use the services of her local Citizens’ Advice Bureau, a scheme largely staffed by volunteers. Because of the help she has received there, Jane would like to train as one of their volunteers but fears, with cause, that this would affect her benefit entitlement. Jane has also received debt counselling from the Catholic charity, the St Vincent de Paul Society. One redeeming feature of their situation is that they do not have to worry about health issues, at least in the sense that the NHS is still free at the point of delivery. So Jane and her son too are receiving state welfare in the form of education, benefits and health care. James is also being cared for by his mother – welfare in the family – and Jane uses the services of voluntary/charitable bodies. But the labour market is doing her no favours while lack of social housing, means that she is spending more on rent than would be ideal. And there is no question that she can save for her far-off retirement. So, because of changing times and different circumstances, Margaret and Jane experience the mixed economy of welfare, which has itself changed, in rather different ways.

Thinking historically about the state and welfare In the mid-19th century the dominant view of the central state’s role in Britain was that it should not, in most circumstances, be ‘directing’. Rather, it should be ‘enabling’, for example through the provision of a legal system with clearly defined rights and responsibilities. Otherwise, people should be left to get on with their lives (Hoppen, 1998, chapter 4). A further dimension of this viewpoint was that local bodies, official or otherwise, should stand as a bulwark against any attempts by the central state to increase its powers. Indeed there was an expansion of the role of local responsibilities by mid-century in areas of welfare such as the Poor Law and public health. Such services were mostly funded by local taxation and local autonomy and rights were fiercely defended. These areas of welfare, along with education, were also crucial to women in gaining a foothold in social politics in an era – the last quarter of the 19th century – when they were

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increasingly gaining political rights in the local sphere while still denied them nationally (King, 2006). However towards the end of the century a re-evaluation of the central state’s role took place. This was because, first, local bodies were not always very efficient in delivering social welfare and other services. Second, economic theory was beginning to question whether, for instance, the unemployed were in that condition because of structural faults in the economy rather than, as the philosophy of the Poor Law would have it, because of individual moral weakness. Third, concerns were being raised about the physical condition of the population and not least in the light of increasing military, imperial and economic competition. These concerns were given further credence by the findings of social investigators such as Charles Booth. Fourth, British politics was changing with part of the Liberal Party embracing social reform while in the early 1900s the Labour Party was founded. In short, a more positive view of the central state and its capacities was beginning to emerge (Searle, 2004, chapters 6 and 7). The most obvious manifestation of this came with the Liberal welfare reforms of 1906 to 1914. These saw, inter alia, the introduction of old age pensions (initially financed out of general taxation), the intervention of the state in areas such as health and unemployment insurance, and mildly redistributive fiscal policy (Searle, 2004, chapter 11). However, although these reforms slowly began to eat into local authority provision of welfare, this by no means disappeared, while in other areas the central state’s role was more indirect. One crucial part of Edwardian child welfare policy, for instance, was the enhanced power given to the National Society for the Prevention of Cruelty to Children (NSPCC), a charitable organisation with its own staff of inspectors (the ‘cruelty men’), to act on the state’s behalf (Hendrick, 2003, pp 82–6). As this example shows, in historical (and contemporary) discussions of the state’s role in welfare it is important to ascertain whether it is acting directly, funding non-state bodies or devolving powers to such bodies. Clearly, this is also important to these bodies themselves. But perhaps what was most important about the Liberal reforms was that social welfare was now pushed much higher up the political agenda than it had been in the laissez-faire 19th century. The inter-war period, while on many levels profoundly disappointing to those who had anticipated the ‘land fit for heroes to live in’ promised during the First World War, nonetheless saw some important developments in state-directed welfare policy. In public sector health care, for example, local authorities were allowed to take over what had been Poor Law hospitals thanks to the Local Government Act 1929. While not all availed themselves of this opportunity, and some that did made a poor job of it, at least in some areas progress was made (Levene et al, 2011). The London County Council in particular was held up by the Labour Party as a model for a future socialised health service although

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this local authority based model was to be rejected by the post-war Labour government (Stewart, 2005). It was in the 1940s that the central state began to come to the fore as welfare provider. In the early years of the Second World War health services had come under central control and this was to be institutionalised with the coming of the NHS in 1948. And if not as far-reaching as he himself liked to claim, nonetheless Beveridge’s 1942 report led to the rationalising, updating and effective universalising of most aspects of social insurance, centrally organised and disbursed. The creation and career of the ‘classic welfare state’ can therefore be seen as largely driven by the central state (Lowe, 2005, chapters 4–11). This is not to say that local government lost all its welfare responsibilities. On the contrary, the expansion of areas such as social housing, the personal social services, and education meant that in certain respects the load carried by local authorities significantly increased, while they simultaneously lost their historic role as, as Harris puts it (1990, pp 90, 98), ‘the main intermediaries between the citizen and the state’. In welfare terms it is also important to recognise that the UK has never been a ‘unitary state’, centralised in Whitehall. Scotland, Wales and (from the 1920s) Northern Ireland all retained varying degrees of ‘welfare autonomy’. Even the NHS, the ‘welfare state’s’ most highly regarded institution, was in fact created by three separate pieces of legislation: for England and Wales (1946), for Scotland (1947) and for Northern Ireland (1948). Northern Ireland was, at this point, the only self-governing part of the UK, and it took considerable political skill for the Unionist government to overcome hostility from both its own party and from Catholic critics. This was therefore a very different experience from the Labourdriven setting up of the NHS in England and Wales and in Scotland (Privilege, 2015). It is important to acknowledge that the differences between the various parts of the UK were largely of degree rather than kind. Nonetheless they were important and further recognised by political devolution from 1997, which was, essentially, about welfare provision and where divergences between the various countries have been taking place ever since (see Social Policy & Administration, 2012). The mixed economy of welfare thus has geographical as well as temporal dimensions. And, as we shall presently see, the ‘welfare state’ did not, nor did it seek to, supplant other forms of welfare provision. All the same, the ‘classic age’ of the ‘welfare state’ was largely driven by the central state, and represented a decisive shift from what had gone before. As suggested, one of the key institutions created by post-war reconstruction was the NHS. Available free at the point of delivery to all citizens and embracing most of major dimensions of health care, the service was, crucially, funded out of general taxation. Taken together this might be seen as an expression of social solidarity and social citizenship which, according to Titmuss (1950), had been fostered by Britain’s wartime experience on the home front. Although much disputed, it has been argued that the first quarter of a century

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or so after the end of the Second World War was an era of ‘consensus’ when the major political parties broadly agreed for the need for the ‘welfare state’. This was to be underpinned by Keynesian economic management, one key aspect of which was the maintenance of full employment, a significant policy goal given the miseries brought about by unemployment in the inter-war era. It should be noted, though, that even during the era of the ‘classic welfare state’ the economy generally took priority over social policy. The 1964 Labour government certainly spent more on social security and succeeded in reducing inequality in some measure. But, given that it was primarily driven by concerns about economic decline, it also expanded the scope of means-testing (Tomlinson, 2008). The post-war consensus began to break down in the 1970s, partly as a result of external shocks to the economy but also because of the questioning of the fundamental premises of social welfare and the state’s role (or otherwise) in providing it. Conservative administrations from 1979 to 1997 sought to ‘roll back the frontiers of the state’ and to encourage non-state sector provision, whether through the family, the private sector or the voluntary sector. All this was underpinned by the alleged primacy of the market and its purported ability to solve social problems (Harrison, 2010, chapter 4). However successful any of this was, or was not, in economic terms there was indisputably an attitudinal change about social welfare and this continued, albeit with some subtle differences, under New Labour, then under the Coalition and up to the present day (for New Labour see Powell, 2008; for the Coalition see Bochel and Powell, 2016b). The relationship between the state and welfare will be a recurring theme in what follows.

Thinking historically about the family and welfare The family might seem a rather more immutable social institution, and certainly historians have shown that the nuclear family, as a form, has long been established in Britain. Although at various points the state and the voluntary/charitable sector have sought to intervene in cases of perceived ‘family failure’ they have not always done so in a coherent fashion. As Levene (2010) has shown, for example, families were of considerable concern to the Poor Law authorities in early 19thcentury London, albeit concern of an uneven and inconsistent type. In a sense, though, this simply illustrates the point that the family, a key social institution, has been, willingly or otherwise, the principal provider of welfare throughout history and that this has been seen as one of its central functions. In turn, family welfare provision has underpinned, and will no doubt continue to underpin, crucial aspects of welfare policy. But over the last few centuries there have been fundamental changes to population structure and in cultural and social attitudes towards the family. It is important to be conscious of these in order to understand the family’s role in welfare provision.

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British society in the 18th and for most of the 19th centuries experienced high rates of marriage and low life expectancy. People generally lived in familydominated households and, certainly when compared with our own, this was a ‘young’ society. All this changed from around the middle of the 19th century, in part thanks to the emergence of the public health movement which began to regulate the supply of drinking water and the disposal of sewage (Hamlin, 2011, for a discussion of the issues). Life expectancy started to rise and one important consequence was that women began to live longer than men. From around the same time, family size started to decline. One effect of this decline was the greater premium placed on raising healthy and well-educated children, particularly when the impact of competition – imperial, military and economic – began to be felt. ‘Investing’ in children was ‘investing’ in the future of the race and the Empire – a process of ‘human capital formation’. In turn this raised, and continues to raise, questions about the relative responsibilities of the family, the voluntary sector and the state for the welfare of the young. So, for instance, in the mid-20th century children deemed to be mentally ‘maladjusted’ might be referred to specialised clinics, run by either voluntary agencies or local authorities, with the aim of restabilising the family. Such an approach had the further implication of contributing to a shift to having children raised, wherever possible, by their biological families rather than being cared for in, say, largescale institutions (Stewart, 2016; for an overview of child welfare in the last two centuries, Levene, 2006). The family’s historic role in welfare provision should not be romanticised, nor should it be seen as always fulfilling what was expected of it. There has been a common, but misplaced, idea that in the past there was a ‘golden age of kin-based welfare provision’. But, for a range of reasons, the family might not always operate as the ‘locus of care’ (Horden and Smith, 1998, p 2). It can also be argued in this context that, from the mid-19th century, there has been increasing surveillance of, and sometimes intervention in, the family by the state and we have encountered a situation where such intervention was delegated to a voluntary/charitable body, the NSPCC. Increasing surveillance and intervention can be associated with the growth of expert knowledge in areas which impacted on family function and welfare provision, for example psychology and social work. The tension lay, and continues to lie, in the perceived need to keep the family unit intact and functioning whenever possible while also securing wider social or economic gains. Shifts in population and social and cultural attitudes continued into the 20th century, raising further issues about the efficacy, or appropriateness, of the family as a welfare provider. During the creation of the post-war ‘welfare state’ the family was seen as central to social stability in the wake of the upheavals of the 1930s and the effects of a devastating war. As such it received various forms of relatively benign support, for example in the expansion of the school meals

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and medical services as a result of the Education Act 1944 (Harris, 1995, chapters 8–10). The era of the ‘classic welfare state’ can also be seen as that of the ‘social democratic’ family. From a rather different perspective Hendrick (2016, p 273), in his analysis of what he sees as the rise of ‘narcissistic parenting’ from the 1970s, points to schemes of parental education, with ‘guidance being seen as an urgent requirement for all responsible parents, not merely the disadvantaged’. Whether or not such schemes worked is less the point than the rather ambiguous relationship they embodied between the state and the family. The latter are to be supported, but also to be placed under surveillance and subject to intervention. Supporting and surveying the family, by the state and by voluntary/charitable bodies, were hardly new to the late 20th/early 21st centuries but, in the particular case of New Labour, do suggest concerns of a particularly acute kind about how the family is actually operating, and to whose benefit. To further complicate matters, recent decades have seen a rise in the number of people living on their own, through choice or otherwise. This derives from a combination of rising affluence, at least for some parts of the population, social and cultural change, and the ability of women to postpone childbirth thanks to improvements in contraception. People are now able, and expect to be able, to create single households for some or all of their lives and this has clear implications for family formation. One particularly contentious issue in relation to the family has been the rise in single-parent – in effect, single-female-parent – households because of the purported role that welfare benefits play in this phenomenon and the associated ‘breakdown’ of family life. The latter should also be placed in the wider context of the long-standing concerns about problem families, troubled families or the ‘underclass’. Welshman cites a speech by the then Coalition Prime Minister, David Cameron, from late 2011. Cameron acknowledged that the urban rioting earlier that year had been a shock to the system before going on to suggest that ‘we’ve known for years that a relatively small number of families are the source of a large proportion of problems in society’. For Cameron the solution was thus to support ‘these families to take control of their own lives’ (Welshman, 2013, pp 209–10). Once again we see the not always comfortable balance between maintaining the integrity of the family unit and surveillance and intervention. Good, bad or indifferent, families have undoubtedly been key providers of welfare over time. A further dimension has been added to this since the 1970s when, successively, the New Right and New Labour sought to re-emphasise the role of individuals and their families in securing their own welfare, a position in some respects similar to that of the 19th century although, as we have seen, surveillance and intervention have had significant roles to play. Having said that, many of the programmes brought in after the Second World War have been diluted or abolished, for instance the school meals and medical services. The central point is, though, that ‘the family’ is a socially and historically constructed

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institution shaped by numerous shifting assumptions about its place in society, the degree to which the state wants to intervene in it, gender roles, and intrafamily relationships.

Thinking historically about the market and welfare It was fundamental to Victorian liberalism that the market could provide most welfare needs for most people at most times. The existence of poverty was not denied. Rather, it was viewed as a fact of economic life whose impact could be softened by prudence, family support or, in the last resort, charity aimed at the ‘respectable’ poor. What could be avoided, though, was the degraded condition of pauperism, brought about by moral failing. Pauperism involved dependence on others, and not least the ratepayers who funded the Poor Law, in an age where ‘independence’ was a key moral virtue. Poor Law reform in 1834 therefore involved the application of ‘less eligibility’, whereby welfare was given at a lower level than that of the worst-off labourer. Relief might be given domestically or in the workhouse. Either way, paupers were to be re-moralised so that they might re-enter the labour market. The boundaries between the ‘respectable’ and the ‘unrespectable’ poor were policed by a voluntary organisation committed to free market principles and with some claims to be the originator of social casework, the Charity Organisation Society, later the Family Welfare Association (Lewis, 1995). It is worth considering the extent to which some tenets of Victorian liberalism persisted into the post-war ‘welfare state’ and beyond. As noted, by the end of the 19th century it was being increasingly realised that the market did not always operate as exponents of classical political economy claimed. Social problems were not necessarily the fault of those who experienced them. Instead, there could be a whole range of imperfections and failures in the market. Social investigators such as Booth and Rowntree were, moreover, demonstrating the effects of problems such as sickness and underemployment on those at the bottom of the social ladder (Searle, 2004, chapters 6 and 7). Such ‘market failure’ was addressed through mechanisms such as labour exchanges, a further component of the Liberal welfare reforms. At the end of the First World War, local authorities, with strong backing from the central state, embarked on an extensive programme of house-building prompted in part by fears of social unrest but also by the accurate perception that the market was not delivering an acceptable volume and quality of accommodation (Harris, 2004, chapter 16). Further evidence of market failure came with the high levels of unemployment, and the associated social misery, experienced in some (although by no means all) parts of the country for almost the entire interwar era. Especially in the 1930s, arguments for ‘planning’ in areas such as health and the social services emerged from organisations such as the politically centrist Political and Economic Planning and the Next Five Years Group (Overy, 2009,

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chapter 2). Again this was in response to market failure, reinforced by the example of Roosevelt’s New Deal in the USA and the growing influence of Keynes. All this was designed not to supplant free market capitalism but rather to curb what were seen as its (self-) destructive tendencies. And, of course, free market capitalism remained the principal source of employment and, as such, contributed to individual and collective welfare. Nevertheless, scepticism about capitalism’s ability to deliver the welfare goods fed into post-war reconstruction, in terms of both nationalisation and the ‘welfare state’. It shaped too the thought of leading figures of what was to become the academic field of social policy (Sheard, 2014). Reaction against such views came to the fore most forcefully from the 1970s onwards. The New Right, or neoliberals, sought to uncouple welfare from the state. Public monopolies or near monopolies were seen as both inefficient and detrimental to the workings of the free market. Welfare ‘dependency’, moreover, corroded individual, familial and social responsibility. If allowed to operate as it should, the market would generate both growth and wealth with residual social services providing a ‘safety net’. None of this was to say that things did not go wrong in an individual’s life or that of their family. But once again the market could offer solutions through, for example, private health insurance. The market had reasserted itself and its impact could be seen in, for instance, attitudes towards the age at which state-provided pensions should be awarded and the participation of older workers in the labour market (Macnicol, 2015). And, as noted, the New Right placed considerable emphasis on the family as a welfare provider. For the moment, though, what needs to be stressed is that the primacy of the market had been made paramount, initially under the Conservative governments of Thatcher and Major. And this continued in a somewhat muted form under New Labour and then with renewed and increased vigour under subsequent Coalition and Conservative governments. So, as Gorsky remarks (2011, p 442), in health care New Labour delivered ‘higher investment but broad policy continuity, now with [the] private sector contracting for capital projects and tougher regulation of drug treatments through the National Institute of Clinical Excellence’ – a combination of direct private sector financing and the managerialism derived from perceptions of how that sector operated. And, as he further points out (Gorsky, 2014, p 59), the penetration of private companies into the NHS has continued apace. Coalition and Conservative governments have committed themselves, ostensibly in the name of ‘austerity’ and ‘freeing up the market’, to slashing welfare budgets, notwithstanding the clear market failure of finance capitalism in 2008. All this should be put in a longer historical context. Even when the efficacy of the market has been questioned the labour market has always been seen as the principal provider of welfare by way of paid employment. Similarly the ability, indeed the right, to purchase welfare has never been seriously questioned. Those with the necessary resources have always been able to buy education, health care, housing, pensions and other forms of social security. This was as true of the era

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the Liberal welfare reforms and of the ‘classic welfare state’ as it is today. The Labour governments of 1945–51 had no intention of abolishing, say, public school education, and the survival of private practice in medicine seemed a small price to pay for the creation of the NHS. There is no suggestion, in the second decade of the 21st century, that any of this will change significantly. Nonetheless, and while this should not be overstated, since the late 1970s the primacy accorded the market has resulted in a sharp move away from the collectivist and public service ethos of the first quarter century or so of the ‘welfare state’.

Thinking historically about the voluntary/charitable sector and welfare We noted earlier that in the 19th century charitable provision of welfare might be available for the ‘deserving poor’. Indeed such provision has a long history, although who historically has constituted the ‘deserving poor’ is rather more problematic. Goose has shown, for instance, that accommodation for the elderly poor in the form of almshouses dates back to the medieval era. He notes too the large volume of charitable giving in the latter part of the 19th century and the crucial role of religion in caring for the elderly (Goose, 2014). Religion has operated in many other areas of welfare. Greenlees (2013) describes the role of the Church of Scotland in organising health care for unmarried mothers in the first half of the 20th century. And in our case study earlier (Box 2.1) we saw that one of our fictional characters received help from the St Vincent de Paul Society. Somewhat neglected in historical accounts of welfare, especially in the modern era, the significance of religion is now being given more attention (Jawad, 2012). But to return briefly to the 19th  century, this was an era when the social casualties of urbanisation and industrialisation were increasingly visible. Helping the ‘deserving’ among them, either directly through giving free labour for various voluntary/charitable agencies or by giving such bodies money, could be motivated by humanitarianism, by religious belief or by fear of social unrest. Charitable giving and charitable relief were thus an integral part of the Victorian worldview, and time or resources given formed a central component of ‘citizenship’. This version of citizenship, with its notions of duty and responsibility, is thus rather different from the social citizenship, with its notions of rights and entitlement, that we encountered earlier. As Finlayson puts it, the former was ‘a citizenship of contribution’ (Finlayson, 1994, p 4 and passim). Against this background, a number of further points emerge. First, voluntary/charitable relief undoubtedly helped, and continues to help, those who, for whatever reason, cannot access state-provided welfare and/or the labour market. It may also be favoured by those seeking assistance over statutorily provided services, some individuals with mental health problems being a case in point. Nonetheless, by the late 19th century problems were evident. Charitable

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relief was often viewed by its recipients as patronising and imbued with particular class and social attitudes. By its very nature, furthermore, such effort was not geographically evenly spread. The cluster of voluntary hospitals in or around the City of London, institutions which relied for income on donations or subscriptions and the free labour of medical specialists, reflected the population distribution of the Middle Ages and not the needs of Londoners in the modern era. Many workers for charitable or voluntary agencies were, moreover, both untrained and unpaid and so could be accused of acting in an amateurish or unsystematic way, however well intentioned. So the argument grew for state-provided services staffed by trained professionals in order to ensure equity and a disinterested approach. Whether this was what transpired is, of course, an entirely different matter (Le Grand, 2010). It is also important to bear in mind that even in times of austerity state expenditure far exceeds that of the voluntary/charitable sector (Glennerster, 2009, p 52). Second, the voluntary/charitable sector has always been highly heterogeneous. At one end of the spectrum can be found large philanthropic bodies, or very rich individuals, using their resources to further particular welfare and welfare research projects. So, for instance, the Ford Foundation played a significant role in setting up the Institute for Community Studies in the 1950s (Tiratsoo and Clapson, 2001). But the sector also includes direct providers of welfare, mutual aid organisations and campaigning groups. A famous example of the last of these is the CPAG, founded in 1965 in response to, as Thane and Davidson (2016, p 6) put it, ‘growing concern among social workers and social researchers about the extent of poverty they perceived in Britain, contrary to the widespread belief that it had largely been eliminated in the post-war welfare state’. In terms of providers, a lot has been written about the voluntary hospitals which, unlike voluntary schools, were nationalised with the coming of the NHS. Much of the attention here has focused on the large, prestigious institutions located in towns and cities. But, as Neville shows (2014), in rural inter-war Devon cottage hospitals were also important and contributed a significant proportion of beds available in the area, notwithstanding that some could accommodate fewer than 50 patients. They were run by local general practitioners and financed by philanthropic donation, subscription and other local forms of support. Even with the coming of the NHS voluntarism, in the form of mutualist contributory schemes, continued to operate in health care although, as Gorsky suggests (2014, pp 52–3), in this particular case the mutualist aspects eventually weakened. Nonetheless, it is historically revealing that in the very year the NHS started operating, one of the ‘architects’ of the ‘welfare state’, William Beveridge (1948), published a volume extolling the virtues, indeed necessity, of a strong voluntary sector. Third, the composition and ambitions of the voluntary/charitable sector have changed significantly over time, with one notable feature being its capacity to adapt to new, often unforeseen, circumstances. From around the time of the

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First World War it became, for instance, more and more reliant on state funding. At the same time what is sometimes called the ‘new philanthropy’ emerged. Among its characteristics were, first, a growth in professionalism and, second, closer cooperation both within the sector and with the local and the central state. This was in marked contrast to the previous prevailing attitude, which had fiercely asserted autonomy and in some cases extolled the virtues of amateurism and consciously opposed state-sponsored welfare (Harris, 2004, pp  186–90). University settlements were charitable bodies founded in the late 19th century to encourage young middle-class people to live in deprived areas and undertake social work. Toynbee Hall in London’s East End was among the most famous and its volunteers included Beveridge and Clement Attlee, later Britain’s postSecond World War Labour Prime Minister. As the 20th  century progressed, though, settlements became more reliant on professionally trained welfare workers and, with the coming of the ‘welfare state’, their functions too began to change. They might, for example, acquire an advocacy role for particularly disadvantaged groups. So, as Bradley puts it (2009, p 194), settlements ‘remained in the welfare mix, but were providers of services in addition to mainstream care or worked to improve the well-being of such groups as the elderly’. And although lacking the resources of local authority social services and the NHS, ‘their importance lay in providing top-up services to their local communities’. The example of settlements also serves to highlight the point that, while clearly the voluntary/ charitable sector was deeply affected by the growth of welfare provision at both local and national levels, it persisted even into the era of the ‘classic welfare state’. Finally, since the 1970s there has been a further rebalancing of the relationship between the voluntary/charitable and the state. As Rochester (2011, p  2) observed, the expectations placed on the sector had ‘changed radically’ in the preceding three decades. It had been ‘increasingly enlisted’ by the Conservative governments of the 1980s and 1990s ‘as contractors whose services could be administered in place of direct provision by statutory bodies’. This fitted closely with New Right aspirations for the voluntary/charitable sector. As Glennerster points out (2009, pp 13–14), this took place against a background of a decline in sector income. Under New Labour much was made of utilising more fully the resources of the voluntary/charitable sector, deemed a crucial part of civil society, in ‘partnership’ with the state and with the private sector (Dobrowolsky and Lister, 2008, pp 299–30). And with the formation of the Coalition government in 2010 came, in response to the financial crisis of 2008, the drive for austerity by way of large-scale cuts in public expenditure. Of particular importance to the voluntary/charitable sector was, first, their importance to the Cameronian notion of a ‘Big Society’; and, second, the loss of state funding. So, as Bochel and Powell put it, on the one hand we saw the ‘development of charitable and social initiatives, including food banks and clothing banks’, while on the other ‘funding for charities and community groups was being reduced by both central

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and local government’ (Bochel and Powell, 2016a, p  11). Recent research, meanwhile, suggests that charitable giving has continued to decline since 2008, although this has varied in relation to the size of charity involved and by region. Disturbingly, it is voluntary/charitable bodies in the most deprived areas which appear to be hit hardest hit, largely because local authorities in such areas suffered disproportionately (Clifford, 2017, pp 23–5).

Conclusion Given the issues raised in the previous sections, it is apparent that there is no fixed relationship between the state, families, the market and the voluntary/ charitable sector – the ‘moving frontier’ identified by Finlayson (1990, 1994). For one thing, this relationship changes over time and will continue to do so. Nor should it be assumed that the various components of the mixed economy of welfare are mutually exclusive or necessarily in competition with one another. The voluntary sector, for instance, can act as a proxy for the state in return for financial support.The boundaries between the various sectors are, moreover, not only subject to change over time but generally porous and overlapping rather than rigidly fixed and delineated. The internal dynamics of the mixed economy of welfare may, furthermore, shape and be shaped by prevailing views about civil society and citizenship. Societies which emphasise collective action or charitable giving as a duty have a rather different outlook from those whose predominant emphasis is on free market individualism. These are obviously complex ideas and one way of thinking about them is through the person of William Beveridge. Beveridge is famous for his 1942 report which laid the basis of the ‘welfare state’. A few years later, having just finished Voluntary Action (Beveridge, 1948), he toured New Zealand. In his speeches and broadcasts he repeatedly stressed the necessity of voluntarism’s role in welfare provision and critiqued his hosts’ welfare state, and by extension that emerging in Britain, for being overly statist. The latter could, he insisted, lead to a ‘banana mentality’. This metaphor invoked the idea of someone sitting under a banana tree waiting for fruit to fall into their lap rather than using their own initiative. Beveridge was certainly sceptical about unrestrained free market capitalism but he was no socialist and predicated many of his welfare proposals on full employment achieved by economic management rather than by direct state control (Stewart, 2015, pp 272–4 and passim). So in the life of one of the ‘founders’ of the ‘welfare state’ we can find a range of ideas about how welfare is to be provided – in this case by the state, the labour market and the voluntary sector. The central points which this chapter has sought to make are thus as follows. First, there has always been a ‘mixed economy of welfare’. Second, its principal components are the state, the family, the market and the voluntary/charitable sector. Third, that although these are useful categories we must be aware that the

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content of each has changed over time as have the relationships between them and according to particular circumstances. As we saw in the fictional case of Margaret and Jane (Box 2.1), individual experience is markedly shaped by historical context and the availability or otherwise of welfare providers and services.

Summary

• • • •

There has always been a ‘mixed economy of welfare’ involving the state, the family, the market and the voluntary/charitable sector. The role and extent of each of these in delivering ‘welfare’ has changed over time. The relationship between each of these actors has also changed over time. The ‘mixed economy of welfare’ is thus a dynamic and changing phenomenon whose contours depend on the particular prevailing historical circumstances prevailing.

Questions for discussion

• • •

How has the mixed economy of welfare changed over the course of your lifetime, and those of your parents and grandparents? Which has served ‘Margaret’ and ‘Jane’ (Box 2.1) best – state welfare, voluntary welfare, or family welfare? How can we reconcile the idea that William Beveridge was one of the ‘architects’ of the ‘welfare state’ with his authorship of a major work on voluntary welfare?

Further reading Finlayson (1990, 1994) remains an essential starting point for an historical approach to the mixed economy of welfare. For a specific case study, Bradley (2009) captures the complex and changing relationships between a particular form of voluntarism and various agencies of the state. The essay by Rochester (2011) is brief but stimulating, while Gorsky (2011) ranges widely in his discussion of health care and its various modes of delivery. Hendrick (2016) is consciously provocative in his analysis of certain aspects of family history, while Levene (2010) provides another specific case study in a similar area. Lowe (2005) is still worth reading on the post-war welfare state although his work should now be supplemented by Powell (2008) and Bochel and Powell (2016b).

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Electronic resources An important website is provided by the organisation History and Policy is http://www. historyandpolicy.org/. This gives access to its various publications and details of meetings, seminars, and other events. The Voluntary Action History Society site, http://www.vahs.org.uk/, posts news of that body’s activities and is a useful resource for those interested in all aspects of the history of voluntarism. For those concerned with the history of health care https://peopleshistorynhs.org/ is an entertaining and informative site, with a rather broader scope than its title might suggest. Based at the London School of Economics, http://sticerd.lse.ac.uk/case/ gives, inter alia, access to the papers of the Centre for the Analysis of Social Exclusion, many of which are relevant for those researching the mixed economy of welfare.

References Beveridge, W. (1948) Voluntary Action: A Report on Methods of Social Advance, London: George Allen and Unwin. Bochel, H. and Powell, M. (2016a) ‘The transformation of the welfare state? The Conservative–Liberal Democrat coalition government and social policy’, in H. Bochel and M. Powell (eds) The Coalition Government and Social Policy: Restructuring the Welfare State, Bristol: Policy Press, pp 1–25. Bochel, H. and Powell, M. (eds) (2016b) The Coalition Government and Social Policy: Restructuring the Welfare State, Bristol: Policy Press. Bradley, K. (2009) Poverty, Philanthropy and the State: Charities and the Working Classes in London, 1918–79, Manchester: Manchester University Press. Bruce, M. (1961) The Coming of the Welfare State, London: B.T. Batsford. Clifford, D. (2017) ‘Charitable organisations, the great recession and the age of austerity: longitudinal evidence for England and Wales’, Journal of Social Policy, vol 46, no 1, pp 1–30. Dobrowolsky, A. and Lister, R. (2008) ‘Social investment: the discourse and the dimensions of change’, in M. Powell (ed), Modernising the Welfare State: The Blair Legacy, Bristol: Policy Press, pp 125–42. Finlayson, G. (1990) ‘A moving frontier: voluntarism and the state in British social welfare, 1911–1949’, Twentieth Century British History, vol 1, no 2, pp 183–206. Finlayson, G. (1994) Citizen, State, and Social Welfare in Britain, 1930–1990, Oxford: Oxford University Press. Fraser, D. (1973) The Evolution of the Welfare State: A History of Social Policy since the Industrial Revolution, London: Macmillan.

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Glennerster, H. (2009) Understanding the Finance of Welfare (2nd edn), Bristol: Policy Press. Goose, N. (2014) ‘Accommodating the elderly poor: almshouses and the mixed economy of welfare in England in the second millennium’, Scandinavian Economic History Review, vol 62, no 1, pp 35–57. Gorsky, M. (2011) ‘The political economy of health care in the nineteenth and twentieth centuries’, in M. Jackson (ed) The Oxford Handbook of the History of Medicine, Oxford: Oxford University Press, pp 429–49. Gorsky, M. (2014) ‘“Voluntarism” in English health and welfare: visions of history’, in D.S. Lucey and V. Crossman (eds) Healthcare in Ireland and Britain from 1850: Voluntary, Regional and Comparative Perspectives, London: Institute of Historical Research, pp 31–60. Greenlees, J. (2013) ‘“The peculiar and complex female problem”: the Church of Scotland and health care for unwed mothers, 1900–1948’, in J. Greenlees and L. Bryder (eds) Western Maternity and Medicine, London: Pickering and Chatto, pp 47–63. Hamlin, C. (2011) ‘Public health’, in M. Jackson. (ed) The Oxford Handbook of the History of Medicine, Oxford: Oxford University Press, pp 411–28. Harris, B. (1995) The Health of the Schoolchild, Buckingham: Open University Press. Harris, B. (2004) The Origins of the British Welfare State: Social Welfare in England and Wales, 1800–1945, Basingstoke: Palgrave Macmillan. Harris, J. (1990) ‘Society and the state in twentieth-century Britain’, in F.M.L. Thompson (ed) The Cambridge Social History of Britain, vol III: Social Agencies and Institutions, Cambridge: Cambridge University Press, pp 63–117. Harrison, B. (2010) Finding a Role? The United Kingdom, 1970–1990, Oxford: Oxford University Press. Hendrick, H. (2003) Child Welfare: Historical Dimensions, Contemporary Debate, Bristol: Policy Press. Hendrick, H. (2016) Narcissistic Parenting in an Insecure World, Bristol: Policy Press. Hoppen, T. (1998) The mid-Victorian Generation, 1846–1886, Oxford: Oxford University Press. Horden, P. and Smith, R. (1998) ‘Introduction’, in P. Horden and R. Smith (eds) The Locus of Care: Families, Communities, Institutions, and the Provision of Welfare since Antiquity, London: Routledge, pp 1–18. Jawad, R. (2012) ‘Religion, social welfare, and social policy in the UK: historical, theoretical and policy perspectives’, Social Policy and Society (themed section on social policy and religion in contemporary Britain), vol 11, no 4, pp 553–64. King, S. (2006) Women, Welfare and Local Politics, 1880–1920, Brighton: Sussex Academic Press. Le Grand, J. (2010) ‘Knights and knaves return: public service motivation and the delivery of public services’, International Public Management Journal, vol 13, no 1, pp 56–71.

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Levene, A. (2006) ‘Family breakdown and the “welfare child” in 19th- and 20thcentury Britain’, History of the Family, vol 11, no 2, pp 67–79. Levene, A. (2010) ‘Poor families, removals and “nurture” in late old Poor Law London’, Continuity and Change, vol 25, no 2, pp 233–62. Levene, A., Powell, M., Stewart, J. and Taylor, B. (2011) Cradle to Grave: Municipal Medicine in Interwar England and Wales, Bern: Peter Lang AG. Lewis, J. (1995) The Voluntary Sector, the State and Social Work in Britain: The Charity Organization Society/Family Welfare Association since 1869, Aldershot: Elgar. Lewis, J. (1999) ‘Voluntary and informal welfare’, in R. Page and R. Silburn (eds) British Social Welfare in the Twentieth Century, London: Macmillan, pp 249–70. Lowe, R. (2005) The Welfare State in Britain since 1945 (3rd  edn), London: Macmillan. Macnicol, J. (2015) Neoliberalising Old Age, Cambridge: Cambridge University Press. Marshall, T.H. (1950) Citizenship and Social Class, Cambridge: Cambridge University Press. Neville, J. (2014) ‘Cottage hospitals and communities in rural East Devon, 1919–39’, in D.S. Lucey and V. Crossman (eds) Healthcare in Ireland and Britain from 1850: Voluntary, Regional and Comparative Perspectives, London: Institute of Historical Research, pp 117–38. Overy, R. (2009) The Morbid Age: Britain between the Wars, London: Allen Lane. Powell, M. (ed) (2008) Modernising the Welfare State: The Blair Legacy, Bristol: Policy Press. Privilege, J. (2015) ‘The Northern Ireland government and the welfare state, 1942–8: the case of health provision’, Irish Historical Studies, vol 39, no 155, pp 439–59. Rochester, C. (2011) ‘Introduction: today’s debate and the experience of the past’, in C. Rochester, G.C. Gosling, A. Penn and M. Zimmeck (eds) Understanding the Roots of Voluntary Action: Historical Perspectives on Current Social Policy, Brighton: Sussex Academic Press, pp 1–13. Rose, H. (1981) ‘Rereading Titmuss: the sexual division of welfare’, Journal of Social Policy, vol 10, no 4, pp 477–502. Searle, G.R. (2004) A New England? Peace and War, 1886–1918, Oxford: Oxford University Press. Sheard, S. (2014) The Passionate Economist: How Brian Abel-Smith Shaped Global Health and Social Welfare, Bristol: Policy Press. Social Policy & Administration (2012), vol 46, no 2, Special Issue on the impact of devolution on various aspects of welfare. Stewart, J. (2005) ‘“The finest municipal hospital service in the world”? Contemporary perceptions of the London County Council’s hospital provision, 1929–1939’, Urban History, vol 32, no 2, pp 327–44.

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Stewart, J. (2014) ‘Healthcare systems in Britain and Ireland in the nineteenth and twentieth centuries: the national, international, and sub-national contexts’, in D.S. Lucey and V. Crossman (eds) Healthcare in Ireland and Britain from 1850: Voluntary, Regional and Comparative Perspectives, London: Institute of Historical Research, pp 61–78. Stewart, J. (2015) ‘William Beveridge in New Zealand: social security and world security’, Canadian Journal of History/Annales Canadiennes d’Histoire, vol  50, no 2, pp 262–89. Stewart, J. (2016) ‘Child guidance and deinstitutionalisation in post-war Britain’, in D. Kritsotaki, V. Long and M. Smith (eds) Deinstitutionalisation and After: Postwar Psychiatry in the Western World, Basingstoke: Palgrave Macmillan, pp 175–93. Thane, P. and Davidson, R. (2016) The Child Poverty Action Group, 1965 to 2015, London: CPAG. Tiratsoo, N. and Clapson, M. (2001) ‘The Ford Foundation and social planning in Britain: the case of the Institute of Community Studies and Family and Kinship in East London’, in G. Gemelli (ed), American Foundations and Large-scale Research: Construction and Transfer of Knowledge, Bologna: CLUEB, pp 201–17. Titmuss, R. (1950) Problems of Social Policy, London: HMSO. Titmuss, R. (1958) Essays on ‘the Welfare State’, London: George Allen and Unwin. Tomlinson, J. (2008) ‘The 1964 Labour government, poverty and social justice’, Benefits, vol 16, no 2, pp 135–45. Welshman, J. (2013) Underclass: A History of the Excluded since 1880 (2nd edn), London: Bloomsbury Academic.

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3 The state Brian Lund

Overview Disputes about the state’s role in welfare are related to different perspectives on the state’s nature. Some welfare state theorists claim that the ‘classic’ welfare state, said to have existed from the 1940s to the 1970s, was founded on the notion that the state embodied the ‘common good’ and direct welfare provision by central and local government – often amalgamated as ‘public services’– were the most efficient and fairest ways to deliver welfare services. From the 1970s the so-called ‘welfare consensus’ on the state’s role was challenged from the left and right. The political right, with a mix of laissez-faire economics and a strong law-and-order state (Gamble, 1988) was successful with the electorate and, under neoliberal influence, the Thatcher/Major governments removed many local government direct provider roles and ‘quasi-markets’ – mainly state financed but with diverse suppliers – were established across the welfare domains. New Labour continued to promote a mixed economy of welfare but tried to steer welfare providers towards the ‘public interest’ via targets and performance indicators. In England, the Coalition government, adopting the Conservative Party’s ‘Big Society’ and ‘localism’ agendas, endorsed an enhanced ‘welfare mix’ but without most of New Labour’s targets and performance indicators that sometimes – reducing area-based social exclusion, for example – involved an equality dimension. Target abandonment by the Conservatives was a political act indicating that market outcomes were not to be counteracted by state activity. The Coalition government also pursued welfare pluralism through spending austerity, pushing the ‘austere state’ towards greater ‘independent’ supply. Cameron’s 2015 Conservative government continued on this path but the devolved governments resisted the austerity agenda and, in Scotland, the Scottish National Party flourished by promoting a Scottish identity via a Scottish ‘public good’ embodied in attitudes to welfare provision. The enhanced ‘welfare mix’ has blurred the welfare state’s borders, making it difficult to track outcomes, but exploring state/private expenditure on welfare and examining income distribution and redistribution are ways to understand the state’s contemporary role. Limited state impact on income predistribution and redistribution appears to have

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influenced the Brexit vote and produced a tentative revision of the state’s role by Theresa May. However, the 2017 general election outcome revealed that this tepid shift was insufficient to deliver an overall Conservative majority in the Westminster parliament. Key concepts State; common good; quasi-market; welfare pluralism; devolution; income distribution

Introduction: the state Weber (1918, p 1) defined the state as ‘the human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory’. Authority for this coercion monopoly is usually located in a democratic process through which the state is seen as representing the collective citizens’ will. However, the nature and legitimate scope of state power is contested, with Marxists asserting that: ‘The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie’ (Marx and Engels, 1848, p 32), a critique augmented by depicting the state’s ‘accumulation’, ‘control’ and ‘legitimation’ functions. Some state activities, such as investment in worker productivity, help capitalism to make higher profits but ‘social expenses’, necessary to maintain social control, and ‘social consumption’ – to justify capitalism – are a drain on capitalist accumulation and likely to produce a capitalist crisis (O’Connor, 1973: Offe, 1984). Idealist/organic theory Theorists supporting an extensive state – directly involved in enhancing citizen wellbeing and redistributing income – claim that the state can embody the ‘common good’ wherein citizens find an identity based on mutual rights and obligations. Known as ‘idealist’ or ‘organic’ theory and reflected in ‘ethical socialism’ (Dennis and Halsey, 1988), this view was set out by Thomas Hill Green in Lectures on the Principles of Political Obligation (1895) to form the basis of ‘reluctant collectivism’ (George and Wilding, 1994), the philosophical basis of the 1906–11 Liberal reforms (Renwick, 2017). The Fabians were also influenced by idealist/organic theory. Hill (1993, p 592) notes that Sidney Webb: was a particular admirer (and frequent imitator) … of the metaphor of society as an organism, as a method of explaining/illustrating the fundamental interdependence of all sections of society. However, Sidney Webb came to believe that trained experts could identify solutions to social problems and their logic could be embedded in a rational

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The state

state supplying welfare services. The social philosophy of Richard Titmuss, the most celebrated pro-welfare state theorist, ‘was full of muffled resonances of the Idealist discourse’ (Harris, 1999, p 60). Titmuss argued: All collectively provided services … are manifestations, first, of society’s will to survive as an organic whole and, secondly, of the expressed wish of all the people to assist the survival of some people. (Titmuss, 1958, p 39) The Fabian notion that the state is the epitome of efficient rationality and the idealist idea that it embodies citizen mutuality came together in endorsing the ‘classic’ welfare state that was underpinned by a political consensus, sometimes called ‘Butskellism’ after the ‘centre’ policies associated with Conservative ‘Rab’ Butler and Labour’s Hugh Gaitskell. Neoliberalism and the state Neoliberal theorists – called ‘anti-collectivists’ by George and Wilding (1994) in their social welfare perspective classification distinguishing anti-collectivists, reluctant collectivists, Fabian Socialists and Marxists – claim the state should be confined to upholding law and order, enforcing contracts, defending the realm and providing a state minimum income ‘to assure to all protection against severe deprivation’ (Hayek, 1979, p 296). Hayek makes a distinction between a ‘catallaxy’ – ‘the order brought about by the mutual adjustment of many individual economies in a market’ (Hayek, 1976 pp 108–9) – and a ‘constructed order’ based on the ideas of politicians and officials who cannot know what individuals desire. Some neoliberal philosophers view the minimal state as a ‘framework for utopia’ (Nozick, 1974), arguing that, within an overarching system of limited state interference, myriad social, moral and religious utopian visions may be realised by ‘little platoons’ (Burke, 1790) involving associations for reciprocal aid and charitable welfare. Minimum state advocates point to the thriving mutual aid associations at the end of the 19th century. Trade unions gave ‘out of work assistance’ to 980,000 members in 1899 (Harris, 1972). Friendly societies such as the Unity of Oddfellows, the Ancient Order of Foresters and the Rechabites had attracted three quarters of all manual workers by the end of the 19th century (Green, 1985). Building societies – starting as working-class self-help groups – had 605,000 members in 1891 (Hopkins, 1995) and between 300,000 and 400,000 people were cooperative society members (Finlayson, 1994). Neoliberalism permeated the ‘classic’ welfare state from the late 1970s via financialisation and privatisation, mediated through quasi-markets (Le Grand and Bartlett, 1993).

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The welfare state: then and now In some ways, the term ‘welfare state’, attributed to British society following the Labour government’s reforms after the Second World War, was a misnomer. Different welfare domains – education, health care, the personal social services, social insurance, social assistance, and housing – had diverse allocation principles and delivery mechanisms. Only basic social insurance and social assistance plus the National Health Service (NHS) were directly provided by the state and, in the NHS, regional bodies and local management organisations administered the service subject to central state control. Local government, albeit subject to central directives, had significant de facto autonomy with the rates an independent income source and was involved in delivering housing, education and, often through the voluntary sector, the personal social services. However, the notion of state responsibility underpinned all the welfare domains. This was reflected in Aneurin Bevan’s statement, that ‘the sound of a bedpan in Tredegar Hospital will reverberate round the Palace of Westminster’ that was related to his belief in the state’s efficiency in supplying services. In justifying his plan for a National Health Service he said: our hospital organisation has grown up with no plan, with no system; it is unevenly distributed over the country and … very often the best hospital facilities are available where they are least needed…. Although I am not myself a devotee of bigness for bigness sake, I would rather be kept alive in the efficient if cold altruism of a large hospital than expire in a gush of warm sympathy in a small one. (Bevan, 1946) Commenting on the ‘classic’ British welfare state, Béland and Lecours (2008, p 107) claim: ‘A politically centralised model, the British welfare state represented an exceptional tool of integration and nation-building’ with the systematic use of the term ‘national’ ‘not accidental’. However, the causal connection can be reversed – a sense of nationhood, built on wartime experience, generated state welfare. ‘The spirit of 1945’ (Loach, 2013), with ‘Citizen Clem’ – a patriot, steeped in T.H. Green’s organic theory and its twin ‘ethical socialism’ (Bew, 2016) at the helm – had a nationalistic life-force. Welfare was a fundamental element in the ‘Home Front’ and the ‘Kitchen Front’ and, in his blueprint for social reconstruction when the war was over, Beveridge (1942, p 49) echoed the welfare state’s racial undertones in stating: ‘In the next thirty years housewives as mothers have vital work to do in ensuring the adequate continuance of the British race and of British ideals in the world.’ In its early years, the ‘classic’ welfare state linked the individual to society via the efficient nation state through the ‘need’ concept. Thus:

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• Beveridge’s ‘national minimum’ – the ‘poverty line’ below which no person would be allowed to fall – was directly related to Rowntree’s 1901 notion of physical efficiency (Veit-Wilson, 1992). The population would be maintained at a level sufficient to ensure its productivity for the nation state. • Education would be organised via the 11+ and the tripartite educational system so that children, would be cost-effectively allocated to the type of school suitable to maximising their future economic potential. • State health care provision would be preventive; hence the Bevan and Beveridge ‘fallacy’ that, over time, state health costs would reduce. The welfare state as established between 1945 and 1951 was adjusted over the years but radical transformation occurred post-1979. Beveridge's welfare plan was built on the idea of full employment but full employment, in the sense of a long-term, secure, full-time job, was eroded with job insecurity now most prevalent among younger people and those in the lowest paid employment. The ‘precariat’ – characterised by frequent movement between low-paid work and unemployment – has been growing fast (Standing, 2016). The notion of a male breadwinner earning a ‘family’ wage has been eradicated. Today, the overwhelming majority of couple households depend on two incomes to pay their bills. The ‘persistent poverty’ rate after housing costs for single-parent households with one income is 29% compared to 16% for all households with children (McGuinness, 2018a). Cribb et al (2017) found that the income of two-earner families was 10% above the 2002/3 level but the incomes of families with stay-at-home mothers – single or in couples – was no higher than 15 years ago and half were now in relative poverty. Privatisation, financialisation and selectivity have been applied in different ways across the welfare domains; with the NHS and education largely retaining their universal, unconditional character, selectivity and conditionality have become a feature of ‘working age’ social protection. In the housing domain, social tenants have become subject to a plethora of control mechanisms ranging from ‘probationary tenancies’ to a housing association demand for ‘Household Ambition Plans’ including, as tenancy conditions, no less than eight hours of community service work per month and tenants to stay fit, quit smoking and look for work (Johnson, 2013). As Secretary of State for Work and Pensions, Iain Duncan Smith changed the poverty definition away from income thresholds and towards ‘a range of other measures and indicators of root causes of poverty, including family breakdown, debt and addiction’ (Duncan Smith, 2015). In the social security domain a distinction between retired people and people of working age – symbolised by the renaming the Department of Social Security as the Department for Work and Pensions – has been made. While we must always be aware of the class and gender divisions in pensioner incomes, the triple lock on pensioner state benefits and enhanced entitlement to occupational

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pensions pushed the median income of retired people from £18,861 in 2006/7 to £21,700 in 2015/16. In contrast, people of working age, have experienced income reductions – down from £28,825 in 2006/7 to £28,481 in 2015/16) (ONS, 2017), accompanied by cutbacks in pension entitlements, enhanced higher education debt and increasing conditionality in benefit receipt with such conditionality eroding the notion of citizenship welfare rights that, in the 1970s, became regarded as a welfare state hallmark (Dean, 2013). To some, a sharp generational divide in income and wealth has emerged (Intergeneration Commission, 2016). These changes have occurred against a background of globalisation and far greater diversity in UK society. Some commentators have directed attention to the tension between diversity and the solidarity needed to underpin a welfare state. In 2004, David Willetts said: The basis on which you can extract large sums of money in tax and pay it out in benefits is that most people think the recipients are people like themselves, facing difficulties that they themselves could face. If values become more diverse, if lifestyles become more differentiated, then it becomes more difficult to sustain the legitimacy of a universal risk-pooling welfare state…. Progressives want diversity, but they thereby undermine part of the moral consensus on which a large welfare state rests. (Willetts, 2004 quoted in Clohesy, 2013, p 48)

The ‘welfare mix’ Shifts in the pattern of welfare delivery have accompanied the changes already outlined but monitoring these changes is complicated by definitional issues. What is welfare? ‘Welfare’ is a contested concept. In ‘Welfare Economics’ it refers to the sum total of human wellbeing – in Jeremy Bentham’s expression ‘it is the greatest happiness of the greatest number that is the measure of right and wrong’ (Bentham, 1776 quoted in Burns and Hart, 1977, p 393). Hills (2015, p xiv) defines the welfare state as: Public spending and provision for health care (such as NHS), education, housing, personal care, pensions and cash benefits of all kind (as opposed to ‘welfare’ as used in the US, referring narrowly to means-tested cash benefits for out-of-work working age people).

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Under Hills’ definition, the ‘them and us’ idea – the ‘skivers’ (welfare receivers) and the ‘strivers’ (taxpayers) – breaks down in welfare state mutuality: we all give and we all receive, so identifying ‘givers’ and ‘receivers’ is complex especially when assessed over life cycles. The term ‘welfare state’ has a genial aura in some academic circles but Michael Young, author of the 1945 Labour Party Election Manifesto, disliked the catchphrase. In 1951 he wrote: It must have been invented by a diabolical copywriter who knew that if the nation was not poisoned by the first word [welfare], recalling the smell of carbolic acid and the tough brown paper of ration books, it could be done to death by the second cold word [state] suggesting the Law Court, the Sanitary Inspector and the Recruiting Officer. (quoted in Briggs, 2001, p 103) Picking up on the negative tone surrounding the term ‘welfare’, the Coalition government adopted a restrictive welfare definition, akin to the US interpretation. According to Laws (2016, p 97): George Osborne saw ‘welfare’ as a big political dividing line. He wanted Labour to be seen as the party of ‘welfare scroungers’, and he hoped that the Conservatives could position themselves as the party of the strivers. The Coalition government sent out information to households on how tax revenue was spent. It divided spending into multiple categories with ‘welfare’ defined as ‘social protection’, excluding spending on state pensions, education and the National Health Service (Hood and Johnson, 2014). State spending Obolenskaya and Burchardt (2016) have attempted to track state spending from 1979/80 to 2013/14 according to various ‘welfare mix’ dimensions (see Table 3.1). Table 3.1 illustrates the impact of expenditure pattern changes in different welfare domains with the state services established as ‘universal’ being most resilient in public finance terms. Housing, always ‘the wobbly pillar under the welfare state’ (Torgersen, 1987, p 116), has experienced the most extreme privatisation. Hills’ welfare state definition as state spending on specified services and the approach adopted by Obolenskaya and Burchardt are problematic because there are difficulties involved in identifying state expenditure. The state’s spending boundaries are blurred, due not only to the ‘shadow’ welfare state involved in tax expenditures and corporate welfare but, inter alia, to accounting practices and

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various government guarantees to individuals involving the state absorbing risk. As examples, from 1988, borrowing by housing associations was not included in the definition of Public Sector Net Debt but, in 2015, the Office for National Statistics (ONS) reclassified housing association debt from private to public, thereby adding £63 billion to the government’s borrowing requirement, albeit that the government rapidly announced changes in housing association regulation to ensure that housing association debt could again be classified as private. The Coalition government’s Help to Buy schemes, involving mortgage guarantees and equity sharing, did not count as public expenditure but exposed the state to liabilities should there be a decline in house prices. Moreover, Quantitative Easing – a device whereby the Bank of England ‘creates new money electronically to make large purchases of assets’ (Bank of England, 2018) – injected cash into the financial sector by buying back government bonds (gilts) with ‘electronically created’ money. Funding for Lending was also a Treasury and Bank of England ‘money tree’. Introduced in 2012, it offered low interest rates to financial institutions as an incentive to boost lending and, until lending for house mortgages was excluded in 2014, a large slice of the finance was injected into the housing market. The distributive outcomes of such measures are difficult to track.

Table 3.1: The changing profile of welfare expenditure: England, 1979/80 to 2013/14, % in each categorya

1979/80 Public finance/public provision Public finance/private provision Private finance/public provision Private finance/private provision 2013/14 Public finance/public provision Public finance/private provision Private finance/public provision Private finance/private provision

Housing

Health care

Education

Social care

Social security

18 (18) 14 (1)   9 (9) 59 (1)

71 (71) 18 (18) 1.2 (1.2) 10 (0)

67 (67) 27 (25) 0   6 (0)

66 (66) 10 (10)   9 (9) 14 (0)

67 (58) 14 (0) 0 19 (0)

  5 (5) 12 (7)   1 (1) 82 (0)

59 (59) 25 (24) 0.7 (0) 15 (0)

60 (18)b 17 (14)   1 (0) 22 (0)

26 (26) 39 (36)   2 (2) 34 (6)

66 (56) 11 (0)   2 (0) 21 (0)

Source: adapted from Obolenskaya and Burchardt (2016). Notes: Obolenskaya and Burchardt attempt to deal with the complexity of regulation by assessing its intensity. They state: ‘A highly regulated activity is likely to restrict one or more aspects of agency as defined here and increase the likelihood that it will be classified as “public decision”’ (Obolenskaya and Burchardt, 2016, p 3). The ‘public decision’ percentage is given in brackets in Table 3.1. a

b

Public decision includes grant maintained schools and academies, 17% of public expenditure.

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Welfare pluralism and local government: out and in the mix? The most significant change in the ‘welfare mix’ has been rapid decline in local government’s direct provider role. Local authorities acquired considerable de facto autonomy in the 19th century. The cities had considerable economic power and financial muscle, derived from their ability to levy a local property tax – known as rates – and their receipts from municipal enterprises. Local government autonomy was staunchly defended. The Leeds Mercury, declaring its opposition to the establishment of the Central Board of Health in 1848, said that while it was ‘most anxious that every town in the kingdom should have the benefits of good sewerage and pure water’ it ‘could not consent to the purchase of these by permanent infringement of the rights of municipalities, and through them, of the people at large’ (quoted in Hunt, 2004, p 302). In 1902, well before ‘Red Clydesider’ influence, in addition to gas, water, tramways, markets, electricity, parks, libraries, museums and schools, Glasgow Corporation owned 2,488 houses, 372 shops, 78 lodging houses, 86 warehouses, a farm and a golf course (Hunt, 2004). In the 1920s, Glasgow Corporation constantly protested about central interference in its ‘municipal mission’ (Morgan, 1989). In welfare state analysis, there has been a tendency to identify social welfare provision with central state finance and delivery, but local government had a major role in welfare delivery. Although it lost hospital provision and its limited role in cash assistance to the central state, local government was the dominant supplier of schooling, albeit with significant voluntary sector involvement via ‘aided’ and ‘controlled’ church schools. Local government provided 31% of the housing stock. The personal social service domain was a ‘welfare mix’ exemplar with local authorities, the voluntary sector, pure private finance/private supply and the ‘informal’ care of relatives/friends all having significant roles in service delivery. It was expected that local authority welfare departments would coordinate and supplement the voluntary sector which, as in the inter-war period, was regarded as the principal ‘social care’ supplier. Local authority expenditure increased rapidly in the 1970s and local government became more directly involved in personal social service supply. Nonetheless, local government autonomy in service delivery was being eroded, mainly as a consequence of Labour’s comprehensive school promotion plus its desire to achieve equal national standards in service delivery via enhanced central government grants. Conservatives were concerned about high local expenditure, an anxiety replicated by Labour when, in 1975, against the financial crisis background, Anthony Crosland told local authority leaders ‘the party’s over’ (quoted in Jacobs and Manzi, 2016, p 10). Letwin (1992, p 159) claims ‘Next to Trade Unions, Thatcherism’s greatest bugbear has been local government.’ Hardly surprising then that undermining local government as a provider was at the forefront of quasi-market welfare pluralism.

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Under Margaret Thatcher and John Major, local government’s role in service delivery was reduced via the poll tax, business rate nationalisation, the council tenant’s Right to Buy and the creation of a range of ‘quasi-markets’ whereby state finance was directed to the consumer or a consumer surrogate who would choose a service from a range of suppliers. Stress was placed on ‘exit’ politics – the ability to choose another supplier when dissatisfied – rather than ‘voice’ politics – changing provider behaviour through influence (Hirschman, 1972). Nicholas Ridley, when Secretary of State for the Environment, ‘wistfully canvassed the merits of councils which merely meet once each year to approve the awarding of contracts’ (quoted in Gyford, 1987, p 138). Tony Blair also disliked local government as a service provider. In 1998 he said: The days of the all-purpose local authority that planned and delivered everything are gone. They are finished. It is in partnership with others – public agencies, private companies, community groups and voluntary organizations – that local government’s future lies. (Blair, 1998, p 13) Under New Labour, with its local authority housing stock transfer to housing associations; ‘best value’ regime; a plethora of performance indicators; regionally determined housing outputs; and the promotion of academies as self-governing schools and so on, local government was declared a ‘policy free zone’ (Maile and Hoggett, 2001, p 512) and compared to ‘a branch of a big retailer’ (Stoker, 2004, p 107). The Conservative Party’s 2010 manifesto An Invitation to Join the Government of Britain (Conservative Party, 2010) promised not only a ‘Big Society’ welfare mix but ‘localism’ in service delivery. However, ‘localism’ became a very malleable idea, not necessarily involving more local government autonomy except in managing ‘austerity’ service cuts. Local authority spending was reduced by 26% between 2010 and 2017 (Full Fact, 2017). In education, local government influence was undermined via accelerating New Labour’s academy programme, introducing ‘free’ schools and setting up regional schools commissioners to regulate the burgeoning number of schools outside local authority control. In the personal social services domain the Coalition government’s Programme for Government (HM Government, 2010) placed emphasis on direct payments and personal budgets (Glasby, 2016). In the housing domain, private landlordism was encouraged by a Build to Rent Fund and council house sales were stimulated in England by a ‘reinvigorated’ Right to Buy. By 2017, local government owned only 7.7% of UK housing stock. Spending cutbacks curtailed local authority regulation of the private sphere leading to ‘regulation without enforcement’ (Tombs, 2015). Nonetheless, other developments promised more local government autonomy. The 2011 Localism Act scrapped New Labour’s regional spatial strategies placing responsibility for estimating local housing needs and the plans to meet these needs

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with local planning authorities. Lord Heseltine’s No Stone Unturned: In Pursuit of Growth (2012, p 2) recalled ‘The grand Victorian town halls of Birmingham, Bradford, Liverpool and Manchester [which] attest to an age when people looked to their city, and not just to Westminster, for solutions’, and recommended funding devolution to city regions to promote economic growth. Some ‘city deals’ were already in place, devolving specified funding streams to cities. The approach culminated in the ‘Greater Manchester Agreement’ – aka ‘devomanc’ – whereby Greater Manchester obtained more budget control, including the resources allocated to housing and the NHS, in return for a Greater Manchester elected mayor (HM Treasury and Greater Manchester Combined Authority, 2014). Other local authority consortia expressed ‘powerhouse’ interest, signing up for variations on ‘devomanc’, and Theresa May promoted a ‘Midlands Engine’. Moreover, there has been an ongoing process of devolving the business rate to local government with associated reduction in central grants. In 2020, when the Revenue Support Grant to local government will be abolished, a large share of local service expenditure will be financed by business and domestic rates plus special ‘economic incentive’ payments from central government, such as the New Homes Bonus, aimed at stimulating housing provision. This change, plus the ‘powerhouse’ deals, hints at enhanced welfare pluralism on a place basis but at the cost of greater area inequality.

The welfare mix, ‘the new managerialism’ and ‘joined-up governance’ Welfare pluralist advocacy and the ‘new managerialism’ are closely linked. Both attack the provider state, emphasise choice rather than rights and want to eliminate single bureaucracies in service delivery. The state will ‘enable’ other agencies – voluntary, not-for-profit ‘social entrepreneur’ organisations and ‘for-profit’ providers to deliver welfare. A ‘hollowed out’ state (Rhodes, 1994) will ‘steer not row’ (Osborne and Gaebler, 1992). A mixed welfare economy raises the questions of how service duplication can be avoided and what happens when elements in the mix malfunction? The answer is the ‘new managerialism’, characterised by the absence of bureaucratic rules – hence ‘flexibility’ in problem resolution – and ‘joined-up governance’ – not government – by managerial networks monitored and incentivised through central ‘stocktaking’ (Hood, 2006, p 512). This poses the question: ‘How pluralistic is the system?’ If ‘governance’ is performed by ‘joined-up’ managerial networks via, as examples, ‘joint commissioning’ and ‘single budgets’ then where is the pluralism? In Managerialism: A Critique of an Ideology, Thomas Klikauer (2013, p 2) claims: Managerialism combines management knowledge and ideology to establish itself systemically in organisations and society while depriving

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owners, employees (organisational-economical) and civil society (social-political) of all decision-making powers.

Devolution Devolution has added an extra complication to delineating the state’s boundaries. Elliott (2014, original emphasis) notes: A cardinal feature of the existing devolution schemes is that the UK Parliament has relinquished none of its power…. Devolved legislatures enjoy law-making autonomy, free from Westminster’s interference, not because Westminster cannot unilaterally intervene in devolved affairs, but because it does not. Nevertheless, electoral domination in Scotland by the Scottish National Party – in 2016, David Cameron said that Scotland was ‘in danger of becoming a oneparty state’ (quoted in BBC News, 2016) – raises the issue of whether, de facto, Scotland has become a ‘state within a state’. Different welfare mixes have emerged in the ‘home’ nations, with Scottish differences leading the way. In the housing domain, for example, McKee et al (2016, p 1) refer to England as an ‘outlier’. This Scottish difference does not appear to be located in a marked preference by the Scottish people for egalitarianism. Curtice (2013, p 1), on the basis of public opinion polls in England and Scotland, comments: When it comes to levels of concern about inequality, the two countries often look rather similar indeed. On the other hand, people in Scotland are somewhat more likely to agree that ‘ordinary working people do not get their fair share of the nation’s wealth’. There was only a 6% difference in whether the people of Scotland and England felt strongly that that government should do something about inequality. However, Scottish identity is strong: ‘61% of Scotland’s residents identify as being of White Scottish ethnicity and feel Scottish is their only national identity’ (University of Manchester, 2014, p 1, original emphasis). This suggests that, as in the creation of the British welfare state, national identity is at the heart of welfare support.

The state and the distribution/redistribution of income It is difficult to make distinctions between the ‘provider’ state and the welfare supplied by other agencies because the state regulates these agencies and often finances them (see Table 1.1 in Chapter One). Quoting Kaufmann’s statement

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(1986, p 129) that ‘Irrespective of their formal status institutions belong to the welfare sector if – and only if – they are subject to regulation by the state in view of social ends pursued by the state’, Leisering (2011, p 265) adds: ‘It does not matter whether institutions are public or private, state, commercial or civil.’ Yet ‘social ends’ is an ambiguous term and may embrace promoting market mechanisms and supply diversity to enhance efficiency, extend choice and promote individual liberty. State finance and direct provision – with local government viewed as a state dimension – has been an important ingredient in the egalitarian case for state welfare. T.H. Marshall (1963 [1950]) in his functionalist/ organic account of rights development, from ‘civil’ through ‘political’ to the ‘social’, referred to citizenship ‘social’ rights as promoting ‘status’ equality, and R.H. Tawney (1938) viewed public services as mechanisms to promote equality of opportunity. In delivering housing, Bevan declared that local authorities were efficient ‘plannable instruments’ (quoted in Foot, 1975, p 269), while private enterprise was certainly not efficient and could not deliver the houses needed by poor people. Given the problems involved in delineating the state’s boundaries in service delivery, one way to explore the state’s influence is to examine the state’s role in redistributing income. Since the early 1960s the ONS has published estimates of the impact of state taxation and spending on income distribution. The methodology has remained fundamentally unchanged. It consists of five stages: 1. ‘Original’ income from employment, private pensions, investments and from other non-government source. 2. Adding income from cash benefits. The sum of cash benefits and original income is referred to as ‘gross’ income. 3. Households then pay direct taxes. Gross income minus direct taxes is referred to as ‘disposable’ income. 4. Indirect taxes are then paid via expenditure. Disposable income minus indirect taxes is referred to as ‘post-tax’ income. 5. Households finally receive a benefit from services (benefits in kind). Benefits in kind plus post-tax income is referred to as ‘final’ income. Households are divided into deciles or quintiles with incomes equivalised by taking into account household composition. The impact of state activity is assessed at each stage in the income distribution process with Gini coefficients often used to summarise the equality impacts. Assessing the benefits in-kind distribution is the most controversial stage in the process. The in-kind benefits included in the ONS analysis are education, the NHS, subsidies for housing, rail and bus travel and free school meals with, for non-retired, households, education and the NHS accounting for 97% of all in-kind benefits.

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The in-kind value of education is allocated according to national expenditure per pupil, divided into age categories, with allowances made for differences in expenditure in the devolved governments. Thus the analysis does not include the investment value of post-16 education or the area expenditure variations within England, Scotland, Wales and Northern Ireland. Benefit from the NHS is allocated according to the estimated average use made of various types of health care by people of the same age and sex, according to the total cost of providing those services. No class analysis is included and, although spending differences between the devolved governments are taken into account, area variations in expenditure within the devolved governments are absent. Nevertheless, the ONS estimates of the impact of state taxation and spending on income distribution are a useful guide to the changing role of the state in income distribution, albeit that the politically sensitive nature of the output means that the published analyses are somewhat bland and, in recent years, there has been an information dearth on ‘final’ income distribution. Predistribution Predistribution, called ‘initial income’ in the ONS studies, has been used refer to ‘market income’ (Förster and Whitehead, 2009). However, the state has a major role in predistribution not restricted to a state-imposed minimum/living wage. Planning law, for example, affects predistribution, with green belts differentially influencing house prices – a wealth impact but with implications for income due to avenues open for converting wealth to income (Lund, 2016). Other state actions are not captured at the predistribution stage. The growth in private landlordism – encouraged by the state via tax breaks and the Build to Rent – is not reflected in predistribution analysis although it has disproportionately affected the spending power of different income groups. In the 10% most deprived areas private landlordism increased by 89.5% between 2001 and 2011 and, in the least deprived decile, by 37.2% (Rhodes, 2015). Whereas, in 1979, the Gini coefficient was the same both before and after housing costs, in 2016/17 it was 4% higher after housing costs (McGuinness, 2018b). The Guardian (2016) labelled private renting ‘the new home of poverty’. In 2016/17 the percentage of children living in the private landlord sector below the poverty line was 23% before housing costs but 43% after housing costs (McGuinness, 2018a). Redistribution The impact of the state on income redistribution since 1979 is presented in Table 3.2.

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Table 3.2: The state and the redistribution of income (Gini coefficient)a Original income Gross income Disposable income Post-tax income Final income

1979 44 30 27 29 23

1990 52 38 36 40 33

1997 53 37 34 38 31

2005 51 36 32 36 29

2015 50 36 33 36 25b

Source: Adapted from ONS (2018a). a

The Gini coefficient is a measure of income distribution. 0 = complete equality, 100 = total inequality.

b

This figure is from 2011.

The demise of the ‘classic’ welfare state produced a sharp increase in inequality at all stages in the distribution/redistribution process. ‘Final income’ inequality reached its zenith in 1990 and, although there was an increase in ‘original income’ inequality under John Major’s government, the trend from the 1990s has been towards an overall reduction in inequality. In-kind services – despite their redistributional impact being subject to the caveats outlined earlier – have made a significant contribution to reducing inequality. New Labour’s boost in social expenditure – up from £1,371 to £1,887 per capita on health care and £1,076 to £1,421 per capita on education between 2005 and 2010 (UK Public Spending, 2016) augmented the in-kind service impact. In 2015 in-kind services reduced the ratio of top quintile to bottom quintile in the income distribution from 6.5 (post-tax) to 3.8 after the impact of in-kind services was taken into account (ONS, 2016). The Gini coefficient is insensitive to large-scale variations in income distribution. Other measures are available such the P90/P10 ratio, that is, the top 10% of incomes divided by the bottom 10%. In 1979, the P90/P10 both before and after housing costs was 3. In 2017, it was 3.9 before housing costs and 5.1 after housing costs (McGuinness, 2018b). Moreover, deciles include wide variations in incomes. Information is sparse on the total impact of taxes and benefits on the top 1% of income holders but, between 2009/10 and 2015/16, this grouping’s income increased by 21.4% before tax and 19% after tax (ONS, 2018b).

Brexit and the 2017 general election There was a strong income gradient in the leave/remain vote in the 2016 European Union referendum. Goodwin and Heath (2016, p 1) commented: ‘The poorest households, with incomes of less than £20,000 per year, were much more likely to support leaving the EU than the wealthiest households.’ Voter turnout was higher in ‘leave’ areas and very high, relative to earlier turnouts in general elections, among social housing tenants. Social housing tenants voted 69/31 to

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leave the European Union. The outcome led some commentators to conclude there had been a ‘Peasant’s Revolt’ (O’Neill, 2016, p 1). It was: About so much more than the European Union. It is about class, and inequality, and a politics now so professionalised that it has left most people staring at the rituals of Westminster with a mixture of anger and bafflement. (Harris, 2016, p 1) Theresa May appeared to have absorbed the implications of the Brexit vote. Her speeches on becoming prime minister embraced a new emphasis on ‘One Nation’ Conservatism – to her, the ‘Union’ meant ‘a union between all of our citizens, every one of us, whoever we are and wherever we’re from’ (May, 2016a, p 1) and Brexit was a ‘call for a change in the way our country works – and the people for whom it works – forever’ (May, 2016b, p 1). According to Davies (2016, p 3), May was promoting a ‘protective’ state, ‘very different from the neoliberal state’, involving a retreat from ‘Osbornite condemnation of welfare recipients’ and a ‘hostility to the fluidity, cosmopolitan and perceived snobbery of liberalism’ reflected in May’s declaration ‘If you believe you’re a citizen of the world, you are a citizen of nowhere.’ Conservative political rhetoric has concentrated on the ‘just about managing’ – labelled JAMs by the media. John Gray (2016) said that Theresa May ‘has broken with the neoliberal model that has ruled British politics since the 1980s’. Theresa May’s foreword to the 2017 Conservative Party Manifesto claimed she would create ‘a fairer Britain that works for everyone, not just a privileged few’ (Conservative Party, 2017, p 5) and the manifesto contained undertones of a united and fairer Britain to counteract leaving the European Union. However, following the general election May lost her Conservative majority in parliament. Rhetoric had not matched reality. Discontent was related to a perceived decline in living standards, not fully captured in the official statistics on income distribution that focus on income received rather than income minus expenditure. For example, there has been a rapid rise in private renting with, in England, the number of privately rented houses up by 1.7 million in the last ten years. In 2016, 20.4% of households rented privately. Fixing Our Broken Housing Market (Ministry of Housing, Communities and Local Government, 2017) revealed that the mean rents of private renters were 53% of their weekly household incomes (45% after benefits).

Conclusion ‘Mix’, ‘blend’, ‘flexible’, ‘associate’, ‘plural’ are better hurrah words than ‘uniform’, (‘bog?’) ‘standard’, ‘unvarying’, ‘identical’, ‘single’, but the contemporary mix – compared to the 19th-century catallaxy of independent local authorities, trade unions, cooperatives, mutual building societies, friendly societies – is insipid. Moreover, although some pundits have disparaged the impact of classic state

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welfare on inequality (Le Grand, 1982) – a criticism disputed by Powell (1995) – inequality has increased under welfare’s mixed economy; welfare rights have been eroded; the new managerialism – trying to prevent the mix becoming a mixup – stifles initiative and, so far, ‘powerhouse’, ‘place-based’, pluralism has been accompanied by fewer resources. Welfare pluralism has strong anti-state undertones but the ‘classic’ welfare state was founded on nationalism as embodied in the state. Some pundits have associated the Brexit vote in England with a resurgent English nationalism (Independent, 2016: O’Toole, 2016) and the Scottish National Party’s success is rooted in Scottish national identity. Leaving the European Union and the strong political reaction to ‘austerity’ may yet promote a revival in the state financing and supply of welfare services.

Summary

• • • • • •

The state’s role in social welfare supply is contested with disputes about the state’s role related to different views about the state’s nature. The central state is increasingly ‘steering’ rather than ‘rowing’ the welfare system but its lodestar has been market outcomes. In the last 25 years, quasi-markets have been created to deliver welfare services. Welfare mix advocacy and the ‘new managerialism’ are closely associated. ‘Home nation’ devolution is producing greater pluralism by place with local government consortia ‘powerhouses’ in England plus changes in the methods of financing local government opening the possibility for more place-based pluralism. The welfare state was founded on nationalism that, after Brexit, may revive as a political force.

Questions for discussion

• • • •

What are the main differences between Fabian and ‘idealist’ perspectives on the state? How is the ‘new managerialism’ connected to welfare pluralism? What are the difficulties involved in defining the boundaries of the welfare state? Visit the websites of the following ‘think tanks’. What is the role of the state endorsed by each ‘think tank’? − New Economics Foundation − Institute of Economic Affairs − Institute for Public Policy Research − Resolution Foundation

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Further reading Nicola McEwen and Richard Parry discuss the implications of devolution in ‘Devolution and the preservation of the United Kingdom welfare state’ (2005). The State: Theories and Issues (2006), edited by Colin Hay, Michael Lister and David Marsh, provides accounts of various state theories that can be applied to social welfare. Public and Private Welfare Activity in England (2016) by Polina Obolenskaya and Tania Burchardt (2016) sets out welfare mix dimensions in terms of relative spending.

Electronic resources Centre for the Analysis of Social Exclusion, London School of Economics, http://sticerd. lse.ac.uk/case/_new/publications/default.asp. Analyses of the changing pattern of the ‘welfare mix’. House of Commons Research Briefings, https://researchbriefings.parliament.uk/. Up-todate information on the state’s role in social welfare. Institute for Fiscal Studies, https://www.ifs.org.uk/. Research findings on poverty, wealth and income distribution. Office for National Statistics, https://www.ons.gov.uk/. Data on demographic trends and income redistribution.

References Bank of England (2018) Quantitative Easing, London: Bank of England. https:// www.bankofengland.co.uk/monetary-policy/quantitative-easing BBC News (2016) ‘David Cameron warns of SNP “one party state” in conference speech’, 4  March. http://www.bbc.co.uk/news/uk-scotland-scotlandpolitics-35719980 Béland, D. and Lecours, A. (2008) Nationalism and Social Policy: The Politics of Territorial Solidarity, Oxford: Oxford University Press. Bevan, A. (1946) Bevan’s Speech on the Second Reading of the NHS Bill, 30 April 1946. http://www.sochealth.co.uk/national-health-service/the-smaand-the-foundation-of-the-national-health-service-dr-leslie-hilliard-1980/ aneurin-bevan-and-the-foundation-of-the-nhs/bevans-speech-on-the-secondreading-of-the-nhs-bill-30-april-1946/ Beveridge, W. (1942) Report on Social Insurance and Allied Services, Cmd 6404, London: HMSO. Bew, J. (2016) Citizen Clem: A Biography of Atlee, London: Riverrun. Blair, T (1998) Leading the Way: A New Vision for Local Government, London: Institute for Public Policy Research.

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Briggs, A. (2001) Michael Young: Social Entrepreneur, Basingstoke: Palgrave Macmillan Burke, E. (1790) Reflections on the Revolution in France, London: James Dodsley. Burns, J.H. and Hart, H.L.A. (1977) The Collected Works of Jeremy Bentham, London: Routledge and Kegan Paul. Clohesy, A.M. (2013) Politics of Empathy: Ethics, Solidarity, Recognition, Abingdon: Routledge. Conservative Party (2010) Invitation to Join the Government of Britain: Conservative Party Manifesto, London: Conservative Party. Conservative Party (2017) Forward Together: Our Plan for a Stronger and More Prosperous Future, London: Conservative Party. Cribb, J., Hood, A., Joyce R. and Norris Keiller, A. (2017) In-work Poverty among Families with Children. London: Institute for Fiscal Studies. https://www.ifs.org. uk/uploads/publications/comms/r129_ch5.pdf Curtice, J. (2013), ‘Two different countries? Scottish and English attitudes to equality and Europe’. http://blog.whatscotlandthinks.org/2013/10/twodifferent-countries-scottish-and-english-attitudes-to-equality-and-europe/ Davies, W. (2016) ‘Home Office rules’, London Review of Books, 3 November, pp 3–4. Dean, H. (2013) Welfare Rights and Social Policy, Abingdon: Routledge. Dennis N. and Halsey A.H. (1988) English Ethical Socialism, Oxford: Clarendon Press. Duncan Smith, I. (2015) ‘Government to strengthen child poverty measure’, press release, https://www.gov.uk/government/news/government-tostrengthenchild-poverty-measure Elliott, M. (2014) ‘Devolution, federalism and a new constitution for the UK’. http://blogs.lse.ac.uk/constitutionuk/2014/01/08/devolution-federalism-anda-new-constitution-for-the-uk/ Finlayson, G.B.A.M. (1994) Citizenship and Social Welfare in Britain 1830–1890, Edinburgh: Edinburgh University Press. Foot, M. (1975) Aneurin Bevan: 1945–60, vol 2, London: Paladin. Förster, M. and Whitehead, P. (2009) ‘How much redistribution do welfare states achieve? The role of cash transfers and household taxes’. https://www. researchgate.net/publication/228892104_How_much_Redistribution_do_ Welfare_States_Achieve_The_Role_of_Cash_Transfers_and_Household_Taxes Full Fact (2017) ‘Local authorities’ budgets are roughly 26% lower since 2010’. https://fullfact.org/economy/local-authorities-budgets/ Gamble, A. (1988) The Free Economy and the Strong State: The Politics of Thatcherism, Basingstoke: Palgrave. George, V. and Wilding, P. (1994) Ideology and Social Welfare, London: Routledge.

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Glasby, J. (2016) ‘“It ain’t what you do, it’s the way that you do it”: adult social care under the Coalition’, in H. Bochel and M. Powell (eds) The Coalition Government and Social Policy: Restructuring the Welfare State, Bristol: Policy Press, pp 221–41. Goodhart, D. (2004) ‘Discomfort of strangers’, Guardian, 24 February. Goodwin, M. and Heath, O. (2016) Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. York: Joseph Rowntree Foundation. Gray, J. (2016) ‘John Gray on moving right in new times’, New Statesman, 9 November. Green, D.G. (1985) Working-class Patients and the Medical Establishment. London: Gower/Maurice Temple Smith. Green, T.H. (1895) Lectures on the Principles of Political Obligation, London: Lawbook Exchange. Guardian (2016) ‘Private rental sector is the “new home of poverty” in the UK’, 20 July. https://www.theguardian.com/housing-network/2016/jul/20/privaterental-sector-poverty-housing-joseph-rowntree Gyford, J. (1987) ‘Decentralisation within local government’, in M. Parkinson (ed) Reshaping Local Government, Oxford: Transaction Books, pp 138–53. Harris, J. (1972) Unemployment and Politics: A Study in English Social Policy 1886– 1914, Oxford: Oxford University Press. Harris, J. (1999) ‘Political thought and the welfare state 1870–1940: an intellectual framework for British social policy’, in G. Gladstone (ed) Before Beveridge: Welfare before the Welfare State. London: Institute for Economic Affairs. Harris, J. (2016) ‘If you’ve got money, you vote in … if you haven’t got money, you vote out’, Guardian, 24 June. Hay, C., Lister, M. and Marsh, D. (eds) (2006) The State: Theories and Issues, Basingstoke: Palgrave Macmillan. Hayek, F.A. (1976) Law, Legislation, and Liberty, vol 2: The Mirage of Social Justice, London: Routledge. Hayek, F.V. (1979) Law, Legislation and Liberty, vol 3: The Political Order of a Free Society, Abingdon: Routledge. Heseltine, Lord (2012) No Stone Unturned: In Pursuit of Growth, London: Department for Business, Education and Skills. https://www.gov.uk/ government/uploads/system/uploads/attachment_data/file/34648/12-1213no-stone-unturned-in-pursuit-of-growth.pdf Hill, C.E. (1993) ‘Sidney Webb and the common good: 1887–1889’, History of Political Thought, vol 14, no 4, pp 591–622. Hills, J. (2015) Good Times, Bad Times: The Welfare Myth of Them and Us, Bristol: Policy Press. Hirschman, A.O. (1972) Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States, Cambridge, MA: Harvard University Press. HM Government (2010) The Coalition: Our Programme for Government, London: Stationery Office.

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HM Treasury and Greater Manchester Combined Authority (2014) ‘Greater Manchester Agreement: Devolution to the Greater Manchester Combined Authority and Transition to a Directly Elected Mayor’. https://assets.publishing. service.gov.uk/government/uploads/system/uploads/attachment_data/ file/369858/Greater_Manchester_Agreement_i.pdf Hood, A. and Johnson, P. (2014) ‘What is welfare spending?’ https://www.ifs. org.uk/publications/7424 Hood, C. (2006) ‘Gaming in target world: the targets approach to managing British public services’, Public Administration Review, vol 66, no 4, pp 515–21. Hopkins, E. (1995) Working-class Self-help in the Nineteenth Century. London: UCL Press. Hunt, T. (2004) Building Jerusalem: The Rise and Fall of the Victorian City, London: Weidenfeld and Nicolson. Independent (2016) ‘Why the rise in post-Brexit nationalism could have unexpected benefits’, 25 August. Intergenerational Commission (2016) ‘Stagnation generation? Launch of the Intergenerational Commission’, London: Intergenerational Commission. http:// www.resolutionfoundation.org/events/stagnation-generation-launch-of-theintergenerational-commission/ Jacobs, K. and Manzi, T. (2016) ‘“The party’s over”: critical junctures, crises and the politics of housing policy’, Housing Studies, published online 18 April. https://www.tandfonline.com/doi/full/10.1080/02673037.2016.1171829 Johnson, A. (2013) ‘Social housing residents told to sign “ambition” plan as part of tenancies’, Independent, 26 April. Kaufmann, F. (1986) ‘The blurring of the distinction “state versus society”’, in G. Majone and V. Ostrom (eds) The Idea and Practice of the Welfare State Guidance, Control and Evaluation in the Public Sector, Bielefield: Bielefeld University, p 127–38. Klikauer, T. (2013) Managerialism: A Critique of an Ideology, London: Palgrave. Laws, D. (2016) Coalition: The Inside Story of the Conservative–Liberal Democrat Coalition Government, London: Biteback Publications. Le Grand, J. (1982) The Strategy of Equality: Redistribution and the Social Services London: Unwin Hyman. Le Grand, J. and Bartlett, W. (1993) Quasi-markets and Social Policy, London: Palgrave. Leisering, L. (2011) The New Regulatory State: Regulating Pensions in Germany and the UK, Basingstoke: Palgrave Macmillan. Letwin, S.R. (1992) The Anatomy of Thatcherism, London: Fontana. Loach, K. (2013) The Spirit of 1945, London: Dogwoof. Lund, B. (2016) Housing Politics in the United Kingdom: Power, Planning and Protest, Bristol: Policy Press.

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Maile, S. and Hoggett, P. (2001) ‘Best value and the politics of pragmatism’, Policy and Politics, vol 29, no 4, pp 509–16. Marshall, T.H (1963 [1950]) ‘Citizenship and social class’, in T.H. Marshall, Sociology at the Crossroads and Other Essays. London: Heinemann. Marx, K. and Engels, F. (1848) Manifesto of the Communist Party. https://www. marxists.org/archive/marx/works/1848/communist-manifesto/ May, T. (2016a) ‘Statement from the new Prime Minister Theresa May’, Prime Minister’s Office. https://www.gov.uk/government/speeches/statement-fromthe-new-prime-minister-theresa-may May, T. (2016b) ‘Conservative conference: Theresa May’s speech in full’. http:// www.bbc.co.uk/news/uk-politics-37563510 McEwen, N. and Parry, R. (2005) ‘Devolution and the preservation of the United Kingdom welfare state’, in N. McEwen and L. Moreno (eds) The Territorial Politics of Welfare, Abingdon: Routledge, pp 41–62. McGuinness, F. (2018a) ‘Poverty in the UK: statistics’, House of Commons Library Briefing Paper No 7096, London: House of Commons. http://researchbriefings. parliament.uk/ResearchBriefing/Summary/SN07096#fullreport McGuinness, F. (2018b) ‘Income inequality in the UK’, House of Commons Briefing Paper No 7484, London: House of Commons. http://researchbriefings. parliament.uk/ResearchBriefing/Summary/CBP-7484 McKee, K., Muir, J. and Moore, T. (2016) ‘Housing policy in the UK: the importance of spatial nuance’, Housing Studies. http://www.tandfonline.com/ action/showAxaArticles?journalCode=chos20 Ministry of Housing Communities and Local Government (2017) Fixing Our Broken Housing Market, Cm 9352, London: Ministry of Housing Communities and Local Government. https://www.gov.uk/government/publications/fixingour-broken-housing-market Morgan, N.J. (1989) ‘“8 cottages for Glasgow citizens”: innovation in municipal house-building in Glasgow in the inter-war years’, in R. Rodger (ed) Scottish Housing in the Twentieth Century, Leicester: Leicester University Press, pp 125–44. Nozick, R. (1974) Anarchy, State and Utopia, Oxford: Blackwell. Obolenskaya, P. and Burchardt, T. (2016) Public and Private Welfare Activity in England, CASE paper 193, London: Centre for Analysis of Social Exclusion, LSE. O’Connor, J. (1973) The Fiscal Crisis of the State, New York: Transaction Books. Offe, C. (1984) Contradictions of the Welfare State, London: Hutchinson. ONS (2016) The Effects of Taxes and Benefits on Income Inequality: 1977 to Financial Year Ending 2015, London: Office for National Statistics. ONS (2017) Household Disposable Income and Inequality in the UK: Financial Year Ending 2016, London: Office for National Statistics. https://www.ons. gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/ incomeandwealth/bulletins/householddisposableincomeandinequality/ financialyearending2016

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ONS (2018a) Effects of Taxes and Benefits on Household Income: Historical Datasets. London: Office for National Statistics. https://www.ons.gov.uk/ peoplepopulationandcommunity/personalandhouseholdfinances/income andwealth/datasets/theeffectsoftaxesandbenefitsonhouseholdincomehistorical datasets ONS (2018b) ‘Percentile points from 1 to 99 for total income before and after tax: taxpayers only’. https://www.gov.uk/government/statistics/percentilepoints-from-1-to-99-for-total-income-before-and-after-tax O’Neill, B. (2016) ‘Brexit voters are not thick, not racist: just poor’, Spectator, 2 July. Osborne, D. and Gaebler, T. (1992) Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector, New York: Addison Wesley. O’Toole, F. (2016) ‘Brexit is an English nationalist revolution’, Irish Times, 24 June. Powell, M. (1995) ‘The strategy of equality revisited’, Journal of Social Policy, vol 24, no 2, pp 163–85. Renwick, C. (2017) Bread for All: The Origins of the Welfare State, London: Allen Lane. Rhodes, D (2015) ‘The fall and rise of the private rented sector in England’, Built Environment, vol 41, no 2, pp 258–70. Rhodes, R.A.W (1994) ‘The hollowing out of the state’, Political Quarterly, vol 65, no 2, pp 138–51. Standing, G. (2016) The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay, London: Biteback. Stoker, G. (2004) Transforming Local Governance: From Thatcherism to New Labour, Basingstoke: Palgrave Macmillan. Tawney, R.H. (1938) Equality, London: Allen and Unwin. Titmuss, R. (1958) Essays on the Welfare State, London: Allen and Unwin. Tombs, S. (2015) Social Protection after the Crisis: Regulation without Enforcement, Bristol: Policy Press. Torgersen, U, (1987) ‘Housing: the wobbly pillar under the welfare state’, in B. Turner, J. Kemeny and L. Lundqvist (eds) Between State and Market: Housing in the Post-industrial Era, Stockholm: Almqvist and Wiksell, pp 116–26. UK Public Spending (2016) Spending History. http://www.ukpublicspending. co.uk/past_spending University of Manchester (2014) ‘Who feels Scottish? National identities and ethnicity in Scotland’. http://www.ethnicity.ac.uk/medialibrary/briefings/ dynamicsofdiversity/code-census-briefing-national-identity-scotland.pdf Veit-Wilson, J. (1992) ‘Muddle or mendacity? The Beveridge Committee and the poverty line’, Journal of Social Policy, vol 21, no 2, pp 269–301. Weber, M. (1918) ‘Politics as a vocation’. http://anthropos-lab.net/wp/wpcontent/uploads/2011/12/Weber-Politics-as-a-Vocation.pdf

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4 Market welfare Robin Miller

Overview Despite common assumptions that welfare is largely the domain of the public and not-for-profit sectors most countries will have elements of market welfare. This relates to both the funding and the delivery of welfare services. Different conceptualisations exist regarding how we define what is mean by ‘market welfare’ and the extent of its contribution. Governments often consider private business to display positive characteristics and therefore encourage increased access through processes described as ‘privatisation’. Privatisation is frequently subject to opposition by stakeholders who are concerned about loss of resources and a weakening of public involvement. The English National Health Service reflects both continued interest in privatisation by successive governments despite passionate challenges to this process by a range of interest groups. Current research evidence is ambivalent about the benefits or deficits of increased market involvement. Key concepts Private; market; public; publicness; privatisation

Introduction Market welfare incorporates provision of services by organisations independent of the state, finance from private business, and individuals purchasing services from their personal resources as ‘welfare consumers’. While the ‘state’ elements of welfare often receive the greatest attention in policy and academic contexts, most developed countries will also have market elements to their welfare funding and provision. In many cases such funding and provision will in fact have pre-dated that from the state (see Chapter Two). Market welfare can exist in parallel to the public elements or be integral within the overall welfare system overseen by policy makers. Burchardt and Obolenskaya (2016) estimate that in

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England in 2007/8 public welfare spending accounted for £396  billion and private spending £221 billion – so almost a third of the total welfare spend was from private sources. In some countries market welfare may be a voluntary option which those with sufficient resources can access in place of or alongside state provision. In others it is the only option, unless the individual or family meets a low-income or other threshold such as age or disability. For example individuals may need to meet their social care costs from their personal income or savings following financial assessment of their personal resources, or to pay for out-of-pocket expenses such as school meals, uniforms or trips (Table 4.1). It is rare, in the UK at least, for individuals to have no call on any aspect of public welfare support, but there are those who largely do so – a group that Burchardt and Propper (1999) categorise as the ‘private welfare class’. This group, and those who make less but still frequent use of private welfare, are of course diverse, but are more likely to have higher household incomes, higher educational qualifications and to vote for the Conservative Party (Burchardt and Propper, 1999). There can also be market elements that are embedded within the public delivery system without a general recognition that this is the case. For example, despite the traditional perception of the National Health Service (NHS) in the UK as a publicly funded and delivered service it has contained private activities since its conception in 1948. General practitioners own their practices as independent contractors and make private profit through in-year surpluses or the selling of their partnerships or estate. NHS consultants have always been able to undertake private practice alongside their public sector work. Market welfare funding therefore works both in parallel and as an intertwined component of the public welfare system. Market welfare can also be seen to incorporate many of the ‘occupational’ and ‘fiscal’ mechanisms of social welfare conceptualised by Titmuss (1963; Chapter One, this volume) as these often lead to individuals having greater personal wealth. Despite its long-standing coexistence with public provision, the role of the market element of a welfare system is an issue that can generate considerable debate, even if this is often one with ‘more heat than light’ (Powell and Miller, 2013). Debates regarding private funding (that is, private corporate and consumer charging; see Spicker, 2008; Chapter One, this volume) centre around the following questions: • What is the contribution that people are expected to make above their contribution to taxes and other governmental levies? • Is there potential for inequity due to those with greater resources having better access to services? • Could a ‘nanny state’ be trying to control too much of people’s private choice and responsibility and enforcing a political belief on citizens’ liberties?

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Table 4.1: Common examples of market–public mixes of welfare Individuals John and Betty

Circumstances Retired couple in their 80s

Market welfare John has an occupational pension. Betty sees a private chiropodist.

Imran and Alexis

Working couple in their 30s with one child who is 13 years old

Josephine

A 19-year-old woman with a physical disability and mental health problems attending university

Public welfare Both receive state pensions. Both are in receipt of a free bus pass.

Their television licence is paid as They pay a home care they are over 75. agency to help John John is under the care of an with his personal care. NHS consultant due to heart They live in a sheltered problems. housing scheme run Betty attends a support group at by a private landlord. her local community centre for people with diabetes. Both have limited The whole family is registered private health with an NHS general practitioner. insurance through Their daughter gets free dental their employers. care on the NHS. Their daughter Their daughter attends a state receives private tuition community school. to support her with They received an interest-free her maths. loan to purchase their property They are ownerthrough the ‘Help to Buy’ scheme. occupiers with a They receive child benefit. mortgage. She pays fees to She is under the care of an NHS attend university. psychiatrist. She employs her own personal assistant through her direct payment.

She receives Disabled Student Allowance to help meet disability related expenditure. She receives a direct payment from the local authority to meet her personal care needs.

Market provision is generally accepted, or at least tolerated, if it is not thought to be detracting from the resources and therefore the capacity or quality of state provision. A welfare system to which individuals and/or companies provide funding alongside contributed contributions to the public system can reduce the demands on the latter, and indeed could be seen to redistribute income from the wealthy to the poor (Besley and Coate, 1991). A contrary view is that if market welfare becomes the norm for many there could be demands by citizens to reduce taxes accordingly which will reduce public services available for those without

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means to access private options. This could in turn lead to decline in availability and quality of public provision, which may push further people to purchase private services in a spiral of public sector decline (Propper and Green, 2001). Therefore, for many the key issue of concern is the risk that the market welfare system is being grown to the detriment of public services and responsibilities. Privatisation rather than market welfare per se as the matter of contention. The mixed economy of welfare (MEW) framework (see Table 1.1 in Chapter One) represents this as a movement out of cell 1 (state-funded and state-provided) to cells 2 (state-funded and market-provided) and 6 (market-funded and market-provided). Reflecting the strength of public feeling, political mudslinging and polarised debates (or non-debates; see Powell and Miller, 2014) that privatisation can provoke we will consider this aspect of market welfare in particular. The rationale that leads to governments considering an increase in the market aspects of their welfare state will be discussed, along with concerns that detractors have regarding such policy directions. The policy mechanisms that can be deployed in seeking to change the balance from public to market will be explored through the case study of the English NHS and the evidence of the impact such policy mechanisms have had in practice. The chapter begins, though, with a consideration of what is meant by ‘private’ and that most controversial of terms, ‘privatisation’.

Private, public or market? Before exploring the various perspectives of the rights and wrongs of greater market aspects within the welfare state it is of course important to start by considering what we mean by these terms. Maarse (2006) highlights that our understanding of and interest in such terms is connected with the academic tradition to which we are affiliated. Economists have traditionally viewed the public sector in association with the state and the private sector with the functioning of markets and the transfer of resources between the actors within these markets. Sociologists commonly view the private as relating to personal or family life, and public life as everything that occurs outside these confined environments. Public administration scholars have been most concerned with the various organisations that work with the state and this is reflected in often loose definitions of what is meant by private. This then leads to non-state owned entities being defined as private, with a common subsequent subdivision being between ‘for-profit private’ and ‘not-for-profit private’. The term independent sector is another variant on this, with the term sometime incorporating ‘for-’ and ‘not-for-’ profit organisations, and sometimes only including the former. In this chapter the focus will be on the provision and funding of welfare services by the for-profit sector.

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Within the social policy literature a key focus has been to understand what is mean by publicness which then in turns helps to differentiate between ‘public’ and ‘private’ (Powell and Miller, 2014). Reflecting the first dimension of the MEW, ownership has often been a starting point for exploring publicness. Put simply, are the assets owned by the state or are they under the control of another body or set of individual(s) (Pesch, 2005). More sophisticated accounts add further dimensions and, furthermore, view such dimensions as sliding scales rather than binary positions (eg Bozeman, 1987). Common dimensions include the balance between governmental funding in the form of grants or contracts and income from consumers or non-state sources, and the influences and restrictions on those making strategic decisions regarding the organisation. Anderson (2012) builds on the work of Bozeman (1987) to display the latter through an authority ‘grid’, with ‘economic’ authority on the y-axis (the extent to which the organisation has freedom to make financial decisions) and ‘political’ authority on the x-axis (the extent to which organisation is subject to central government control). The grid enables organisations to then be placed relative to each other in respect of their freedom of authority. Figure 4.1 illustrates this in relation to education services. • Community schools are controlled by the local council and not influenced by business or religious groups. • Academy schools get money direct from the government rather than local councils, are run by a governing body and are independent from the local council – they can follow a different curriculum. • Free schools are funded by the government but are not run by the local council. They have more control over how they do things. They can set their own pay and conditions for staff and change the length of school terms and the school day. • State boarding schools provide free education but charge fees for boarding. Some state boarding schools are run by local councils, and some are run as academies or free schools. • Private schools (also known as ‘independent schools’) charge fees to attend instead of being funded by the government. Pupils don’t have to follow the national curriculum set up government. Anderson (2012) further develops the publicness concepts into a framework incorporating three aspects – core publicness refers to the ownership or formal legal status of an organisation, that is, public or private sector; government or industry owned; dimensional publicness refers to the extent to which an organisation is subject to political and economic central government control; and normative publicness refers to the extent to which organisations adhere to and achieve public values. Bozeman (2007, p 131) defines these as values which provide ‘normative consensus about (a) the rights, benefits and prerogatives to which citizens should (and should not) be entitled; (b) the obligations of citizens

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Figure 4.1: Economic and political authority: example from education in England Economic authority

Private schools

State boarding schools

Free schools Academy schools Community schools

Political authority

Key: • Economic authority: extent to which the organisation has freedom to make financial decisions • Political authority: extent to which organisation is subject to central government control.

to society, the state and one another; and (c) the principles on which government policies should be based’. Indicators of normative publicness include the extent to which services are of general public value, whether they are suited to private provision, and whether they should be part of social welfare or if citizens should have to pay for it themselves. Burchardt (1997, 2013), and Burchardt and Obolenskaya (2016) (see also Powell, 2008) provide an alternative typology to help to differentiate between market and public contributions to welfare. This has three dimensions – which sector provides the services; who funds these services; and how decisions are reached about funding and provision. These are represented through inner and outer ‘wheels’ of welfare (Figure 4.2). The inner wheel relates to public decisions and the outer to private decisions, the upper quadrant to public provision and the lower quadrant to private provision, and the left quadrants to private purchase and the right

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Figure 4.2: Wheels of welfare Right half: Private purchase

Top half: Public provision

Bottom half: Private provision

Left half: Public purchase

6

5 1

2

4

3

8

Inner circle (Public decision) 1. Publicly provided: paid by user charges 2. Publicly funded: public purchased 3. Contracted out: state purchased 4. Contracted out: consumer pays

7 Outer circle (Private decision) 5. Publicly provided: individual purchase 6. Publicly provided: voucher purchased 7. Privately provided: bought with vouchers, tax-reliefs or grant 8. Free market services

quadrants to public purchase. Social care can illustrate the necessary complexities which are captured through these interconnecting dimensions. For example, an individual who receives personal care support at home from a domiciliary care agency could be purchasing this care from their own resources or be subject to charges to access a publicly funded service; the service could be provided by a state or private home care agency; the support provider could be selected by the state through for example a care coordinator or the individual could have freedom to choose their provider (and indeed how their needs are met). Regulation is not explicitly included an element within the Wheels of Welfare framework, however Burchardt and Obolenskaya (2016) highlight that the degree of agency enjoyed by a user reflects to some degree the strength of regulation. They argue that a highly regulated service will provide more restriction on end users regarding a choice over how much service they want, who provides this service and what alternatives are available. ‘Privatisation’ is sometimes conflated with ‘marketisation’ but while the two are often closely connected they are not necessarily the same thing (Powell and Miller, 2014). Krachler and Greer 2015) define ‘marketisation’ as a ‘change in transactions through the introduction or intensification of competition. This can take place through an increase in the standardisation of the good or service

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being exchanged, the frequency of exchange, the openness of the market to new providers, and/or the transparency and importance of the price mechanism’ (p 216). While marketisation could include the encouragement of privately owned businesses to participate in delivery of services previously only provided by the state it could also relate to competition between publicly owned organisations (sometimes referred to as a ‘quasi-market’). For Krachler and Greer (2015), privatisation refers to a change in ownership in which non-state actors become increasingly involved in provision. This definition includes then ‘for’ and ‘not-for’profit organisations (as both are non-state actors) although others see privatisation as indicating profit making entities. Further distinctions can be drawn between between ‘privatisation’ and ‘commercialisation’ (changes within a sector, such as state services being transferred into an arm’s-length arrangement; Starr, 1988), and ‘privatisation’ and ‘corporatisation’ (in which state providers develop more autonomy) (Powell and Miller, 2014). Other commentators see these nuances as splitting hairs and instead view corporatisation, commercialisation and indeed marketisation as being common foundation stones through which privatisation can then occur (eg Gingrich, 2011; Lister, 2013). Mirroring the debates regarding ‘publicness’, there are various dimensions that commentators include (or not) to establish if a change should be considered as privatisation. Indeed, the typologies presented earlier regarding publicness can be used for this purpose, with, for example, a transfer from Zone 2 to Zone 8 in the ‘wheels of welfare’ (see Figure 4.2; see also Burchardt, 2013) or from low to high economic autonomy in the authority grid (see Figure 4.1; see also Anderson, 2012) suggesting a decrease in publicness and corresponding increase in privatisation. Dunleavy (1986, p 13), though, interprets it more simply as the permanent transfer of services previously carried out by state bureaucracies to private sector firms. He comments that: I see no analytic point whatsoever in fitting the label ‘privatisation’ to a range of other changes such as cutting down the scope of public policy responsibilities, selling state-held equities in corporations, selling off public capital assets to finance revenue spending, or encouraging new private sector initiatives – which have no theoretical or empirical interconnection with each other … but which are customarily grouped together for ideological reasons. (1986, p 32, n) Other commentators, though, consider that a wider range of dimensions should be considered. For example, Le Grand and Robinson (1984) see privatisation not only as a transfer of state assets but also as a reduction of state activity in provision, funding and/or regulation which could lead to a greater role or greater autonomy for private welfare actors. Starr (1988) argues that there is a continuum between

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‘total’ privatisation (in which the state relinquishes its responsibility for an aspect of welfare policy) and ‘partial’ privatisation (in which the state maintains some responsibility but contracts out other elements). The latter could, for example, include transferring social care funding to individuals in the form of a direct payment, or allowing individuals to choose from private and public providers of a publicly funded and purchased service. Maarse (2006) suggests there are three key areas of shifts to privatisation. • Shift from public to private sector in scope of the tasks and responsibilities of the state. This will commonly be experienced by individuals as governments no longer funding a particular service. Therefore individuals are required to arrange an equivalent service for themselves or a charge being levied for the state to do so on their behalf. For example, previously schools may have provided meals or drinks to all pupils but now require parents to purchase a school dinner or bring a packed lunch. There may be some contingencies in place for those whose circumstances mean that they would be financially unable to do so. Alternatively, it may be that the state no longer sees that it has any responsibility towards what it considers an aspect of private life and will therefore no longer develop and implement policies to support or influence this welfare component. It will then be down to individuals, the voluntary and community sector, or the market to decide if they have sufficient interest in developing responses to this aspect of societal need. • Shift from the public to private sector in relation to the institutional structure of state programmes. In this form of privatisation, the scope of the public sector does not change but how this welfare policy is funded and delivered does alter. This could translate into the contracting out of direct services or management operations from the public to private sector and/or the private sector investment in public facilities for which rent or a fee is charged. This could for example incorporate the ‘spinning out’ of supported transport or housing services from the public to the private sector, or private finance being used to build a new school or leisure centre. A third variation would the responsibility for purchasing services on behalf of the public sector being passed to non-state organisations. This could be on a ‘macro’ basis (for example, a private sector organisation acting as the prime contractor for a pathway of services) or a ‘micro’ basis (for example, a family carer managing a direct payment for someone who does not have capacity to do so themselves). • A growth of the private sector relative to the public sector without a shift of elements of the public sector. In this form of privatisation state involvement essentially stands still while the private sector offer grows in depth and/or breadth. For example, if the public sector only offers a limited range of wheelchairs to those children with most profound needs then private organisations may promote a wider range for families and/or charities to purchase directly.

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Why privatise the welfare state? There are a number of potential rationales and beliefs that lead governments to consider increased privatisation of public welfare services (Janssen and Van der Made, 1990; Maarse, 2006; Bel and Fageda, 2007; Edwards and Lewis, 2008). Such rationales are difficult to prove empirically, or indeed refute, due to the complexity of factors that must be accommodated (Propper and Green, 2001) and later in the chapter we will consider the evidence pertaining to health care in particular. Common arguments for an increase in private sector funding and delivery include: • The public sector is inefficient: Public choice theory (Buchanan, 1984) would suggest that governmental bureaucracies tend to serve their own interests rather than those of the public they have been created to support. This is seen to result in such organisations holding on to resources that are not required, employing slow and ineffective processes, failing to tackle long-standing issues such as poor workforce performance, and being unwilling to adapt to new contexts and opportunities such as emerging technologies. • The private sector is more innovative: In contrast to the public sector, privately owned organisations are portrayed as being more ‘consumer’ focused in order to attract the maximum resources. They are viewed as willing to adopt new technologies and processes, and to take difficult decisions such as redesigning workforces to minimise transactional costs and exploit potential opportunities for increased profit. Private sector companies are also seen to have more levers to motivate their staff members to work ‘harder and smarter’ through the use of financial incentives and accelerated career opportunities. Such motivations are thought to be particularly strong in employee-owned business as each employee can potentially reap individual benefits from a strong company performance. Private companies may also have experience of using innovations in other aspects of their work and can transfer this learning to welfare provision. • Attraction of new resources: The public sector has limitations on its finances due to the limited willingness of citizens to pay higher taxes and governmental borrowing rules. The private sector can however bring in new funding through other profitable activities, drawing on their company reserves, borrowing funding from the market, and encouraging private investment. Privatisation policies that require individuals to contribute more to their welfare provision will also bring in new income from people’s personal wealth. • Strengthening of competition: Beyond such perceived characteristics of public and private organisations, many governments have become interested in strengthening competition between welfare providers. This is on the basis that organisations are fundamentally motivated by securing the income to ensure

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their long-term survival and indeed to grow in size and scope (Pfeffer and Salancik, 2003). In public sector (or indeed any) monopolies in which one organisation has guaranteed access to the available resources it is thought that this can lead to complacency and resistance to change as there is little danger of loss of income. Introducing rivals for the available resources will increase competitive pressure on the providers and ensure that they improve their efficiency and/or quality (depending on how the market is structured). • Political paradigm: Within some political doctrines a key principle is that of personal freedom. The state is seen as potentially interfering with private life and should therefore be minimised so that individuals are allowed to make their own decisions about what is important and how their personal assets are utilised. Privatisation is therefore a means to fundamentally reduce the role of the state and enable individuals to engage with their market of choice. Governments of less neoliberal traditions may also see the private sector running services as a way to distance themselves from the messiness of day-to-day operations.

What are the concerns about privatisation? As noted in the introduction privatisation, and particularly that which relates to the transfer of existing tasks and responsibilities of the state, or a greater involvement of private companies in the institutional nature of state programmes, is often of great concern to many stakeholders in the connected welfare sector (eg  Pollock, 2005; Lister, 2008; Leys and Player, 2011; Jones, 2015). This commonly includes frontline workers, unions, professional bodies, academics and commentators (see eg Powell and Miller, 2013). Box 4.1 provides an example of actual online responses to a case of a private sector company winning a tender for a public contract. The responses are not unusual in the strength and depth of their opposition. Such resistance may reflect the political paradigms of those who believe in a more communal society, with the state rather than the market having the central role in responding to the needs and wishes of the individual. People holding these political beliefs also may find problematic the ethics of an individual’s welfare need being commodified and sold for private profit. Alongside these important principles are more pragmatic concerns including: • Profit motive and loss of resources: The private sector will seek to make and take the maximal profit that it can from running public services. Such profit would be distributed to the owners of the business and would therefore be taken out of the welfare system. Furthermore, if profit is the key motivator for private business there is a danger that they will seek to cut back on quality to reduce costs or to limit their offer tightly to what was set out in the tender. It is also often alleged that they will seek to work with those individuals whose needs can be met with less resources (cherry picking).

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• Unsustainable public services: The loss of income connected with previously public services now being run by a private company may result in a public sector provider no longer being viable. It has commonly been the case that larger public sector organisations have effectively ‘risk pooled’ across different services and individuals, meaning that more expensive services and meeting complex needs of individuals are financially possible due to others not requiring as much funding as is provided. This can be amplified if there is ‘cherry picking’, as the public sector provider will be left to respond to the more complex and therefore expensive needs. • Inequalities: If there is an element of co-payment relating to the service concerned then the private service provider may have an interest in offering enhanced access or level of support to those who can afford to purchase it. Mirroring the issue regarding cherry picking of lower level needs, the private provider may see those with personal wealth as being more attractive consumers of their service and take steps to encourage them to access the service concerned. • Fragmentation: There is increasing recognition of the importance of welfare services being joined up, both within and between different sectors. For example, to support homeless people with mental health needs it is vital that there is communication and coordination with primary care, specialist mental health, social care and housing services. Such integration is already significantly challenging when such services are run by agencies who are motivated in principle by public service values and who are all governed by the state. The introduction of more diverse providers who may have alternative values and will be accountable to other owners may result in further gaps opening up between services. Furthermore, private companies will be focused on the delivery of their element of the pathway to ensure that they received the appropriate income and may therefore be less willing than public sector agencies to go beyond their core specification.

Box 4.1: Examples of online comments regarding privatisation The (edited) comments that follow relate to the winning by private company of a primary care service: £65 m to cover urgent care services. £74 m for the great british bake off. Presumably they are looking forward to the great British rake off. Private companies are there to strip out funding for patients into profits, cherry pick the most profitable services in the low risk patients leaving

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the costly and difficult expensive work to the NHS, which then don’t have the easy cases to subsidise the costly ones. Good luck – you will need it. Bet they got more money than the last saps to do this. Pandora’s box has been opened and there is no closing it now. Well this should really please Nutter from UKIP – who has already stated that he wants the NHS privatised. I really really hope that someone is checking that no one is linked to the bidding entities in any way what-soever! This stinks! The purchaser provider split, outsourcing, privatisations, PFI’s [private finance initiatives] are all total catastrophes that have wasted north of probably 200 billion since this madness commenced under the insane Thatcher..and continue to waste probably around 10 to 15 billion a year ... who will be held to account for the massive suffering and poor care this disgraceful political waste has caused?

Market welfare: trends over time Despite the common assumption that it is right-leaning governments that primarily are interested in privatisation, the experience from England is that political parties from the right, left and centre can see shifting elements of welfare from public to private as offering opportunities and solutions to long-standing problems. Gingrich (2011) suggests that interest across the political spectrum is common but that different approaches are typically taken by the political right or left. She argues that the right is often looking to fundamentally cut the overall size of public provision and funding and reduce citizens’ support for public welfare whereas the left wants to maintain public support and the overall size but is willing to use the private services as delivery vehicles. Obolenskaya and Burchardt (2016) have analysed public and private welfare spending in England in the three decades between 1979/80 and 2013/14. They found that absolute (ie private and state) welfare spend had increased from £225.0 billion (26% of GDP) in 1979/80 to £694.5 billion (40% of GDP) in 2013/14. Over this period there was a steady rebalancing between private and state welfare spend, with an increase in the former and a decline in the latter. This was largely the case in all the sectors that they considered but with some variation (ibid). In social care, public welfare spending (ie cell 1 in Table 1.1, Chapter One) fell in the late 2000s, with funding for public sector provided services being particularly hit. In contrast, public funded but privately (or at least

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independently) provided services (cell 2 in Table 1.1, Chapter One) increased from 10% to 35% of total welfare spend. This increase was at least partly due to direct policy interventions as, for example, the NHS and Community Care Act 1990 required local authorities to spend a substantial proportion of their adult social care funding purchasing from the independent sector, with restrictions on how much they could spend on their own services (Gash and Roos, 2012). Education is a trickier sector to quantify due to difficulties in how to place academies and free schools (Obolenskaya and Burchardt, 2016). If they are taken as public provision then there has been a 6% decline in the percentage of total spending that is publicly funded and provided between 1979/80 and 2013/14, but if they are excluded then this becomes a 24% decline (cell 1 in Table 1.1, Chapter One). In housing, privately funded and provided options (including home ownership and rental) (cell 6 in Table 1.1, Chapter One) continue to be dominant and have grown in percentage of total welfare spend (from 60% to 80% between 1979/80 and 2013/14), while public funding and provision has decreased in the same period. Sellick (2011) has investigated foster care in the UK. Recruiting, training and supervision of foster carers was traditionally a public sector activity completed by local authorities. In the 1990s, foster care was seen as providing a better environment for children and young people than residential care, and there was therefore an increase in demand with which local authorities were struggling to cope. This coincided with the political beliefs of New Labour regarding engaging all sectors in the delivery of public services to dramatically increase foster placements through independent fostering providers (IFPs). This change in practice meant that by 2010 (Department for Education, 2010) almost one third of children in foster care were placed through IFPs, and in England and Wales IFPs outnumber local authorities by almost two to one (Sellick, 2011).

Market welfare and English health care in practice The ‘sacred status’ of the English NHS means that it is a prime example of welfare policy which reflects the debates set out earlier. Indeed, those who seek to privatise any of its responsibilities are portrayed as ‘heretics’ to the cause of the NHS (Klein, 1995; Elkind, 1998). The allegation that a political rival is seeking to further privatise health care is seen as a toxic bomb to throw at election times. Bespoke political parties have been created to lobby for the service to remain firmly in state ownership and control. Despite such vociferous opposition successive English governments led by all the main political parties have attempted to increase the role of the private sector in the NHS. This has included numerous initiatives regarding the delivery, funding and purchasing of health care services. While there is insufficient space to consider these initiatives in this chapter, it is worth noting that through devolution the UK as a whole is an interesting

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example of the influence of political and societal beliefs. The course steered by home nations such as Wales and Scotland regarding health care privatisation has shown key differences, despite many of the political parties being the same as in England (eg Timmins, 2013; Bevan et al, 2014). The income generated by the private acute medical sector in 2011 is generally calculated to be £6.42 billion (LaingBuisson, 2013). The majority of private sector income is centred on the delivery of elective procedures through outpatient or short inpatient stays. Boyle (2011) estimates that in 2007 private hospital beds in England formed 5.8% of the total number of acute sector beds available across the health care system. These were provided through 304 independent acute hospitals (LaingBuisson, 2007). A further 1,180 beds were also provided through dedicated private patient units within NHS hospitals, which increased the proportion of private beds to 6.5%. It is worth noting that this percentage was much lower than in many other European countries such as France (35% of beds), Germany (27% of beds) and the EU as a whole (21% in the EU) (WHO Regional Office for Europe, 2009). The British Medical Association has estimated that 53% of NHS consultants undertake private practice, which is a decline of 17% since 1999 (King’s Fund, 2014). This equates to 85% of the private practice undertaken, with only 3,000 or so consultants working purely in the private sector. The other main private health care activities relate to mental health hospital care (£1.1 billion in 2011) and private general practice (£500 million in 2011) (LaingBuisson, 2011, 2013). There are also various treatments provided by other professions allied to medicine such as psychotherapy, physiotherapy and chiropody, and alternative therapies including osteopathy, homeopathy and acupuncture. The amount of these provided is difficult to quantify due to a lack of reliable estimates of activity and income (King’s Fund, 2014). The NHS Confederation (2015) suggests that a more inclusive view of non-NHS activity, which includes independent contractors such as general practitioners, dentists and pharmacists, will raise the percentage spend on private and third sector providers to 34% (based on 2012/13 figures). In 2011, 56% of the income in relation to the acute medical sector came from private medical insurance, self-pay patients contributed 15% of the income, 26% came from NHS funders and around 3% from private overseas patients (King’s Fund, 2014). Individual purchase of private medical insurance has declined in recent years so that in 2011 this amounted to 18% of the insurance income with the majority (82%) coming from company-paid subscribers (LaingBuisson, 2013). In total, approximately 11% of the population has private medical insurance. It must be remembered though that the depth and breadth of such cover varies enormously, with few policies including maternity or mental health care and many requiring co-payment by the individual patient. Older people made up only 18% of those covered but were the source of around 40% of the payments made (LaingBuisson, 2013; King’s Fund, 2014).

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Privatisation in policy In this section the key policy initiatives taken by all the major parties in relation to privatisation and the English NHS are summarised. Conservatives (1979–97) The Conservative government’s initial focus in relation to privatisation related to the contracting out of ancillary services such as cleaning within hospitals. This did not, though, extend to compulsory tendering of clinical services. GP fundholding enabled large general practices to hold budgets from which they could procure secondary health care services. Tax relief was given to older people regarding private medical insurance and there were increases in charges to individual patients. Private finance initiatives (PFIs), in which private companies build a facility on behalf of the NHS and then receive income for leasing the property to the NHS and providing ongoing maintenance service, was initially muted during this period. At the end of a set contractual period (typically around 30 years), PFI properties become owned by the NHS, making them temporary private sector assets. Alongside these more tangible initiatives, the Conservatives during this period of government are also credited with introducing management approaches which reflected those classically associated with the private sector. New Labour (1997–2010) Labour was initially critical about the possibility of PFIs in the NHS but then had a change of heart and became more enthusiastic implementers than their Conservative predecessors. During their early days in government they were also opposed to further engagement of the private sector in clinical services. However, following the replacement of the health secretary a new vision was produced which emphasised collective funding and equal access rather than public ownership of providers. A concordat was published which enabled NHS commissioners to contract with private providers and was described as ‘the start not the end of a more constructive relationship with the independent sector’. Independent Sector Treatment Centres (ISTCs) were introduced as a means to increase the overall health system’s capacity to undertake elective procedures and so reduce waiting times. ISTCs were given a guaranteed level of work and payment to encourage private organisations to consider investing in such provision. Individual choice was also promoted, with patients enabled to select from four providers for certain procedures and the diversity of community providers enhanced through the ‘any willing provider’ (AWP) initiative. It is worth noting that, at the end of Labour’s time in government, there was some change of direction with the then secretary of state announcing that the NHS would have ‘preferred provider’ status. Direct

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private sector management of NHS organisations was also explored with the venture capital owned Circle group taking over responsibility for Hitchingbrooke Hospital. Responding to high-profile incidents such as the Bristol Royal Infirmary case in which higher death rates of infants following cardiac surgery was linked to a lack of leadership, a poor culture and insufficient governance of quality, a national Commission for Health Improvement was created to support NHS trusts with their clinical governance. This was then merged in 2004 with the National Standards Commission (the independent regulatory body responsible for inspecting and regulating residential and domiciliary care) to form the Healthcare Commission. This had responsibility for private, voluntary and NHS providers, and was subsequently replaced by the Care Quality Commission. The Coalition (2010–15) From the outset competition, choice and diversity of provision was at the heart of the Coalition government’s reforms for health. While these were diluted somewhat during the passage of the corresponding legislation through parliament they remained key principles on which the English NHS was to operate. The role of the executive non-departmental public body Monitor moved from only overseeing the finances and governance of foundation trusts to becoming the health care market regulator. Following the amendments to the Health and Social Care Bill its role (as set out in the Section 75 Regulations) was not to promote competition but rather to ensure that the NHS was not acting in anti-competitive manner unless this was in the interests of patients. Commissioners were given similar duties, with corresponding guidance requiring them to undertake procurement in a manner that did not discriminate between providers from different sectors, was proportionate to the service being procured, and involved transparency regarding tendering opportunities and the criteria that would be applied. The ‘cap’ on the proportion of private income that NHS foundation trusts could generate was also increased to 49% of their total income. ‘Any qualified provider’ (AQP) regulations extended the range of services to which the previous AWP requirement would be applied, and the option of a personal health budget was mandated for any NHS patients receiving continuing health care. This enables the patient to take control over how NHS funds for aspects of their health care are spent. The Care Quality Commission continued under the Coalition as the regulator of quality. This included licensing of health care providers which sought to deliver services on behalf of the NHS.

Impacts of privatisation policies in the English NHS It is clear from the preceding sections that, despite political pronouncements to the contrary, all English governments between 1979 and 2015 had initiatives

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that can be interpreted as privatising the NHS to some extent. With regard to the MEW, this relates to the provision of health care services such as the introduction of ISTCs, patient choice of AQP/AWP private providers, and the funding of health care services such as PFI and greater patient contribution to charges. In addition to these aspects, there have also been attempts to privatise the management and decision making processes (Burchardt, 2013). Related initiatives include patients having control over their personal health budget, independent general practitioners overseeing commissioning budgets, private sector companies taking on operational control of NHS trusts, and consultancy firms providing change management and analytical support. These have led commentators to make the claims set out earlier regarding the scale and pace of privatisation and the connected loss of the public sector core of the NHS. The potential counterbalance to these is the public control of private providers and funders through new inspection and registration arrangements (Anderson, 2012). In this section we consider the evidence of the extent to which the nature of the NHS can be said to have become more private, and also evidence relating to the actual impacts of three key privatisation initiatives relating to provision (ISTCs), funding (PFI) and governance (competition). In relation to changes in the overall balance between public and private, between 2000 and 2011 in the UK as a whole, the total spend on public health care increased by 70% but spending on private health care increased by only 33%, with a decline from 2008 associated with the overall downturn in the UK’s economy. Therefore, despite the privatisation policies outlined earlier, the percentage of total health care spending on public sector provision actually rose to 82.8% in 2011 from 79.2% in 2000 (Arora et al, 2013). In England specifically, in 2013/14 it was estimated that £10.4 billion of NHS funds was used by commissioners to purchase care from non-NHS providers (other than primary care). This equates to approximately 10.8% of the total commissioning budget (Spencelayh, 2015). This reflects an increase in non-NHS provider spend between 2006/7 and 2011/12 which was principally due to a rise in funding for private rather than third sector providers (Arora et al, 2013). During this period, NHS commissioners’ spending on private sector clinical services rose from £2.6 billion to £6.5 billion (with the income given to the third sector remaining similar during that period) (Spencelayh, 2015). Research by Iacobucci (2014) discovered that between April 2013 and August 2014 private providers won 41% of 195 competitive tenders analysed and NHS providers 30%. Despite this, out of a total value of £10 billion contracts that were disclosed, NHS providers shared 85% of the income with the private sector receiving 5%. Private income generated by NHS providers in 2012/13 was about £500 million and therefore remained a small percentage of the total NHS income (Spencelayh, 2015). Allen and Jones (2011) provide a helpful overview of the evidence regarding the impact of ISTCs. Their review identifies that, in relation to efficiency, there

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have not been quantitative studies as such, but some suggestions that ISTCs have characteristics which should enable increased efficiency (such as a limited range of procedures and opportunity to design new processes), and that their more productive practices were being adopted by NHS organisations (Bartlett et al, 2011; Turner et al, 2011). In relation to quality, comparative studies show no significant differences between ISTCs and NHS services regarding clinical outcomes but that patient experience was better rated in ISTCs with regard to aspects such as decision making, information and timing of procedures (Healthcare Commission, 2007; Browne et al, 2008). In assessing the policy as a whole, they conclude that ‘higher prices, coupled with low utilisation rates of ISTCs while guaranteeing minimum payments to their owners, may have wasted public resources and failed to deliver value for money from these contracts’ (Allen and Jones, 2011, p 22). Subsequent to this review, Chard et al (2011) report on an analysis of patient outcomes in surgery data. They conclude that patients who underwent a hip or knee replacement in ISTCs had better outcomes in terms of severity of symptoms, health related quality of life and post-operative complications, but that there were no significant differences in outcomes reported after hernia repair and varicose vein surgery. They also highlight that there were case mix differences between ISTCs and NHS providers which may have contributed to any outcome variation. PFI has been the subject of numerous reviews by the English government (eg  NAO, 2011). In relation to PFI in general (ie  broader than health), the House of Commons Treasury Committee (2011) concluded that PFI projects are significantly more expensive over the whole life of the project than government borrowing and that there was no clear evidence of savings or benefits in other aspects of such projects to justify this expense. For example, the building costs were not less in PFI and design innovation and building quality were worse than those funded by other means. A separate House of Commons Committee of Public Accounts (2011) review which focused on health and housing PFIs could not determine if this option resulted in better or worse value than other procurement routes but recognised that it had led to the building of new hospitals that would not have been achieved without this funding being available. The NAO (2011) review of hospital PFI is more positive in that it reports that, in its view, most PFI hospital contracts are well managed and are achieving the value for money expected at the point the contracts were signed. Concerns have been raised, though, in relation to the role of PFI in generating financial deficits in NHS trusts, with those with highest PFI charges most likely to have poor financial results (NAO, 2014). Hellowell and Pollock (2010) consider that the pressure placed on NHS providers through the costs of PFI had negatively impacted on their capacity and led to reductions in service. As outlined earlier, ‘marketisation’ and the competition that it seeks to promote does not per se increase privatisation as this could be undertaken between public

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sector organisations. It has though been connected with increased privatisation in relation to some aspects of the English NHS. This includes competition for a market, such as tenders for the delivery of community health or out-of-hours primary care services in a locality and competition in a market such as patient choice and AQP. The evidence available to date suggests that when competition (such as within the internal NHS market of the English NHS in the 1990s) is based on price, this has a negative impact on less measurable aspects of quality such as mortality rates but a positive impact on more measurable ones such as waiting times (Propper, 2010). If, however, the competition is based on quality (with price being fixed by governments), then competition can improve quality depending on the strength of the local market, the previous arrangements upon which it is being introduced, and the nature and buyer strength of the purchaser (Spencelayh, 2015). Cooper et  al (2012) suggest that competition between private and public health care provision can leave the latter with more complex and therefore costly needs. Research evidence and practice experience both highlight that introducing or further developing a market approach within health, or indeed other areas of public welfare is a complex and uncertain process (Gash and Roos, 2012) (Box 4.2).

Box 4.2: Public sector markets The Institute for Government held a series of public events to reflect on attempts in England to increase choice and competition in public services. Participants included current and previous ministers, academics, regulators, providers and others. The areas examined included employment services, social care, health and local government services (Gash and Roos, 2012). Key insights included:

• • • •

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Creating a new ‘market’ takes considerable time as providers have to develop the appropriate offers and the public sector has to understand how best to procure such services. A strong and positive narrative about what the nature of the problem that is being addressed and why the market is appropriate means to do so helps to reduce controversy and resistance. Even when services are outsourced to private companies governments still retain accountability and therefore need to retain or include levers through which they can have an influence over the market. Some services and/or a proportion of some services may be better retained inhouse due to their sensitivity or the potential need for government to be able to quickly and directly respond to a crisis.

Market welfare

Conclusion Market funding and provision is an integral part of the welfare state and one that continues to grow, despite the controversy and resistance aroused by privatisation in particular. The arguments both for and against an increased role for the private sector are based partly on evidence, but also on personal and political notions of how private and public (and indeed voluntary) sector organisations will respond to particular contexts and opportunities. The rise of hybridisation, in which organisations such as social enterprises consciously seek to adopt characteristics of multiple sectors, is challenging such traditional notions of organisational difference (Allen et al, 2011; Mullins et al, 2012; Hall et al, 2016). Wherever one stands on such debates, what cannot be contested is that increasing, or indeed decreasing, the role of private welfare is far from straightforward. It requires careful thought about the market dynamics that will be applied, the respective roles and influence of government, public, providers and funders, and the transactional costs that will be connected with overseeing competition and contractual agreements. Externalising services and attracting private funding may seem like a quick win to reduce day-to-day responsibility and prop up cash-starved services, but there is no doubt that there is a price to be paid. Understanding and managing such complexity requires a degree of stability and competence that has not often been found among public sector commissioners (Rees et al, 2016). That said, we cannot be complacent about the dangers of retaining the status quo, as publicly funded and/or delivered services are also often far from perfect. More collaborative arrangements, in which groups of providers, or providers and commissioners, take a shared responsibility for meeting the needs of identified populations may provide a helpful mechanism for obtaining the best from the private sector (Billings and De Weger, 2015). Returning to our case study, the English NHS highlights once again the intensity of feeling regarding private welfare as original plans to describe such arrangements as ‘accountable care organisations’ were suddenly dropped due to commentators suggesting that it implied a takeover by American private health care organisations. The term was replaced by the more generic term of ‘integrated care system’. It seems likely that the role of private welfare will continue to generate controversy, passion and division.

Summary

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Most countries have market elements to many aspects of their welfare systems. Market involvement can extend to funding and/or provision of welfare support. Government commonly looks to private business to improve efficiency and effectiveness. Privatisation is often opposed on pragmatic and political grounds.

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•

Evidence suggests that increasing market elements should not be simply categorised as good or bad but their impact will depend on local context and wider political and economic environment.

Questions for discussion

• • • •

Is privatisation better explored through the three-dimensional mixed economy of welfare lens of provision, finance and regulation or Burchardt’s ‘Wheels of Welfare’? Does it matter who provides services such as health care, so long as they are provided at no cost at the point of delivery to the user? As the ‘market’ is broadly allowed to allocate the essential good of food to the population, why shouldn’t the market allocate the essential service of health care? Is the NHS being privatised? Do particular types of privatisation matter more than others?

Further reading Dated, but still interesting, arguments on the private sector and privatisation in the welfare state can be seen in Le Grand and Robinson (1984), and in Mark Drakeford’s Privatisation and Social Policy (London: Longman, 2000). Recent contributions include Burchardt (2013) and Burchardt and Obolenskaya. A recent comparative text is Gingrich (2011).

Electronic resources The Institute of Economic Affairs (www.iea.org.uk) has broadly positive material favouring privatisation and private welfare, while the Centre for Labour and Social Studies (http://classonline.org.uk/) provides critical material. The King’s Fund (www.kingsfund.org.uk) and the Nuffield Trust (www.nuffieldtrust.org. uk) have research material and commentary on the role and impact of private sector involvement in the NHS.

References Allen, P. and Jones, L. (2011) ‘Diversity of health care providers’, in N. Mays, A. Dixon and L. Jones (eds) Understanding New Labour’s Market Reforms of the English NHS, London: King’s Fund. Allen, P., Bartlett, W., Pérotin, V., Zamora, B. and Turner, S. (2011) ‘New forms of provider in the English National Health Service’, Annals of Public and Cooperative Economics, vol 82, no 1, pp 77–95. Anderson, S. (2012) ‘Public, private, neither, both? Publicness theory and the analysis of healthcare organisations’, Social Science & Medicine, vol 74, pp 313–22.

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Arora, S., Charlesworth, A., Kelly, E. and Stoye, G. (2013) Public Payment and Private Provision, London: Nuffield Trust and IFS. Bartlett, W., Allen, P., Pérotin, V., Turner, S., Zamora, B., Matchaya, G. and Roberts, J. (2011) Provider Diversity in the NHS: Impact on Quality and Innovation, final report, London: NIHR Policy Research Programme. http://researchonline. lshtm.ac.uk/146751/1/107949.pdf. Bel, G. and Fageda, X. (2007) ‘Why do local governments privatise public services? A survey of empirical studies’, Local Government Studies, vol 33, no 4, pp 517–34. Besley, T. and Coate, S. (1991) ‘Public provision of private goods and the redistribution of income’,  American Economic Review, vol 81, no 4, pp 979–84. Bevan, G., Karanikolos, M., Exley, J., Nolte, E., Connolly, S. and Mays, N. (2014) The Four Health Systems of the United Kingdom: How Do They Compare? Summary Report, London: Nuffield Trust. Billings, J. and De Weger, E. (2015) ‘Contracting for integrated health and social care: a critical review of four models’, Journal of Integrated Care, vol 23, no 3, pp 153–75. Boyle, S. (2011) United Kingdom (England):  Health System Review. Health Systems in Transition, vol 13, no 1, pp 1–483. Bozeman, B. (1987) All Organizations Are Public. San Francisco, CA: Jossey-Bass Bozeman, B. (2007)  Public Values and Public Interest: Counterbalancing Economic Individualism. Washington, DC: Georgetown University Press. Browne, J., Jamieson, L., Lewsey, J., van der Meulen, J., Copley, L. and Black, N. (2008) ‘Case-mix and patients’ reports of outcome in Independent Sector Treatment Centres: comparison with NHS providers’,  BMC Health Services Research, vol 8, no 1, p 78. Buchanan, J.M. (1984) ‘Politics without romance: a sketch of positive public choice theory and its normative implications’, Theory of Public Choice II, vol 11, 22. Burchardt, T. (1997) Boundaries between Public and Private Welfare: A Typology and Map of Services, CASE paper 2, London: LSE. Burchardt, T. (2013) ‘Re-visiting the conceptual framework for public/private boundaries in welfare’, Social Policy in a Cold Climate Research Note 2, London: LSE. Burchardt, T. and Obolenskaya, P. (2016) ‘Public and private welfare’, in  R. Lupton, J. Hills, T. Burchardt, K. Stewart and P. Vizard (eds) Social Policy in a Cold Climate: Policies and Their Consequences Since the Crisis. Bristol: Policy Press. Burchardt, T. and Propper, C. (1999) ‘Does the UK have a private welfare class?’, Journal of Social Policy, vol 28, no 4, pp 643–65. Chard, J., Kuczawski, M., Black, N. and van der Meulen, J. (2011) ‘Outcomes of elective surgery undertaken in independent sector treatment centres and NHS providers in England: audit of patient outcomes in surgery’, British Medical Journal, vol 343, d6404.

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Cooper, Z., Gibbons, S., Jones, S. and McGuire, A. (2012) Does competition improve public hospitals’ efficiency?: evidence from a quasi-experiment in the English National Health Service, http://cep.lse.ac.uk/pubs/download/dp1125. pdf. Department for Education (2010) Children Looked After by Local Authorities in England – year ending 31 March 2010, London: Office for National Statistics. Dunleavy, P. (1986) ‘Explaining the privatization boom’, Public Administration, vol 64, pp 13–34. Edwards, N. and Lewis, R. (2008) ‘Who owns and operates healthcare providers and does it matter?’, Journal of the Royal Society of Medicine, vol 101, no 2, pp 54–8. Elkind, A. (1998) ‘Using metaphor to read the organisation of the NHS’, Social Science & Medicine, vol 47, no 11, pp 1715–27. Gash, T. and Roos, T. (2012) Choice and Competition: Learning from History. London: Institute for Government, https://www.instituteforgovernment.org. uk/sites/default/files/publications/Choice%20and%20competion%20in%20 public%20services_0.pdf Gingrich, J.R. (2011) Making Markets in the Welfare State: The Politics of Varying Market Reforms. Cambridge: Cambridge University Press. Hall, K., Miller, R. and Millar, R. (2016) ‘Public, private or neither? Analysing the publicness of health care social enterprises’,  Public Management Review, vol 18, no 4, pp 539–57. Healthcare Commission (2007) Independent Sector Treatment Centres: A Review of the Quality of Care. London: Healthcare Commission. Hellowell, M. and Pollock, A.M. (2010) Do PPPs in social infrastructure enhance the public interest? Evidence from England’s National Health Service’, Australian Journal of Public Administration, vol 69, no s1, pp S23–S34. House of Commons Committee of Public Accounts (2011) PFI in Housing and Hospitals London: Stationery Office. House of Commons Treasury Committee (2011) Private Finance Initiative. London: The Stationery Office. Iacobucci G. (2014) A third of NHS contracts awarded since health act have gone to private sector, BMJ investigation shows, BMJ, 349: g7606. Janssen, R. and Van der Made, J. (1990) ‘Privatisation in health care: concepts, motives and policies’, Health Policy, vol 14, no 3, pp 191–202. Jones, R. (2015) ‘The marketisation and privatisation of children’s social work and child protection: integration or fragmentation?’, Journal of Integrated Care, vol 23, no 6, pp 364–75. King’s Fund (2014) The UK Private Health Market. London: King’s Fund. Klein, R. (1995) The New Politics of the NHS (3rd edn). Harlow: Longman. Krachler, N. and Greer, I. (2015) ‘When does marketisation lead to privatisation? Profit-making in English health services after the 2012 Health and Social Care Act’, Social Science & Medicine, vol 124, pp 215–23.

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LaingBuisson (2007) Health Cover UK Market Report 2007. London: LaingBuisson. LaingBuisson (2011) Laing’s Healthcare Market Review 2010/11. London: LaingBuisson. LaingBuisson (2013) Laing’s Healthcare Market Review 2012/13. London: LaingBuisson. Le Grand, J. and Robinson, R. (eds) (1984) Privatization and the Welfare State, London: Allen and Unwin. Leys, C. and Player, S. (2011) The Plot against the NHS, Pontypool: Merlin Press. Lister, J. (2008) The NHS after 60: For Patients or Profits? London: Middlesex University Press. Lister, J. (2013) Health Policy Reform, Faringdon: Libri. Maarse, H. (2006) ‘The privatization of health care in Europe: an eight-country analysis’, Journal of Health Politics, Policy and Law, vol 31, no 5, pp 981–1014. Mullins, D., Czischke, D. and van Bortel, G. (2012) ‘Exploring the meaning of hybridity and social enterprise in housing organisations’, Housing Studies, vol 27, no 4, pp 405–17. NAO (2011) The Performance and Management of Hospital PFI Contracts, London: National Audit Office. NAO (2014) The Financial Sustainability of NHS Bodies, London: National Audit Office. NHS Confederation (2015) NHS Partners Network: 15 Years of Concordat, London: NHS Confederation, https://www.nhsconfed.org/-/media/Confederation/ Files/public-access/15-Years-of-Concordat.pdf. Obolenskaya, P. and Burchardt, T. (2016) Public and private welfare activity in England. http://sticerd.lse.ac.uk/dps/case/cp/casepaper193.pdf Pesch, U. (2005)  The Predicaments of Publicness: An Inquiry into the Conceptual Ambiguity of Public Administration, Delft: Eburon Uitgeverij BV. Pfeffer, J. and Salancik, G.R. (2003)  The External Control of Organizations: A Resource Dependence Perspective, Stanford, CA: Stanford University Press. Pollock, A. (2005) NHS plc. The Privatisation of Our Health Care, London: Verso. Powell, M. (2008) ‘Welfare state reforms in the United Kingdom’, in M. SeeleibKaiser (ed) Welfare State Transformations, Basingstoke: Palgrave Macmillan, pp 17–32. Powell, M. and Miller, R. (2013) ‘Behind the jargon: privatising the British National Health Service: an irregular verb?’, Journal of Health Politics, Policy and Law, vol 38, no 5, pp 1051–9. Powell, M. and Miller, R. (2014) Framing Privatisation in the English National Health Service. Journal of Social Policy, vol 43, no 3, pp 575–594. Propper, C. (2010). The operation of choice and competition in healthcare. A review of the evidence, 2020, http://www.2020publicservicestrust.org/ downloads/18_The_Operation_of_Choice_and_Competition_in_Healthcare. pdf

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Propper, C., and Green, K. (2001) ‘A larger role for the private sector in financing UK health care: the arguments and the evidence’, Journal of Social Policy, vol 30, no 4, pp 685–704. Rees, J., Miller, R. and Buckingham, H. (2016) ‘Commission incomplete: exploring the new model for purchasing public services from the third sector’, Journal of Social Policy, vol 46, no 1, pp 175–94. Sellick, C. (2011) ‘Privatising foster care: the UK experience within an international context’, Social Policy & Administration, vol 45, no 7, pp 788–805. Spencelayh, E. (2015) Evolution, Revolution or Confusion? Competition and Privatisation in the NHS, London: The Health Foundation. Spicker, P. (2008) Social Policy: Themes and Approaches, Bristol: Policy Press. Starr, P. (1988) ‘The meaning of privatization’, Yale Law and Policy Review, vol 6, pp 6–41. Timmins, N. (2013) The Four UK Health Systems: Learning from Each Other, London: King’s Fund. Titmuss, R.M. (1963) ‘War and social policy’,  in Essays on ‘the Welfare State’ (2nd edn), London: Unwin University Books, pp 75–87. Turner, S., Allen, P., Bartlett, W. and Pérotin, V. (2011) ‘Innovation and the English National Health Service: a qualitative study of the independent sector treatment centre programme’, Social Science & Medicine, vol 73, no 4, pp 522–9. WHO Regional Office for Europe (2009) European Health for All database (HFA-DB) [online/offline database as updated August 2009]. Copenhagen: WHO Regional Office for Europe, http://www.euro.who.int/hfadb.

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5 Voluntary and community welfare Rob Macmillan and James Rees

Overview Voluntary organisations and community groups have long been involved providing welfare support and services in different fields, although over time their relationships with state, commercial and informal welfare have changed. It is unlikely that their role in the mixed economy of welfare will diminish in the near future. This chapter provides an outline of the nature and scope of voluntary and community welfare, a historical overview of its role, and examines the current context, challenges and prospects faced by voluntary organisations and community groups. Key concepts Voluntary and community sector; civil society; welfare pluralism; voluntary sector independence; horizontal and vertical fields and dimensions of policy; public service delivery

Introduction: definitions Conventionally we think of the welfare state in terms of the state: what it provides by way of welfare services, what it costs to provide them, and what they achieve. However, as the chapters in this book amply demonstrate, this is at best a narrow conception of welfare and of the services, policies and practices operating to promote it. This chapter looks beyond the state at the vast array of non-profit making organisations and services in the voluntary and community sector. It does not remove the state from the picture, however. The state is heavily involved and implicated in the way the voluntary and community sector has developed, the roles it plays and the way it operates. The relationship between the state and the voluntary and community sector remains an ongoing tension, where increasing concern over threats to the independence of the sector have been voiced in recent years.

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After some introductory discussion of context and definition, the chapter looks in turn at data on the voluntary and community sector’s scale, scope and activities; gives an overview of its historical development in welfare services from the late Victorian era; then looks more closely at the sector’s experience from the New Labour governments through to Brexit. The chapter concludes by considering the main challenges facing the sector and, finally, its future prospects. In the discussion we refer to the voluntary and community sector, but this presents readers unfamiliar with the field with two immediate problems: first, what do we mean by ‘voluntary and community’, and, second, what is implied by the idea of ‘sector’? The first problem is compounded by the existence of multiple alternative labels which are intended to cover more or less the same territory. References may be found in the academic and research literature and professional commentary, for example, to: the third sector, civil society, the social sector, the social economy, the charitable sector, the non-profit or not-for-profit sector and the voluntary sector, alongside our favoured term here, the voluntary and community sector.1 Yet while more or less the same sphere is being described, the choice of label often involves a subtle display of preferences. Labels have a political implication. For example, the New Labour governments of 1997–2010 preferred the term ‘third sector’ (after the state and the market), which would encompass all nongovernmental and value-driven organisations that ‘would define themselves as voluntary and community organisations, charities, social enterprises, mutuals or co-operatives’ (HM Treasury, 2005, p 7). This was explicitly intended to cover traditional charities, voluntary organisations and community groups, but also organisations which seek to trade, while still primarily reinvesting profits in the organisation, rather than distributing them to shareholders. However, in 2010, in the early days of the Conservative-led Coalition government, new Prime Minister David Cameron challenged the ‘third sector’ label: we will want to do everything we can to help what used to be called, rather condescendingly, the third sector but I believe is the first sector: the excellent charities, voluntary organisations and social enterprises that do so much for our country … so often these first sector organisations have the right answers to the social problems in our country. (Cameron, 2010) This ‘sector’, however described, tends to be regarded as comprising a wealth of organisations and groups: charities, voluntary organisations, community groups, social enterprises, civil society organisations, third sector organisations and so on. The variety of labels is amplified by the wide diversity of organisations and groups operating in the sector, of different sizes, structures and histories, operating at different and often overlapping geographical scales, and focusing

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on a wide variety of social issues in pursuit of different purposes (or ‘missions’). The sector encompasses, at one and the same time, very large international and national household-name charities, such as Oxfam, Barnardo’s and Macmillan Cancer Support, alongside very small and often informal groups operating at a local level, in villages or neighbourhoods, such as lunch clubs, youth clubs and Scout Groups. For these reasons Kendall and Knapp (1995) characterised efforts to define the sector as contending with a ‘loose and baggy monster’. Yet such variety also calls into question the idea of a single ‘sector’, at least insofar as it suggests organisations having common experiences and interests. Politicians, commentators and academics typically refer to a ‘sector’, but this should only be taken as a short-hand description, rather than any assumption of a single entity with a common or unified purpose. Attempts to construct a ‘strategic unity’ across the sector, out of such diversity, will always be partial, contested and fragile (Alcock, 2010). For the purposes of this chapter, we define ‘voluntary and community welfare’ as the activities of those primarily non-governmental and non-market organisations and groups which aim to address social welfare issues. They may be more or less formally structured, more or less aligned to government policy, or funded and regulated by government bodies, and they may pursue their missions in more or less business-like and enterprising ways. The activities in mind include providing social welfare services, advocating on behalf of particular marginalised and disadvantaged individuals and groups, and lobbying and campaigning to change policy and practice. There have been a number of attempts to conceptualise this field of activity beyond the state and the market. Economists have referred to the existence of either ‘market/state failure’ in some key areas of service, or of ‘contract failure’. Weisbrod (1988), for example, suggests that non-profit organisations may find a role in niche service areas where no market is possible (because service users are unable to pay, or providers are unable to exclude non-payers), and where governments are unlikely to be active (because they tend to focus resources on popular services supported by majorities of voters). Hansmann (1980) stresses the fact that non-profit organisations do not seek to maximise profits for distribution to private interests, and suggests that as a result vulnerable and marginalised groups and communities are more likely to trust non-profit organisations than private companies (or organised professional interests). This kind of theoretical work assumes something of a zero-sum relationship between sectors. In this view the state, market and voluntary sector would each tend to operate in separate spheres, depending on their comparative advantage (Billis and Glennerster, 1998). In response to this stream of argument, Salamon (1987) calls for acknowledgement that, in practice, the state and the voluntary sector, and latterly the market, are deeply intertwined rather than separate: there is a greater sense of complementary ‘partnership’ than is suggested by economic theory. In this view, the voluntary and

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community sector can act to mitigate potential state failure (such as its bureaucratic unresponsiveness) while the state acts to compensate for the suggested failings of the voluntary and community sector (that it is, for example, an insufficient response to need, or its paternalistic and amateur aspects). In one helpful attempt to encapsulate the complex relationships and fuzzy boundaries between different forms of welfare provision, Evers (1995) suggests that the voluntary sector operates in an intermediate area in a ‘welfare triangle’ bounded by the state, the market and informal household provision. This area consists of hybrid organisations which draw from and mix resources and rationales from the other sectors. Evers and Laville (2005) subsequently develop this conceptual framework with further distinctions between ‘public’/‘private’, ‘non-profit’/‘for-profit’, and formal/informal organisations. Following this, research attention has focused on measuring the scale of activity at the core of the intermediate area, and understanding the dynamics and relationships along the fuzzy boundary lines. We discuss these issues in the next two sections.

Scope So, how many voluntary organisations and community groups are there in the UK, and what do we know about them? Our understanding of the role of the sector in social welfare has been helped in the last two decades by an ongoing and developing programme of quantitative research to map the scale, scope and trajectories of voluntary organisations and community groups in the UK, organised by the National Council of Voluntary Organisations (NCVO). The NCVO publishes an annual ‘Almanac’ of data on civil society2 and the voluntary sector, with headline statistics on, among other things, total income, sources and types of income, expenditure and assets for ‘general charities’3 (where most information is available), based on a sample of financial accounts data submitted to the Charity Commission (Benard et al, 2018). This remains the most comprehensive picture of the voluntary and community sector in the UK, covering both social welfare activities and the whole range of other causes for which voluntary and community organisations exist. The NCVO reports that in 2015–164 there are 166,001 voluntary organisations in the UK. Beyond this relatively formal, narrow calculation, lie an estimated 390,000 other civil society organisations, such as sports clubs, cooperatives, friendly societies and housing associations, and further, a suggested 600,000 to 900,000 unincorporated organisations, sometimes referred to as groups which are ‘below the radar’ (McCabe and Phillimore, 2017). The latest survey data suggests that in 2016–17, 22% of people volunteer regularly (that is, at least once a month) through a group, club or organisation, estimated to amount to approximately 11.9 million people in total. Despite the

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name, though, the sector is not just made up of volunteers. The paid workforce in the sector is estimated (in June 2017) to be 880,556. The workforce is primarily female (63%), and around two thirds (64%) of paid staff are full time. In total, the annual income of the voluntary and community sector is estimated to be £47.8  billion in 2015–16. This figure has grown steadily during the New Labour years (from £31.7  billion in 2000–1, at 2015–16 prices), but has subsequently faltered during the Conservative-led Coalition government’s austerity programme. Most of the sector’s income is concentrated in the largest organisations. In fact, voluntary organisations with annual incomes of £1 million and above represent only 3% of all voluntary organisations, but account for 81% of the sector’s aggregate income. In contrast, the vast bulk of the sector consists of much smaller organisations: those with annual incomes of £100,000 or less represent 82% of all voluntary organisations but less than 5% of total sector income. There is some suggestion that income growth in the last couple of years has been confined to the largest organisations, while overall income for smaller and medium sized organisations has declined or stayed the same, and income volatility has been highest for the smallest organisations (Crees et al, 2016; Benard et al, 2018). Variable fortunes across different types of organisation further undermine attempts to talk of a single unified ‘sector’.

Box 5.1: The voluntary and community sector in children and young people’s services Voluntary organisations and community groups have long played a vital role in providing services for children, young people and families, and for advocating on their behalf. Some of the best-known children’s charities today have long histories of providing welfare support for children. For example, Family Action, with an income of £21.9 million in 2016–17, runs family support, mental health and early years child care services. It was originally the Charity Organisation Society, established in 1869 to coordinate poor law relief efforts in London more effectively. It pioneered early social work methods, such as family visiting and ‘casework’. Barnardo’s, now with an annual income of £312.8 million, was originally established in 1867 when Thomas Barnardo opened the ragged school for boys in the East end of London, and its first children’s home in 1870. Over time its work has changed, from primarily running children’s homes to supporting adoption and fostering, alongside work on domestic violence, child sexual exploitation and campaigning on child poverty. It was estimated that in 2013–14 there was a core of 36,965 charities in England with children and young people listed as primary beneficiaries, and a further 28,403 where they are beneficiaries among other groups (NCVO, 2016). The core is primarily made up of relatively small organisations, for example play groups, youth clubs, Scout Groups

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and Parent Teacher Associations. Total income for the core children and young people’s voluntary sector increased slightly to £6.1 billion in 2013–14, but as with the voluntary and community sector as a whole, this is skewed: the 94 largest organisations (with annual incomes of £10 million or more) account for around 45% of the sector’s total income.

Alongside the division according to size, voluntary organisations and community groups also vary considerably in the sources and types of income they access. Overall, just over half (52%) of the sector’s income is classified as ‘earned’, meaning that it comes from fees, charges and contract payments for goods and services. Income classified as ‘voluntary’, such as grants, donations and legacies, represents 41% of the sector’s income. In aggregate, funding mainly comes from individuals (47%) and government (32%). The latter has continued at a broadly similar proportion of the sector’s total income for many years, amounting to £15.3  billion in 2015–16 (although this only represents about 2% of total government expenditure). But over half of government funding (£8.6 billion) goes to the largest organisations (with incomes over £10 million per year). Only 15% of the aggregate income of the smallest organisations (those with annual incomes less than £100,000) comes from government, compared with 40% and 27%, respectively, for ‘major’ and ‘super major’ organisations – those with incomes, respectively, of £10 million to £100 million and £100 million or more. While these figures provide a picture of the voluntary and community sector as a whole, it is possible, albeit imprecisely, to identify key fields of social welfare in which the sector has a presence.5 In 2015–16, for example, it was estimated that voluntary and community organisations spent £10.2 billion in ‘social services’, £5.13 billion in health, £1.88 billion in education, £1.4 billion in housing (not including the work of housing associations) and £1.17 billion in employment and training. Activities by organisations classified as working in social services by far outstripped any other single category. Disaggregating the sector by primary activities suggests another important set of fault lines between organisations. Kendall (2003) suggests that it may be fruitful to think of the voluntary sector, in policy terms, along two dimensions: ‘horizontally’, where the emphasis is on policies and institutions designed to act on the sector as a whole; and ‘vertically’, where the focus is on the particular ‘sub-sector’ or ‘industry’ in which organisations operate (such as social services, health, advice services, housing and so on). The latter may be more important as a focus of attention and affiliation for organisations than membership of a broader general notion of a voluntary and community sector. Boxes 5.1 and 5.2 highlight the importance of the ‘sub-sector’ dimension, focusing on the sector in children and young people’s services, and on the sector in criminal justice.

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Box 5.2: The voluntary and community sector in criminal justice The voluntary and community sector in criminal justice is primarily made up of small and medium sized organisations: a recent study indicated that 26% of specialist criminal justice organisations (whose primary purpose involves work in criminal justice) have an annual income of less than £100,000, and overall 75% have an income of less than £1 million, but in combination these organisations account for just 12% of total income in 2014–15. Organisations in this sub-sector provide a range of services to offenders and their families, in prisons and in the community, including mentoring and befriending, providing advice and information, employment support, training and education, accommodation, and family support. Government funding, at 70%, makes up the vast majority of income for the voluntary sector in criminal justice. This has been stable since 2008–9, but the balance has shifted: away from local government (down 40% over seven years) to central government (up 68% over seven years), and away from grants to contracts. Larger organisations are more likely to receive government funding, in the form of contracts, compared with smaller organisations, who tend to be more reliant on grants from charitable trusts and foundations. A recent ‘state of the sector’ survey from umbrella body, Clinks, reported that voluntary and community organisations were seeing increasing, more complex and more immediate needs among service users, and that the funding environment was becoming more challenging and competitive, with more resources needing to be deployed in fundraising to support the work (Drinkwater, 2017; NCVO, 2017).

Historical development Having considered questions of naming, definition and scope, in this section we provide a brief historical overview of the changing role of voluntary and community organisations in welfare services. The aim here is to outline some necessary historical context to discussions about the role of voluntary and community welfare today.6 The account begins in the 19th  century because this proves to be an especially significant era for the role of voluntary welfare organisations and for the emergence of welfare state in the 20th century, although it is important to note that the origins of voluntary action in Britain go as far back as – and beyond – the Tudor period in the 1500s (Davis Smith, 1995, p 9). William Beveridge distinguished two main ‘impulses’ for voluntary action – philanthropy and mutual aid – in his 1948 report on Voluntary Action (Beveridge, 1948), a less well-known follow up to the more famous Beveridge Report of 1942. Broadly speaking, these two forms of class-based social provision came to prominence amid the expanding population and social upheaval associated

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with urbanisation and industrialisation in the 19th century, although, as noted, much earlier roots are traceable. On the one hand the long-standing tradition of (primarily middle-class) philanthropy, charitable associations and home visiting provided alms and basic services for the poor and needy. This was supported by a combination of evangelical Christian theology and classical Victorian liberalism, which promoted self-help and assumed a minimal role for the state. On the other hand, working-class mutual aid and friendly societies formed, particularly in newly industrialising areas of Lancashire and Yorkshire, to pool resources and provide basic insurance against significant risks such as sickness and funeral costs. Both movements can be seen as pioneers in the emergence of welfare services, and their legacies are still in evidence today. For example, the professional practices we associate now with social work and probation were both originally developed by charitable organisations in the late 19th century: by the Charity Organisation Society and the Church of England Temperance Society respectively (Pierson, 2011); while the development of trade unions, cooperatives, building societies and credit unions arose in the mutual aid movements of the 19th century. Both models, however, came under criticism. Philanthropy was condemned by the left for being a middle-class ‘Lady Bountiful’ project to reform and discipline the working classes, as well as for not being up to the task of meeting need. Meanwhile mutual aid was criticised for its partial coverage, inability to provide insurance for older members, and the exclusion of the poorest. Although significant reforms to welfare provision were introduced in the Edwardian era (notably the introduction of old age pensions and national insurance), more significant developments in both welfare services and the role of voluntary action were not to arise until the 1940s. The 1942 Beveridge Report, Social Insurance and Allied Services (HMSO, 1942), became a blueprint for the post-war establishment of a ‘cradle to grave’ comprehensive welfare state designed to vanquish the five giant evils of squalor, ignorance, want, disease and idleness (Timmins, 2017). Given left of centre criticism of traditional charity, and the new pre-eminence for the state in organising, funding and delivering welfare services, it is probable that many voluntary organisations and community groups now considered themselves redundant. This turned out not to be the case, however. Many organisations sought to work with state services in new ways, for example by making their expertise available for the new state-led services. While arguing for the state to ensure and provide a welfare minimum, Beveridge remained anxious to retain a role for voluntary social services. In a 1949 debate in the House of Lords, following publication of Voluntary Action (1948), he made the case for a continuing role for voluntary social services, arguing that there are many activities which should not be left for the state to undertake on its own: however much the State has done or may yet continue to do, Philanthropy will still be needed…. It will be needed to pioneer ahead

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of the State. The State has taken over many things which occupied the philanthropists of the early nineteenth century…. That means merely that there is a perpetually moving frontier for philanthropic action. (Beveridge, 1949) Beveridge’s concerns went largely unheeded. In the practical development of post-war social policy, and in the newly emerging field of study of social policy, the focus was firmly on state welfare services, as part of what became known as the social democratic welfare state. But this apparent consensus was to fracture in the mid to late 1960s, as disquiet about the role, reach and impact of the state welfare ‘safety net’ began to be voiced. New organisations were established to take more of a critical campaigning role around aspects of welfare, for example against child poverty (Child Poverty Action Group, established in 1965) and homelessness (Shelter, established in 1966). Alongside the promotion of bottomup community development from the late 1960s, official recognition of the role of volunteers and voluntary effort in social services was provided by the report of the Aves Committee (1969), which recommended the establishment of a ‘Volunteer Centre’ to support the development of volunteering (Deakin, 1995). ‘Crisis’ talk intensified around the social democratic welfare state by the mid1970s. It was criticised for its rising costs, bureaucracy, paternalist operating models and lack of responsiveness to service user needs and demands. An influential stream of ‘welfare pluralist’ thinking emerged, seeking to challenge the idea of state-dominated welfare services (Gladstone, 1979; Hadley and Hatch, 1981). In its place it advocated a new and enhanced role for voluntary and community-led services, developed at a more responsive local, neighbourhood or ‘patch’ level. A report on the future of voluntary organisations recommended developing the voluntary and community sector in order to realise a welfare pluralist model (Wolfenden Committee, 1978), but by this time the political tide was turning. The election of Margaret Thatcher’s Conservative government in 1979 promised a concerted effort to ‘roll back’ the frontiers of the state. A more thoroughgoing attack on the very notion of a welfare state was mounted, but not from a welfare pluralist starting point. Under the influence of public choice thinking and the ‘New Public Management’ (Hood, 1991), Conservative politicians and policy makers sought to develop competitive market mechanisms and a quasi-market architecture of contracts, pricing, competitive tendering, managerial targets and business-like systems. Voluntary organisations were seen as putative non-state independent providers of services under a new ‘contract culture’, and in this sense conceptually indistinguishable from the private sector. They were seen as competitors to state services, alternative providers in a new set of public service markets, particularly in Community Care. A parallel ‘active citizenship’ strand of policy development emerged during John Major’s term as prime minister (1990–97), designed to empower individuals as consumers. The voluntary and

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community sector would enable citizens to take a more active and responsible role in social life.

The broad policy context: from New Labour to Brexit The New Labour government from 1997 brought a renewed emphasis on deepening the voluntary sector’s role in the mixed economy of welfare. This was highlighted at the political level by a discourse of partnership with the sector and in more concrete terms by the introduction of a Compact to improve relations with the sector, which in turn reflected earlier disquiet with the instrumental ‘contract culture’ that emerged from reforms enacted in the 1990s (Lewis, 2005). Memorably described by Kendall (2009) as a period of hyperactive mainstreaming, the period from 1997 saw a focus on involving the sector across a wide range policy domains, including neighbourhood regeneration, ‘civic renewal’ and community cohesion, and public service delivery. Rhetorical commitments were backed up by ‘capacity building’ investments in the form of Futurebuilders and Capacitybuilders (Alcock, 2016), led within central government by the newly established Office of the Third Sector. Capacity building was designed to improve the ability of the sector to engage in public service delivery through increased knowledge and professionalism. Nevertheless, critics argued that New Labour’s policy represented an effort to subordinate the sector to its own agenda, attempting to reshape it as a ‘governable terrain’ of pliant delivery agents (Kelly, 2007; Carmel and Harlock, 2008). Many were critical of the perceived increase in competitive pressures, and the threat to independence and ability to speak out against local and national government policies (Buckingham, 2009). The latter part of the New Labour period saw incremental evolution of mechanisms with which to ‘purchase’ services from the sector, particularly within the paradigm of increasingly commercially oriented public sector commissioning (Rees, 2014). Although in theory commissioning is a cyclical approach to the purchase of services from non-state providers, thereby involving consultation with the voluntary and community sector, research suggests the sector experienced it as a highly problematic market-based approach (Rees, 2014). Although this was continued by the Coalition government formed in 2010, the closing years of the New Labour period saw significant upheaval marked by the financial crisis and the onset of austerity politics, contributing to the sense of a wider ‘unsettlement’ in roles, relationships and funding within the sector (Macmillan et al, 2013). Nevertheless, the incoming Conservative-led Coalition attempted to frame its policy towards ‘civil society’ (its preferred term covering the sector) with a positive vision, namely the ‘Big Society’. Although mercilessly criticised as nebulous, contradictory and a diversion from deep public sector retrenchment, a more positive reading saw it as the opening up of space for social action and

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civil society organisations created by a programme of activity explicitly designed to rebalance the responsibilities – and expectations – of the state, private and civil society sectors. Specific programmes designed to support this included a Big Society Bank funded by dormant assets, a Community Organisers programme designed to stimulate social action, renewed support for philanthropic giving, and a National Citizen Service to encourage youth volunteering. Many within the sector also interpreted the Big Society idea as a more conventional form of government support for the voluntary sector’s role in the mixed economy of public service delivery. Indeed, this perception was encouraged by other aspects of early Coalition policy, notably the ‘Open Public Services’ agenda that sought to ‘modernise’ commissioning and ‘open up’ public services to a wider range of providers; albeit with an even more determined emphasis on a rigorous and commercial approach to commissioning, involving the transfer of risk and the specification of and reward for achieving outcomes, notably through payment by results and social impact bonds (HM Government, 2011). The Work Programme, for instance, was heralded as a major boost for the Big Society (see Box 5.3), and similar rhetoric of opportunities for the voluntary sector accompanied the Transforming Rehabilitation reforms to probation services (Macmillan, 2016b ; Taylor et al, 2016).

Box 5.3: Public services and ‘Prime’ contracting The introduction of ‘Prime’ contracting arrangements, particularly since 2010, has had a significant impact on the parts of the sector involved in public service delivery. The most high profile of these was the Work Programme, a welfare-to-work scheme introduced by the Coalition aimed at the majority of those on work-related benefits. The programme involved the adoption of a comprehensive supply chain contracting model with an intensification of ‘payment by results’ financing. Sold, rhetorically, as a ‘triumph for the Big Society’ involving many third sector organisations, the Work Programme involved the Department for Work and Pensions (DWP) commissioning large, mainly private sector, ‘Prime’ providers, who were responsible for delivery in each geographical area and in turn subcontracted work to other providers, establishing a web of supply chain relations between providers across the private, third and public sectors. Taken together these shifts created a much more commercially focused, more results-driven environment with greater resource constraints, which heightened fears that the third sector would be ‘squeezed out’. Indeed, voluntary sector involvement in the programme was widely regarded as disappointing, at all levels of the supply chain. Many organisations struggled with the low or unpredictable volume of referrals and financial pressures. Both the prevalence

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of ‘creaming and parking’, and the mandatory elements of the programme, conflicted with the values and mission of many voluntary organisations. The Work Programme was introduced by DWP minister Chris Grayling, who on moving to the Ministry of Justice in 2012 was determined to introduce a similar contracting model in reforms to the probation services. The resulting ‘rehabilitation revolution’ was supposed to have learnt lessons from the Work Programme, and was intended to widen the involvement voluntary sector in rehabilitating offenders in order to drive down reoffending and improve service quality. Recent research suggests that again results are deeply disappointing, with voluntary organisations struggling to survive in a resourceconstrained system that has proven to be highly fragmented and has left many feeling less central than prior to the reforms (Clinks, 2018).

The ideological foundations of the Big Society idea came under sustained criticism from many quarters. But ultimately, it was perhaps undone by the contradiction inherent in a vision of expansive social action being accompanied by the significant and very practical effects of the cuts being made to both social welfare and public services, and the curtailing of the effectiveness of local government. A short-term Transition Fund was designed to soften the blow of cuts but also to encourage voluntary sector organisations to become less reliant on public funding. More broadly, many of the previous policy and practical supports to the voluntary sector have been gradually withdrawn, and the Office for Civil Society has been downgraded. Coupled with a shift of capacity building to a more market-based and demand-led model (Macmillan, 2016a), this suggests that the era of hyperactive mainstreaming has come to an end. Thus, in many respects, the formation of a majority Conservative government in 2015 ushered in an even more complete ‘de-coupling’ of the state–sector relationship than that first envisaged by Macmillan (2013b) in his examination of the Big Society agenda. At the very least, subsequent events have suggested a very considerable dimming of the favourable policy spotlight previously afforded the sector. In ‘vertical’ policy fields such as employment services, the voluntary sector has continued to play a part, but evidence suggests that early concerns about the squeezing out of the sector have been partly borne out (Damm, 2014), and there have been notable winners and losers, while government ministers have displayed their indifference towards ‘uncompetitive’ organisations that cannot survive in this ‘commercial’ landscape. There have been occasional bursts of enthusiasm for the sector, but within central government the Office for Civil Society (OCS), and its minister, have played a diminished role in policy making. Indeed, following the 2017 election, the OCS was moved again into the Department for Digital, Culture, Media and Sport. The situation is perhaps best characterised as one in which specialised parts of the voluntary and community sector endure in public

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service niches, appreciated even by a relatively hostile government where such organisations can prove their delivery credentials. It is also important to note that, following the June 2016 referendum decision to leave the European Union, UK government policy making has been almost entirely directed to the challenges of negotiating Britain’s withdrawal. Thus, since at least early 2016, the voluntary sector has fallen even further down the policy agenda, while the upheavals flowing from ‘Brexit’ could have profound implications for the landscape in which the voluntary sector delivers in the mixed economy of welfare. We take these issues further by considering, in the next two sections, the major challenges, and likely future prospects that face the sector given these broad, and rather unpropitious circumstances.

Challenges Commentary on the voluntary sector since the late 2000s has been largely pessimistic, reflecting the scale of cuts to national and local government budgets (Milbourne and Cushman, 2015). At the same time, there have been concerns that smaller and less formal organisations would be squeezed out of the largescale contracted programmes, leading to a loss of a ‘distinctive’ voluntary sector input (Damm, 2014). Clearly the voluntary sector’s role in the mixed economy of welfare has to be set within the context of the trends on the broader trajectory of public spending in recent years, particularly public sector austerity. As noted, that trend in government funding for the voluntary sector, from 2000–1, was clearly upwards, peaking in 2009–10. Since then growth has stalled, and government funding has levelled off at just over £15 billion per year. Rather than the voluntary sector experiencing a ‘cliff edge’, it might be more appropriate to think of the changes since the financial crisis and public sector austerity as an unsettling of existing assumptions and expectations developed in the New Labour years (Macmillan et al, 2013). Although public funding, from the sector’s point of view, appears to come with more strings attached, the sector as a whole has largely maintained its place in the welfare mix. However, arguably just as important as the volume of funding and the position of the sector in the landscape of the welfare mix, is the tone and quality of key state–sector relationships. This has been particularly reflected in recent years in a public debate about threats to voluntary sector ‘independence’ or constraints in its ‘voice’ or campaigning role (Civil Exchange, 2016; Hemmings, 2017). Concerns about the autonomy and independence of voluntary organisations and community groups matter because they reflect normative beliefs within the sector about what the sector is for; but they also are rooted in more theoretical concerns with why the sector exists, notably what distinguishes it from the public or private realms (Macmillan, 2013a). Echoing earlier discussions of the ‘contract culture’, recent criticism has focused on the idea that government contracting and

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commissioning arrangements have reduced the scope for innovation, hampered valued ways of working, and stymied collaboration and cooperation – for instance in encouraging organisations to keep knowledge and ideas to themselves in order to win contracts (Buckingham, 2009; Milbourne and Cushman, 2015). More generally, competitive funding allocation is argued to encourage ‘mission drift’ and short-termism as well as risk aversion and a convergence of approaches (Egdell and Dutton, 2017). There is evidence that the design of recent programmes has become more conditional and precarious for provider organisations (see Box 5.3). Such programmes also often present stark dilemmas to organisations: between engagement with government and threatening the trust invested in them by beneficiaries. Towards the end of the Coalition period and subsequently there has been a hardening of attitudes towards the sector at the political level. The Big Society was seen by many as an opportunity for the sector, but as its appeal began to wane more atavistic messages began to emerge. The right-wing Institute for Economic Affairs attacked charities, which they saw as ‘sock puppets’: publicly funded charities that lobby government over supposedly trendy left-wing causes. Similarly, the then Minister for Civil Society Brooks Newmark told charities that they should ‘stick to their knitting’, that is, keep out of politics and get on with delivering services rather than campaigning. This groundswell appeared to have real effects, with the government introducing a Lobbying Act7 in 2014; while in 2016 the Cabinet Office introduced an anti-advocacy clause into government contracts which explicitly ‘banned [organisations] from using these taxpayer funds to lobby government and Parliament’ (Cabinet Office, 2016). Similarly, large national programmes such as the Work Programme were considered to contain ‘gagging clauses’ to prevent subcontracted providers from speaking out (Civil Exchange, 2016). Certainly it is worth noting that public funding is based on a quid pro quo: funders are entitled to expect a degree of influence – through monitoring, specification of outcomes, or measuring ‘impact’– in return for their funding. But much of this trend has been met with some resentment by the voluntary sector, which has come uneasily to accept a gradual cooling and a less trustful state–sector relationship. However it is worth noting that there are multiple ways in which voluntary and community organisations can influence and represent the interests of their users: through co-producing new and improved services, or developing innovative new approaches to solve or mitigate social issues; or they can advocate behind the scenes with multiple stakeholders; they can campaign publicly (for instance collating uniquely grounded messages from their own work, or by carrying out research); and they can take part in wider campaigning coalitions or social action. Nevertheless, even this more positive sector-centric vision has been stymied by a succession of recent charity-related ‘scandals’; for example, over-assertive marketing and fundraising techniques, the collapse of Kids Company in 2014,

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and most recently the sexual abuse allegations within Oxfam’s international and UK operations. These have cast a long shadow over the sector, inviting intense scrutiny of charity governance, legitimacy and the degree of trust invested in charities by the public. They have also led to intense soul searching within the sector and a sense that aspects of its culture and practices should be cleaned up. Furthermore, the collapse of the private outsourcing company Carillion in early 2018 has further shaken faith in the provision of services outside of the state, emboldening a more left-wing Labour Party to declare that its policy would reduce the role of the private sector. Arguably the nature of these shifts and pressures on the sector are nothing new, and it is likely to adapt accordingly. What perhaps is new is the combination of governmental ambivalence towards the sector, outright antipathy from some quarters, and a situation of deep uncertainty resulting from Brexit. The future of these trends is assessed in the final section of this chapter.

Future prospects It is worth noting that the role of the voluntary sector in the mixed economy of welfare has always attracted controversy from across the political spectrum, and particularly from those associated with the ‘traditional’ left and right. The Left has sometimes been wary of the sector’s role insofar as it is seen as a Trojan Horse for privatisation, softening up opposition to the abandonment of the vision of universal (state-led) public service; while for some within the sector the delivery role is perceived to undermine the ‘purity’ of independent social action (Rochester, 2013). Conversely, the right is wary of the dilution of free market principles and seeks to challenge special pleading for ‘good causes’, clientelism or the growth of a ‘charity industry’ (Whelan, 1999). But as this chapter makes clear, the history of the voluntary and community sector in the mixed economy of welfare shows such claims to be simplistic. A ‘third way’ interpretation posits that the sector could be something of a saviour of welfare, with it being well placed to pioneer and maintain associational and relational welfare, advance coproduction, and enhance personalisation and accountability (Pestoff et al, 2012). Meanwhile many voluntary sector commentators have been critical of both the embrace by the state of the voluntary sector within the mixed economy of welfare in the expansionary years of New Labour (Carmel and Harlock, 2008), as well as of the subsequent cuts and recasting of that role following the financial crisis, recession and the post-2010 austerity programme (Milbourne and Cushman, 2015). Again, as this chapter demonstrates, the aggregate picture of the sector’s experience as a whole should caution against deep pessimism. There is evidence of both stability and limited growth in particular sub-sectors, suggesting a certain degree of mutual dependence and indeed partnership underlying the mixed economy of welfare. Nor is it clear that, despite some high-profile casualties, those parts of the sector directly engaged in the mixed economy of welfare are

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irreconcilably damaged by involvement in the ways suggested by critics. Although these fears may come to be realised – and there are good reasons to remain cautious, including in the various ways that the changes to public services may have as much impact on service users and citizens – there insufficient empirical evidence to be confident about the future trajectory. Indeed, the most salient feature of the current juncture is uncertainty, following the upheavals of the vote to leave the European Union in June 2016 and the relatively inconclusive outcome of the snap general election of June 2017. Clearly the Conservative government under Theresa May, and arguably much of the machinery of central government, is preoccupied with one very big issue: Brexit. There seem to be no flagship programmes for public service reform. What remains of the domestic social policy agenda looks set to be dominated by the National Health Service (NHS), schools and possibly prisons, typically fields without a large voluntary and community sector presence. In contrast, although the Coalition government’s leitmotif was deficit reduction, it still managed to launch the Big Society narrative and some allied programmes, the Localism and Open Public Services agendas, the Work Programme and, later, the Transforming Rehabilitation reforms to probation services, all of which were considered to have implications for the sector’s role in the mixed economy of welfare. Many in the sector were suspicious of the intentions underlying these programmes, but recognised that, in each case, the sector was rhetorically welcomed with warm words about its potential contribution. Theresa May has talked up the idea of a ‘shared society’ (May, 2017), but this appears to have remained at the level of rhetoric, apart from some prioritisation of enhanced mental health provision, and the somewhat belated development of a civil society strategy (Department for Digital, Culture, Media and Sport , 2018). Overall, the current policy environment feels qualitatively different: cooler at best, hostile at worst. Where a role for the sector remains (in health and social care, probation and rehabilitation, employment and social integration), it looks set to be a constrained one, defined by the narrow and instrumental aims of the government’s domestic policy agenda. The government is now effectively saying to the voluntary and community sector: compete to deliver on our terms, within narrow parameters, don’t campaign (and embarrass us), and do it all for less. It is a far cry from the era of ‘partnership’: modern hegemonic Conservatism, at the national level at least, is essentially agnostic about the sector of ‘independent’ providers, or tends towards favouring particularly large providers, especially those in the private sector. The voluntary and community sector could very well find itself held at arm’s-length from the state, through an intermediary relationship with the private sector. There is some emerging evidence, however, of a voluntary and community sector forging a less state-oriented future; perhaps reinforcing government-led ‘decoupling’ of the state and the sector in an austerity and now Brexit-dominated policy landscape. For example, an independent inquiry is

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exploring ‘Civil Society Futures’ in England, and many grant-making bodies, such as the Big Lottery Fund, Lankelly Chase Foundation and Lloyds Bank Foundation for England and Wales are taking a more strategic approach in encouraging voluntary and community organisations to lead broader ‘system change’ efforts in the organisation and delivery of public services (see, for example, DavidsonKnight et al, 2017). Finally, therefore, it is clear that thinking about the voluntary and community sector’s role inescapably leads us to think about the very nature of contemporary public services. It leads us to ask deeper questions such as: what is now the essential nature of many public services, what is their purpose, do the ends justify the means, and what can we afford? Notes See Milbourne (2013, especially chapter 1), for further discussion. Data comes from the NCVO’s online data resource for the Almanac programme, https:// data.ncvo.org.uk/ 3 ‘General charities’ are those registered with the Charity Commission which are also: formal (institutionalised to some extent), independent (separate from the state), nonprofit distributing (not returning profits generated to owners or directors), self-governing, involve some meaningful degree of voluntary participation, and provide a public benefit. Some registered charities are thus excluded from the definition, such as religious organisations or places of worship, independent schools, government-controlled bodies and housing associations. 4 The last financial year for which data is available. 5 Based on the International Classification of Non-profit Organisations. 6 See Chapter Two, this volume, by John Stewart for a fuller historical discussion of the mixed economy of welfare. 7 Its full title is the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014. 1 2

Summary

• • •

The voluntary and community sector comprises a wide range of non-state and nonmarket organisations and groups, of different sizes, purposes and activities – this diversity almost defies efforts to define and measure the sector’s scale and scope. Voluntary organisations and community groups have long been involved in developing, organising and delivering welfare services in the mixed economy of welfare, including campaigning for change. The future for voluntary and community welfare is highly uncertain in the current austerity and Brexit-dominated policy landscape, but its role in the mixed economy of welfare will remain deeply contested.

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Questions for discussion

• • •

Is the voluntary and community sector a saviour of the welfare state, or a cover for retrenchment? Is the voluntary and community sector compromised by its relationship with the state? What role can and should the voluntary and community sector play in campaigning for social justice?

Further reading The best source of data on the voluntary and community sector is the annual UK Civil Society Almanac produced by the National Council of Voluntary Organisations (NCVO). The data is published online each spring: https://data.ncvo.org.uk/ Overviews of the voluntary and community sector in the UK from a range of perspectives, including the policy context for the sector, can be found in: Kendall (2003), Milbourne (2013), Rochester (2013), Rees and Mullins (2016), and Mohan and Breeze (2016).

Electronic resources https://www.thirdsector.co.uk/ – the main ‘sector press’ and news source for and about the UK voluntary sector. https://civilsocietyfutures.org/ – major review of the voluntary sector initiated in 2017 and led by influential commentator Julia Unwin. https://www.gov.uk/government/organisations/office-for-civil-society – the Office for Civil Society is responsible for voluntary sector policy within the UK government. https://www.birmingham.ac.uk/generic/tsrc/index.aspx – the formerly Economic and Social Research Council (ESRC)-funded academic research centre with many resources on the UK voluntary sector.

References Alcock, P. (2010) ‘A strategic unity: defining the third sector in the UK’, Voluntary Sector Review, vol 1, no 1, pp 5–24. Alcock, P. (2016) ‘From partnership to the Big Society: the third sector policy regime in the UK’, Nonprofit Policy Forum, vol 7, no 2, pp 95–116. Aves Committee (1969) The Voluntary Worker in the Social Services, London: Allen and Unwin. Benard, C., Davies, J., Dobbs, J., Hornung, L., Jochum, V., Lawson, M. and McGarvey, A. (2018) The UK Civil Society Almanac 2018, London: NCVO.

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Beveridge, W. (1948) Voluntary Action: A Report on Methods of Social Advance, London: Allen and Unwin. Beveridge, W. (1949) House of Lords Debate, Hansard, HL Deb, 22 June 1949, vol 163, cc75–136. Billis, D. and Glennerster, H. (1998) ‘Human services and the voluntary sector: towards a theory of comparative advantage’, Journal of Social Policy, vol 27, no 1, pp 79–98. Buckingham, H. (2009) ‘Competition and contracts in the voluntary sector: exploring the implications for homelessness service providers in Southampton’, Policy & Politics, vol 37, no 2, pp 235–54. Cabinet Office (2016) ‘Government announces new clause to be inserted into grant agreements’, Press release. https://www.gov.uk/government/news/ government-announces-new-clause-to-be-inserted-into-grant-agreements Cameron, D. (2010) Prime Minister’s Questions, 14  July, Hansard, House of Commons, vol 513, col 944. Carmel, E. and Harlock, J. (2008) ‘Instituting the “third sector” as a governable terrain: partnership, procurement and performance in the UK’, Policy & Politics, vol 36, no 2, pp 155–71. Civil Exchange (2016) Independence in Question: The Voluntary Sector in 2016, London: Civil Exchange/Baring Foundation. Clinks (2018) Under-represented, Under Pressure, Under-resourced: The Voluntary Sector in Transforming Rehabilitation, London: Clinks. Crees, J., Davies, N., Jochum, V. and Kane, D. (2016) Navigating Change: An Analysis of Financial Trends for Small and Medium-sized Charities, London: NCVO/ Lloyds Bank Foundation for England and Wales. Damm, C. (2014) ‘A mid-term review of third sector involvement in the Work Programme’, Voluntary Sector Review, vol 5 , no 1, pp 97–116. Davidson-Knight, A., Lowe, T., Brossard, M. and Wilson, J. (2017) A Whole New World: Funding and Commissioning in Complexity, London: Collaborate. Davis Smith, J. (1995) ‘The voluntary tradition: philanthropy and self-help in Britain 1500–1945’, in J. Davis Smith, C. Rochester and R. Hedley, R. (eds) An Introduction to the Voluntary Sector, London: Routledge, pp 9–39. Deakin, N. (1995) ‘The perils of partnership: the voluntary sector and the state, 1945–1992’, in J. Davis Smith, C. Rochester and R. Hedley (eds) An Introduction to the Voluntary Sector, London: Routledge, pp 40–65. Department for Digital, Culture, Media and Sport (2018) ‘Government launches call for evidence for Civil Society Strategy’, press release. https://www.gov.uk/ government/news/government-launches-call-for-evidence-for-civil-societystrategy Drinkwater, N. (2017) The State of the Sector: Key Trends for Voluntary Sector Organisations Working with Offenders and Their Families, London: Clinks.

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Macmillan, R. (2016b) ‘Talking up the voluntary sector in criminal justice: market making in rehabilitation’, in J. Rees and D. Mullins (eds) The Third Sector Delivering Public Services: Developments, Innovations and Challenges, Bristol: Policy Press, pp 237–60. Macmillan, R., Taylor, R., Arvidson, M., Soteri-Proctor, A. and Teasdale, S. (2013) The Third Sector in Unsettled Times: A Field Guide, TSRC Working Paper 109, Birmingham: Third Sector Research Centre. May, T. (2017) ‘The shared society: Prime Minister’s speech at the Charity Commission annual meeting’, 9  January. https://www.gov.uk/government/ speeches/the-shared-society-pr ime-ministers-speech-at-the-char itycommission-annual-meeting McCabe, A. and Phillimore, J. (eds) (2017) Community Groups in Context: Local Activities and Actions, Bristol: Policy Press. Milbourne, L. (2013) Voluntary Sector in Transition: Hard Times or New Opportunities, Bristol: Policy Press. Milbourne, L. and Cushman, M. (2015) ‘Complying, transforming or resisting in the new austerity? Realigning social welfare and independent action among English voluntary organisations’, Journal of Social Policy, vol 44, no 3, pp 463–85. Mohan, J. and Breeze, B. (2016) The Logic of Charity: Great Expectations in Hard Times, Basingstoke: Palgrave Macmillan. NCVO (2016) The Children and Young People’s Voluntary Sector in England, 2013– 14, London: NCVO. https://data.ncvo.org.uk/a/almanac16/the-children-andyoung-peoples-voluntary-sector-in-england-201314-2/ NCVO (2017) ‘UK Civil Society Almanac 2017: a changing funding landscape for charities involved in criminal justice’. https://data.ncvo.org.uk/a/almanac17/achanging-funding-landscape-for-charities-involved-in-criminal-justice/ Pestoff, V., Brandsen, T. and Verschuere, B. (eds) (2012) New Public Governance, the Third Sector and Co-Production, London: Routledge. Pierson, J. (2011) Understanding Social Work: History and Context, Maidenhead: Open University Press. Rees, J. (2014) ‘Public sector commissioning and the third sector: old wine in new bottles?’, Public Policy and Administration, vol 29, no 1, pp 45–63. Rochester, C. (2013) Rediscovering Voluntary Action: The Beat of a Different Drum, Basingstoke: Palgrave Macmillan. Salamon, L.M. (1987) ‘Of market failure, voluntary failure, and third-party government: toward a theory of government–nonprofit relations in the modern welfare state’, Nonprofit and Voluntary Sector Quarterly, vol 16, no 1–2, pp 29–49. Taylor, R., Rees, J. and Damm, C. (2016) ‘UK employment services: understanding provider strategies in a dynamic strategic action field’, Policy & Politics, vol 44, no 2, pp 253–67. Timmins, N. (2017) The Five Giants: A Biography of the Welfare State (revised and updated edn), London: Harper Collins.

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Weisbrod, B.A. (1988) The Nonprofit Economy, Cambridge, MA: Harvard University Press. Whelan, R. (1999) Involuntary Action: How Voluntary is the ‘Voluntary’ Sector?, London: Institute for Economic Affairs. Wolfenden Committee (1978) The Future for Voluntary Organisations: Report of the Wolfenden Committee, London: Croom Helm.

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6 Informal welfare Martin Powell

Overview The informal sector is an important but often overlooked part of the mixed economy of welfare, which is different in some ways from the other formal sectors. Informal care, largely in the form of the family and more particularly women, has traditionally provided the bulk of care for groups such as older people. While governments have produced a series of strategies and pieces of legislation on care and carers over the last twenty years or so, it has recently been estimated that unpaid care saves government approximately the equivalent cost of the National Health Service each year. Moreover, Britain still appears to rely on unpaid care more than many other nations. Finally, some commentators point to a crisis or ‘tipping point’ in care, pointing to a growing ‘care gap’ as the supply of unpaid care is outstripped by need associated with population ageing. Key concepts Informal sector; community care; carer legislation; Care Act 2014; informal welfare in comparative context

Introduction The informal sector is perhaps the most important but least visible component of the mixed economy of welfare (MEW). For example, Johnson (1987, p 65) stated that in the case of elderly people not living in institutions the informal system is almost certainly more important than both the statutory and voluntary sectors. More recent commentators confirm that the most important source of welfare for disabled and older people in the UK is informal care provided by family and friends (Pickard, 2016). Jenson (1997) suggested three key questions that needed to be placed at the heart of any care-centred typology and analysis of social policy: Who cares? Who pays? How is care provided? However, the informal sector may be rather different from the other three (formal) components (eg Qureshi and Walker, 1989; Finlayson,

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1990). This suggests that it is difficult to apply the three-dimensional analysis of provision, finance and regulation to informal care. Informal provision is usually regarded in terms of ‘provision’ in the sense of hours of care. There is limited ‘finance’ like the state paying for (say) private hospitals, as informal care is unpaid, although there are some policies in place such as providing carers with cash benefits or benefits in kind (Glendinning, 2016; discussed later in this chapter). However, it has been estimated that the contribution of carers such as family and friends is worth about £132 billion per year in the UK, roughly equivalent to the National Health Service (NHS) budget (Carers UK, 2017). Finally, there is limited ‘regulation’ of the ‘private sphere’ of caring. ‘Welfare triangles’ (state, market, families) or welfare (or care) diamonds (adding the voluntary sector) constitute a popular form of analysis of the actors involved (eg Razavi, 2007; see discussion later in this chapter). Their calibration is not fully clear, but they appear to be based on a single dimension, that of ‘input’ or ‘provision’. This one-dimensional analysis suggests that the standard analytical tools of the MEW are difficult to apply to the informal sector. Some other characteristics of informal welfare also appear to differentiate it in terms of the other components of the MEW. First, it tends to be hidden. It is extremely difficult to measure the extent and importance of such care because, by its very nature, much of it must go unrecorded (Johnson, 1987). Arksey and Glendinning (2007) stated that because informal welfare is rooted in close relationships within families and between friends, it is difficult to identify and quantify. Lyberaki and Tinios (2014) write that the ‘informal welfare state’ is effectively ‘statistically invisible’. Lewis (1995) claims that the family, or as it is termed in the late 20th century, ‘the informal sector’ is the least discussed element in the MEW. Second, informal care is associated with a clear gendered division of labour. Finch and Groves (1980, p 494) produced the ‘double equation’ that ‘in practice community care equals care by the family, and in practice care by the family equals care by women’. Land and Rose (1985, p 93) pointed to ‘compulsory altruism’: ‘altruistic practices are structured into women’s lives as they are structured out of men’s’. Rose (1981) re-read Titmuss’s ‘social division of welfare’ to highlight the ‘the sexual division of welfare’, stating that the need to reconceptualise welfare as a service provided primarily by the paid and unpaid labour of women remains. Morgan (2018) notes that during the post-war period, with the exception of some Nordic countries, the care-related risks associated with long-term care and informal care remained social risks largely unrecognised by governments, because they were socially constructed as the prerogative of the family to manage. There are problems over the origins and meaning of terms (eg Parker, 1990; Lewis, 1995; Means et al, 2008). According to Johnson (1987, p 64), what is normally implied by the informal sector is the provision of social and health care by relatives, friends and neighbours. However, most studies are narrower and focus on family care, with limited work on friends and neighbours, For example, Arksey

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and Glendinning (2007) focused on one particular type of informal welfare – the help, largely unpaid, provided by the close relatives and friends of sick or disabled children, adults and older people. Some use the term ‘informal care’. However, ‘care’ itself is a contested concept. For example, Rummery and Fine (2012, p  321) stated that, for a seemingly innocuous and positive word, ‘care’ is a source of critical tension in current social theory, policy and practice. Moreover, Wanless (2006) considered that ‘informal care’ is a misleading term for the magnitude of the task it describes and the dedication of the individuals who perform it, but is perhaps the least problematic regarding clarity. Glasby (2012, pp 165–6) claimed that the term unpaid ‘informal care’ seems ‘deeply insulting’ as it implies that this support is somehow less important than ‘proper’ or ‘formal’ care. There are similar problems over the terms community care or social care. Means et al (2008, pp 3–4) state that community care has long been a contested term used by different people in different ways at different points in time. Titmuss (1968) described it as the ‘ever-lasting cottage-garden trailer’, but claimed he had tried and failed to discover in any precise form the social origins of the term. Abrams (1977, p 151) defined it as ‘the provision of help, support and protection to others by lay members of societies acting in everyday domestic and occupational settings’. Some make a key distinction between care in the community and care by the community (eg  Finch and Groves, 1980; Qureshi and Walker, 1989). According to Johnson (1987), community care is distinguished by its agents (lay people) and the setting in which it occurs (open). Means et al (2008) chart the changing usage over time, with a growing use in recent years of the term ‘social care’ rather than ‘community care’. But like Titmuss, they could not find the first official use of the term (2008, p 7). This chapter first briefly examines the history of informal care. It then looks at the number and characteristics of carers in Britain, before turning to focus on informal care after the Care Act 2014. It then moves to exploring informal welfare in comparative context, and ending with some concluding comments. It is largely a ‘mainstream account’ (see Orloff, 2009) that does not explore the gender, care or family policy literature in any detail.

History of informal care In his section on ‘Thinking historically about the family and welfare’, John Stewart (Chapter Two, this volume) notes that the family has been, willingly or otherwise, the principal provider of welfare throughout history (see also Qureshi and Walker, 1989; Lewis, 1995; Means et al, 2008). He warns that the family’s historic role in welfare provision should not be romanticised nor should it be seen as always able to fulfil what was expected of it. There has been a common, but misplaced, idea that in the past there was a

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‘golden age of kin-based welfare provision’ (see also Qureshi and Walker, 1989; Parker, 1990). Qureshi and Walker (1989, p 25) state that from the late 16th century to the 19th  century, the primacy of family responsibility was enshrined in the Poor Laws and the fear that state help, if too easy to obtain, would undermine family relationships, was ever present. Means et al (2008, p 23) point out that the Poor Law Act 1930 stressed the duty of the ‘father, grandfather, mother, grandmother, husband or child’ to relieve a person not able to work. Similar assumptions of ‘compulsory altruism’ were built into the marrow of the welfare state. According to Esping-Andersen (1999, p 52), Lord Beveridge and other builders of the post‑war welfare state explicitly assumed that mothers would be housewives, meaning that welfare states did not absorb the family caring burden. As already stated, there are problems over the origins and meanings of terms. However, the term of community care is sometimes linked with the 1957 Royal Commission on the Law Relating to Mental Illness and Mental Deficiency, which recommended a shift from hospital to community based care (Parker, 1990; Lewis, 1995). According to Johnson (1987, p 66), in the 1960s community care in Britain was generally interpreted to mean statutory personnel working in the community. Glendinning (2016) sums up the main features of work–life balance measures for working-age people with dependent relatives: carers’ leave (eg the right to request flexible working hours and time off in an emergency); carers’ cash benefits; and carers’ benefits in kind, the latter being the responsibility of local authorities, with the types, coverage and value of these benefits varying considerably between local authorities (see also Means et al, 2008; Glasby, 2012, 2016; Pickard, 2016). The following account focuses mainly on England, but there are some differences between the nations of the UK (Betts and Thompson, 2016). Arksey and Glendinning (2007) note that in 1976, a new cash benefit, the Invalid Care Allowance (now called Carers Allowance) was introduced for working-age men and single women who had no income from paid work because they were caring for a relative. Married women were not eligible, on the grounds that they would be at home in any case. They only became eligible for the benefit in 1986 following a test case in the European Court. Conservative government (1979–97) The meaning of community care changed with the Conservative Governments of 1979 to 1997 (Lewis, 1995; Corbett and Walker, 2013). This can be seen by looking at speeches on the importance of family care by Prime Minister Margaret Thatcher, for example in 1981 (Qureshi and Walker, 1989, p 1) and 1987 (Corbett and Walker, 2013).

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According to Corbett and Walker (2013), the practical policy implementation of Thatcher’s philosophy centred on proposals to support ‘informal networks’, increase the ‘caring capacity’ of the community and help carers to care. As the White Paper Growing Older (DHSS,1981) put it: ‘Care in the community must increasingly mean care by the community.’ The Griffiths Report on community care (Griffiths, 1988) informed the White Paper Caring for People (with its subtitle of Community Care in the Next Decade and Beyond; HMG, 1989), which recognised that ‘carers need help and support’ (1989, p 4). Parker (1990, p 6) writes that Caring for People was ‘the first official document in this area to take carers out of the taken-for-granted background to the provision of care in the community, and to recognise that they have needs of their own which must be assessed along the lines of the person they care for’. However, she adds that ‘how this recognition translates into practice remains to be seen’ (Parker, 1990, p 6). The following years saw a number of strategies and pieces of legislation which aimed to recognise carers from Conservative and Labour governments (eg Arksey and Glendinning, 2007; HMG, 2008; House of Commons Work and Pensions Committee, 2008; Means et al, 2008; Glasby, 2012). In 1986 the Disabled Persons (Services, Consultation and Representation Act) required social services to ‘have regard’ for carers’ ability to provide care. The Carers (Recognition of Services) Act 1995, with its origins as a private member’s bill, gave carers the right to request a separate assessment of their needs, but no right to services independent of those provided to the user. Labour government (1997–2010) The first national strategy for carers, Caring for Carers (HMG, 1999) contained a ‘Foreword’ by Prime Minister Tony Blair, who stated that carers are among the unsung heroes of British life’ (1999, p 3). The document stated that ‘We are giving new support to carers – because we value what they do. Carers care for those in need of care. We now need to care about carers. So the Government is bringing forward for the first time a new substantial policy package about carers’ (1999, p 5). It contained three main elements: information; support; and care for carers. The Carers and Disabled Children Act 2000 (another private member’s bill) gave the right to an assessment. The Carers (Equal Opportunities) Act 2004 (yet another private member’s bill) gives information on carers’ rights to an assessment. The Work and Equalities Act 2006 gave carers the right to request flexible working. In 2007 the government introduced its ‘New Deal for Carers’ in England and Wales. Glasby (2012, pp 161–2) comments that this legislation indicates that there is no single definition of ‘carer’ and carers have to rely on a number of different pieces of legislation to claim their rights; so much carer legislation began as

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private member’s bills; early legislation in particular focuses on the right to an assessment, without conferring any rights to follow-up services or support; entitlement has tended to depend on the carer providing or intending to provide a substantial amount of care on a regular basis; and increased responsibilities for social services and other services have rarely been matched with new funds to discharge new duties. In 2008, the government published its new ten-year vision for carers, Carers at the Heart of 21st-century Families and Communities (HMG, 2008). The document stated that twenty years ago there was little or no recognition of the contribution and distinct needs of carers, but there has been ‘significant progress’ since the 1999 prime minister’s carers’ strategy. Its vision was that, by 2018, carers would be universally recognised and valued as being fundamental to strong families and stable communities, with action to transform this from a vision to a reality over the next ten years. The House of Commons Work and Pensions Committee (2008) noted that the government carers strategy stated that: ‘Carers will be supported so that they are not forced into financial hardship by their caring role.’ However, the committee was ‘disappointed that benefits for carers were not directly addressed in the Carers Strategy and were only identified as a long-term priority from 2011 onwards.’ It produced 55 recommendations, suggesting that the government strategy was far from ideal. It produced a ‘job advertisement’ for the post of ‘carer’ (Box 6.1).

Box 6.1: ‘Job advertisement’ for the post of ‘carer’ On a visit to Australia, the committee was shown a ‘job advertisement’ for the post of ‘carer’ by the Chief Executive of Carers New South Wales, which had been written by a carer: Critical role for self-starter for hands-on role • Experience in first aid, counselling, occupational health and safety, pharmacology, cooking, cleaning, communication skills, stress management and ability to selfmedicate may be required. • The successful applicant must be able to forgo personal privacy and the choice to do what you want. • You will be required to lose your independent thinking ability and become invisible to the community at large. • The successful applicant must be able to endure the lack of joy, self-love and relationships indefinitely. Must also be able to function alone as friends leave due to your state of depression. • Although entitled to holidays, the successful applicant will not usually be able to have them due to lack of support or financial difficulties.

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• • • • •

The successful applicant must be able to function credibly with a smile while dying on the inside from lack of laughter due to losing your mind. Reassessment qualities are essential while you lose your sense of self, your reasons to get up in the morning, your dress sense, your hair and your sense of humour and identity. The successful applicant may be required and therefore willing to move home to accommodate the client and be happy developing bad nerves and anxiety 24/7. The successful applicant may be required to fight every day to remember five things to be grateful for while letting go of everything held dear. Must be able to let go and find comfort in a state of being stunned. The successful applicant must be able to cope with slowly going insane and back on a continual basis. The successful applicant must learn to live in silence to enjoy this truly challenging lifestyle.

Coalition government (2010–15) Glasby (2016, p 223) charts the Coalition government’s journey in social care ‘from initial neglect to the Care Act 2014’. The flagship project of the ‘Big Society’ made vague claims about ‘empowering communities’. However, while there were some concrete policies in the formal voluntary sector, it was unclear how the intermediate institutions of community groups and families could practically fund, organise, run and maintain services when substantial public funding has been cut (Glasby, 2012; Corbett and Walker, 2013; Morgan, 2018). Recognised, Valued and Supported: Next Steps for the Carers Strategy (HMG, 2010) set (yet another) ambitious agenda of change over the coming decade. This ‘refreshed’ strategy set four priority areas for future work: carer identification and involvement; fulfilment of educational and employment potential; personalising support; and supporting carers to remain mentally and physically well. However, Carers UK (2014) were deeply disappointed that these new priorities both excluded carers’ finances and failed to retain the 2008 commitment. Instead of committing to tackling carers’ financial hardship by 2018, the government will in fact leave carers over £1 billion worse off by 2018. The Carers’ Strategy: Second National Action Plan 2014–2016 (HMG, 2014) gave high priority to enabling those with caring responsibilities to fulfil their education and employment potential. The Care and Support Minister, Norman Lamb (2014), claimed that the Care Act 2014 ‘represents the most significant reform of care and support in more than 60 years, putting people and their carers in control of their care and support’. It involved a duty to promote ‘wellbeing’; a greater stress on prevention; a duty to provide information and advice; and offered important new rights for carers (Betts and Thompson, 2016; Glasby, 2016; Humphries et al, 2016). However, its ambition may be blunted by the

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wider environment of public austerity (Humphries et al, 2016; Morgan, 2018; Brimblecombe et al, 2018). A year on, the potential benefits of the legislation appear to be outweighed by pressures in social care and changes in the benefits system (Humphries et al, 2016). Conservative government (2015–) The Conservative Manifesto (2017) noted that ‘as the majority of care is informally provided, mainly by families, we will give workers a new statutory entitlement to carer’s leave, as enjoyed in other countries’. A major speech by Health Secretary Jeremy Hunt (2018) promised ‘better practical support for families and carers’ and an ‘action plan’ to be published ahead of a Green Paper on social care. The Carers Action Plan 2018–2020 (DHSC, 2018) outlines the crossgovernment programme of work to support carers in England over the next two years, building on the National Carers Strategy. It retains the strategic vision for recognising, valuing and supporting carers from 2008, which has been the vision of successive governments. It sets out five priorities emerging from the carers’ call for evidence (services and systems that work for carers; employment and financial wellbeing; supporting young carers; recognising and supporting carers in the wider community and society; and building research and evidence to improve outcomes for carers) and 64 actions. It promises that carers would be at the heart of the forthcoming social care Green Paper, which would address other areas of importance to carers, including improving the quality of care, increasing personalisation and ensuring a sustainable financial system for care. This brief history suggests that the degree and gendered nature of informal care has been recognised (Boxes 6.2 and 6.3), but the policy response beyond recognition and warm words has been more muted.

Box 6.2: Recognition of informal care

• • • • •

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The reality is that most care is provided by family, friends and neighbours. (HMG, 1989). Caring forms a vital part of the fabric and character of Britain (HMG, 1999). Caring for our relatives and friends when they are in need is a challenge that the vast majority of us will rise to at some point in our lives (HMG, 2008). The traditional source of care and support for those without full independence has historically been, and continues to be, the family (HMG, 2010). The Government recognises and values the contribution of carers. By caring for people in their own time and supporting other people’s independence, carers embody the spirit of the Big Society (HMG, 2010).

Informal welfare

• •

Most of us will have caring responsibilities at one or more stages in our lives (HMG, 2014). The enormous contribution of our country’s carers not only makes an invaluable difference to the people they support, it is an integral part of our health and social care system and it deserves to be better recognised (DHSC, 2018).

Box 6.3: Recognition of the gendered nature of informal care

•

•

•

Women are more likely to be carers than men – 58% of carers in Britain are women, compared with 42% who are men. Women are also more likely than men to carry the main responsibility for caring, where there is more than one person with some responsibility (HMG, 1999). Traditionally caring has been seen as women’s work – and 70% of it is still done by women but as our culture continues to change so too will this figure. Nine per cent of men now have caring responsibilities compared with 11% of women (HMG, 2008). More women than men in the age group 50–64 were providing care. But there has been a shift in the age group of 65 and above – more men were providing care than women in 2011 (HMG, 2014).

The number and characteristics of carers There are a number of different definitions of and sources on carers. EuroCarers’1 The Situation of Care suggested that the ‘official’ number of carers in the UK was 5.5 million (8.9% of the population) with the ‘unofficial’ number was 9.82 million (15.2%). According to the 2011 Census (ONS, 2013), there were approximately 5.8 million people providing unpaid care in England and Wales, representing just over one tenth (10.3%) of the population, compared to 10.0% in 2001. Of these, around 3.7 million provide 1–19 hours per week, 775,000 provide 20–49 hours and 1.4 million provide 50 hours or more unpaid care. Burchardt et al (2016) drew on Family Resource Survey figures, pointing to an increase from 4.8 million providing care at least weekly in 2009/10 to 5.6 million in 2012/13 before falling back to 5.1 million for 2013/14. They considered that there was some support for the argument that a reduction in formal services has produced an increase in informal care. Moreover, there appeared to be a long-term trend towards receipt of more intensive care: in 2002/3 29% of all individuals receiving unpaid care received continuous care, which had increased to 39% in 2013/14.

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The Family Resources Survey (DWP, 2018) stated that 8% (5.4 million) of people were informal carers in the UK in 2016/17. It noted that the percentage of adults providing informal care varied by age and gender. Men and women in the 55–64 age group were most likely to provide informal care. Women were more likely to provide informal care than men up to and including the 75–84 age group. Of those aged 85 or over, 12% of men and 5% of women provided informal care. Twenty-nine per cent of adult informal carers reported providing care for 35 hours or more per week. The number of hours of care provided was similar for men and women, although there were some gender differences for those providing up to 19 hours of care per week. A third of adult informal carers were in full-time employment. Forty-eight per cent of men providing informal care were in full-time employment compared to 26% of women. Women providing informal care were much more likely to be in part-time employment than men; 25% of women providing informal care worked part-time compared to 8% of men. Turning to those receiving care, 5% of people were in receipt of formal or informal care at home. More women than men received care in the 55–64 and older age groups. For those aged 85 or over, 40% of women and 24% of men were receiving care. Forty per cent of those receiving care needed continuous help. The latest annual State of Caring survey (Carers UK, 2017) of about 7,000 people suggested that the UK had about 6.5 million unpaid carers, with some 3 million, 1 in 9 of the workforce, combining caring for a loved one with paid work. One third (37%) of carers responding to the survey reported currently being in paid work. As many as a quarter (25%) of those providing care for over 50 hours a week reported being in paid work. The survey found that caring can have a significant impact on health, with those providing round-the-clock care more than twice as likely to be in bad health as non-carers. Some 61% said their physical health has worsened as a result of caring, while 70% said they have suffered mental ill health. Shockingly, many carers report not having a break for years. A quarter of people (25%) said they hadn’t had a day off from caring for more than five years. According to Mortimer and Green (2015) and Age UK (2017), the number of carers rose from 8.2  million in 2011 to over 9  million by 2015, with the proportion of people who provide unpaid care for family and friends rising from 16.6% of the population in 2011 to 17.8% in 2015. Many carers are older people, with around 1 in 5 people aged 65 and over providing care. There are now over 2 million carers aged over 65, including 417,000 aged 80 and over. Older carers are also among those most likely to care at high levels of intensity, with over 37% of carers aged 80+ providing 20 hours or more care a week, while 34% provide 35 hours or more. Yet nearly two thirds of older carers themselves have a health condition or disability. Defining, let alone measuring, the extent of unmet need is fraught with difficulty. However, it has been estimated that by 2011 there was already strong

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evidence of significant levels of unmet need among older people (Vlachantoni et al, 2011). Since then it appears that that unmet need has grown. More than 1 million people who have difficulties with the basic activities of daily living, such as getting out of bed, washing and dressing, now receive no formal or informal help at all, which represented an increase of 100,000 in one year alone (Humphries et al, 2016). AgeUK (2017) suggested that there were nearly 1.2 million people who did not receive the help they need with essential activities, which represented a 17.9% increase on the previous year and a 48% increase since 2010. Nearly 1 in 8 older people now lived with some level of unmet need with vital everyday tasks.

Informal care after the Care Act 2014 There seem to be few published summative evaluations (as it is too early to say much about an act which was introduced in 2015). However, there are a few formative or process views. For example, Carers UK (2017) noted that the Care Act should be making it easier for carers to get an assessment that looks at the impact of their caring role on all aspects of their life and what support they and their family need. A survey two years after introduction of the act found that just over one third of carers living in England (39%) said they had either been offered (23%) or asked for (16%) a carer’s assessment in the previous year. Similarly, Humphries et al (2016) noted that the Care Act 2014 introduced a new requirement on local authorities to consider how they can identify unmet needs. They report that monitoring arrangements are in place in 34% of local authorities and in development in a further 31%. The Carers Trust (2016) concluded that the Care Act had made ‘little or no difference’ to many carers. In short, the potentially progressive edge of the Care Act 2014 has been blunted by austerity (Humphries et al, 2016; Brimblecombe et al, 2018). More generally, a survey of carers (Carers UK, 2017) noted that almost three quarters of people said they feel government does not understand their contribution or value it at all. When asked about their expectations for the future, just over half of carers (53%) said they expect their quality of life to get worse in the next year. It noted that at just £62.70 a week (2017/18 rates), Carer’s Allowance is the lowest benefit of its kind, and carers often report struggling financially. As one carer put it, “How can we say carers’ contributions are valued when (if you qualify) we earn under £2 per hour?”

Informal welfare in comparative context Just as the degree of informal care has varied over time, it also varies between nations. This has been explored at various levels such as nations, regimes, and different types and models which show policy variation.

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Lyberaki and Tinios (2014) explored the ‘informal welfare state’, albeit with no reference to the MEW literature. They claimed that social protection in Greece is provided by an amalgam of formal and informal welfare systems – a hybrid system, with ‘strong familialism’ underpinning a weak safety net. Turning to regimes, Esping-Andersen (1990) did not include services or care in his original ‘Three Worlds’ typology (see also Hill, Chapter Nine in this volume). His central variables were decommodification, stratification and the public/private or welfare mix. However, Esping-Andersen (1999) admitted that the welfare mix ‘went missing’: ‘The lack of systematic attention to households is painfully evident in my own Three Worlds of Welfare Capitalism. It starts out by defining welfare regimes as the interaction of state, market, and family and subsequently pays hardly any notice to the latter’ (1999, p 47 (footnote)). He revisited welfare regimes through the analytical lens of the family and introduced the concept of de‑familialisation which paralleled the concept of de‑commodification. However, his definition of the term differed from that found in feminist research. For example, it contrasted with Lister’s (1994, p 37) definition of de-familialisation as ‘the degree to which individuals can uphold a socially acceptable standard of living independently of family relationships’. Orloff (2009) pointed out that the radical edge of their concept, linking it to relations of dominance and dependency in families, was blunted in Esping-Andersen’s usage. Moreover, the term has different origins, meanings, spellings and phases (eg Lohmann and Zagel, 2016), with a major division between care-focused defamilisation and economic defamilisation. Esping-Andersen (1999) largely missed issues of services and care, and concerns around ‘dedomestication’ (Kröger, 2011), and ‘care-focused defamilisation’ (Chau et al, 2016). Gough et al (2004) examine ‘informal security regimes’, which are seen as family-based informal protection networks reminiscent of many developing countries, where people cannot reasonably expect to meet their security needs via accessing services from the state or via participation in open labour markets, and so have to rely more heavily upon community and family relationships of various kinds. Razavi (2007) discusses the ‘welfare diamond’ or ‘care diamond’. Ochiai (2009) argued that the care diamonds for child care or elderly care in six Asian societies (Korea, China, Taiwan, Thailand, Singapore, and Japan) vary between nations, by type of care, and over time. Anttonen and Sipila (1996) analysed both child care and institutional care for the over-65s. They found not three, but four groups: those with abundant social care services (Denmark, Sweden and Finland), those with scarce social care services (Portugal, Greece, Spain, Ireland and Germany), those with abundant services for older people but scarce services for children (Netherlands, Norway and the UK) and those with abundant services for children but scarce services for older people (Belgium, France and Italy).

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Trifiletti (1999) presented a typology of welfare regimes formed by simply crossing the dimension of whether the state treats women as wives and mothers or as workers, with the classic Esping-Andersen criterion of decommodification. Four theoretical cells emerge: the classic breadwinner regime (eg Germany, Great Britain and Ireland); the Mediterranean regime (eg  Italy, Spain and Greece); the universalist social-democratic welfare states of northern Europe – Sweden, Denmark, Norway and Finland; and the residual liberal welfare states – the USA and, to a lesser extent, Australia, although post-Thatcher Britain has been moving in this direction. Bouget et al (2016) found two main categories for the work–life balance of carers of dependent persons underpinned by three main social policy arrangements: leave schemes, cash benefits and benefits in kind. The first category of ‘Developed and mature support schemes’ is composed of two subgroups: ‘Countries with relatively universal and comprehensive LTC [long-term care] support schemes for carers’ (broadly Nordic nations) and ‘Countries providing provisions mainly to the dependent person and specific support to the carer’. This 15 nation subgroup included the UK and Ireland, but their situation within subgroup was specific, with comprehensive schemes targeted specifically at the carer which are subject to strict eligibility conditions concerning both the carer and the dependant. The second broad category of ‘Underdeveloped support schemes for carers’ contained 15 nations and followed the so-called ‘familistic model’, with few or no specific provisions allowing for the buying in of care. Kröger, (2011) constructed an index of dedomestication of child care service provisions for 15 Organisation for Economic Co-operation and Development (OECD) welfare states. He found that Denmark offered the highest degree of dedomestication to parents of young children, followed by a group of Nordic and western European countries. In English-speaking ‘liberal regime’ nations, dedomestication remains more limited but it is lowest in the Central European countries of Hungary and Austria. Kraus et al (2011) developed two typologies of the organisation and financing of care for 21 European countries, and the use and financing of care of LTC systems in 14 European countries (due to data availability). However, they conclude that the two approaches yield the same result for 10 out of 14 countries for the attractiveness ordering. Denmark, the Netherlands and Sweden end up in the most preferred category in both typologies. Colombo et al (2011) reviewed policies across OECD countries to support family carers. The key policies adopted by countries fall into three main areas: helping carers combine care responsibilities with paid work; improving carers’ physical and mental wellbeing; and compensating and recognising carers. EuroCarers (nd) cited a 2011 Eurobarometer survey which identified the most useful things that governments could do to help informal carer (in order of preference). These measures include: providing financial remuneration for carers;

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facilitating flexible working hours; allowing leave from work for care reasons; giving pension credits for care time; providing a right to part-time work; providing training; and funding respite care during caregiver holidays. EuroCarers provide a table of policy measures by nation. These are: formal recognition of carers; financial remuneration (‘direct’ care allowance; ‘indirect’ attendance allowance); leave to care (for dependent relatives; for terminally ill relatives); pension credits for care time; flexible working arrangements; counselling; respite care; training; and self-help groups. Of the 11 policy measures, the UK had the highest number of ‘ticks’ with 10 (the exception was leave to care for terminally ill relatives). Of course, this simply indicates the existence of a policy, and not its content or success. Finally, the number and characteristics of carers vary by nation. Using figures from the early 1990s, Esping-Andersen (1999) noted that care by kin covers about 30% of need in Denmark, 50% in the USA and a full 83% in Britain. According to Colombo et  al (2011), across the OECD, one in five adults aged 50 years and above suffering from one limitation of daily activities receives informal care. More than 1 in 10 adults aged over 50 provide informal (usually unpaid) help with personal care to people with functional limitations. Much of this informal care is of low intensity: just over half of carers are involved in caring activities involving less than ten hours per week. This low intensity of caring is particularly prevalent in northern European countries and Switzerland. In contrast, in southern Europe, the Czech Republic and Poland, more than 30% are intensive carers (supplying more than 20 hours per week), rising to over 50% in Spain and over 60% in Korea. Close to two thirds of family carers are women, typically caring for close relatives such as their parents or their spouse, but more men become carers at older ages. Burchardt et al (2016) noted that even before the recent increase, the UK already depended heavily on unpaid care by international standards. According to OECD figures from about 2011, only around 8% or 9% of people aged 50 or over were providing unpaid care in Sweden and Denmark in the mid2000s, compared to 15% in the UK. Moreover, while only 13% or 15% were providing 20 hours or more per week in Sweden and Denmark respectively, the UK figure was 27%. Updated figures for 2015 (OECD, 2018) suggest that on average, across OECD countries for which data is available, around 13% of people aged 50 and over report providing informal care at least weekly. The UK is fourth highest in the OECD 18 in this respect, with 17%. The OECD noted that the lowest rates of daily care provision are found in Sweden, Switzerland, Denmark and the Netherlands – countries where the formal LTC sector is well developed and public coverage is comprehensive. The fact that fewer people provide daily care in countries with stronger formal LTC systems suggests that there is a trade-off between informal and formal care. Moreover, on average across OECD countries, 60% of those providing daily informal care are women.

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The UK comes sixth among the OECD 21 with about 64%. Sweden is the only country where more men than women report that they provide at least weekly informal care. However, it notes that the definition of informal carers differs between surveys. EuroCarers (nd) states that there are currently more than 100 million carers in Europe, a greatly underestimated figure given the (self-)recognition problem of carers. These carers provide 80% of care across the European Union (EU). A typical carer is a woman between 45 and 75 years of age. Estimates suggest that the economic value of unpaid informal care as a percentage of the overall cost of LTC in EU member states ranges from 50% to 90%. EuroCarers (nd) presents the number of carers in 16 EU nations, which have data. For the ‘official’ figures, the UK is the second highest (after the Netherlands), while for the ‘unofficial’ figures the UK is third highest after Spain and Italy. However, figures from Bouget (2016) for around 2010 suggest that the number of carers (people who regularly take care of relatives or friends aged 15 or over in need of care) in the UK is not consistently out of line with EU15 and EU28. For example, both the EU28 and EU15 percentages for women were around 60% (UK 59%) and for men around 41% (UK 41%).

Conclusion Colombo et al (2011) stated that family carers are the backbone of any LTC system, but support for family carers is often tokenistic, provided as recognition that they perform a socially useful and difficult task. However, they argue that supporting family carers effectively is a win-win-win solution. It is beneficial for carers, for care recipients and for public finances, because it involves far less public expenditure for a given amount of care than if it was provided in the formal sector. Despite much policy rhetoric in the UK since about 1999 (eg Pickard, 2016), earlier comments appear almost frozen in time. For example, Griffiths (1988, p iv) stated that ‘community care has been talked about for thirty years and in few areas can the gap between political rhetoric and policy on the one hand, or between policy and reality in this field on the other hand have been so great’. More recent commentators stress that this gap between rhetoric and reality on the ground remains (eg Arksey and Glendinning, 2007; Glasby, 2012, 2016; Pickard, 2016; Morgan, 2018). Glasby (2012, p 170) stated that those ‘rights’ set out in legislation are rarely real in the sense of being practical and effective, and resources are inadequate to allow rights to be protected. Put another way, there have been many ten-year visions and strategies, but like tomorrow, the end of those ten years appears never to come. Moreover, Griffiths (1988, p iii) stated that ‘many social services departments and voluntary groups grappling with the problems at local level certainly felt that the Israelites faced with the requirement to make bricks without straw had a comparatively routine and possible task’.

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Arguably, this has been compounded by austerity politics (eg Humphries et al, 2016; Brimblecombe et al, 2018). Giving a sense of ‘déjà vu all over again’, accounts from around the time of the Griffiths Report still have great resonance. For example, Parker (1990) pointed to the economic, physical, emotional and opportunity costs (such as loss of employment) of caring. Similarly, Qureshi and Walker (1989) stated that it is now well documented that for women acting as principal carers, caring involves considerable economic, physical, emotional and psychological costs. Rose (1981) pointed to the celebration of the informal economy, the ideological solution to a deteriorating formal economy and a systematically reduced welfare system. This reprivatisation of welfare seeks to transfer the resource strain from the collectivity to the family (which effectively means women). Recent accounts (eg Brimblecombe et al, 2018) point to difficulties around combining work and care which have consequences in terms of stress, and mental and physical health. The provision of unpaid care impacts on employment, including reduction of working hours, taking on less well-paid employment and leaving employment. In England, it has been estimated that approximately 315,000 unpaid carers of working age have left work because of caring at a cost to the government of at least £1.3 billion (Pickard et al, 2013). The Caring and Family Finances Inquiry: UK Report (Carers UK, 2014) stated that their evidence showed an increasingly divergent picture of families’ increasing contribution in unpaid care and diminishing support from government. In short, ‘families are giving more and getting less’. The report continued that demographic pressures already indicate that we are approaching a ‘tipping point in care’, where the number of older people needing support will begin to outstrip the number of working-age family members able to care for them. Further reductions in support for families who are often already struggling to cope will push many into crisis. The same term has been used by the Care Quality Commission (CQC, 2017), which reported in the previous year they had said that social care was approaching a ‘tipping point’. It stated that ‘the future of care for older people and the adult care system is one of the greatest unresolved public policy issues of our time’ (2017, p 4). This issue is unlikely to go away. Carers UK (2014) estimated that the number of carers will increase to 9 million by 2037. There is likely to be a growing ‘care gap’ as the supply of unpaid care is outstripped by need associated with population ageing. By 2032 there is a projected shortfall of 160,000 care givers in England (Pickard, 2016). Note EuroCarers receives support from The European Union through the programme for Employment and Social Innovation (EASI Programme, 2014-2017). 1

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Summary

• • • • • •

The informal sector is an important part of the mixed economy of welfare (MEW). For example, it has recently been estimated that unpaid care saves the British government approximately the equivalent cost of the NHS each year. The informal sector is an often overlooked part of the MEW, which is different in some ways from the other formal sectors. Informal care, largely in the form of the family and more particularly women, has traditionally provided the bulk of care for groups such as older people. British governments have produced a series of strategies and pieces of legislation on care and carers over the last twenty years or so. Britain still appears to rely on unpaid care more than many other nations. There is a growing ‘care gap’ as the supply of unpaid care is outstripped by need associated by population ageing.

Questions for discussion

• • •

In what ways do friends, families and neighbours provide informal care? Should governments or family members be responsible for caring? Would a higher Carer’s Allowance be a step forward for carers and/or a step backwards for female carers?

Further reading Carers UK provide an annual State of Caring survey, with the latest being Carers UK (2017). Alcock et al (2016) has chapters on informal care, family policy and feminist perspectives. The UK situation is well covered by Glendinning (2016), while similar ground is covered for the EU by Bouget et al (2016) and for the OECD by Colombo et al (2011).

Electronic resources Carers Trust is ‘a major new charity for, with and about carers’ (https://carers.org). Carers UK, ‘UK’s only national membership charity for carers’, has factsheets and guides (www. carersuk.org). NHS Choices provides ‘your guide to care and support’ (www.nhs.uk/conditions/social-careand-support). ‘Carer facts – why investing in carers matters’, is produced by NHS England (www.england.nhs. uk/commissioning/comm-carers/carer-facts/). EuroCarers, ‘the European association working for carers, aims to represent the interests of carers in Europe’, provides some information across nations (www.eurocarers.org/).

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References Abrams, P. (1977) ‘Community care’, Policy and Politics, vol 6, pp 125–51. Age UK (2017) Briefing: Health and Care of Older People in England 2017, London: Age UK. Alcock, P., Haux, T., May, M. and Wright, S. (eds) The Student’s Companion to Social Policy, 5th edn, Chichester: Wiley-Blackwell. Anttonen, A. and Sipila, J. (1996) ‘European social care services: is it possible to identify models?’, Journal of European Social Policy, vol 6, no 2, pp 87–100. Arksey, H. and Glendinning, C. (2007) ‘Informal welfare’ in M. Powell (ed) Understanding the Mixed Economy of Welfare, Bristol: Policy Press, pp 107–28. Betts, J. and Thompson, J. (2016) Carers: Legislation, Policy and Practice, Research and Information Service Briefing Paper NIAR 43-17, Belfast: Northern Ireland Assembly. Bouget, D., Spasova, S. and Vanhercke, B. (2016) Work–Life Balance Measures for Persons of Working Age with Dependent Relatives in Europe. A Study of National Policies, European Social Policy Network (ESPN), Brussels: European Commission. Brimblecombe, N., Pickard, L., King, D. and Knapp, M. (2018) ‘Barriers to receipt of social care services for working carers and the people they care for in times of austerity’, Journal of Social Policy, vol 47, no 2, pp 215–33. Burchardt, T., Obolenskaya, P. and Vizard, P. (2016) ‘Adult social care’, in R. Lupton et al (eds) Social Policy in a Cold Climate, Bristol: Policy Press, pp 187–214. Carers Trust (2016) Care Act for Carers: One Year – Lessons Learned, Next Steps. London: Carers Trust. Carers UK (2014) Caring and Family Finances Inquiry: UK Report. London: Carers UK. Carers UK (2017) State of Caring 2017, London: Carers UK. Colombo, F. et  al (2011), Health Wanted? Providing and Paying for Long-Tterm Care, Paris: OECD. Conservative Manifesto (2017), Forward Together, London: Conservative Party. Corbett, S. and Walker, A. (2013) ‘The Big Society: rediscovery of “the social” or rhetorical fig-leaf for neo-liberalism?’, Critical Social Policy, vol  33, no  3, pp 451–72. CQC (2017) The State of Health Care and Adult Social Care in England 2016/17, London: Care Quality Commission. DHSC (2018) Carers Action Plan 2018–2020: Supporting Carers Today, London: Department of Health and Social Care. DHSS (Department of Health and Social Security) (1981) Growing Older, Cmnd 8173, London: HMSO. DWP (2018) Family Resources Survey 2016/17, London: Department for Work and Pensions.

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Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism, Cambridge: Polity Press. Esping-Andersen, G. (1999) Social Foundations of Post-industrial Economies, Oxford: Oxford University Press. EuroCarers (nd) The Situation of Care, Brussels: EuroCarers. www.eurocarers.org/ Finch, J. and Groves, D. (1980) ‘Community care and the family: a case for equal opportunities’, Journal of Social Policy, vol 9, pp 487–511. Glasby, J. (2012) Understanding Health and Social Care, 2nd edn, Bristol: Policy Press. Glasby, J. (2016) ‘“It ain’t what you do; it’s the way that you do it”: adult social care under the Coalition’, in H. Bochel and M. Powell (eds) The Coalition Government and Social Policy, Bristol: Policy Press, pp 221–41. Glendinning, C. (2016) ESPN Thematic Report on Work–Life Balance Measures for Persons of Working Age with Dependent Relatives: UK, European Social Policy Network (ESPN), Brussels: European Commission. Gough, I., Wood, G., Barrientos, A., Bevan, P., Davis, P. and Room, G. (2004). Insecurity and Welfare Regimes in Asia, Africa and Latin America: Social Policy in Development Contexts, Cambridge: Cambridge University Press. Griffiths, Sir Roy (1988) Community Care: An Agenda for Action (the Griffiths Report), London: HMSO. HMG (1989) Caring for People: Community Care in the Next Decade and Beyond. Cm 849, London: HMSO. HMG (1999) Caring about Carers: A National Strategy for Carers, London: HM Government. HMG (2008) Carers at the Heart of 21st-century Families and Communities: A Caring System on Your Side, a Life of Your Own, London: Department of Health. HMG (2010) Recognised, Valued and Supported: Next Steps for the Carers Strategy, London: Department of Health. HMG (2014) Carers Strategy: Second National Action Plan 2014–2016, London: The Stationery Office. House of Commons Work and Pensions Committee (2008) Valuing and Supporting Carers, 4th Report of Session 2007–2008, Volume 1, London: The Stationery Office. Humphries, R., Thorlby, R., Holder, H., Hall, P. and Charles, A. (2016) Social Care for Older People: Home Truths, London: King’s Fund and Nuffield Trust. Hunt, J. (2018) ‘We need to do better on social care’, 20 March. https://www. gov.uk/government/speeches/we-need-to-do-better-on-social-care Jenson, J. (1997) ‘Who cares? Gender and welfare regimes’, Social Politics, vol 4, no 2, pp 182–7. Johnson, N. (1987) The Welfare State in Transition: The Theory and Practice of Welfare Pluralism, Brighton: Wheatsheaf Books.

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Kraus, M., Czypionka, T., Riedel, M., Mot, E. and Willemé, P. (2011) How European Nations Care for Their Elderly: A New Typology of Long-term Care Systems. Assessing Needs of Care in European Nations (ANCIEN) Policy Brief No 7. Kröger, T. (2011) ‘Defamilisation, dedomestication and care policy: comparing childcare service provisions of welfare states’, International Journal of Sociology and Social Policy, vol 31, no 7, pp 424–40. Lamb, N. (2014) ‘Care Bill becomes Care Act 2014’. www.gov.uk/government/ speeches/care-bill-becomes-care-act-2014 Land, H. and Rose, H. (1985) ‘Compulsory altruism for some or an altruistic society for all?’, in P. Bean, J. Ferris and D. Whynes (eds) In Defense of Welfare, London: Tavistock, pp. 74–99. Lewis, J. (1995) ‘Family provision of health and welfare in the mixed economy of care in the late nineteenth and twentieth centuries’, Social History of Medicine, vol 8, no 1, pp 1–16. Lister, R. (1994) ‘“She has other duties” – women, citizenship and social security’, in S. Baldwin and J. Falkingham (eds) Social Security and Social Change: New Challenges to the Beveridge Model, New York: Harvester Wheatsheaf. Lohmann, H. and Zagel, H. (2016) ‘Family policy in comparative perspective: the concepts and measurement of familization and defamilization’, Journal of European Social Policy, vol 26, no 1, pp 48–65. Lyberaki, A. and Tinios, P. (2014) ‘The informal welfare state and the family: invisible actors in the Greek drama’, Political Studies Review, vol 12, pp 193–208. Means, R., Richards, S. and Smith, R. (2008) Community Care, 4th  edn, Basingstoke: Palgrave Macmillan. Morgan, F. (2018) ‘The treatment of informal care-related risks as social risks: an analysis of the English care policy system’, Journal of Social Policy, vol 47, no 1, pp 179–96. Mortimer, J. and Green, M. (2015) Briefing: The Health and Care of Older People in England 2015, London: Age Concern. Ochiai, E. (2009) ‘Care diamonds and welfare regimes in East and South-East Asian societies: bridging family and welfare sociology’, International Journal of Japanese Sociology, vol 18, pp 60–78. OECD (2018) Health at a Glance 2017, Paris: Organisation for Economic Co‑operation and Development. ONS (2013) 2011 Census Analysis: Unpaid Care in England and Wales, 2011 and Comparison with 2001, London: Office for National Statistics. Orloff, A.S. (2009) ‘Gendering the comparative analysis of welfare states: an unfinished agenda’, Sociological Theory, vol 27, no 3, pp 317–43. Parker, G. (1990) With Due Care and Attention: A Review of Research on Informal Care, London: Family Policy Studies Centre. Pickard, L. (2016) ‘Informal welfare’, in P. Alcock et  al (eds) The Student’s Companion to Social Policy, 5th edn, Chichester: Wiley-Blackwell, pp 269–76.

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Pickard, L., Brimblecombe, N., King, D. and Knapp, M. (2013) Can we save the Government £1.3bn in benefits and lost taxes annually by supporting carers to stay in work? London: NIHR SSCR. Qureshi, H. and Walker, A. (1989) The Caring Relationship: Elderly People and Their Families, Basingstoke: Macmillan. Razavi, S. (2007) The Political and Social Economy of Care in a Development Context, Geneva: United Nations Research Institute for Social Development. Rose, H. (1981) ‘Rereading Titmuss: the sexual division of welfare’, Journal of Social Policy, vol 10, no 4, pp 477–502. Rummery, K. and Fine, M. (2012) ‘Care: a critical review of theory, policy and practice’, Social Policy & Administration, vol 46, no 3, pp 321–43. Trifiletti, R. (1999) ‘Southern European welfare regimes and the worsening position of women’, Journal of European Social Policy, vol 9, no 1, pp 49–64. Vlachantoni, A., Shaw, R., Willis, R., Evandrou, M., Falkingham, J. and Luff, R. (2011) ‘Measuring unmet need for social care amongst older people’, Population Trends, vol 145, no 1, pp 60–76. Wanless, D. (2006) Securing Good Care for Older People: Taking a Long-term View, London: King’s Fund.

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7 The benefits and inequalities of fiscal welfare Adrian Sinfield

Overview Through fiscal welfare the tax system is providing substantial support to many taxpayers even while it is raising revenue for public spending including the welfare state. The first role is generally little known, let alone examined in the critical way to which public expenditure is subject. Yet it results in many people, usually the better-off, having more resources than without it. The inequity of this state intervention remains generally invisible and undiscussed although it was clearly set out over sixty years ago by Richard Titmuss in his analysis of ‘the social division of welfare’. As an exception to this upward redistribution, tax credits have been used since 1999 to reduce poverty, especially child poverty, and to assist those on low pay. Replacing and extending major social security benefits, until Universal Credit replaces them, they deliver resources to those who previously gained nothing via the tax system. Changes to fiscal welfare for non-state pensions have also been considerable, although they have not removed its traditional impact, leading to wider inequalities while diminishing the role of the welfare state in the mixed economy of welfare. This chapter reviews the limited evidence available on fiscal welfare and focuses on these two major developments, tax credits and pensions tax relief. After a brief indication of the even more limited comparative discussion, it assesses the broader implications for the common wealth. Key concepts fiscal welfare; tax welfare; social division of welfare; tax expenditure; tax benefit; tax allowance; tax credit; upside-down, regressive benefit

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Box 7.1: Key terms Fiscal welfare – benefits or subsidies received through tax or related systems such as National Insurance. Tax expenditure – loss of revenue through tax or related systems as a result of favourable treatment of particular types of activities or groups of taxpayers. Tax relief – income designated not subject to tax. Tax benefit – resource obtained through some form of tax relief. Tax allowance – relief given against gross income, thus reducing taxable income. Tax credit – relief deducted from the tax bill, thus reducing tax liability. Can be refundable so that it is paid to the individual, if tax bill is nil or lower than the credit.

Introduction: the forms and scale of fiscal welfare The many ways that social policy is run through the tax system is still largely neglected in sharp contrast to the constant scrutiny and debate over value for money in the welfare state. Fiscal welfare has considerable costs and significant effects on who gets what, when and how. This was pointed out over sixty years ago by Richard Titmuss, the first professor of social administration (Titmuss, 1958, chapter 2; and lecture delivered on 1 December 1955, in Alcock et al, 2001, pp 52–70). In setting out ‘the social division of welfare’, Titmuss challenged the conventional wisdom that redistribution was confined to the welfare state, identifying two other forms of intervention which affect the distribution of welfare and resources – fiscal welfare and occupational welfare, the subject of Chapter Eight (Sinfield, 1978). By giving tax reliefs the government encourages particular activities and groups, and provides benefits. As a result, tax is forgone that would otherwise have been collected. However, ‘allowances and reliefs from income tax, though providing similar benefits and expressing a similar social purpose in the recognition of dependencies, are not … treated as social service expenditure’ (Titmuss, 1958, p 44). The term ‘tax expenditure’ (Surrey, 1973) was introduced to contrast with public expenditure and covers such losses of revenue, whether concerned with welfare or any other objective. The Organisation for Economic Co-operation and Development (OECD) has pioneered the term ‘tax breaks for social purposes’ (Adema et al, 2011, 2014) although these do not include forms of fiscal welfare that are not directly comparable to public programmes (Sinfield, 2012, p 22).

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Box 7.2: Tax allowances and tax credits How much benefit is derived from a tax allowance depends on the marginal rate of tax paid – that is, the highest rate to which the taxpayer’s income is subject. Most only pay the basic rate of 20%, and so gain £200 from a tax allowance of £1,000. Higher rate taxpayers gain £400 from the 40% rate and additional-rate payers £450 from the 45% rate. (Scottish income tax rates range from 19% to 46% in 2018–19.) By contrast, a tax credit is not deducted from pre-tax income but from the individual’s tax liability – the amount of tax they are due to pay. A tax credit of £200 benefits most people as much as a £1,000 tax allowance. The 15% currently paying higher and additional rates, however, receive no more than the rest, losing at least £200. Tax credits can also be made ‘refundable’. Those whose tax bill is less than £200 have the remaining amount paid to them so that they lose none of the credit’s value. To those on a low income paying no income tax the full credit is paid.

The most common form of tax relief is the tax allowance where the amount of the tax benefit depends upon the individual’s marginal rate of tax (see Box 7.2). It therefore works as an ‘upside-down’ benefit in that it delivers more to those with higher incomes whose needs in social policy terms are not at all likely to be as great as those with average or even smaller incomes (Surrey, 1973, p 37). This regressive effect is reverse targeting and means-enhancing, the exact opposite to the more familiar public policy targeting by means-testing those with the lowest incomes. Unlike other tax reliefs, tax credits are not regressive in this way and can be made progressive (Box 7.2). Fiscal welfare operates almost invisibly with little parliamentary or independent scrutiny. This is a very different world from that of the benefits and services of public or social welfare, which are the responsibility of specific government departments. For these benefits and services, who receives what and how much it all costs are issues routinely reported in the public accounts, discussed by parliament and its select committees, and subject to much official, political, media, research and public scrutiny. The costs of tax and related reliefs are not included in the public expenditure statistics, and it took considerable effort to start obtaining annual estimates of the main reliefs at the end of the 1970s. With the exception of tax credits, it is not regularly reported, if at all, how many people actually use most of the reliefs, let alone their gender or age. Regional data are available for some reliefs, but ethnicity or disability are not recorded. This hidden world is nicely caught in an American study: ‘subterranean politics … allow policies to pass that would not survive if subjected to the bright light of political scrutiny or the cold calculations of accurate budgeting’ (Hacker, 2002, pp 43–4). Once established, usually in Finance Acts following

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the annual budget, tax reliefs are administered through Her Majesty’s Revenue and Customs (HMRC, until 2005 the Inland Revenue). This is a very large, ‘non-ministerial Department with qualified, but not full, independence from Government’ (Treasury Committee, 2016, para 9). HMRC sees its role as ensuring that tax reliefs are properly administered and costs identified: they are very reluctant to be seen as involved in policy making. This is effectively ‘running spending programs through the tax system’ (McDaniel and Surrey, 1985, p 6). What higher control there is rests with the Chancellor of the Exchequer and the Treasury that has long ‘reserved its sole proprietorship of “budget” matters such as tax expenditures and national insurance contributions’ (Deakin and Parry, 2000, p 47). In recent years the adequacy of this oversight has been vigorously questioned. It has become evident that the world of tax reliefs has long been very much greater than has been officially reported and that its regulation has been at best patchy and often inadequate. In 2011 the Office for Tax Simplification (OTS), set up by the Coalition government, identified 1,042 reliefs (OTS, 2011). By 2015 the number had grown to 1,156, nearly three times as many as the 400 the HMRC has listed for many years (OTS, 2015). While many reliefs are technical, defining the scope of a tax and a very few related to international agreements, the OTS has classified half of their longer list as special cases for special interest groups, targeted to influence behaviour and/or establishing thresholds for exemptions: many constitute fiscal welfare. The OTS work led the National Audit Office (NAO) to review the management of tax reliefs (NAO, 2014a, 2014b). Despite reported opposition from the Chancellor of the Exchequer and the Treasury to its even investigating tax reliefs as they did not constitute public spending, it produced a very critical analysis which has been followed up in some vigorous hearings by the Public Accounts Committee (PAC) (eg PAC, 2015; Hodge, 2016, chapter 9). HMRC has been tackling some of the issues raised, setting out ‘best practice guidance’, commissioning some research and consulting on proposals in some long-neglected areas. However, the PAC re-emphasised its concerns: ‘We remain concerned that HMRC does not scrutinise effectively whether tax reliefs are being used as intended’, and ‘Despite our repeated recommendations, HMRC still does not make tax reliefs sufficiently visible to support parliamentary scrutiny and public debate about areas where the UK chooses not to collect tax’ (PAC, 2016, summary; second main conclusion, emphasis in original, see also paras 17–22). While resistance from the Treasury and HMRC continues, the world of tax reliefs is receiving more parliamentary and public attention. How much value the taxpayer gets from public welfare services is much discussed. In contrast, HMRC have only provided estimated costs for 200 reliefs, half of their list and barely one sixth of the OTS list. They maintain that these are the main ones. How much more welfare is provided through the tax system

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is therefore still uncertain, unlike public spending where virtually all items are identified with the cost and numbers receiving benefits. HMRC now provide five years of estimated costs in their annual list of tax reliefs, with explanatory footnotes more than doubled to sixty in the main table. However, there are no additional estimates and information, let alone discussion, remains very limited. The published costs of the major tax and related National Insurance Contribution (NIC) reliefs providing fiscal welfare are shown in Table 7.1. In 2017–18 the income tax reliefs made up over three quarters of the published income tax reliefs excluding the personal allowances (HMRC, 2018a). Totalling £29 billion, they were equivalent to some 17% of the income tax actually collected. Table 7.1: Major tax and other reliefs related to social policy, UK, 1995–6, 2005–6 and 2017–18 estimates in £ millions I Beyond public welfare Income tax Married couple’s/marriage allowance additional to personal allowance Age-related allowance Additional allowance for one-parent family Employer supported child care Exemption of first £30,000 paid on termination of employment Relief for non-state pensions Relief for mortgage interest National Insurance Contributions relief: Employer contribs to approved pensions Employer supported child care Capital Gains Tax Gains arising on disposal of only or main residence II Exemptions of welfare state benefits Child Benefit Long-term disability benefits III Tax credits Child Tax Credit Working Tax Credit

1995–6

2005–6

2017–18

2,700

ended

815

950 200 –

 2,300 ended –

– – 500

1,500

 1,000

1,000

7,200 + 2,000 2,800

13,700 ended

24,050 –

np –

 7,400 np

16,900 420

500

12,000

27,800

700 1,310

 1,110  1,060

1,165 1,360

– –

 3,300  1,100

– –

Sources: HMRC (2018a) and earlier versions on basis of revenue forgone. Note: Italic – forecast; np – not published.

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The relative amount of revenue forgone in fiscal welfare has fallen for two reasons. Income tax rates have come down – the top rate to 45%, down from a peak of 83% in 1979, even 98% with an additional 15% on unearned, investment income; and the basic rate to 20% from 35% (21% in Scotland). Some reliefs have also been reduced or removed. In particular, two major costly social policy ones, the married couple’s allowance and mortgage interest relief, were phased out. The second was eventually much criticised for its impact on the housing market and investments. Today the capital gains tax exemption for any gains from selling one’s home remains considerable at £27.8 billion but appears impregnable. Most of the costed tax reliefs in Table 7.1 support benefits over and above public welfare benefits. Less than 4% exempt some of the social benefits from tax – Child Benefit, war pensions and long-term disablement benefits. In the past the tax relief element to tax credits provided some 6% before they were removed from the list and included in public spending.

The move to tax credits The introduction of personal tax credits in 1999 generated much greater interest in the role of taxation in social policy, largely because they took over from and extended social security benefits central to the welfare state (Ridge, 2003). Virtually a combination of social and tax rights, they have been an exception to the generally invisible world of fiscal welfare by directing resources downwards to those on lower incomes. Support to children through the tax system has a much longer history. In 1909 child tax allowances were brought in for the poorest of the best-off, that is, those at the bottom of the then very small proportion of the population paying any income tax. In 1920 they were extended to all taxpayers, still a minority. By contrast the universal and tax-free welfare state family allowance only began in 1946, and then not for the first child. In comparison, the child tax allowance was always for all dependent children, its amount age-related and able to be paid for longer. It had an upside-down effect, with a cost to the exchequer greater than that of family allowance. After much campaigning building on Titmuss’s analysis, both tax and family allowances were merged in the late 1970s into the tax-free Child Benefit. The use of tax credits to help working families on low incomes was proposed by a task force established by the newly elected Labour government in 1997 to help ‘streamline and modernize’ the tax and benefit systems ‘so as to fulfil our objectives of promoting work incentives, reducing poverty and welfare dependency, and strengthening community and family life’ (HM Treasury, 1998, p 5, quoted in Millar, 2003, pp 128–9). In 1999 the refundable Working Families Tax Credit (WFTC), administered by the then Inland Revenue, replaced the Department of Social Security benefit, Family Credit, which had in 1988 replaced the Family

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Income Supplement of 1971. Together with tax credits for disabled and older workers, WFTC was aimed at supporting the government’s ‘work first’ strategy to reduce poverty. Tax credits had been considered by the Conservative government in the early 1970s, but were abandoned when Labour was re-elected in 1974. The impetus for WFTC owed much to the Earned Income Tax Credit in the United States (Howard, 1997, chapters 3 and 7). It was argued that ‘a tax credit will associate the payment in the recipient’s mind with the fact of working, a potentially valuable psychological tool … a payment through the tax system, associated with the recipient’s work, is likely to prove more acceptable to society at large’ (HM Treasury, 1998, p 5, quoted in Millar, 2003, p 129). This second concern – to win the support of, or at least avoid alienating, powerful groups in society opposed to welfare – was probably dominant. How to increase support to families in poverty was all the greater a political problem given that social security and its recipients of working age had been systematically stigmatised, and often demonised, by the previous Conservative governments. In 2003 these tax credits and some more social security benefits were replaced by the more extensive Working Tax Credits and Child Tax Credits (WTC and CTC), the second intended to reach more than four out of five children. With the exception of the universal Child Benefit, all other central government financial support for children ended. The 2004 increase in CTC the following year directed significantly greater benefit to children in low-income families – what the Labour government called ‘progressive universalism’. At this stage the experience of Australia and Canada was also influential.

Box 7.3: Child Tax Credit Paid weekly or monthly to the main carer, it provides £2,780 a year for each child in 2018–19, increased for disabled and severely disabled children, but phased out as income goes over £16,105. On 6 April 2017 the credit was limited to two children for new applicants, with very few exceptions, and the family element of £545 withheld if no children were born before that date.

In contrast to the replaced WFTC, CTC treated children the same whether they had a parent in work or not. The extra WTC increased total tax credit income where a parent was working on low wages. The credits helped reduce child poverty but were not enough to meet the government target of cutting child poverty by one half by 2010–11. The then family element brought greater support for the first child but was not enough to counter the higher risk of poverty among large families. Interaction with Housing Benefit and other means-tested measures reduced increases in net disposable income for many.

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Box 7.4: Working Tax Credit Payable with a basic element of £1,690 a year to low-income households with at least one parent in employment for 16 hours or more a week, and to workers in low-paid jobs without children, but they have to be 25 or over and working at least 30 hours a week, not the 16 hours for single parents or usually 24 for a couple (those with a disability or aged 50 or over and meeting specific conditions can qualify at 16 hours with supplements). It is phased out as income goes over £6,420, a much lower level than CTC.

The Treasury saw WTC as a major labour market measure working with the National Minimum Wage introduced in 1999 to deliver a more flexible labour market, while ensuring that workers are protected against falls in income (HM Treasury, 2005, chapter 4). How far these actually increased employment and/or got people into low-paid jobs and kept them there by subsidising poorpaying employers remains debated, given increasing low-paid and poor-quality jobs with high turnover and a family-unfriendly impact (Shildrick et al, 2012). CTC was presented as ‘seamless and transparent’, but there were considerable operational problems with very many awards readjusted as income or other factors changed during the tax year (King and Crewe, 2013, chapter 6). Those on the lowest incomes with least funds to repay were particularly vulnerable, reinforcing their insecurity. The need to make yearly reapplications separately from the annual tax return affected take-up which was lower for WTC, particularly for those without children. While income tax had switched to individual taxation in 1990, joint assessment of partners in effect returned with tax credits based on joint income just as means-tested benefits were. The peak of fiscal welfare support for low-income households with and without children was reached as I began writing the first edition of this text in 2005. Since then much of the support has been replaced or dismantled (Clegg, 2015). The real value of tax credits – along with other working-age benefits (except elements for disabled people) – has not been maintained and from 2016 all these were frozen completely for four years. The Coalition government replaced both tax credits, along with four benefits, by Universal Credit (UC), a single working-age benefit, as part of the Welfare Reform Act 2012, with the same objectives as tax credits initially. It was intended to simplify the very complex system, responding more quickly to changes in wages and replacing the annual adjustment of tax credits. However, policy changes since have already made it less generous than tax credits and increased its complexity (Hodge, 2016, chapter 14). The aim of ‘internet by default’ added to the problems of many applicants. Those already on tax credits may continue to receive them till 2022, if not later, given the many slippages in the introduction of UC.

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Meanwhile CTC (and UC) payments to third and subsequent children born after 6  April 2017 have been abolished except for very limited exceptions – including multiple births to a one-child family or births that are the result of rape. Two-child families with none born before that date have lost the family element, which amounts to a 10% cut. In addition the tax-free universality of Child Benefit ended in April 2014, with an income tax charge for individuals whose ‘taxable’ income rose above £50,000 until it was tapered out altogether at £60,000 (allowing a couple to earn under £50,000 each without loss). Just on decisions taken by 2016, tax credits and successor benefits will have been cut by over £10 billion by 2020–21 (Keen, 2016, Figure 4 and Table 4). The introduction of tax credits constituted an important innovation, whether regarded as part of the tax system or a ‘modernised’ form of means test delivered by HMRC (Adler, 2004). For the first time, fiscal welfare was redistributed downwards: only the best-off did not qualify for CTC, although WTC was confined to the poorest-paid. Tax credits also meant a transfer of resources, often significant, from men to women and lone parents, predominantly women, particularly benefited. However, WTC was ‘more likely to reduce the number of workless households than encourage potential second earners in couples’ (Bennett, 2005, p ix), and this may continue with UC. Many politicians on the right wanted to cut social security support to those out of work, accepting tax credits for those in work. They later added the argument of many on the left that tax credits to those in work were subsidising low-paying employers at the taxpayers’ expense. From 2016 the Conservative government increased the National Minimum Wage, renaming it the National Living Wage (neatly confusing it with the more generous and independently calculated Living Wage). They thus threw responsibility back on to employers and reduced spending on tax credits and UC. The eventual ending of personal tax credits means that most forms of fiscal welfare are regressive. They constitute the government’s contribution to ‘predistribution’ (Hacker, 2011, p 35), effectively allocated before the division of the budget among the spending departments. This underlines the significance of the failure to include them in examining the implications of government intervention for the distribution of resources throughout society.

Fiscal welfare for retirement By far the largest fiscal welfare, some £41 billion, supports retirement pensions. The net cost of income tax relief on non-state pensions for 2017–18 is officially forecast to be £24.05  billion (HMRC, 2018a, 2018b), after deducting some £13 billion tax levied on pensions in payment. A further subsidy of £16.9 billion in NIC exemptions is discussed later. This upside-down, regressive relief is more

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than six times the £6.5 billion spent on pension credit, the main means-tested assistance to the poorest older people. Generous tax reliefs to encourage savings for pensions were introduced in 1920. These, especially benefiting the highest paid including senior management, and the corporation tax efficiencies have been the main reasons for the growth of company pensions (Pensions Commission, 2004, p 120). The scale of pensions funds benefiting has become immense, some £2.1 trillion in 2010, equivalent to 147% of GDP (PPI, 2016, Table 26). Major changes to the tax reliefs came into effect in 2006. Until then the system had been little altered apart from some changes in the 1950s and 1980s (Titmuss, 1958, chapter 3; Hannah, 1986). No taxes were collected on contributions to pensions made by both employee and employer, although there was a generous ceiling on what the employee could put in tax free. The investment income arising was largely exempt from tax, although a particularly generous relief – effectively giving extra subsidy to the growth of funds for some years – was ended in 1997: some critics argued that this was a ‘raid’ on the funds (but see Emmerson and Tanner, 2000, p 67). Finally, the pension paid out was taxable after any tax-free lump sum payable on retirement, usually up to one and a half times annual earnings (Hughes and Sinfield, 2004, pp 173–5, 191). Reviews of the savings and investment structures stressing weaknesses in pension taxation led the Labour government in 2002 to consult on a ‘radical simplification’ of the tax treatment of pensions ‘to persuade people to save more in individual or company pensions’ (DWP, 2002; HM Treasury and Inland Revenue, 2002). This was presented as a central part of its long-term strategy to change the mixed economy of welfare in retirement from 60% public/40% private to 40% public/60% private. In April 2006 lifetime and annual allowances replaced a complex system of eight different regimes (Box 7.5). The limits of £1.5  million and £215,000 respectively were more generous than first proposed, after intensive lobbying. ‘In practical terms this will mean that most people can make pension contributions with tax relief, up to whatever they can afford’ (Inland Revenue, 2004, para 17).

Box 7.5: Lifetime and annual allowances A ‘single lifetime limit’ on the total amount of tax-free pension saving is complemented by a ‘light touch’ compliance regime with an ‘annual limit’ on the value of inflows to each person’s pension savings that can gain tax relief. The lifetime and annual allowances have been reduced to £1.03 million and £40,000. Any lump sum is tax free, generally up to 25% of the total, and other payments out are taxed.

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Increases to the new allowances in the first few years resulted in higher costs in lost revenue. In response, Coalition and Conservative governments brought the ceilings down. In 2018–19 the lifetime allowance limit is £1.03 million, reduced from a peak of £1.8 million in 2010, and the annual allowance of £40,000, down from £255,000, and to £10,000 for those with incomes above £210,000. However, unused allowances in previous years can be carried over with special protection for those already exceeding the reduced lifetime allowance ceiling. A 2015 consultation offered various alternatives to reduce the total cost, but after considerable lobbying the Conservative government shelved the consultation shortly before the European referendum. When public benefits are being cut under an ‘austerity’ regime, the case for limiting the substantial cost of these tax reliefs would appear to be made even stronger by their very uneven distribution, concentrated heavily among the better-off. However, this is rarely mentioned, almost entirely emerging only in response to occasional parliamentary questions. There are two main reasons for the inequality. First, the higher paid are more likely to have access to private pensions, and ones with more generous contributions from employers – and the annual Trades Union Congress’s (TUC) Pensionwatch demonstrates that employers and directors are generally even more generous to themselves (Curry, 2003; TUC, 2015). Second, the regressive working of tax reliefs means that those with higher marginal tax rates receive a greater rate of relief. Even with the increased restrictions to those at the top in recent years, some three fifths of the reliefs on pension contributions continue to be received by those paying above the standard rate of tax, or who would be without this relief (latest data in Hansard, 2014). The differences between the worlds of social and fiscal welfare are illustrated in two consultations, Labour in 2002 and Conservative in 2015. The 2002 consultation made much of the word ‘fair’ but did not discuss who would benefit or lose. This neglect was all the more remarkable in view of, first, the specific statement that the proposals should be ‘considered in a broad social and economic context’ (HM Treasury and Inland Revenue, 2002, para ii); second, the concern constantly expressed by the Treasury about ‘fiscal sustainability’ although it never mentioned the total cost, or cost of changes (beyond small administrative ones); and, third, the particular emphasis on ‘fairness in retirement’, with an explicit ministerial introduction: ‘This Government is committed to enabling all pensioners to share fairly in the rising prosperity of the nation’ (HM Treasury and Inland Revenue, 2002, first sentence of the Foreword). The problems of sharp gender inequalities in pensions were not even mentioned, despite the part tax reliefs played in reinforcing them, while an accompanying consultation by the Department for Work and Pensions (DWP) recognised the gender inequality but never mentioned tax reliefs (Ginn et al, 2001; DWP, 2002, last chapter).

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The Conservative consultation in 2015 reported that recent reductions to the maximum pensions tax allowances had ‘been necessary to ensure that … pensions tax relief is targeted at pension savers who need it most’ (HM Treasury, 2015, para 2.2). However, this objective was not mentioned again, and was not one of the four principles set out for the proposals (2015, para 3.4). The specific inclusion of more equal benefit could have encouraged a more open discussion of the distributional impact of different suggestions. On both occasions the bulk of the press campaigned vigorously to ‘save our pensions’, as if rumoured decisions would greatly deprive all and not just the better-off. As in the past they were supported by powerful lobby groups in the industry and in business generally (Lawson, 1992, p 369, on the opposition to any attempt to tax the lump sum). In 2015 no references to tackling the overall budget deficit appeared in any of the tax papers, let alone any need to share the pain of ‘austerity’ in public spending programmes. A hole of £4  billion was unexpectedly left in the 2016 budget because some proposed cuts to disability benefit were dropped, but scarcely anyone then suggested that pensions tax reliefs, or any others, might be reduced instead. Nevertheless, the already announced cuts to lifetime and annual allowance ceilings may keep costs from rising further. Most commentators presented these as a deprivation contrary to the need to encourage saving: it was not discussed whether someone with an income of £210,000 or more, over seven times the median wage, should need any subsidy to save, let alone be able to contribute £10,000 tax free despite the reduced relief. Yet since 2013 Child Benefit has been totally removed from anyone with an income less than a third of that to help reduce the budget deficit under ‘austerity’. Finally, it should be noted that the distributional analysis only includes some 80% of the total income tax reliefs, those on contributions but not those on investment income. In addition there is another £16.9  billion subsidy from employers not having to pay NICs on what they pay into employees’ pensions and their employees not having to pay their NICs on that extra amount (HMRC, 2018b). This is very rarely included in official discussions such as consultations. One further subsidy, both unmentioned and uncosted in HMRC statistics, is through ‘salary sacrifice’. Employees can give up the amount of salary they pay in occupational pensions contributions and their employers pay it in instead. Both employers and employees then pay fewer NICs on what has become a smaller salary. Although much more common in recent years, total numbers benefiting and the cost are not collected by HMRC, even though the government has now given more encouragement to this form of salary sacrifice while restricting many others. While the value of social welfare measures is often under review, I have not been able to locate any official assessment that justifies the merits of pensions tax reliefs in promoting private pensions saving, let alone at current levels of subsidies.

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The importance of pensions saving tends to be taken for granted, despite sceptical independent analyses. One comparative review concluded: ‘the balance of the evidence … from time-series, cross-section, and personal pension studies does not support the case for the private funding of pensions’ (Hughes, 2000; Barr and Diamond, 2008, p 95). In developing pensions tax reforms, governments have been more concerned to win over the pension industry and to keep the goodwill of employers who waver over providing pensions, than to tackle the broader social and economic question of creating ‘a level playing field’ in retirement to replace the existing bias towards those already better-off and more secure. They have encouraged a mixed economy of welfare with subsidies through taxes and even public policy National Insurance contributions to the pensions industry and employers as well as to employees. This is little recognised in the social policy literature and broader policy making, although Titmuss long ago argued in The Irresponsible Society, that insurance and pension interests had ‘increasingly become the arbiters of welfare and amenity’ (Titmuss in Alcock et al, eds, 2001, p 141; see also Titmuss, 1958, chapter 3).

Fiscal welfare and the welfare state This chapter has focused on two areas of fiscal welfare which can affect most people and cost most, but they are not the only ones, as Table 7.1 shows. Unlike pension tax reliefs, the age tax allowance was unusual in that it was phased out as taxable income rose, so that there was no benefit at all long before people started paying the higher rate of tax. While the phasing out of means-tested benefits is taken for granted, this was seen as an unfair extra tax. As the standard rate tax threshold has been lifted, to £11,850 from April 2018, the allowance has been phased out. Tax-free child care is being introduced to replace employer supported child care tax relief, although both may remain at least for a while (Seely, 2018). The new scheme is limited to two parents in work, each earning below £100,000. At present, income tax relief costs £500 million and reduced NICs almost as much again in salary sacrifice arrangements, without, apparently, any discussion of the use of National Insurance to support private provision (Table 7.1). Changes have also been made to the typically regressive tax exemption for the ‘first £30,000 of payments on termination of employment’, often used by management to get rid of senior staff with a taxpayer subsidy. Despite the limit being frozen at £30,000 since 1988, its revenue cost of £1 billion is still nearly four times as much as contribution-based Jobseeker’s Allowance received by very many more people. An OTS review revealed additional but unestimated costs as NICs for employers and employees were not levied at all on these payments, and not just on the first £30,000 (OTS, 2014). NAO criticisms led to an HMRC

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consultation and since April 2018 employers’ NICs have to be paid on termination payments over £30,000. Fiscal welfare is not an extended part of the welfare state. Tax credits replace or extend some social security benefits, but the many differences have been indicated and they are due to end. Tax and National Insurance reliefs are operated outside the control of spending departments and are made available, effectively ‘predistributed’ before the budget divisions (Hacker, 2011, p 35). Excluded from public expenditure accounts, they have not been subject to the routine monitoring of the activities of government departments by select committees and audit reviews. One claimed advantage for tax benefits has been that they require less administration than direct provision, making them more attractive to governments intent on reducing the role of the state. However, compared to the constant, detailed examinations of social security, there have been few studies apart from those on tax credits generated by its many operational problems. In the 1990s, the shock of Maxwell and other pension scandals helped generate action on many problems that had been allowed to lie dormant (Blair, 1995). It was only in 1994 that illegal activities in relation to pensions tax relief were subjected to any penalty, despite barely veiled calls by tax officials for sanctions for many years. The tolerance of ‘non-compliance’ in fiscal welfare continues to contrast sharply with the much greater pursuit of ‘fraud’ in the social security system (Cook, 1989). The promotion of welfare through tax reliefs becomes even more relevant to social policy analysis when strategies of ‘austerity’ reduce funds available to public agencies to provide services or support voluntary effort. Tax reliefs to encourage charitable giving help charities to play a greater role. While Gift Aid has become the main relief for donations, it has received only limited official scrutiny, all the more incomprehensible given generous changes to the relief in 2000. Thirteen years later, charities continued to benefit by no more in real terms than in 1999–2000, just over £1 billion. By contrast, the costs of tax reliefs benefiting donors rose from £130 million to just under £1 billion (NAO, 2013, para 14). So the total cost to society in terms of lost revenue almost doubled without any evident gain to charities. One might have expected prompt official investigation to identify the form and value of the extra donations and how they were meeting social need, but there was none. The NAO’s scathing understatement – ‘HMRC does not know if the changes have met the objective to encourage more charitable giving’ (NAO, 2013, Summary, para 12) – underlined the need for greater scrutiny comparable to the treatment of the welfare state. How much more, for example, are donors giving; how far do they influence charities’ work; and who are the major beneficiaries of the extra tax reliefs for donors? The criticism has provoked HMRC to commission research. The total effect of reliefs on the distribution of income is very hard to see. Official data reveal that in 2015–16 the average household paid in all taxes 33.4% of their gross income, with the top fifth paying 34.1% and the bottom, poorest,

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fifth paying 35% – in part at least, because they were less able to save and exploit the range of fiscal welfare (ONS, 2017, Table 22). One special analysis for 2004–05 showed that reliefs enabled the top 10% of income taxpayers to reduce their tax bill by nearly £12 billion, some 70% of the extra tax relief received over and above the basic personal allowance by all taxpayers. The top one tenth of the top 1% – some 47,000 people – were estimated to benefit by nearly £50,000 each. With a pre-tax income 31 times the average, they benefited from tax reliefs 86 times the average, enabling those at the very top to ‘race away’ even further at considerable cost to the rest of the community (my estimates from Brewer et al, 2008, Table 1). Both the NAO and the PAC have urged HMRC to take a tougher line with ‘high net worth individuals’: all but 2% use advisers who are no doubt expected to ensure that their clients benefit from the maximum tax-mitigating and redistributive, or predistributive, use of tax reliefs (NAO, 2016b; see also Sikka, 2012; PAC, 2017). Fiscal welfare can also feed corporate welfare (Farnsworth, 2012), the National Insurance subsidy to private pensions being a particular example.

Fiscal welfare in comparative perspective Fiscal welfare is common in most countries, but data available vary greatly. The OECD’s analysis of tax breaks for social purposes provides comparative evidence but excludes some fiscal welfare (Adema et al, 2011, 2014; see also on tax expenditures OECD, 2010; EC, 2014). The largest income tax welfare is usually for pensions and has increased in many countries (Hughes and Sinfield, 2004). Comparative analyses by a Bank of England economist identified ‘taxation’ as the first of ‘the main determinants of the scale of benefits and advantages of pension funds as means of saving’ (Davis, 1991, p 381, emphasis in the original). The management of tax-privileged pension funds has both an economic and a social impact: Minns argues that privatisation of pension funds is not about better pensions for more people but ‘about reducing the role of the state and expanding the role of stock markets, which is altogether a different proposition’ (Minns, 2001, pp xiv– xv, emphasis in the original; Blackburn, 2002). The second largest income tax reliefs are usually those promoting owner-occupation, as in the UK until their abolition some 25 years ago. However, in the United States income tax exemptions on employer contributions for medical insurance premiums and medical care come first in cost, indicating the importance of that occupational welfare there. Yet discussion of private health care and insurance, as opposed to state provision through Medicare and Medicaid, rarely seems to mention the considerable taxpayer subsidy involved. Generally, however, there is more evidence on fiscal welfare for the United States, and some excellent studies of how the mixed economy of welfare has been shaped by interest groups, particularly the pensions and insurance industries and

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employers. In his study subtitled The Battle over Public and Private Social Benefits in the United States, Hacker analyses how ‘tax privileges … have been gained and defended’ (Hacker, 2002, pp 43–4; see also McDaniel and Surrey, 1985; Howard, 2007; Mettler, 2011; Faricy, 2015; Prasad, 2011, 2016; for Denmark, see Greve, 1994; for Denmark and the UK, see Kvist and Sinfield, 1997; for Australia, see Stebbing and Spies-Butcher, 2010; for six European countries, see Avram, 2018; for France, see Morel et al, 2018). Analysis of the redistributive effect of fiscal welfare, almost invariably upwards, has been largely non-existent everywhere, but this may be changing (Baneman and Toder et  al, 2016, on United States). The OECD has recently become more specific on the inequalities created by tax expenditures: ‘Scaling back tax expenditures that are not well-targeted at redistributive objectives may help achieve both greater efficiency and a narrower distribution of disposable income. Tax bases should be broadened first by removing or reducing tax expenditures that disproportionately benefit high income groups’ (Brys et al, 2016, p 51). An international group of social scientists have set up an independent European Network on Fiscal Welfare to research the political economy of fiscal welfare across European Union countries (Morel et al, 2016 and website).­­

Conclusion Fiscal welfare in the United Kingdom is changing again. The use of tax credits to lift lower earnings and help families was a major development that is now being abandoned to the more limited UC. Tax credits have been an important exception to the general pattern reinforcing existing inequalities. Despite continuing limitations to pensions tax relief to the very highest paid, most elements of fiscal welfare continue to work to widen inequalities – and do so relatively invisibly, insulated from the democratic process. In fact, the total number of tax reliefs of all types is still not recognised by the Treasury and HMRC, who fail to provide full estimates of the costs. The persistence and growth of fiscal welfare underline the need to use a broader framework than ‘the welfare state’ for analysis of social policy, particularly in the growing but fitful discussion of poverty and inequality given the role of fiscal welfare in quietly reinforcing inequality. The impact – economic, political and social – of the largely hidden tax benefits in reinforcing inequality remains very largely neglected. The few studies focus on the barest economics of fiscal welfare – how much does it cost; to a very much lesser extent, who gets what; and only occasionally, who pays. The wider impact of ‘nurturing privilege’ (Titmuss, 1958, p 52) and ‘naturalising inequality’ (Platt, 2005, p 24) has rarely been discussed. In debates, policy choice is still presented in terms of universal benefits to all including ‘those who do not need them’ versus ‘more efficient, better targeted’ selective benefits to ‘those who really need them’, often with a filtering out of the

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‘undeserving poor’. In reality, increasingly means-tested conditionality for the worse-off who are seen as unwilling to compete in the market is accompanied by concealed public subsidies through the tax system that act as means-enhancing, helping others, and particularly the better-off, to purchase their own private protection more easily in the market. There is little evidence of problems with take-up for these tax-targeted measures. The closing-off of universalistic and solidaristic policies is supported by a reframing of the concept of fairness – no longer the collective sharing of risks so that social costs do not fall unfairly, but a fairness based on an individualistic calculus where you get out what you put in, and even that can be distorted by the tax subsidies to the higher paid. Nothing becomes ‘wasted’ in redistribution or prevention in this ‘individualisation of the social’ (Ferge, 1997). All the main issues of selectivity versus universality, residual versus institutional models, vertical versus horizontal redistribution of resources, increasing or decreasing inequality, will look different if we employ a broader definition of the welfare system which includes fiscal and occupational welfare. (Ascoli, 1987, p 134)

Summary

• • •

• •

•

Tax and National Insurance systems can and do increase the resources and welfare of specific groups and individuals in relation to others through reliefs and subsidies. Fiscal welfare acts to reinforce and widen inequalities while reducing revenue for public spending. Its subterranean workings conceal its scale and effects and reduce its political visibility – and so democratic accountability. This is now being recognised and pursued by the National Audit Office and parliamentary select committees, but its redistributive impact still receives least attention. Through tax credits fiscal welfare has helped to reduce poverty and the extent of low-paid work, although this is now being replaced by a more limited Universal Credit. Fiscal welfare deserves to be given much greater attention in analyses of the mixed economy of welfare because its use by governments to build up alternatives to state provision has helped to shape and develop the present mixed economy while reinforcing and enlarging inequalities. Recognition of the workings and costs of fiscal welfare raises important questions about current policy making. The effect of the greater pressure on HMRC and the Treasury to play a more active role in assessing and reporting the existence, use and costs of reliefs needs to be monitored.

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Questions for discussion

• • • •

Who are the main beneficiaries and losers from fiscal welfare? What are the main ways in which fiscal welfare has affected the development of the mixed economy of welfare? Why has fiscal welfare received so little attention? How is the increased scrutiny by the National Audit Office and select committees likely to affect the scale and effects of fiscal welfare?

Further reading Titmuss’s original discussion of fiscal/tax welfare (Titmuss, 1958, chapter 2; and in Alcock et al 2001, pp 57–70) still provides excellent analysis of its interaction across the social division of welfare in a broad context that brings out its significance. I would strongly recommend Hacker (2002) and Howard (1997) for their detailed historical studies of the politics and policy making of fiscal welfare in the United States as no comparable study is available here. Clegg (2015) provides a concise picture of the rise and fall of UK personal tax credits. The reports of the National Audit Office (NAO, 2014a, 2014b) throw light on the limited scrutiny and control of tax reliefs. This is further illustrated in the exchanges of the Public Accounts Committee with HMRC and Treasury ministers and officials (eg PAC, 2015 and evidence, para 141 on). NAO reports (eg 2013) on individual reliefs and on HMRC developments (eg NAO 2016a, Part Three) are worth monitoring. Comparative studies are starting to emerge but definitions can vary considerably. Adema et al (2014) on OECD countries and EC (2014) on the European Union both omit significant areas of fiscal welfare.

Electronic resources These are very limited although there is more now from HMRC, but details are often confined to short notes or buried in appendices. See HMRC, Tax Relief Statistics, KAI Data Policy and Co-ordination, https://www.gov.uk/government/collections/tax-relief-statistics. See also HMRC, Registered Pension Schemes Cost of Tax Relief, https://www.gov.uk/government/ statistics/registered-pension-schemes-cost-of-tax-relief. And see the European Network on Fiscal Welfare website, http://fiscalwelfare.eu/, which includes research agenda (Morel et al, 2016). It lists relevant material in ‘papers’ – only reachable at the time of writing by clicking on ‘papers and books’ across the top of the page.

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References Adema, W., Fron, P. and Ladaique, M. (2011) ‘Is the European welfare state really more expensive? Indicators on social spending, 1980–2012; and a Manual to the OECD Social Expenditure Database (SOCX)’, OECD Social, Employment and Migration Working Papers 124, Paris: Organisation for Economic Cooperation and Development. Adema W., Fron, P. and Ladaique, M. (2014) ‘How much do OECD countries spend on social protection and how redistributive are their tax/benefit systems?’, International Social Security Review, vol 67, no 1, pp 1–25. Adler, M. (2004) ‘Combining welfare-to-work measures with tax credits: a new hybrid approach to social security in the United Kingdom’, International Social Security Review, vol 57, no 2, pp 87–106. Alcock, P. et al (eds) (2001) Welfare and Wellbeing: Richard Titmuss’s Contribution to Social Policy, Bristol: Policy Press. Ascoli, U. (1987) ‘The Italian welfare state: between incrementalism and rationalism’, in R.R. Friedmann, N. Gilbert and M. Sherer (eds) Modern Welfare States: A Comparative View of Trends and Prospects, Brighton: Harvester Wheatsheaf. Avram, S. (2018) ‘Who benefits from the “hidden welfare state”? The distributional effects of personal income tax expenditure in six countries’, Journal of European Social Policy, vol 28, no 3, pp 271–93. Barr, N. and Diamond, P. (2008) Reforming Pensions: Principles and Policy Choices, Oxford: Oxford University Press. Bennett, F. (2005) Gender and Benefits, London: Equal Opportunities Commission. Blackburn, R. (2002) Banking on Death – or Investing in Life: The History and Future of Pensions, London: Verso. Blair, C. (1995) Pension Fund Regulation, Research Paper 95/10, London: House of Commons Library. Brewer, M., Sibieta, L. and Wren-Lewis, L. (2008) Racing Away? Income Inequality and the Evolution of High Incomes, IFS Briefing 76, London: Institute for Fiscal Studies. Brys, B. et al (2016) Tax Design for Inclusive Economic Growth, OECD Taxation Working Papers 26, Paris: Organisation for Economic Co-operation and Development. Clegg D. (2015) ‘The demise of tax credits’, Political Quarterly, vol  86, no  4, pp 493–9. Cook, D. (1989) Rich Law, Poor Law, Milton Keynes: Open University Press. Curry, C. (2003) The Under-pensioned, London: Pensions Policy Institute. Davis, E.B. (1991) ‘The Development of Pension Funds – An International Comparison’, Bank of England Quarterly Bulletin, vol 31, no 3, pp 380–90. Deakin, N. and Parry, R. (2000) The Treasury and Social Policy: The Contest for Control of Welfare Strategy, Basingstoke: Palgrave Macmillan.

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DWP (Department for Work and Pensions) (2002) Simplicity, Security and Choice, Cm 5677, London: The Stationery Office. EC (2014) Tax Expenditures in Direct Taxation in EU Member States, Occasional Papers 207, Brussels: European Commission. Emmerson, C. and Tanner, S. (2000) ‘A note on the tax treatment of private pensions and Individual Savings Accounts’, Fiscal Studies, vol 21, no 1, pp 65–74. Faricy, C.G. (2015) Welfare for the Wealthy Parties, Social Spending, and Inequality in the United States, Cambridge: Cambridge University Press. Farnsworth, K. (2012) Social versus Corporate Welfare: Competing Needs and Interests within the Welfare State, London: Palgrave. Ferge, Z. (1997) ‘The changed welfare paradigm: the individualisation of the social’, Social Policy & Administration, vol 31, no 1, pp 20–44. Ginn, J., Street, D. and Arber, S. (eds) (2001) Women, Work and Pensions: International Issues and Prospects, Buckingham: Open University Press. Greve, B. (1994) ‘The hidden welfare state: tax expenditure and social policy’, Scandinavian Journal of Social Welfare, vol 3, no 4, pp 203–11. Hacker, J.S. (2002) The Divided Welfare State: The Battle over Public and Private Social Benefits in the United States, Cambridge: Cambridge University Press. Hacker, J.S. (2011) ‘The institutional foundations of middle-class democracy’, Policy Network, pp  33–7. http://www.policy-network.net/pno_detail.aspx?I D=3998&title=The+institutional+foundations+of+middle-class+democracy Hannah, L. (1986) Inventing Retirement: The Development of Occupational Pensions in Britain, Cambridge: Cambridge University Press. Hansard (2014) Written Answer 215992 by David Gauke to PQ from Steve Doughty, 10 December. HM Treasury (1998) The Modernization of Britain’s Tax and Benefit System, Number 2: Work Incentives: A Report by Martin Taylor, London: HM Treasury. HM Treasury and Inland Revenue (2002) Simplifying the Taxation of Pensions: Increasing Choice and Flexibility for All, London: The Stationery Office. HM Treasury (2005) Departmental Report, Cm 6540, London: The Stationery Office, June. HM Treasury (2015) Strengthening the Incentive to Save: A Consultation on Pensions Tax Relief, Cm 9102, London: OGL, July. HMRC (2018a) Estimated Costs of Tax Reliefs, KAI Data Policy and Co-ordination, HMRC. https://www.gov.uk/government/collections/tax-relief-statistics HMRC (2018b) Registered Pension Schemes Cost of Tax Relief. https://www.gov. uk/government/statistics/registered-pension-schemes-cost-of-tax-relief Hodge, M. (2016) Called to Account, London: Little, Brown. Howard, C. (1997) The Hidden Welfare State: Tax Expenditures and Social Policy in the United States, Princeton, NJ: Princeton University Press. Howard, C. (2007) The Welfare State Nobody Knows: Debunking Myths about U.S. Social Policy, Princeton, NJ: Princeton University Press.

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Hughes, G. (2000) ‘Pension financing, the substitution effect and national savings’, in G. Hughes and J. Stewart (eds) Pensions in the European Union, Dordrecht: Kluwer, pp 45–61. Hughes, G. and Sinfield, A. (2004) ‘Financing pensions by stealth’, in G. Hughes and J. Stewart (eds) Reforming Pensions in Europe: Evolution of Pension Financing and Sources of Retirement Income, Cheltenham: Edward Elgar, pp 163–92. Inland Revenue (2004) Simplifying the Taxation of Pensions: Regulatory Impact Assessment, London: TSO. Keen, R. (2016) Welfare Savings 2010–11 to 2020–21, House of Commons Briefing Paper CBP 7667, 26 July. King, A. and Crewe, I. (2013) The Blunders of our Governments, London: Oneworld. Kvist, J. and Sinfield, A. (1997) ‘Comparing tax welfare states’, in M. May, E. Brunsdon and G. Craig (eds) Social Policy Review 9, London: SPA, pp 249–75. Lawson, N. (1992) The view from No. 11, London: Bantam. McDaniel, P.R. and Surrey, S.S. (eds) (1985) International Aspects of Tax Expenditures: A Comparative Study, Deventer: Kluwer. Mettler, S. (2011) The Submerged State: How Invisible Government Policies Undermine American Democracy, Chicago: University of Chicago Press. Millar, J. (2003) ‘From wage replacement to wage supplement: benefits and tax credits’, in J. Millar (ed) Understanding Social Security, Bristol: Policy Press. Minns, R. (2001) The Cold War on Welfare: Stock Markets versus Pensions, London: Verso. Morel, N., Touzet. C. and Zemmour M. (2016) Fiscal Welfare and Welfare State Reform: A Research Agenda, LIEPP Working Paper 45, www.fiscalwelfare.eu Morel, N., Touzet. C. and Zemmour M. (2018) ‘From the hidden welfare state to the hidden part of welfare state reform: analyzing the uses and effects of fiscal welfare in France’, Social Policy & Administration, available at https://onlinelibrary. wiley.com/doi/abs/10.1111/spol.12416 NAO (National Audit Office) (2013) HMRC: Gift Aid and Reliefs on Donations, HC 733, Session 2013–14, 21 November, London: The Stationery Office. NAO (2014a) Tax reliefs, HC 1256, Session 2013–14, 7  April, London: The Stationery Office. NAO (2014b) The Effective Management of Tax Reliefs, HC 785, Session 2014–15, 7 November, London: The Stationery Office. NAO (2016a) Report by the Comptroller and Auditor General, in HMRC, Annual Report and Accounts 2015–2016, London: HMRC, pp R1–90. NAO (2016b) HMRC’s Approach to Collecting Tax from High Net Worth Individuals, Session 2016–17, HC 790. OECD (2010) Tax Expenditures in OECD Countries, Paris: Organisation for Economic Co-operation and Development. ONS (2017) The Effects of Taxes and Benefits on Household Income: Financial Year Ending 2016, London: Office for National Statistics.

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OTS (2011) Review of Tax Reliefs: Final Report, London: Office of Tax Simplification. OTS (2014) Review of Employee Benefits and Expenses: Final Report, London: Office of Tax Simplification. OTS (2015) OTS list of tax reliefs updated to March 2015, available at https:// taxsimplificationblog.files.wordpress.com/2015/03/ots-list-of-tax-reliefsupdated-to-march-2015.xls PAC (Public Accounts Committee) (2015) HMRC’s Performance in 2014–15, HC 393, Session 2015–16, 4 November. PAC (2016) HMRC’s Performance in 2015–16, HC 712, Session 2016–17, 2 December. PAC (2017) Collecting Tax from High Net Worth Individuals, Session 2016–17, HC 774, Session 2016–17, Thirty-sixth report, 23 January. Pensions Commission (2004) Pensions: Challenges and Choices: The First Report of the Pensions Commission, London: The Stationery Office. Platt, L. (2005) Discovering Child Poverty: The Creation of a Policy Agenda from 1800 to the Present, Bristol: Policy Press. PPI (2016) Pensions Facts, London: Pensions Policy Institute. Prasad, M. (2011) ‘Tax “expenditures” and welfare states: a critique’, Journal of Policy History, vol 23, no 2, pp 251–66. Prasad, M. (2016) ‘American exceptionalism and the welfare state: the revisionist literature’, Annual Review of Political Science, vol 19, pp 187–203. Ridge, T. (2003) ‘Benefiting children? The challenge of social security support for children’, in J. Millar (ed) Understanding Social Security (1st edn), Bristol: Policy Press. Seely, A. (2018) Tax Relief for Childcare, House of Commons Library Briefing 19, 15 May. Shildrick, T., MacDonald, R., Webster, C. and Garthwaite, K. (2012) Poverty and Insecurity: Life in Low-pay, No-pay Britain, Bristol: Policy Press. Sikka, P. (2012) ‘The tax avoidance industry: the role of accountants’, Radical Statistics annual conference, London, 24 February. Sinfield, A. (1978) ‘Analyses in the social division of welfare’, Journal of Social Policy, vol 7, no 2, pp 129–56. Sinfield, A. (2012) ‘Fiscal welfare’, in B. Greve (ed) The Routledge Handbook of the Welfare State, London: Routledge, pp 20–9. Stebbing, A. and Spies-Butcher, B. (2010) ‘Universal welfare by “other means”? Tax expenditures and the Australian welfare state’, Journal of Social Policy, vol 39, no 4, pp 585–606. Surrey, S.S. (1973) Pathways to Tax Reform, Cambridge, MA: Harvard University Press. Titmuss, R.M. (1958) Essays on ‘the Welfare State’, London: Allen and Unwin.

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Toder, E., Berger, D. and Zhang, Y. (2016) Distributional Effects of Individual Income Tax Expenditures: An Update, Washington DC: Tax Policy Center, Urban Institute and Brookings Institution. Treasury Committee (2016) ‘Appointment of Edward Troup as Executive Chair of HMRC’, HC 498, Third Report of Session 2016–17, 28 June. TUC (2015) Pensionswatch2015: An Analysis of Director and Staff Pensions, London: TUC. www.tuc.org.uk/extras/incentivesreport.doc

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8 Occupational welfare Edward Brunsdon and Margaret May

Overview Occupational welfare is an important but neglected facet of the mixed economy of welfare (MEW) and social division of welfare (SDW), and one marked by increasing changes both through employer initiatives and state intervention. Starting with an overview of its constituents the chapter outlines the key developments in this domain over the last decade. The analysis is then extended through two case studies and concludes with a consideration of its role in the UK’s welfare nexus. Key concepts Occupational/work-based welfare; mandatory and non-mandatory (contractual and discretionary) provision; workplace pensions and occupational health care

Introduction This chapter addresses an important but largely overlooked aspect of the UK’s welfare order, namely, the non-wage benefits or ‘supplementary reward systems’ provided by employers for their employees. Traditionally called ‘occupational’ or ‘work-based’ welfare, it forms a key strand of Titmuss’s (1963) social division of welfare (SDW) and is an entity that has gained significance in the mixed economy of welfare (MEW) over the last decade. Despite this, detailed analyses of many of its benefits and services remain sparse. Whether this is because the domain is considered marginal to mainstream policy matters is unclear. What does not help however are deep-rooted features of the terrain, not least, the diversity and complexity of provision and the conceptual and methodological difficulties involved in its analysis. The conceptual issues mainly emanate from two sources, the location of the subject-matter at the crossroads of several academic disciplines (social policy, employee relations, social history and human resource management), each with its own research problems and lexicons for addressing them and, in the

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case of social policy, uncertainty about the breadth of the field of inquiry. The methodological concerns arise from the difficulties of accessing good-quality data. There is systematic government information on some benefits, partial data on others but very little on the bulk of provision. Gaps can be filled by research undertaken by consultancies, trade unions, professional and trade associations and, in a few instances, academics. Great care, however, needs to be taken given wide variations in validity and reliability and the reluctance of some organisations to reveal the provision they offer. Navigating the terrain and unravelling its complexities is therefore challenging, but by no means impossible. Where opportunities are not available for primary research, investigation can proceed using existing systematic and ‘grey’ quantitative and qualitative materials though it does require searching through multidisciplinary sources and piecing together the slivers of evidence to create as representative a picture as possible. This in turn involves acknowledging the multi-agency nature of work-based welfare. Organisations from the public, commercial and third sectors offer their employees benefits that may be provided in-house or procured from external suppliers. The latter come predominantly from the commercial, but in certain instances, from the third or public sectors. There is, in addition, an industry of consultants, some linked to benefits suppliers, competing to develop new products and advise employers on the effectiveness of different schemes. Our aim here is to document the continuities and changes in UK work-based welfare since the first edition of this text (in 2007).1 It begins by considering how the domain is best defined and introduces a classification of benefits that might be supplied. Drawing on pre-existing literature, it then provides a brief overview of the main developments during the period before offering two contrasting case studies – workplace pensions and health care – to illustrate the array of factors that contribute to the patterning of provision. Workplace pensions, the most valuable benefit for employees and the costliest for employers, are an important example of government-instigated change which, in this instance, involved the transfer from optional to mandatory provision. Health care, a field increasing in significance, is the product of a broader mix of employer-led and government initiatives.

What is occupational welfare? For a domain with such a small research output, studies of occupational welfare have used surprisingly varied definitions. It is widely accepted that it refers to welfare supplied through employment and includes both mandatory and nonmandatory benefits2 that are wholly or partially funded, delivered or facilitated by employers. There is, however, no consensus as to its constituents. UK researchers have tended to adopt one of two positions, favouring a narrow or broad formulation.

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Occupational welfare

The source of the difference lies in two paragraphs of Titmuss’ account of the SDW (Titmuss, 1963, pp 50–1). He initially offers an outline of occupational welfare in the form of an illustrative list of interventions: pensions for employees, wives and dependents; child allowances; death benefits; health and welfare services; personal expenses for travel, entertainment, dress and equipment; meal vouchers; motor cars and season tickets; residential accommodation; holiday expenses; children’s school fees; sickness benefits; medical expenses; education and training grants; cheap meals; unemployment benefit; medical bills and an incalculable variety of benefits in kind ranging from the obvious forms of realisable goods to the most intangible forms of amenity. However, he then divides these benefits into two types, those that duplicate or overlap public and fiscal welfare and those that do not: A substantial part of all these multifarious benefits can be interpreted as the recognition of dependencies; the dependencies of old age, of sickness and incapacity, of childhood, widowhood and so forth. They are, in effect, ‘social services’, duplicating and overlapping social and fiscal welfare benefits. Some researchers (eg Farnsworth, 2004) place great emphasis on this subdivision, maintaining that through it Titmuss was offering a narrower definition than suggested by the initial listing. In their terms, he was restricting occupational welfare to benefits that could be viewed as addressing the same risks/dependencies as the state. Provision excluded by this criterion was deemed ‘fringe benefits’. Other analysts (eg Sinfield, 1978) maintain that the full litany of benefits constitutes employer welfare provision. As explained elsewhere (Brunsdon and May, 2015), we align ourselves with the latter grouping. This is not just a matter of a ‘correct’ reading of Titmuss or the flaws in the arguments of those proposing a narrower definition, but because using the functions of state welfare as the yardstick for inclusion would omit an array of initiatives introduced by employers and benefits suppliers independently of public provision. Aware that Titmuss’s list of provision was becoming dated (as much by what was absent as what was included), we sought a more abstract definition that encompassed features he added in later writings and allows for developments since. It describes occupational welfare as: ‘all non-wage benefits (both mandatory and non-mandatory) in cash and kind supplied to employees by virtue of their status, performance, record or recognised needs’ (Brunsdon and May, 2016a). Mandatory benefits are those welfare interventions that employers are required to provide through primary or secondary legislation and which are employees’ statutory

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rights. Non-mandatory (or voluntary) benefits are those that employers elect to provide and can be divided into two sub-types: contractual and discretionary. Contractual benefits, whether set unilaterally through collective agreement or negotiated with an individual employee, are specified in (or added to) the terms and conditions of employment. They may be provided as single benefits or as parts of fixed or flexible schemes (where employees are allocated a sum to choose the mix of benefits they wish to access, or can adjust their salary to take more or fewer benefits). The key characteristic, however, is not the nature or number of benefits but their standing as part of employees’ contracts and thus as entitlements. By contrast, discretionary offerings are not entitlements; they can range from fully or partly funded benefits to discounted items facilitated by employers but paid for by staff. Certain contractual and discretionary benefits may also be available to family members and sometimes friends. This definition and taxonomy underwrites the differentiation of contemporary provision into eight main fields of mandatory and/or voluntary benefits: income protection and other financial support; education and training; health care services; care support services; housing services; transport; leisure and employer-supported volunteering (see Table 8.1). Acknowledging this breadth however is but a step on a long road to understanding the domain. What is also required is an appreciation of the factors involved in its historical development and current configurations. The beginning of employer provision can be traced back to the late 18th century, significant growth did not occur however until the mid-20th  century when organisations extended and introduced new forms of pay substitute and supplement. Benefits became a way of containing wage pressures, buying allegiance and easing technological change, and in the 1960s and 1970s circumventing incomes policies. The following decades saw the arrival of American and Japanese businesses bringing an enhanced vision of the role of benefits in corporate and human resources strategy which was taken up by benefits suppliers and many large UK organisations. For these, work-based welfare not only became an important aspect of recruitment and retention but also a key facet of managing performance and controlling the labour process. The majority of small- and medium- sized enterprises (SMEs), however, were either unwilling or unable to make provision beyond mandatory requirements. This is still the case today and even among organisations offering voluntary schemes, there are marked variations in what is supplied and how it is delivered. Most public sector organisations offer non-mandatory benefits (although programmes can vary). Within the third sector, larger employers supply schemes or buy-in packages, but many smaller charities and community groups are unable to make such provision. Among commercial employers, the arrangements are yet more complex. There are significant disparities between companies of varying size and in different labour markets. Large businesses in capital-intensive manufacturing, finance and professional services invest more heavily in contractual

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Income protection and other financial support

Types of occupational welfare Enhanced workplace pension schemes

Workplace pensions

Enhanced maternity pay Enhanced paternity pay Enhanced adoption pay Enhanced shared parental pay Enhanced redundancy pay Professional indemnity insurance

Statutory maternity pay

Statutory paternity pay

Statutory adoption pay

Statutory shared parental pay

Statutory redundancy pay

Industrial Injury Benefits

Discount schemes

Affinity benefits

Laptop, tablet and computer schemes

Mobile phones and tariffs

Travel insurance

Savings schemes (eg employee shares, ISAs)

Credit, loan and debt management schemes

Occupational sick pay

Statutory sick pay

(Group) personal accident insurance

(Group) critical illness insurance

(Group) income protection/ill-health retirement

Life insurance/Death-in-service benefits

Non-mandatory (contractual/discretionary)

Mandatory

Table 8.1: Mandatory and non-mandatory benefits and services in the UK (2018)

(continued)

Occupational welfare

163

164

Health care

Education and training

Types of occupational welfare Non-mandatory (contractual/discretionary)

Chiropody services

Enhanced health and safety training Enhanced young workers training Apprenticeships Training/staff development schemes Study support (eg fees, equipment, travel, subsistence) (Paid) study leave Professional body subscriptions (Paid) personal development leave (eg sabbaticals, career breaks) Responsibilities under health and safety legislation Occupational health services Preventive wellness services Diagnostic and referral services In-work rehabilitation services Addiction support services Return-to-work rehabilitation services (Paid) enhanced antenatal/adoption/surrogacy appointments time off Antenatal/adoption/Surrogacy appointments time off (Paid) fertility treatment leave Leave/time off for appointments/treatment (medical/dental/ auditory/ophthalmic) Private medical insurance Health cash plans Health trust plans Dental insurance Ophthalmic insurance

Health and Safety training Paid time off for young workers training Right to request time off for training

Mandatory

Table 8.1: Mandatory and non-mandatory benefits and services in the UK (2018) (continued) Understanding the mixed economy of welfare (2nd edn)

Extended (paid) adoption/surrogate leave Extended (paid) shared parental leave

Adoption/surrogate leave

Shared parental leave

Right to request flexible working

(continued)

Advice/counselling services (eg employee assistance programmes)

(Paid) compassionate leave

(Paid) bereavement leave

(Paid) carers leave

(Paid) foster parent leave

Respite care

Extended (paid) dependant care leave

Grandparental (paid) leave

Extended (paid) paternity leave

Paternity leave

Dependant emergency care leave

Extended (paid) maternity leave

Maternity/leave

(Paid) marriage and civil partnership leave

(Paid) leave for personal reasons

(Paid) leave for religious festivals

Extended (paid) civic duties leave

Annual leave trading schemes

Extended (paid) annual leave

Civic duties leave

Audiology services

Statutory annual leave

Care support services

Enhanced ophthalmic provision

Non-mandatory (contractual/discretionary)

Free eye test vouchers

Mandatory

Health care (continued)

Types of occupational welfare

Occupational welfare

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Paid leave for job search/re-training

 

 

 

 

 

 

Housing services

 

 

 

 

 

Mandatory

Care support services (continued)

Types of occupational welfare

Buildings/contents insurance

Bridging loans

Relocation assistance

Rent deposit assistance schemes

First-time buyers mortgage deposit/assistance schemes

Employer-provided accommodation

Subsidised cafeterias/meal allowances/vouchers

Information and referral services

Respite care

Elder care support

Educational assistance for children (fees, grants, loans, subsidies)

Provision for employees with disabled children

Child care vouchers (phased out from 2019)

Workplace nurseries/employer-contracted nurseries

Post-retirement (non-pension) benefits and services

Pre-retirement services and information

Pension planning/education

Personal finance management schemes

Financial education

Legal assistance

Outplacement services (eg counselling, career planning, job-search, placement services)

Extended (paid) leave for job search/re-training

Non-mandatory (contractual/discretionary)

Table 8.1: Mandatory and non-mandatory benefits and services in the UK (2018) (continued) Understanding the mixed economy of welfare (2nd edn)

 

 

Employer-supported volunteering programmes

Leisure

 

 

Employee fundraising schemes

(Paid) employee volunteering schemes

(Paid) employee mentoring schemes

(Paid) employee secondments

Subsidised domestic services

Subsidised cafeterias; meal allowances/vouchers

Free information/referral services

Subsidised sport/recreational club membership

Social/recreational facilities

Cycle2Work Schemes and Cyclists’ Safety Equipment

Driving lessons

Free/subsidised car parking

Road tax, fuel, insurance, congestion charge assistance

Assistance with/loans for car purchase/leases

Car allowance

All-employee car ownership schemes

 

 

Non-mandatory (contractual/discretionary) Company cars

Mandatory

Transport

Types of occupational welfare

(continued)

Occupational welfare

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and discretionary schemes than other industries (Eurofound, 2016). In addition, there can be intra-organisational variations with higher earners often receiving more generous contractual packages. What this produces overall is significant inequities in access and entitlements to non-mandatory provision. Bearing these complexities in mind, the next section reviews the broad changes in provision over the last decade.

Key recent developments Two significant features characterised this period for occupational welfare: (1) the differing positions taken by Labour (1997–2010) and the subsequent Coalition (2010–15) and Conservative (2015–16, 2016–) administrations, and (2) the increasingly cautious, cost-sensitive, stance adopted by employers in developing their own initiatives. The Blair and Brown governments had a clear objective for this domain. They saw work-based welfare as integral to their efforts of assisting people to remain in/return to work and contributing to the overall strategy of modernising the UK economy and welfare system. By contrast, the Coalition and Cameron governments developed no overarching work-based policy (and nor has the Theresa May government to date). Facing an ailing economy, their attention was fixed on tackling the record debts they had inherited, stimulating economic growth, radically restructuring state welfare and, in the case of the current administration, managing the Brexit negotiations. The seeds of Labour’s approach were sown in the early years of the Blair administrations between 1997 and 2006. Although initially constrained by countervailing financial pressures, its aim was to use a mix of European Union and UK legislation/regulation, fiscal interventions and campaigns to require or encourage employers to widen welfare support for their workers. Initiatives included augmenting existing work–life balance provision, extending schemes (eg paid maternity and holiday leave) and new benefits (eg adoption and paid paternity leave, the right to request flexible working for parents of young children and child care vouchers). Tax incentives included expanding the elements of work-related training that qualified for corporation tax relief (2003), boosting salary sacrifice arrangements (Brunsdon and May, 2016b) and introducing concessions for low-emission company cars, workforce-wide counselling and cycle-to-work schemes. The Labour government’s standpoint crystallised with the publication of the Health, Work and Wellbeing strategy (DWP, DoH and HSE, 2005). Although focused on health, this provided the framework for broader-based ambitions and a tranche of new measures. It saw employee benefits in general as a means of enhancing performance, productivity and retention, cutting sickness absence and meeting many of the challenges posed by an ageing workforce. The government felt the policy would best be accomplished through shared responsibility, with employers

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working in partnership with public agencies, trade unions and other stakeholders. Alongside health care developments, its interventions included further extensions of holiday and family-related leave (with an element of shared parental leave), widening flexible working rights, the introduction of ‘Train-to-Gain’ and the right to unpaid time off for training, and the renewal of apprenticeships. Despite the financial turbulence created by the 2007–8 banking crisis and the ensuing recession, Labour sought to retain its work-based policies throughout its period in office. The same could not be said of the non-mandatory arrangements offered by commercial employers. Against the grain, some manufacturing organisations, responding to skills shortages, either added new contractual and discretionary benefits, or extended the value of existing ones, to attract additional staff. Most businesses, however, particularly those in financial and professional services feeling the full impact of bank write-downs and the inter-bank and retail credit squeeze, made sizeable adjustments to their remuneration packages, with pay freezes, wage cuts and reductions in the coverage and/or value of benefits provision. To part compensate for these they created cheaper options, toppingup mandatory provision or introducing discretionary schemes, particularly salary sacrifice and discount arrangements. Third sector and public sector organisations largely escaped the initial economic buffeting and engaged in some cautious, relatively low-cost, expansion in work– life balance arrangements. Employees in public administration, health services and education, for instance, saw increased access to flexitime, compressed hours, home and part-time working. It was not until early 2010, with the economy showing initial signs of recovery that commercial organisations began revitalising their benefits schemes to attract and retain staff. Many large businesses (outside manufacturing and construction) extended their flexible working options, switched some schemes from fixed to variable contractual packages and, given their popularity, extended discount schemes. The financial crisis and Labour’s response formed the backdrop to the 2010 election and the emergence of the Coalition. The new government saw its primary task as reducing public sector debt instigating the: ‘longest, deepest, sustained period of cuts to public services spending … since World War II’ (Chote, cited in Timmins, 2015, p 329). The process was, however, one of ‘selective austerity’ (Hills et al, 2016), a pattern that also marked its approach to work-based benefits, where it endorsed the growth of some while adding to organisations’ costs of supplying others. The Coalition government’s legislative and regulatory actions illustrated this dualism. It widened Labour’s family-friendly policies, extending the right to request flexible working arrangements to all parents, and then to all employees. It also implemented Labour’s proposals for additional paternity leave and paternity pay (2010), subsequently replacing them with an improved shared parental leave scheme for couples expecting or adopting children (2015). Parents’ efforts to

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balance work and domestic care were also recognised with the extension of unpaid leave from 13 to 18 weeks (2015). At the same time, however, it began the process of phasing out Labour’s employer-centred child care voucher scheme with a view to substituting a controversial tax-free version that will benefit some but not all working parents. In adult skills training, it scrapped Labour’s flagship Train-to-Gain programme on grounds of costs and effectiveness, replacing it with pre-apprenticeship and apprenticeship schemes that switched the financial onus away from government towards employers. A similar disjuncture occurred in the Coalition’s fiscal interventions. To raise revenue, it increased National Insurance Contributions (NICs), VAT and Insurance Premium Tax (IPT) – all in 2011. In the case of NICs, the impact was to reduce organisations’ cash flows and employee take-home pay while raising the cost of taxable benefits. VAT (raised from 17.5% to 20%) increased the cost of company cars, and IPT (raised from 5% to 6%) that of private medical insurance (PMI), personal accident insurance and health cash plans. It also abolished the Percentage Threshold Scheme (PTS), the final act in the transfer of financial responsibility for statutory sick pay to employers (2014). Salary sacrifice arrangements were also curbed. This variously involved: withdrawing the tax advantage for workplace canteens (2011); limiting the tax-free sums higher earners who were new members of child care voucher schemes could receive (2011); restricting tax advantages for employer-supported local buses (2013); and increasing the benefits-in-kind tax on cars based on their CO2 emissions (2015). Against this it placed ipads and tablets on the same tax-advantaged footing as mobile phones (2012) and encouraged wider share ownership/savings in the workplace by raising the upper limit on Save As You Earn (SAYE)-linked savings, increasing the amount that could be saved as free or partnership shares in Saving Investment Plans (SIPs) and extending tax relief on Enterprise Management Incentive (EMI) schemes (2013). In addition, the sum that could be offered as a beneficial loan was doubled and an NIC employment allowance introduced for small businesses and charities (both in 2014). Employer-driven changes during the Coalition’s period of office were set within tight financial limits. Restraint became as important for public sector and third sector employers as it had previously been for commercial establishments. In consequence, there was greater scrutiny and the tailoring of welfare programmes to ensure that they offered value for money, were in line with organisational strategies and remained competitive. Adjustments, across all sectors, occurred in one of several ways: delaying the upgrade or planned introduction of provision; expunging benefits from schemes or relocating them from fixed to flexible elements of contracts or discretionary portfolios (Aon, 2015). Among those benefits that suffered were group risk insurances and company-ownership car schemes; the use of consultants also fell. Key aspects of cross-sector provision that remained unscathed (or were added) included: flexible working; training

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and development; above-mandatory paid leave; paid leave for bereavement; grandparental leave; financial wellness support; employee assistance programmes (EAPs) and the extension of salary sacrifice and discount schemes. Sectorspecific benefits that were retained or introduced comprised on-site parking in manufacturing, health care screening and assessments, particularly in commercial services, and debt counselling predominantly in the public and third sectors. When the Cameron-led Conservative government replaced the Coalition in 2015, its Summer Budget continued the austerity agenda and initiated a fundamental change in skills training with the establishment of an Apprenticeship Levy (from 2017). It also further reduced pension tax relief for high earners, signalled another rise in IPT (from 6% to 9.5%) and Vehicle Excise Duty on new cars (based on their emissions) from 2017, and initiated a reconsideration of salary sacrifice usage. Its Autumn Statement increased IPT to 10% and said that the government would simplify the tax rules for employee share schemes and consult on future salary sacrifice arrangements. More fundamental changes followed the Brexit referendum vote when May became prime minister after Cameron’s resignation. Her government’s Autumn Statement (November 2016) instituted the salary sacrifice changes signposted by its predecessors, reducing the number of benefits that could attract tax and NIC advantages to pensions and pensions advice, child care, bikes-for-work schemes and ultra-low-emission vehicles. Further acts of fiscal consolidation included increasing NICs (by raising the upper limit of the 12% band) and another rise in IPT to 12%. The Autumn Budget in 2017 introduced changes to company car tax rates designed to encourage the purchase of ultra-low-emission vehicles. Proposals to adjust the taxation of employer-provided accommodation and to legislate for shared leave for working grandparents remain in the pipeline. Higher taxation and spiralling premium costs again meant the key challenge for employers was finding ways of controlling their expenditure without diminishing their offerings. The solution for increasing numbers was the expansion of discretionary benefits. As well as restricting costs, this had the continued advantage of compensating for suppressed wages and enabling employees to tailor provision to their personal requirements. Among the benefits to grow in this format were financial wellbeing arrangements (Brunsdon and May, 2017), holiday trading (with employees buying additional or selling unused holiday time), access to smart phones, laptops, tablets and discounted merchandise. Looked at overall what is clear is the diverse, uneven and mutable nature of occupational welfare and the intricate ways in which it intersects with other elements of the MEW. Each cluster of provision has its own drivers, variations in mandatory, contractual and discretionary arrangements, and financial demands. This complexity, the differing pressures for change over the last decade and the increasing significance of work-based welfare are exemplified in the following case studies.

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Case study 1: workplace pensions When Labour came to power, workplace pensions were provided in a multiplicity of forms that built on two basic designs: defined benefit (DB) and defined contribution (DC) plans. DB plans offered members an assured retirement income typically linked to final salary and length of service. In the public sector, most were unfunded, that is, provided on a Pay-As-You-Go (PAYG) basis, with contributions from employers and active scheme members being used to pay retirees’ pensions and with shortfalls underwritten by the Treasury. By contrast, all commercial and third sector DB plans and the public sector local government pension schemes (LGPS) were funded. Here contributions were paid into and administered by trust funds that invested in a range of markets with the returns expected to meet both current pension entitlements and forward risks. The financial responsibility for fund deficits or cash flow problems rested with the employers as scheme sponsors. DC schemes were also funded and mainly trust-based, although they could be offered as contract-based Group Personal Pension Schemes. The latter were operated by external providers (eg insurance companies) chosen by employers but with pension contracts between individual employees and suppliers. In all DC plans, pension ‘pots’ depended on employer and employees’ contributions plus their investment performance (minus management charges). There was no guaranteed pension and poor returns were the employees’ not the employers’ risk, as was the decision on how to convert ‘pots’ into retirement income. Aware of rising longevity and its potential impact on state pensions, Labour initially hoped to bolster the take-up of these voluntary schemes to provide an increasing proportion of retirement income. But it soon became clear that more broad-based reform was necessary. There were known issues regarding scheme governance, pension reporting and the mounting costs of public service plans. They added to long-standing concerns about inequities in coverage, with provision mainly confined to large employers and particular industries, and advantaging high earners. Beyond these, however, unanticipated factors were also emerging. Life expectancy projections had been under-estimated, affecting the future outlay for both state and workplace pensions, and the stock market crash of 2000 had shown that many commercial and third sector DB schemes held inadequate funds to cover current and future risks. Although this design had seen falling numbers over several decades, these developments accelerated the decline. Even with some employers switching to DC provision, a further drop in overall active membership in the commercial and third sectors was triggered. The government responded to this situation on four interrelated fronts, addressing the governance of commercial and third sector DB plans, pension saving in these sectors, pension taxation and public service schemes. In terms of governance, it issued a stream of regulatory requirements, including revised

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accountancy standards. The objective was to improve fund management but also had the effect of increasing employers’ compliance costs. To stop organisations abandoning their pension obligations and to limit the impact of insolvency, the government created two agencies. The Pensions Regulator was established to protect members’ benefits and promote effective scheme management, while the Pension Protection Fund, financed by levies on all non-public service DB plans, oversaw a compensation system for employees whose organisations became insolvent (2004). The adequacy of workplace pension saving was tackled through the appointment of a Pensions Commission (2002). Extending its initial remit to include state pensions, its key proposals gained widespread parliamentary support and formed the basis of a new retirement income structure. The Pensions Act 2007 heralded changes to state pensions, including staged rises in the state pension age and a reduction in qualifying years, while the Pensions Act 2008 took the fundamental step of shifting workplace pensions from voluntary to mandatory provision. This required all employers to enrol entitled employees (that is, those between 22 and pensionable age, not already in a plan and earning above £5,035) into a qualifying pension scheme. It also paved the way for a state-sponsored DC savings scheme, the National Employment Savings Trust (NEST), giving employers the option of using this as an alternative to existing or other new provision. Schemes were to be funded by a minimum of 8% of an employee’s qualifying earnings, made up of 3% employer contributions and 5% employee contributions, of which 1% would come from tax relief. The aim was to stagger the roll-out (starting with large employers) between 2012 and 2017, with contribution levels also staged to limit the financial impact on both employers and savers. On the fiscal front, Labour retained employers’ National Insurance pension relief and allowed the use of salary sacrifice based SMART (Save Money And Reduce Tax) pensions (2004). To reduce the administrative burden on scheme sponsors, it replaced the existing patchwork of pension taxation with a single-tier regime for all pension types (2006). While maintaining income tax relief, this introduced a maximum lifetime allowance for pension savings set at £1.5 million (for 2006/7), an annual allowance of £215,000 for tax relief on contributions, standardised the tax-free lump sum at 25% of savings and increased the minimum age at which pensions could be taken from 50 to 55. The reform of public service pensions began as soon as Labour took office, starting with increases in pension age and lower accrual rates for new entrants in uniformed services schemes (1997). It followed this with a proposal (2002) to raise new entrants’ pension ages in all non-uniformed plans and, subject to consultation, those of existing members. After protracted negotiations between employer bodies and unions, and linked industrial action, the schemes for civil servants, teachers and the National Health Service (NHS) were altered. New entrants’ normal pension age and accrual rates were changed and ‘cap-and-share’

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rules introduced to spread the cost of unexpected longevity rises more equitably between employees and taxpayers. As funded schemes, the LGPS were tackled separately, leading to adjustments to their accrual and tiered contribution rates (2008). The government’s actions as an employer were mirrored in the commercial and third sectors where many organisations also reviewed and curtailed their pension provision. Here the economic turmoil of 2007 to 2010 had a substantial impact, exacerbated by further damaging life expectancy projections and the burden imposed by Labour’s new regulatory regime. Together these precipitated a further exodus from DB plans with a consequent steep fall in coverage. This gave added impetus to the establishment of auto-enrolment, which was taken forward with revisions by the Coalition and Conservatives. To smooth its implementation, the Coalition extended the roll-out to 2018 and the period of staged contributions to 2019. It also addressed governance matters adding regulations that capped charges in auto-enrolment DC default plans and instituting the requirement that each workplace scheme should have an Independent Governance Committee to secure effective administration, protect members and help ensure value for money. On pension tax, both the Coalition and Conservatives went much further than Labour in cutting the relief for high earners. Annual allowances were reduced from £255,000 (2010) to £50,000 (2011) then £40,000 (2016) and lifetime allowances from £1.8 million to £1.25 million (2014) and then to £1 million (2016). Both administrations, however, sanctioned the continued use of salary sacrifice, thus potentially cushioning the tax costs of auto-enrolment for employers and employees (May, 2015). The Coalition’s most radical tax intervention was to give DC scheme members over 55 ‘freedom and choice’ to withdraw their pension savings as they saw fit rather than taking an annuity (2015). It attempted to placate the critics of this move by founding a guidance service (Pension Wise) and retaining salary sacrifice arrangements for employers’ pension advice services. Alongside this seismic change, it gave commercial and third sector DB scheme members the right to transfer to DC plans and thus access to these new freedoms and instigated an alternative long-term savings vehicle, the Lifetime ISA (2017). Dissatisfied with Labour’s public service pension reforms, the Coalition commissioned a structural review of these schemes (IPSPC, 2010) incorporating its key proposals into legislation (2013). While preserving existing pension rights, this moved public service plans from final-salary to career-average entitlements, and increased employee contributions and normal pension age. Further reducing the costs to the Treasury, it also set limits on the proportion to be contributed by taxpayers. While DB schemes remained the public service norm, auto-enrolment had both increased the numbers and accelerated the shift to DC provision in the other sectors. By the end of November 2017, more than 9 million workers in

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commercial and third sector organisations had been automatically enrolled into a workplace pension scheme and more than 938,000 organisations had completed their compliance requirements (DWP, 2017). This success, however, worked only to highlight the limitations of coverage and pension adequacy. It was estimated, for instance, that at least 7.3 million workers whose employers had gone through the auto-enrolment process were excluded because these workers were too young or not earning enough (PPI, 2017). Given the goal of auto-enrolment was to increase the numbers saving for retirement, this led to questions as to the fairness of retaining the enrolment age of 22, excluding part-time workers (predominantly women) earning less than threshold income (£10,000) and those with multiple jobs earning less than that sum per job. The May administration’s auto-enrolment review (DWP, 2017) responded to these concerns with important proposals for reform. To be introduced by the mid-2020s, the reform plans to reduce the threshold age from 22 to 18 and remove the lower earnings limit, thus enabling younger people and low earners to participate in schemes.3 The government anticipates these measures would increase pension membership by at least 900,000 and add an extra £2.6 billion to retirement savings. While welcoming the proposals, critics nonetheless questioned why there was a delay in implementation and whether the 8% level of contribution required by 2019 would generate sufficient retirement income, arguing that to avoid pension poverty it should be nearer 16%. There is also unease about the significant disparities in employer contribution levels both within DC schemes and between these and DB arrangements, generating wildly varying pension entitlements.

Case study 2: workplace health care While changes in workplace pensions were largely orchestrated through the legislative/regulatory interventions of successive administrations, those in health care had a more diverse set of drivers. There were mandatory changes, particularly in preventive health care, but fiscal and government promotional measures took much greater prominence along with employers own initiatives and those recommended by benefits suppliers.4 Labour’s occupational health care goal was to reduce the levels of injury and illness associated with work and, where possible, contribute to a reduction in health inequalities (DWP, DoH and HSE, 2005). During its early years in office, fatalities and reportable injuries had declined significantly but there were still major challenges facing both state and employers. In 2006/7, 36 million working days were lost to sickness absence, costing the economy £30 billion or 3% of GDP. Musculoskeletal disorders were responsible for over 9 million days lost and the rise in mental ill-health conditions accounted for nearly 14 million lost days. Serious concern also continued about lifestyle issues, including poor nutrition,

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obesity and smoking. Together, these posed a continuing threat to productivity and a substantial public cost in welfare payments, health care and lost income tax. The government sought to address these problems through the Health, Work and Wellbeing framework (DWP, DoH and HSE, 2005). While recognising the value of its initial interventions, it accepted that extensive improvements were needed in areas such as workplace health promotion and ill-health prevention, support for people recovering from illness while at work and the coordination of services for employers. It also conceded that many employers, mainly SMEs, still required convincing that they had ‘a duty of care’ to improve employees’ health and wellbeing. To these ends the government commissioned a review of the beneficial links between health care initiatives and work (Waddell and Burton, 2006) and appointed a National Director for Health and Work (Carol Black) to look at ways of keeping working-age people healthy, resilient and in employment. Maintaining Labour’s adherence to evidence-based policy, Black undertook a consultative review on the health of Britain’s working-age population which was complemented by research on specific areas of concern, including vocational rehabilitation, mental ill-health and the business case for health and wellness. Black’s report (Black, 2008) concluded that the workplace was pivotal to sustaining the nation’s health but employers needed to be part of an integrated approach involving collaboration with GPs, public health and occupational health specialists. This view was reinforced by the other reports. The first (Waddell et al, 2008) found strong evidence to support and extend vocational rehabilitation services; the second (Lelliott et  al, 2008), though highlighting gaps in diagnosis and treatment and the need to improve collaboration between primary care providers and employers, saw well-managed work environments being particularly beneficial for those with common mental health issues, while PricewaterhouseCoopers’ (PwC) research (PwC, 2008) on the business case found that workplace health care reduced sickness absence and turnover, and frequently had a positive impact on productivity and profits. Labour accepted most of their recommendations. It sanctioned Black’s proposals regarding the ‘fit for work’ conception, a ‘fit note’ to replace the ‘sick note’ issued by GPs and supported the trialling of new initiatives such as the ‘Fit for Work’ service, advice for SMEs and closer joint working between occupational health services, the NHS and employers. It also launched the first national framework for mental health and employment and a Workplace Wellbeing Charter for England, giving employers the opportunity to commit to the health and wellbeing of their workforce (2009). The steady increase in government initiatives was accompanied by a growth in employer-led schemes. The Chartered Institute of Personnel Development (CIPD) reported that the number of organisations with a health and wellbeing strategy increased from 25% to almost 50% between 2006 and 2010; most were developed by larger entities predominantly in the public sector. Commonly

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supplied benefits included counselling and EAPs, health promotion events (eg  smoking cessation, healthy eating or free eye tests), healthy menus in canteens and subsidised gym membership. Other benefits regularly offered, although varying by sector, included: health screening (tax exempt from 2009 for one appointment per year), access to physiotherapy, free fresh fruit and cycle-to-work schemes (CIPD, 2006, 2010). The recession, together with rising premiums, did, however, hit the supply of PMI. A major benefit in the packages offered in the commercial sector, it increasingly became an option exclusively for senior managers. Other employees, if offered a replacement, were supplied with cheaper and less comprehensive health cash plans. These, moreover, were typically supplied as part of discretionary discount schemes to be part or wholly purchased by employees. Under the Coalition, fresh policies with different political aims were interwoven with its legacy. These were geared to both reducing the regulatory burden on organisations and shifting more responsibility for health care from the state to employers, communities and individuals. The former concerned safety rules which the government felt were excessive and stifling productivity. In the light of the Löfstedt review (2011), the Health and Safety Executive (HSE) set out a new approach that focused on high-risk industries and serious breaches of rules and reduced the stock of regulations by 50%. The latter was exemplified by the employer element of the controversial Public Health Responsibility Deal (PHRD). Launched in 2011 this sought to promote preventive health care initiatives through voluntary partnerships in which employers across the sectors were invited to join local networks and sign up to one or more pledges to improve the health of their workforces. Policy continuities with Labour were tapered; funding was withdrawn for many of its pilot workplace experiments (2011) and the role of National Director for Health and Work cut (though Black became an adviser on health and work in 2012). The Coalition did take up its predecessor’s concerns about sickness absence, however, commissioning a review (Black and Frost, 2011) to address ways of reducing costs and helping people to stay in/return to work. Although taking over a year to respond, it implemented changes based on the review’s recommendations. These entailed: the introduction of new standards for managing sickness absence in the public sector; improved occupational health care in the NHS; the extension of the telephone-based advice pilot scheme; and the revamping of occupational health services for SMEs through NHS Health at Work and Syngentis (2013). At their heart, however, was a new Fit for Work scheme rolled out during 2015. This provided an advisory service for employers, workers and GPs, as well as health assessments for those employees referred by employers or GPs after four weeks away from work. To encourage support for the service, the Coalition implemented a £500 tax exemption for employer expenditure on recommended medical treatment. In a linked venture, it also promoted the Disability Confident

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programme, encouraging organisations to widen their recruitment base by employing more people with disabilities. Echoing the Coalition’s aims and policies the Cameron administration completed the implementation of Fit for Work, updated HSE and National Institute for Clinical Excellence (NICE) guidance and created a new Health and Work Joint Unit (2016) tasked with improving productivity and economic growth, joining up health and employment agendas and overseeing a £40 million innovation fund. Employer-initiated health care schemes continued to grow, albeit unevenly, under the Coalition and Conservative administrations. Whether triggered by the governments’ schemes and duty of care responsibilities, a response to organisationspecific issues, suppliers’ marketing or development of new products is difficult to determine. What is clear is that in this field, advances had been made despite the recession, ongoing austerity policies and the rising costs of tax interventions. Even demand for PMI policies picked up as the economy improved and firms established IPT-exempt corporate health care trusts (LaingBuisson, 2016). Expansion occurred in both preventive and illness management/rehabilitative provision. The preventive measures were primarily targeted at the main causes of long-term sickness absence – musculoskeletal disorders and work-related stress – as well as the public health concerns highlighted in the PHRD. Once again, large organisations were the main providers, offering services such as awareness and education campaigns, stress/mental health audits, health screening, vaccinations, subsidised gym membership, healthy eating advice, smoking cessation programmes and healthy canteen options. There was major sectoral variation in the provision of physiotherapy, relaxation or exercise classes, walking/pedometer initiatives (predominantly public sector benefits) and insurance/protection plans (chiefly commercial sector provision) (CIPD, 2016). New preventive developments included employer-funded virtual GP access, wearable fitness devices and wellness apps (CIPD/Simplyhealth, 2018). The growth in illness management/rehabilitative provision generally involved more establishments adopting existing interventions rather than the development of new measures. This consisted of modified duties, workplace adjustments, flexible working options, access to EAPs (particularly in the public sector), greater involvement of occupational health specialists, ergonomic assessments, physiotherapy (for musculoskeletal disorders) and cognitive behavioural therapy (for stress, anxiety and depression). More recent initiatives have included specialist counselling and support for cancer patients and those returning to work after a stroke or heart attack. Despite this expanding range of services, it seems that much more will be expected of employers in the future. Building on the consultations that followed the Improving Lives: Work, Health and Disability Green Paper (DWP and DoH, 2016) and the Stevenson and Farmer (2017) review of mental health and employment, the government launched a new ten-year strategy in late 2017

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(DWP and DoH, 2017). This not only expects employers to hire an additional 1 million people who are disabled or suffering from long-term health problems but also to provide them with new or improved support services. This, it is acknowledged, will involve a considerable step-change in employment practices for large numbers of UK organisations, not only in recruitment but also the forms of intervention needed to support people with ill-health through their careers.

Conclusion: occupational provision, the MEW and the SDW As both case studies and the general overview demonstrate, work-based welfare in the UK has undergone significant change over the last decade. In the process, it has become more enmeshed in both the MEW and SDW. New synergies have developed both between employers and the state, and between employers and benefits suppliers. Successive governments have utilised legislative and regulatory changes, made fiscal incursions (including increasing employers’ NICs) and promoted particular workplace benefits. Through statutory payments, tax reliefs and salary sacrifice arrangements they have also subsidised provision. Collectively, this has drawn occupational welfare closer to public policy and, in the case of some benefits, made employers agents of the state. For their part, while accommodating new statutory/regulatory obligations, employers have actively developed their own welfare agendas, taking up a range of benefits geared to their business needs. This has not only involved in-house provision but also procuring from an expanding market of commercial and, to a lesser extent, third sector and public sector suppliers. For employees, the mandatory elements of this transformation have increased the significance of occupational welfare and reduced some inequities in access (eg pensions) and entitlements (eg family-related leave). Nonetheless, with levels of contractual and discretionary benefits determined by employers, major inter- and intra- organisational inequities remain. The government is looking to enhance provision, especially that provided by SMEs, but this is unlikely to lead to the parities traditionally associated with state services and benefits.

Summary

• • •

Occupational welfare is a key but often overlooked dimension of the MEW and SDW. The last decade has seen new synergies develop between state and employers, and employers and benefits suppliers. While this form of welfare can contribute to individual and social wellbeing it can also reinforce social inequalities.

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Questions for discussion

• • •

Why is the definition of occupational welfare problematic? Choosing examples of work-based provision, how would you account for recent trends? What forms of occupational welfare are available to you or your family and how are they financed?

Further reading With the exception of pensions there are few general studies of occupational welfare in the UK. Broad ‘starter’ accounts can be found in Farnsworth (2013), and Brunsdon and May (2016a). Developments in pensions can be tracked through the briefings of the PPI (www.pensionspolicyinstitute.org.uk) and the publications of the DWP and those of the Department of Health and Social Care for health care (available at www.gov.uk).

Electronic resources Employer and governmental initiatives can be followed at: www.employeebenefits.co.uk and www.cipd.co.uk

Notes Most of the developments in occupational welfare apply across the UK. Consideration of those subject to devolved policy areas is beyond the scope of this chapter and in these instances the coverage is confined to England. 2 The exception to this argument is the analysis undertaken by Natali and colleagues who want to limit occupational welfare to voluntary contractual provision (see Natali et al, 2018). 3 Outside auto-enrolment, it also plans to test different approaches to increasing the pension saving of self-employed people. 4 Some of these independent initiatives were later adopted by government as part of its health strategy. 1

References Aon (2015) Employee Benefits and Trends Survey 2015, London: Aon. Available at http://www.aon.com/unitedkingdom/employee-benefits/news/articles/aonbenefits-trends-survey-2015.jsp” www.aon.com/unitedkingdom/employeebenefits/news/articles/aon-benefits-trends-survey-2015.jsp

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Black, C. (2008) Working for a healthier tomorrow, London: The Stationery Office. Available at: https//www.gov.uk/government/uploads/system/uploads/ attachment_data/file/209782/hwwb-working-for-a-healthier-tomorrow.pdf Black, C. and Frost, D. (2011) Health at Work an Independent Review of Sickness Absence, Cm 8205, London: The Stationery Office. Brunsdon, E. and May, M. (2015) ‘Replacing public welfare? UK divisions of welfare in the 21st century’, paper presented at University of Birmingham/SPA Conference, 9 December. Brunsdon, E. and May, M. (2016a) ‘Occupational welfare’, in P. Alcock, T. Haux, M. May and S. Wright (eds) The Student’s Companion to Social Policy, Chichester: Wiley-Blackwell. Brunsdon, E. and May, M. (2016b) ‘W(h)ither salary sacrifice?’, CHASM Briefing Paper BP7-2016, University of Birmingham, CHASM. Brunsdon, E. and May, M. (2017) ‘Making work pay: workplace financial wellbeing services’, CHASM Briefing Paper BP9-2017, University of Birmingham, CHASM. CIPD (Chartered Institute of Personnel Development) (2006) Absence Management Survey 2006. cipd.co.uk/knowledge/fundamentals/relations/absence/absencemanagement-survey CIPD (2010) Absence Management Survey 2010. cipd.co.uk/knowledge/ fundamentals/relations/absence/absence-management-survey CIPD (2016) Absence Management Survey 2016. cipd.co.uk/knowledge/ fundamentals/relations/absence/absence-management-survey CIPD/Simplyhealth (2018) Health and Well-being at Work. https://www.cipd. co.uk/knowledge/culture/well-being/health-well-being-work DWP (Department for Work and Pensions) (2017) Auto-enrolment Review 2017: Maintaining the Momentum, Cm 9546, London: The Stationery Office. DWP and DoH (Department of Health) (2016) Improving Lives: The Work, Health and Disability Green Paper Cm 9342, London: The Stationery Office. DWP and DoH (2017) Improving Lives: The Future of Work, Health and Disability, Cm 9526, London: The Stationery Office. DWP, DoH and HSE (Health and Safety Executive) (2005) Health, work and well-being: Caring for our future, London: The Stationery Office. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/209570/health-and-wellbeing.pdf Eurofound (2016) Changes in Remuneration and Reward Systems, Luxembourg: Publications Office of the European Union. Farnsworth, K. (2004) ‘Welfare through work: an audit of occupational social provision at the turn of the century’, Social Policy & Administration, vol 38, no 5, pp 437–55. Farnsworth, K. (2013) ‘Occupational welfare’, in B. Greve (ed) The Routledge Handbook of the Welfare State, Abingdon: Routledge.

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Hills J., Lupton, R., Burchardt, T., Stewart, K. and Vizard, P. (2016) ‘Summary and conclusion’, in R. Lupton, T. Burchardt, J. Hills, K. Stewart and P. Vizard (eds) Social Policy in a Cold Climate, Bristol: Policy Press. IPSPC (Independent Public Service Pensions Commission) (2011) Final Report. govt.uk/government/uploads/system/uploads/attachment_data/file/207720/ hutton_final_10031 LaingBuisson (2016) The Healthcare Market Review, 28th edition, London: LaingBuisson. Lelliott, P., Tulloch, S., Boardman, J., Harvey, S., Henderson, M. and Knapp, M. (2008) Mental Health at Work, London: RCPsych/Workingforhealth.gov.uk Löfstedt, R. (2011) Reclaiming Health and Safety for All: An Independent Review of Health and Safety Legislation, London: The Stationery Office. May, M. (2015) SMART (Save Money and Reduce Tax) Pensions in the UK: Salary Sacrifice and Auto-Enrolment, CHASM Briefing Paper BP/2015, University of Birmingham, CHASM. Natali, D., Keune, M., Pavolini, E. and Seeleib-Kaiser, M. (2018) ‘Sixty years after Titmuss: new findings on occupational welfare in Europe’, Social Policy & Administration, vol 52, no 2, pp 435–48. PPI (2017) The Future Book: Unravelling Workplace Pensions, London: Pensions Policy Institute. PwC (2008) Building the Case for Wellness, London: PricewaterhouseCoopers. Sinfield, A. (1978) ‘Analyses in the social division of welfare’, Journal of Social Policy, vol 7, no 2, pp 129–56. Stevenson, D. and Farmer, P. (2017) Thriving at Work: The Stevenson–Farmer Review of Mental Health and Employers. www.gov.uk/government/uploads/ system/uploads/attachment_data/file/658145/thriving-at-work-stevensonfarmer-review.pdf Timmins, N. (2015) ‘The coalition and society (iv): “Welfare”’, in A. Seldon and M. Finn (ed) The Coalition Effect 2010–2015, Cambridge: Cambridge University Press. Titmuss, R.M. (1963) ‘The social division of welfare: some reflections on the search for equity’, in Essays on ‘the Welfare State’ (2nd edn), London: Unwin Books. Waddell, G. and Burton, A. (2006) Is Work Good for Your Health and Well-being? London: The Stationery Office. Waddell, G., Burton, A. and Kendall, N. (2008) Vocational Rehabilitation: What Works, for Whom and When? London: The Stationery Office.

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9 The mixed economy of welfare: a comparative perspective Michael Hill

Overview This chapter starts with a consideration of the way in which comparative work on social policy involves the exploration of varying mixed economies. It goes on to review policy comparisons in three areas of social policy: income maintenance, health care and social care. Key concepts Regime theory; welfare without the state; new social risks; health care typologies; purchase and provision in social care

Introduction Early comparative analysis, where it was not simply atheoretical, tended to be concerned to explain levels of state expenditure. It worked with a view of the ‘welfare state’ that either saw welfare as essentially something provided by the state, or with a notion that development entailed the replacement of other sources of welfare by state welfare. But then attention began to be given to variations both in the extent of the welfare provided (particularly the extent to which it contributed to the reduction of inequality) and in the way in which it was provided. Regime theory has become the dominant approach to this issue, it is discussed in the next section and used as a way of orientating this chapter as a whole.

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Regime theory Esping-Andersen’s approach While Esping-Andersen’s regime theory (1990) represents a crucial move away from the unitary developmental approach which saw states as on a general evolutionary path in which, with economic development or democracy there would be an inevitable growth in state welfare, its emphasis on ‘welfare regimes’ still puts the state at the very centre of the analysis. However, it also brings out very clearly issues about the state–economy relationship. This is particularly embodied in Esping-Andersen’s use of the notion of ‘decommodification’ (the extent to which access to benefits and services is detached from determination by the market). His explanation of the extent to which decommodification occurs is then based upon an analysis of politics, with the strength of social democratic parties the crucial variable. Esping-Andersen’s regime model, involves the postulation of three regime types: • the social democratic regime, the most decommodified type, characteristic of the Nordic countries; • the liberal, the least decommodified, characteristic of the United States, the United Kingdom, Australia and New Zealand; • an intermediate type, which tends to be rather confusingly labelled as either conservative or corporatist, characteristic of much of continental Europe (and, particularly controversially, Japan) where social benefits are extensive but very much determined by labour market status. Esping-Andersen’s model has attracted both considerable criticism and a range of attempts to improve upon it (see Arts and Gelissen, 2002 and 2010 for reviews). It needs to be noted that Esping-Andersen’s original path-breaking work compared cash benefits in a small number of Organisation for Economic Co-operation and Development (OECD) member nations. While it has been the inspiration for much other work it has inevitably provoked efforts to update it using either a larger sample of nations or different data (particularly from outside social security). A particular weakness in the original typology is the large conservative/corporatist category containing a rather large ‘bag’ of diverse societies. Within this group there is only one nation from southern Europe (Italy). Hence various writers (for example, Ferrara, 1996; Castles, 2004) have identified a separate southern European variant of the corporatist group. The further implications of taking a global view are discussed later in the chapter. The following sub-sections explore various developments from, or elaborations of, regime theory.

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Elaborating issues about gender and family life An important challenge to Esping-Andersen’s original approach has come from scholars interested in issues of gender and welfare. Their approach has stressed the issues of the roles of families, which were neglected in the original concern to explore state–market relationships (Lewis, 1992, 1993, 1997; Sainsbury, 1994, 1996; O’Connor, 1996). In his elaboration of regime theory Esping-Andersen (1999) took this on board to write of a welfare triangle: state, market and family. Issues of family ideologies have been raised in the literature which attempts to use regime theory for the exploration of social policy development in East Asian countries. The main argument along these lines has been the suggestion that Confucian family ideologies lead to a greater delegation of welfare responsibilities to the family and extended family (Jones, 1985). The problems with this argument are that (a) in any underdeveloped income maintenance system the family will, faute de mieux, have to take on greater responsibilities, and (b) the use of Confucian ideologies as a justification for inaction by the political elite is not evidence that political demands can and will be damped down in this way in the absence of evidence of the acceptance of that reasoning by the people. Voluntary sector roles Regime theory does little to tie issues of the role of the voluntary sector into comparative analysis. Hence there have been suggestions that there is a need to add to Esping-Andersen’s ‘triangle’ the ‘community’ (Evers, et al, 1994; Jenson, 2015). Voluntary sector actors are certainly more salient in some societies than others. There are grounds for expecting this to be particularly the case in societies where there has been a strong cultural commitment to the delegation of care tasks to local organisations, and particularly to faith-based organisations, as embodied in Catholic social theory. This characterises some of Esping-Andersen’s conservative societies. Case study evidence – for example on Germany and Austria – supports this. Conversely, the strong state tradition in Scandinavia has been seen as inhibiting voluntary action. However, there is evidence from Sweden refuting that hypothesis (Lundström and Svedberg, 2003; Dahlberg, 2005), the social democratic tradition involves high participatory norms. Many of the liberal societies also have strong voluntary organisation traditions (not least the United States). Studies by Anheier and Salamon (2001) explore these issues, but face difficulties about how exactly to identify a strong voluntary sector (in terms of levels of volunteering or in terms of the incidence of voluntary organisations). Volunteering is shown to be high in much of northern Europe and in the United States but low in southern Europe and Japan. Overall it is difficult to tie comparative analyses of the voluntary sector into mainstream comparative theory.

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Beyond welfare states? Gough and Wood see the analysis of ‘Western social policy [as] … associated with particular sets of means (the state) towards the ends of ensuring security of welfare’ (2004, p 4). They see regime theory as a useful starting point for the analysis of social policy outside the OECD nations analysed in most discussion of regime theory. Hence for Gough and Wood it is important to see welfare state regimes as one ‘family’ of welfare regimes in a world in which there are others. These are identified as ‘informal security regimes’, in which families and communities may play key roles as providers of welfare and ‘insecurity regimes’ in which even these do not provide effective welfare. Hence regime theory is used by Gough and Wood and extended in important ways to contribute to the analysis of welfare worldwide. Table 9.1 sets out the elements that are important for this alternative approach in a way that brings out clearly the mixed economy issues. Important elements in Gough and Wood’s analysis of regimes include exploration of the implications of an absence of secure formal employment, of states that function ineffectively or even exploitatively, of weak or absent communities and even of families that do not protect their members. Attention is also given to various respects in which welfare outcomes depend heavily on actions outside the regimes – not just the impact of global capitalism and of aid via governments and NGOs, but also of the extent to which welfare in many societies depends upon contributions from family members living and working elsewhere in the world. Gough and Wood offer suggestions on how regime theory may be extended and highlight some of the problems regarding the original theory. Their concerns with the interconnectedness of systems, both because of multinational economic activities but also because of remittances from workers abroad and international aid, offer a quite new perspective on comparative analysis. Yet still their analysis does not extend to China or India or most of the Islamic world. However, they offer tools for the use of those who want to go further, deriving them from the regime theory paradigm. Table 9.1: Components of the welfare mix

State

National Government institutions

Supra-national and extra-national International governmental organisations

Market

Domestic markets

Global markets

Community Community-based NGOs

International NGOs

Household Household exchanges and services

International household transfers

Source: Based on Sharkh and Gough (2010, p 28). Note: NGO – non-governmental organisation.

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Limitations to the use of regime theory While variants of regime theory have come to dominate comparative analysis of social policy, there is a need for attention to be paid to the question: what do differences as identified in a typology offer in the quest for explanations of differences in the mixed economy? Arts and Gelissen ask: Do typologies based on ideal-types have theoretical and empirical value …? The conclusion emerging from the philosophy of science literature is clear: not if ideal types are goals in themselves, but only if they are a means to a goal; namely, the representation of a reality, which cannot yet be described using laws. (2010, p 138–9 citing Klant, 1984; see also Powell and Barrientos, 2004 on this theme) Esping-Andersen defended his theory as one able to explain welfare state growth and therefore ‘able to understand its retrenchment and decline’ (1990, p  32). He wrote that when the pressures towards retrenchment were just beginning to grow, and he went on to stress the extent to which his analysis of the coalitions that contributed to its growth also protect the welfare state from decline. This is a theme that he took up in his later work, and has been echoed by many of those influenced by him. Regime theory, as originally developed, primarily offers an explanation of differences in the growth of social policy in a specific number of states. It does not offer much in predictive terms either for the explanation of retrenchment or for events in states very different to Esping-Andersen’s original sample. Furthermore, in its emphasis on patterns it can only avoid the determinism of the theories it replaced by an emphasis on the economic, political and cultural factors that have influenced the diverse policies it identifies. In the following sections the issues raised here will be explored further with particular reference to specific policy areas.

Income maintenance Esping-Andersen’s original comparative work (1990) is almost totally preoccupied with distinctions between nations in respect of income maintenance expenditure. At the heart of his regime theory there is an assumptions that states may be compared in terms of the role played by social insurance. In the conservative group social insurance is dominant but not particularly redistributive, in the social democratic group it is dominant and redistributive and in the liberal group it is much less important and may be overshadowed by a combination of private provision for the better off and means-testing for everyone else. Two questions that will then be addressed in this section are (a) the extent to which these distinctions are helpful for the comparative analysis of income maintenance and

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(b) the extent to which developments since the theory was developed contribute to undermining its usefulness. Powell’s introduction to this book has of course stressed the need to relate ‘social divisions’ issues to mixed economy issues, and as Sinfield’s contribution shows relationships between cash benefits and taxation are important (see Chapters One and Seven). In the social security field there are therefore areas for comparison between countries, not merely in terms of levels and types of expenditure but also in terms of the ways in which expenditure is funded (Howard, 1999). Considerations here are (a) the relationships between tax funding and contribution funding, (b) the roles played by employers as opposed to employees in relation to the latter and (c) the extent to which social security provision is private but may then be mandated by or regulated by the state. There is relatively little comparative work that explores these issues. An important exception to this is work by Mitchell (1991) which compares income measures before and after tax and advances an argument further developed in Castles and Mitchell (1992) that Australia and New Zealand stand out as exceptions from the generalisation implicit in regime theory inasmuch as, while there is no social insurance, there is relevant government intervention to affect pre-tax incomes. An essay by Adema and Whiteford (2010) sets out the issues that need to be considered in such a comparison, indicating substantial variation in the importance of private social protection and the role the tax system plays in ‘social effort’. They conclude: the incentive and distributional effects of private and occupational welfare are usually not included in assessments of welfare state outcomes. Different social security systems produce different distributions of public and private pension rights, and the incomplete treatment of this redistributive activity may bias cross-country comparisons of income distribution. The implication of this is that just as comprehensive measures of welfare state effort suggest greater similarities in real spending levels, real outcomes will be more similar than conventionally measured. (Adema and Whiteford, 2010, kindle loc 3404–12) Pensions That quotation makes a specific reference to pension systems and these are by far the largest elements in income maintenance policy. Much comparative discussion of pensions uses an approach developed by World Bank (1994) and OECD (2005) of analysing pensions systems in terms of tiers or pillars. The OECD define systems in terms of the presence of:

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• a first tier offering universal coverage and providing a redistributive element inasmuch as a concern to prevent people falling below a basic minimum has a redistributive effect; • a mandatory second tier using an insurance approach, which may be either defined benefit or defined contribution based and may be either publicly or privately provided; and • an optional private third tier. They show that the first tier (universally present in the nations that belong to OECD) has the following variations for mandatory public pensions: • social assistance (involving a separate means-tested scheme); • basic (flat rate and unaffected by other income); • targeted (paying a higher benefit to poorer pensioners and then tapering off for the better off); • minimum (like targeted but based upon rules within the second tier scheme). There are three crucial issues here, which such a classification leads us towards but does not fully explore, about: • where the minimum is located (what level of income is guaranteed); • whether the minimum is available to all; • the extent to which effects which may deter self-provision are embedded in the system (here the ‘basic’ pension idea stands out as avoiding this while the others probably do not). Comparing national pension schemes then involves trying to sort out these interactions in respect of individual entitlements. Moreover, the role of contribution rules for pension entitlements means that any comparison depends upon taking a long view of interactions between employment experience on the one hand and changing system rules on the other. Inasmuch as the history of pension schemes initially shows a gradual growth of inclusive public schemes but then a shift towards privatisation (see Bonoli and Shinkawa, 2005) it can be very hard to compare the actual outcomes in different countries. Meyer et al (2007) provide an interesting examination of this problem using a network of collaborating scholars asked to calculate the likely pension outcomes in 2050 for ‘case study’ people with a variety of personal biographies in Britain, the Netherlands, Switzerland, Germany, Italy and Poland. They show that while extensive recent efforts have been made to extend private pensions, the effectiveness of these depends upon the relationship of these to public provisions. The system in the Netherlands stands out as the most satisfactory, therefore, not

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because it has a well-regulated private occupational system but because the basic (first tier) state system is a strong and inclusive one, with a high level minimum. New social risks While the issues about pensions are ever present, for income maintenance systems an argument has been developed that suggests that the view of social risks embedded in the Beveridge Report (1942) (and therefore fundamental for the emphasis on the role of social insurance in comparisons between regimes) is to some extent dated. It is argued there are different new social risks ‘that people have to face in the course of their lives as a result of economic and social change associated with the transition to a post-industrial society’ (TaylorGooby, 2004). Bonoli argues that the welfare states established by Beveridge and his contemporaries ‘had one key objective: to protect the income of the male breadwinner’ (Bonoli, 2005, p 432). He goes on to argue: Today the task facing welfare states is admittedly more complex. Income protection for wage earners remains a key function of our social protection systems, but the transformation of the labour market and of family structures means that this strategy is not as successful as it used to be in protecting all against poverty, in guaranteeing social cohesion and in responding to citizens’ aspirations in modern democracies. (2005, p 432) Bonoli (2005, p 433) goes on to delineate the following ‘new social risks’: • insufficient social security coverage • single parenthood • reconciling work and family life • possessing low or obsolete skills • having a frail relative There are grounds for doubt about the case for distinguishing between old and new social risks. To do so implies that there was something inadequate about the old ideas, implicitly supporting those politicians who reject the universalist aspirations of Beveridge and his contemporaries. However, in the context of the concerns of this book the question remains about the extent to which new social risks pose new issues for comparative analysis. Crucial here are two issues: changing economic systems and changing family life. Bonoli’s book The Origins of Active Social Policies (2013) explores a political willingness, despite a general concern to curb welfare state growth, to promote labour market and child care policies. His comparative analysis shows variations between nations in this respect,

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particularly a relative absence of such development in southern Europe. But it may also be seen from a mixed economy perspective to involve a shift away from simple state provision to efforts to promote and support ‘active’ participation in the labour market, particularly by women. We return to this later.

Health care Regime theory’s preoccupation with income maintenance was mentioned at the beginning of the last section, Bambra argues that it has ‘ignored the fact that it is also about the actual delivery of services’ and that countries are not necessarily consistent ‘in terms of the relative emphasis they place upon cash benefits and/or welfare state services’ (2013,p 261). Starting from Esping-Andersen’s three regimes she arrived at a rather different categorisations of nations through calculations using indices featuring variations in the relationship between public and private health care provision (Bambra, 2005a, 2005b). But the basic proposition that the standard regime model may not be very helpful is evident from just one variable: an examination of public sector health expenditure as a percentage of total health spend in OECD member countries. This is set out in Table 9.2. Table 9.2 shows that, apart from the United States all the nations in EspingAndersen’s ‘liberal’ group have systems dominated by the public sector, with the UK particularly high in this respect. Moreover, although three ‘social democratic’ states are in the first six in Table 9.2, differences between them and many nations in the ‘conservative’ group are quite slight; note particularly the identification of Germany and Japan as proportionately high public spenders. But a central proposition from regime theory is that a simple comparison in terms of public expenditure gives too little attention to institutional variation (see Burau and Blank, 2006). There are a number of roles the state may play in relation to health care. These are as: • regulator • funder/purchaser • provider/planner Any specific system is likely to involve a combination of all or most of these roles. While logically there is no reason why the state cannot be involved in planning and providing without funding, in practice the three are likely to be mixed together, although the state may only be a part funder. The relationship between the role of the state as funder and the role of the state as provider can logically take any of four forms – for it to be funder and provider, for it to be neither funded nor provider, for it to be a funder but not a provider, or for it to be a provider but not a funder. The history of health provision in Britain has involved the development with the coming of the National Health

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Table 9.2: Public sector health spend as a percentage of total health spend 2015 Country Norway Germany Japan Czech Republic Sweden Denmark Netherlands New Zealand UK France Belgium Turkey Austria Finland

Public spend as a % of total spend 85 85 85 84 83 83 81 79 79 79 77 77 76 76

Country Italy Canada Spain Ireland Switzerland Australia Hungary Portugal Israel Greece Chile Korea Mexico USA

Public spend as a % of total spend 76 71 70 69 68 67 67 66 63 61 61 56 52 49

Source: Data from OECD (2016).

Service (NHS) of a system where the state was both funder and provider and then more recently some evolution towards relinquishing part of the provider role. Saltman and von Otter (1992; see also Saltman 1998) have demonstrated similar complexities in the Swedish system, where local authorities are the key units in the system and recent developments have also involved the evolution of mixed provider systems. Social insurance funded systems, such as those in France, Germany or the Netherlands, often allow for payments to private providers, as well as supplementation from private funds. All the cases where funding and provision are not unified require quite complex arrangements to deal with issues like the following: • the making, variation and termination of contracts; • the determination of the amounts and forms of reimbursement for services; • the ways in which public and privately funded activities may be mixed; • the monitoring of standards and the determination of needs for new services. Wendt takes many of these considerations into account to arrive at a typology of health care systems departing a long way from the regime approach, as follows: • Type 1: low total health expenditure, high public financing and low additional charges. Inpatient health care is higher and outpatient health care lower than

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the OECD average. General practitioners are paid by capitation, and patients’ access to health care is strictly regulated. • Type 2: an average level of expenditure, high public financing, above average additional charges, and high inpatient and outpatient health care. GPs receive a salary, and access regulation is strict. • Type 3: very low expenditure, low public financing, and very high additional charges. Both inpatient and outpatient health care is well below average, and GPs are paid a salary. • Type 4: high expenditure, high public financin, and low additional charges. (précis of Wendt’s abstract, 2014, p 864)

Social care Social care policy is, even more than health care, an area where the mixed economy is evident. Table 9.3 set out an approach to a typology for social care, which has been derived from but goes beyond Esping-Andersen’s (1990) original three regimes developing his (1999) rethink on family roles. This owes much to the work of Siaroff (1994) and Ferrara (1996). In this new classification category 1 can be equated with the Nordic social democratic welfare states, 2 with the conservative regimes of northern Europe, 3 with the liberal regimes and 4 with the conservative southern European regimes. In fact, Siaroff has produced a fourfold division between types of regimes like that set out in Table 9.1, drawing attention to the extent to which there is a Roman Catholic and/or southern European (Siaroff in Sainsbury, 1994; see also Ferrara, 1996) approach to the design of social policy. This is alternatively to be seen as either more ‘protective’ of the housewife outside the labour market or as increasing her ‘dependency’ within the family. What is at stake here is an issue about the way in which three alternatives for care – family, market and state – are combined in various societies. Hence there are seven alternatives, as set out in Table 9.4. Of course in any real world situation, as has been stressed, there are likely to be elements of family, state and market, the issues that deserve attention concern the extent to which any particular variant is dominant. Table 9.3: A typology of systems highlighting alternative approaches to care State Market

Individual 1 Rights to care 3 Purchase of care

Family 2 Support of family care efforts 4 Family on its own

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Bettio and Plantenga’s (2004) comparison of European care regimes arrives at the following categorisation:

Table 9.4: Logical alternative care patterns • • • • • • •

Family alone Market alone State alone Family plus market Family plus state State plus market All three

• ‘Countries that appear to delegate all the management of care to the family’ (Italy, Greece and Spain) with two ‘outlier’ cases, Portugal, where there is high female labour market participation, and Ireland lying between this group and the next one. • Countries with high dependence on informal care, but where this is much more salient in respect of child care than of care for elderly people (UK and the Netherlands). • Countries with ‘publicly facilitated, private care’ (Austria and Germany). • Countries with quite well developed formal care strategies (Belgium and France). • Countries with moderate to high levels of formal care (Denmark, Finland, Sweden). Had East Asian nations been included, they would probably have fallen into the predominantly family category. In the case of East Asia the interesting questions are about their future evolution on this issue, noting the way in which concerns about low birth rates have led to attention to family (and particularly female) care burdens. Some writers remain uneasy about efforts to force distinctions between care systems into a regime typology. It has been objected that care services cannot be typologised so easily. Anttonen et al (2003), who studied care for both children and elderly people in Finland, Germany, Japan, the UK and the USA, had hoped to apply a version of the regime typology to care but concluded that this was not feasible. They argue: Two main complications have arisen, one to do with how social care is consumed, the other to do with how it is produced. First, the manner in which the citizens of any one country use or consume a particular form of care is rarely standardized in some monolithic or dominant manner. The take-up and use of particular social care services is highly varied, even among those with broadly similar care needs … Second, on the production side, nations do not exhibit coherent patterns of social care in terms either of the principles that inform them or the ways in which they are delivered. A country may simultaneously provide or support care services that are universal and appear to confer

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genuine citizenship rights alongside others that are selective and sharply rationed. Equally, there is within each country, and even within the provision for a particular form of care, a considerable variety of delivery mechanisms. In some aspects of a nation’s care services, direct public provision may be the rule, in others contracting out to the private or voluntary sectors, the use of tax credits or payments for care may be the dominant method. (2003, p 168) The discussion so far in this section has been about social care in general. Certainly, as far as families are concerned there are interactions between care responsibilities at each end of the life cycle, but from the public policy point of view there are some very different care issues to be considered. Broadly these fall into three categories: care of elderly frail people, care of adults with disabilities who are below pension age and care of children. This discussion will focus first on the issues about care of older people, described here – following widespread contemporary usage – as ‘long-term care’ and then on the child care issues. There is not space to deal with the rather specialised issues about the varied and comparative small group of people in need of care services between childhood and old age. Long-term care As noted earlier, the label ‘long-term care’ (LTC) is applied to care largely provided for older people with difficulties in respect of daily living that lead to a need for care either in their own homes or in institutions. An OECD report on public LTC financing arrangements argues that three broad country clusters can be identified: • universal coverage within a single programme • mixed systems • means-tested safety net schemes (OECD, 2011, p 215) That sounds very simple, however the OECD report goes on to divide the universal coverage category into: • tax based models • public long-term care insurance models • personal care through the health system (2011, pp 221–2) Furthermore, even within this category, ‘universal coverage’ is subject to various cost-sharing arrangements and exclusions in respect of individuals with high levels of income and/or assets.

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Not surprisingly, therefore, when the OECD report goes on to mixed systems they say: It is difficult to give a proper account of the variety and complexity of institutional arrangements belonging to this group. Nevertheless, one possible way to group countries – in decreasing order of universality of the LTC benefits – is the following: i) parallel universal schemes; ii) income-related universal benefits or subsidy; iii) mix of universal and means-tested (or no) benefits. (OECD, 2011, 223) Inasmuch as this chapter has taken its lead from regime theory it is tempting to point up examples that seem to fit that approach: relative generosity in the Nordic countries, emphasis on means-tests in England (though not Scotland) and the USA, and care insurance in Germany, the Netherlands and Japan. Overall, however, the variation in practice escapes simplistic typology generation. Even in the most broadly encompassing state welfare systems rights to care are qualified in various ways. In Sweden, Denmark and Finland care for elderly people is subject to the application of means-tests and there is therefore also the private purchase of care. At the other extreme, in the systems where marketisation is most evident, the provision of state care for the elderly poor in exceptional circumstances has a history as old as the Poor Law. The difficulty, then, is of drawing lines within what is, in many respects, a shared approach throughout all nations between care as something widely subsidised from the public purse and care that is only exceptionally supported in this way. The institutional analysis approach of the OECD report does not give attention to the extent to which there are differences in the involvement of extended families in care. Exploration of specific arrangements for cost-sharing and means-testing, and variations in the extent to which care is offered in or outside institutions would be needed to throw more light on this. Using a rather different approach, Haynes et al (2013) draw on data from the International Social Survey Programme to explore variations in social networks. This approach, contrasting the weak networks of Denmark, France, Norway, the UK and the USA with the strong ones of Italy, Spain and Japan (with of course some middle cases), does not, of course, explain policy differences, but does suggest the importance of family network variations for care policy. On the family side of the equation, the interesting issue is about the extent to which there are cash benefits available that reduce the burden of family care. The significant development here is the emergence of care insurance in Germany and Japan. These offer an alternative to the straight choice between state and markets since cash benefits can be used to subsidise family care. The UK is also interesting as an in between case inasmuch as there are various cash benefits available offering

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part support of care, which may be used to enhance family income or contribute to the purchase of care. Child care A number of studies have explored child care policy comparatively, drawing attention to aspects of the mixed economy. It is pertinent to note that it is difficult to draw defining lines for this policy area. Child care policy for pre-school children may be seen as about: • care which will supplement (or even exceptionally replace) the care provided by parents; • care for children who are exceptionally vulnerable because of their own health problems or disabilities; • educational activities for children that will prepare them for the compulsory education system; • care to facilitate labour market participation on the part of the parents. In some circumstances it may also be appropriate to focus on cash benefits targeted to meet children’s needs, as in comparative work by Bradshaw and Finch (2002). Bonoli and Reber examine child care services across OECD countries, giving particular attention to, on the one hand, formal day care services and, on the other, public expenditure on family services noting: English-speaking liberal welfare states have relatively high coverage rates, with low public spending. Continental European countries are low on both dimensions and the Nordic countries have higher coverage, but only thanks to sizeable public investment in the field. (Bonoli and Reber, 2010, p 99). But they note two nations with high levels of public spending not predictable from regime theory, France and Belgium. France is interesting in having a longstanding commitment in this area. As noted earlier, Bonoli sees the expansion of child care provision in terms of the expansion of ‘active social policy’ specifically linked to labour market policy. Hence in his 2013 book his main explanatory variable is government efforts to stimulate employment. Alongside this, he gives attention to feminist demands (making an assumption that these are essentially for greater labour market participation) and to political ‘credit claiming’ (particularly by governments that see few other opportunities for positive social policy making). Hence little attention is given to education policies seeking ‘strong starts’ for children (OECD, 2006).

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Bonoli’s review of the evolution of policy in Sweden, Denmark, the Netherlands, Germany, France, Italy and UK (in his chapter 6) suggests a need for more exploration of historical and institutional factors, and of the ideas salient in the debates in various countries. While Sweden and Denmark stand out as pioneers of child care provisions, with substantial public investment, in both countries there have been interesting debates about aspects of the provision: for example, about the role of the private sector in Sweden and about the ‘institutionalisation’ of the roles of child minders in Denmark. France is interesting as another country with strong public provision but with a particularly strong emphasis upon pre-school education. All the other countries have seen substantial modern developments. In Germany, unification had a crucial impact since there was very much a permissive system with non-profit elements in West Germany but a state-run system in the East. In the Netherlands, Italy and the UK there has been much catch-up activity, particularly in the Netherlands. There are some complex issues running through (on which change has often been rapid and Bonoli’s account may be out of date) about means-testing of places and the use of tax or benefit credits to help lower income parents pay care costs. Purchase and provision The examination of the issue of care particularly highlights the problems around the distinction between purchase and provision, also evident in the health sector in many countries. The link between the state as payer and the arrangements for provision may be complex. Various efforts have been made to specify the options. For example, a complicated matrix illustrating purchaser–provider relationships in the UK in Wistow et al (1994, p 37, Figure 3.1) delineates on one dimension the public, voluntary and private sectors and on the other the following: • coerced collective demand • voluntary collective demand • corporate demand • uncompensated individual consumption • compensated individual consumption • individual donation On the provider side, three sectors roughly define the alternatives to direct provision by the state: the private sector, the voluntary sector and informal care (meaning in most cases the extended family). The feasibility of typology development seems limited by difficulty in finding comparative work that helps us to identify differences in choice between the provider options when the state is the payer. There are three questions here about possible differences between states in respects of:

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• propensities to use the private sector • willingness to subsidise families • propensities to use the voluntary sector The logic of the Esping-Andersen model suggests that, where the public sector does fund care, interest in drawing in the private sector might be expected to be strongest in the ‘liberal’ regimes and weakest in the ‘social democratic’ ones. But efforts to draw the private sector in as providers seems to have been as widespread in Scandinavia as in the UK and the USA. This issue has been examined a little in an article by Bahle (2003), which compares the UK with France and Germany, indicating the importance of the trend towards the privatisation of provision, but suggests significant institutional influences upon how this has developed. There are difficulties in trying to explore this issue further with respect to the voluntary sector given the limited comparative data and the way it has been analysed by scholars not interested in relating it to mainstream comparative social policy theory. The issues regarding the subsidy of families are complicated by the diversity of ways in which this may occur. This has been given more comparative attention than the issue of levels of subsidy per se. A particular concern of analyses of the role of women in welfare has been with the implications of alternative ways of providing state support for care. One amplification of that is to recognise an important difference between paying the cared-for (leaving them choices about where to purchase, including indeed of course the possibility of using the money within the family) and paying the carer (in which case a much more prescriptive stance may be taken on who is to do the caring). But Ungerson (1995) and Daly (2002) have also identified that subsidy to carers may come in a variety of ways: cash-payments, opportunities to secure subsidised leave from work, credits for social security, and relief from taxation.

Conclusions This chapter has explored the way in which the mixed economy of welfare is handled in comparative studies. After efforts to generalise about welfare policy overall, sections have been devoted to social security, health policy and social care. There has not been sufficient space to explore education policy, where state input is generally high, and housing policy, where it is often low. A particular focus has been on efforts to develop typologies. Any typology imposes a rough framework upon reality; consequently many people shy away from typologies seeing their creation as a game that contributes nothing to our understanding. The defence of typologies is that even a rough framework can bring key issues to light and help us to explore comparisons in a more sophisticated way. And anything more than a rough framework gets hopelessly over-elaborate in this respect. We can end up, in the words of Esping-Andersen, in a situation

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in which ‘the desired parsimony ... [is] sacrificed and we might as well return to individual comparison’ (1999, p 88). The mixed economy of welfare is particularly hard to handle comparatively, the essence of the mixed economy of welfare proposition being that systems are ‘mixed’ in often complex ways. What has been done here has been merely to suggest that the ‘mixes’ may sometimes differ significantly. Understanding those differences just a little may help in understanding (a) process of change in individual societies and (b) prospects for policy interventions (particularly policy borrowings). However, it is very difficult to be very specific about comparisons relating to some of the key dimensions – particularly variations in voluntary sector provision and variations in regulation. In many respects, in relation to a topic like this, comparison between a very limited sample of nations which can focus upon the richness of variation may often be more appropriate than broad statistical comparisons.

Summary

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In many respects issues regarding differences between countries in respect of their mixed economy of welfare are a central preoccupation of comparative studies, concerned with variations both in the extent of the welfare provided and in the way in which it was provided. This brings out very clearly issues about the state– economy relationship. This is particularly embodied in regime theory’s notion of ‘decommodification’ (the extent to which access to benefits and services is detached from determination by the market). Developments of Esping-Andersen’s approach have added issues about variations in the roles of families and, to some extent, the role of voluntary and community organisations in the provision of welfare. With respect to income maintenance, at the heart of regime theory there is an assumption that states may be compared in terms of the role played by social insurance. In the conservative group, social insurance is dominant but not particularly redistributive, in the social democratic group it is dominant and redistributive and in the liberal group it is much less important and may be overshadowed by a combination of private provision for the better off and means-testing for everyone else. Two questions addressed are then (a) the extent to which these distinctions are helpful for the comparative analysis of income maintenance and (b) the extent to which developments since the theory was propounded contribute to undermining its usefulness. The regime theory approach is less useful for the analysis of differences in health policy. There is a need to go beyond that to explore variations in the state role in respect of regulation, funding (or purchasing) and providing and planning. Any specific system is likely to involve a combination of all or most of these roles.

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Social care policy is, even more than health care, an area where the mixed economy is evident. What is at stake here is an issue about the way in which three alternatives for care – family, market and state – are combined in various societies.

Questions for discussion

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Regime theory particularly focuses upon issues of state–market relationships. What are the limitations of this approach? How important is it to distinguish issues about who pays from issues about who provides in the comparative analysis of the mixed economy?

Further reading Esping-Andersen’s revision of his regime theory in his 1999 book is probably the best source for explorations on the roles of state, market and family, while Arts and Gelissen’s (2010) review offers the best overview of regime theory. The article by Sharkh and Gough (2010) contains a valuable approach to giving regime theory a more universal application. Bonoli’s (2013) book provides a comparative analysis of the issues regarding ‘new social risks’, with particular reference to child care.

Electronic resources The OECD has a large collection of reports and data on health and social expenditure on its member countries: http://www.oecd.org/els/soc/ and http://www.oecd.org/els/healthsystems/ Esping-Andersen’s dataset is available via ‘Social Citizenship Indicator Program (SCIP) 1930–2005’: https://www.sofi.su.se/spin/about-the-project/social-citizenship-indicatorprogram-scip-1930-2005-1.202043 The Luxembourg Income Study Database (LIS) has data on a wide range of social policy subjects: http://www.lisdatacenter.org/resources/other-databases/

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References Adema, W. and Whiteford, P. (2010) ‘Public and private social welfare’, in F.G. Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds) The Oxford Handbook of the Welfare State, Oxford: Oxford University Press. Anheier, H.K. and Salamon, H.K. (2001) Volunteering in Cross-national Perspective: Initial Comparisons’, Civil Society Working Paper 10, London: LSE. Anttonen, A., Baldock, J. and Sipilä, J. (eds) (2003) The Young, the Old and the State: Social Care Systems in Five Industrial Nations, Cheltenham: Edward Elgar. Arts, W. and Gelissen, J. (2002) ‘Three worlds of welfare capitalism or more?’, Journal of European Social Policy, vol 12, no 2, pp 137–58. Arts, W. and Gelissen, J. (2010) ‘Models of the welfare state’ in F.G. Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds) The Oxford Handbook of the Welfare State, Oxford: Oxford University Press. Bahle, T. (2003) ‘The changing institutionalisation of social services in England and Wales, France and Germany: is the welfare state on retreat?’, Journal of European Social Policy, vol 13, no 1, pp 5–20. Bambra, C. (2005a) ‘Worlds of welfare and the health care discrepancy’, Social Policy and Society, vol 4, no 1, pp 31–41. Bambra, C. (2005b) ‘Cash versus services: “worlds of welfare” and the decommodification of cash benefits and health care services’, Journal of Social Policy, vol 34, no 2, pp 195–214. Bambra, C. (2013) ‘States of health: welfare regimes, health and health care’, in B. Greve (ed) The Routledge Handbook of the Welfare State, Abingdon: Routledge. Bettio, F. and Plantenga, J. (2004) ‘Comparing care regimes in Europe’, Feminist Economics, vol 10, no 1, pp 85–113. Beveridge, W. (1942) Social Insurance and Allied Services, Cmd. 6404, London: HMSO. Bonoli, G. (2005) ‘The politics of the new social policies: providing coverage against new social risks in mature welfare states’, Policy and Politics, vol 33, no 3, pp 431–50. Bonoli, G. (2013) The Origins of Active Social Policy: Labour Market and Childcare Policies in a Comparative Perspective, Oxford: Oxford University Press. Bonoli, G. and Reber, F. (2010) The political economy of childcare in OECD countries: explaining cross-national variation in spending and coverage rates’, European Journal of Political Research, vol 49, pp 97–118. Bonoli, G. and Shinkawa, T. (eds) (2005) Ageing and Pension Reform Around the World, Cheltenham: Edward Elgar. Bradshaw, J. and Finch, N. (2002) A Comparison of Child Benefit Packages in 22 Countries, DWP Research Report 174, Leeds: Department of Work and Pensions. Burau, V. and Blank, R.H. (2006) ‘Comparing health policy: an assessment of typologies of health systems’, Journal of Comparative Policy Analysis, vol 8, no 1, pp 63–76.

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Castles, F.G. (2004) The Future of the Welfare State, Oxford: Oxford University Press. Castles, F.G. and Mitchell, D. (1992) ‘Identifying welfare state regimes: the links between politics, instruments and outcomes’, Governance, vol 5, no 1, pp 1–26. Dahlberg, L. (2005) ‘Interaction between voluntary and statutory social service provision in Sweden: a matter of welfare pluralism, substitution or complementarity?’, Social Policy & Administration, vol 39, no 7, pp 740–63. Daly, M. (2002) ‘Care as a good for social policy’, Journal of Social Policy, vol 31, no 2, pp 251–70. Esping-Andersen G. (1990) Three Worlds of Welfare Capitalism, Cambridge: Polity Press. Esping-Andersen G. (1999) Social Foundations of Post-industrial Economies. Oxford: Oxford University Press. Evers, A., Pijl, M. and Ungerson, C. (eds) (1994) Payments for Care: A Comparative Overview, Aldershot: Avebury. Ferrara, M. (1996) ‘The “southern model” of welfare in social Europe’, Journal of European Social Policy, vol 6, no 1, pp 17–37. Gough, I. and Wood, G. (2004) Insecurity and Welfare Regimes in Asia, Africa and Latin America: Social Policy in Development Contexts, Cambridge: Cambridge University Press. Haynes, P., Banks, L. and Hill, M. (2013) ‘Social networks amongst older people in OECD countries: a qualitative comparative analysis’, Journal of International and Comparative Social Policy, vol 29, no 1, pp 15–27. Howard, C. (1999) The Hidden Welfare State: Tax Expenditures and Social Policy in the United States, Princeton, NJ: Princeton University Press. Jenson, J. (2015) ‘Social innovation: redesigning the welfare diamond’, unpublished preview piece available online. Jones, C. (1985) Patterns of Social Policy: An Introduction to Comparative Analysis, London: Tavistock. Klant, J.J. (1984) The Rules of the Game: The Logical Structure of Economic Theories, Cambridge: Cambridge University Press. Lewis, J. (1992) ‘Gender and the development of welfare regimes’, Journal of European Social Policy, vol 2, no 3, pp 159–73. Lewis, J. (ed) (1993) Women and Social Policies in Europe: Work, Family and the State, Aldershot: Edward Elgar. Lewis, J. (ed) (1997) Lone Mothers in European Welfare Regimes, London: Jessica Kingsley. Lundström, T. and Svedberg, L. (2003) ‘The voluntary sector in a social democratic welfare state – the case of Sweden’, Journal of Social Policy, vol 32, no 2, pp 217–38.

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Meyer, T., Bridgen, P. and Reidmüller, B. (eds) (2007) Private Pensions versus Social Inclusion: Non-state Provision for Citizens at Risk in Europe, Cheltenham: Edward Elgar. Mitchell, D. (1991) Income Transfers in Ten Welfare States, Aldershot: Avebury. O’Connor, J. (1996) ‘From women in the welfare state to gendering welfare state regimes’ Special issue of Current Sociology, vol 44, no 2. OECD (2005) Pension Markets in Focus, Paris: Organisation for Economic Cooperation and Development. OECD (2006) Starting Strong, Paris: Organisation for Economic Co-operation and Development. OECD (2011) Help Wanted? Providing and Paying for Long-term Care, Paris: Organisation for Economic Co-operation and Development. OECD (2016) Health Data 2016, Paris: Organisation for Economic Co-operation and Development. Powell, M. and Barrientos, A. (2004) ‘Welfare regimes and the welfare mix’, European Journal of Political Research, vol 43, no 1, pp 83–105. Sainsbury, D. (ed) (1994) Gendering Welfare States, London: Sage. Sainsbury, D. (1996) Gender Equality and Welfare States. Cambridge: Cambridge University Press. Saltman, R. (1998) ‘Health reform in Sweden: the road beyond cost containment’, in W. Ranade (ed) Markets and Health Care, London: Longman. Saltman, R.B. and von Otter, C. (1992) Planned Markets and Public Competition, Buckingham: Open University Press. Sharkh, M.A. and Gough, I. (2010) ‘Global welfare regimes: a cluster analysis’, Global Social Policy, vol 10, no 1, pp 27­–58. Siaroff, A. (1994) ‘Work, welfare and gender equality: a new typology’, in D. Sainsbury (ed) Gendering Welfare States, London: Sage. Taylor-Gooby, P. (ed) (2004) New Risks, New Welfare, Oxford: Oxford University Press. Ungerson, C. (1995) ‘Gender, cash and informal care: European perspectives and dilemmas’, Journal of Social Policy, vol 24, no 1, pp 31–52. Wendt, C. (2014) ‘Changing healthcare system types’, Social Policy & Administration, vol 48, no 7, pp 864–82. Wistow, G., Knapp, M., Hardy, B. and Allen, C. (1994) Social Care in a Mixed Economy, Buckingham: Open University Press. World Bank (1994) Averting the Old Age Crisis, Oxford: Oxford University Press.

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10 Conclusion: analyses in the mixed economy of welfare and the social division of welfare Martin Powell

Overview This chapter draws together some of the main issues arising from the book. It gives a brief overview of the welfare mix over time and space. It then focuses on the changing welfare mix under the New Labour, Coalition and Conservative governments, the forgotten dimensions of finance and regulation, the importance of a ‘three-dimensional’ mixed economy of welfare (MEW), the links between the MEW and other debates, and the impact of the MEW and social division of welfare (SDW). Key concepts The welfare mix over time and space; changing welfare mix for recent UK governments; finance; regulation; the ‘three-dimensional MEW’; impact of MEW and SDW

Introduction The title of this chapter is derived from the pioneering account of Sinfield (1978). While ‘analyses’ may promise a little too much, this concluding chapter aims to reinforce the importance of the mixed economy of welfare (MEW) and the social division of welfare (SDW). Drawing on the material from earlier chapters, it examines the importance of the MEW and SDW over time and space. The MEW and SDW are important in an analytical as well as a descriptive sense. It is important to examine changes in the complex three-dimensional space of provision, finance and regulation rather than focusing on simple and misleading changes in one dimension such as provision. It then examines how the MEW and SDW are linked to important debates in social policy, and how they are associated with complex differential impacts on service users.

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The MEW and SDW over time and space The MEW and SDW are vital, but relatively neglected, concepts in social policy. Mayo (1994, p 26) writes that ‘the MEW has been fundamental to the welfare state in Britain, although the mix has clearly varied between services and over time, just as the mix varies between Britain and the USA, for instance’. John Stewart (Chapter Two) draws attention to the historical importance of the MEW. While many authors claim that the mix changes over time, he points out that the components of the MEW themselves change over time. For example, the ‘voluntary sector’ in the 19th century was not the same as the ‘voluntary sector’ today. Nevertheless, the different components of the MEW in the UK follow a fairly broad trend – or ‘moving frontier’ – over time. In simple terms, private, voluntary and informal components of welfare were historically the dominant sources of welfare. From 1601 the most important role of (local) state welfare was located in the Poor Laws. For example, in the early 19th century, there were ‘only three ways of getting a state education: by being a cadet, a felon or a pauper’ (Fraser, 2003, p  85). State intervention increased from about the mid-19th century onwards (Fraser, 2003; Harris, 2004). Collectivist solutions increased at the expense of individualist ones. Sidney Webb’s view of the importance of ‘socialism’ is given in Box 10.1. However, it also serves to highlight the importance of state intervention. As Stewart shows, it is important in highlighting the rise of the state that the moves from local to central state are not forgotten (see also Brian Lund, Chapter Three), neither is it satisfactory simply to focus on the UK, as the MEW is also likely to have varied between the nations of the UK.

Box 10.1: Sidney Webb’s account of the importance of the state The individualist town councillor will walk along the municipal pavement, lit by municipal gas and cleansed by municipal brooms with municipal water, and seeing by the municipal clock in the municipal market that he is too early to meet his children coming from the municipal school, hard by the county lunatic asylum and municipal hospital, will use the national telegraph system to tell them not to walk through the municipal park, but to come by the municipal tramway to meet him in the municipal reading-room by the municipal art gallery, museum and library where he intends to consult some of the national publications in order to prepare his next speech in the municipal town hall in favour of the nationalisation of canals and the increase of Government control over the railway system. ‘Socialism, Sir’, he will say, ‘don’t waste the time of a practical man by fantastic absurdities. Self-help, Sir, individual self-help, that’s what made our city what it is’ (Sidney Webb, 1889, in Fraser, 2003: 122–3).

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Nevertheless, it is possible to construct an alternative view of the importance of non-state sources of welfare at that time (Box 10.2; see also Finlayson, 1994; Harris, 2004).

Box 10.2: Alternative account of the importance of non-state welfare The collectivist town councillor passes the voluntary hospital, hard by the voluntary school and the voluntary housing, on his way to see the doctor from his Friendly Society. He later buys some goods at the Co-op, including some ‘over the counter’ medicine for his child (who is not covered by the Friendly Society scheme). He returns home, to thank the neighbour who will be looking after the child, while he goes to the council meeting to make a speech on the value of municipal welfare in the city.

It is generally accepted that the importance of state welfare increased during the 20th century through the Liberal reforms of 1906–14 culminating in the ‘classic welfare state’ introduced by the 1945 Labour government after the Second World War. The historian, A.J.P. Taylor (1970, p 25) opens his account of English History 1914–1945 with the famous claim that ‘Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman.’ Although it would be fair to say that the non-state elements assumed less importance after 1945, in some accounts they were almost completely neglected. However, there are clear differences between the largely state-provided health and education services and the greater pluralism found in housing and social care. Neither should it be forgotten that one of the most important parts of the classic welfare state was rooted in the regulation of employment levels through Keynesian demand management rather than by direct state employment. As well as varying over time, we saw that the MEW also over space. In Chapter Nine, Michael Hill shows that that systems are mixed in often complex ways. Esping-Andersen (1990) focused on state–market relationships, especially on the level of ‘decommodification’ (the extent to which state goods and services are detached from the market). In response to his feminist critics, Esping-Andersen (1999) also acknowledged the importance of ‘defamilisation’ (the extent to which women are detached from the gendered obligations of unpaid labour within the household). This still leaves a large gap on the role of the voluntary sector in the comparative MEW. While the welfare mix bears some broad relationships to ‘welfare regimes’ (Esping-Andersen, 1990), there is considerable variation within regimes (such as the UK and USA within the ‘liberal’ regime), between variations between services within one country (such as the National Health

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Service [NHS] and housing within the UK), and between services in different countries (patterns of health care do not neatly map onto patterns of education or social care). Moreover, while the ‘Social Democratic’ or ‘Scandinavian’ regime relies heavily on the state, this does not mean that voluntary provision is totally lacking (Dahlberg, 2005). The picture is further complicated by our limited knowledge of the different patterns of provision, finance and regulation. Even less is known about the international dimensions of the SDW. According to Natali and Pavolini (2014), occupational welfare has been a relatively neglected area in both theoretical and empirical studies of the welfare state despite its importance to the overall levels of social provision. While comparative information on occupational welfare is very limited, they claim that the average level of voluntary private social spending is 6.7% of total expenditure for the eight European countries they studied. However, there is a wide variation between countries, with a broad distinction between higher spending in northern and continental European countries and lower spending in southern and central-eastern European countries. They note that the UK has an ‘oversize’ voluntary private welfare sector (almost three times the average). Voluntary occupational welfare is of substantial importance (defined as covering more than 20% of the total employees) in at least one of three policy areas covered (training, health care, sickness insurance) in all of their eight countries. In particular, voluntary occupational pensions are of extreme importance in many countries. However, the UK (a country with a high level of spending on voluntary private welfare) does not show an impressive degree of coverage. Even in the case of pensions, fewer than 50% of employees are covered by occupational schemes. They also note that coverage varies from one policy field to the other, with different risks covered to a differing extent by voluntary occupational welfare programmes in the same country. They conclude that in most European countries and for the majority of policy fields, voluntary occupational welfare programmes have been designed as an addition to the welfare state more than a substitution. However, they represent a ‘doubleedged sword’, offering possibilities for improving workers’ conditions and life while at the same time creating incentives to weaken the welfare state and to fragment employees’ conditions on the labour market. Morel et al (2016) claim that since the 1990s, in the European context, Social Tax Expenditures (STEs) have constituted an important yet under-studied part of welfare state reforms. STEs are important in a number of fields, notably employment and labour market risks, family policy and child care, and income support. However, Morel et  al write that the Organisation for Economic Co‑operation and Development (OECD) dataset on Net Social Expenditures is the only available dataset with detailed, comparative cross-sectoral data on STEs in OECD countries, and warn that caution should apply when it comes to using this data for descriptive or comparative purposes.

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The MEW and SDW under New Labour, Coalition and Conservative governments: from the ‘Third Way’ to the ‘Big Society’ It can be argued that there are some significant continuities from Labour’s ‘Third Way’ to the Conservatives’ ‘Big Society’. At the risk of some over-simplification, it might be said that: ‘Third Way’ + ‘financial crisis’ = ‘Big Society’. Labour’s ‘Third Way’ was originally portrayed as based on ‘networks’ rather than on markets or state hierarchies. As seen in the previous chapters (and discussed further later), it had significant implications for the components of the MEW and SDW, and the associations between them. However, Labour placed an increasing emphasis on the market that it originally rejected. The Coalition’s ‘big idea’ was the ‘Big Society’, which aimed to mend ‘Broken Britain’ financially, socially and politically. By taking power, responsibility and decision making from the state and giving it to individuals and neighbourhoods, the Coalition government wished to move from’ Big Government’ to the ‘Big Society’. However, the policy content of the Big Society was rather vague (eg Corbett and Walker, 2013). Toynbee and Walker (2017, p 3) saw it as ‘the failed fantasy of an already half-forgotten prime minister’, and as ‘cover for spending cuts’ (Toynbee and Walker, 2015, pp 56–9). Perhaps a clearer view of the Coalition policy direction is presented in the Open Public Services White Paper (HMG, 2011), which has been seen as ‘Cameron’s summa theologica … a tract for the “public bad, private good” gospel’ (Toynbee and Walker, 2015, pp 86–7). It states that ‘the old centralised approach to public service delivery is broken’. It claims that total public spending increased by 57% in real terms from 1997/08 to 2010/11, from 38% to 48% of GDP. Yet on key international comparisons such as school results, cancer survival rates and crime rates, the UK has been treading water. The differences in the social outcomes experienced by the most and least well-off have remained static over the last ten years despite these huge increases in public spending. It sets out five principles for modernising public services: • Wherever possible we will increase choice. • Public services should be decentralised to the lowest appropriate level. • Public services should be open to a range of providers. • We will ensure fair access to public services. • Public services should be accountable to users and to taxpayers. With some references to the Labour government, the document notes that the Coalition is not the first government to realise the power of open public services; others have tried it, for example social enterprise providers of community health care and the introduction of academyschools in the last decade. ‘But we are the

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first government to introduce these principles systematically across the entire public sector, and it is one of the fundamental areas of shared belief that brought together the two parties that form the Coalition Government’ (HMG, 2011, p 11). Sounding very similar to Labour’s Third Way, the document notes that ‘we do not have an ideological presumption that only one sector should run services: high-quality services can be provided by the public sector, the voluntary and community sector, or the private sector’ (2011, p 9). However, wherever possible, public services should be open to a range of providers competing to offer a better service. Moreover, there should be fair funding on the basis of quality, so that public service providers are paid for the results they achieve regardless of which sector they are from. The document lists key ‘Payment by results’ policies as including the Work Programme; ‘the rehabilitation revolution’; public health; drug and alcohol recovery; children’s centres; and care of vulnerable people. The document states that while the government will support greater diversity in the provision of public services from the private, independent, and voluntary and community sectors, core public services will continue to be funded and regulated by the state, and they will be accountable to citizens through choice, community involvement and representative democracy. What matters is the quality of service, not the ownership model (HMG, 2011, p 47). We introduced in Chapter One a three-dimensional approach to the MEW (Table 1.1), differentiating the dimensions of provision, finance and regulation. This differs from the work of Burchardt (1997) in that her third dimension is choice rather than regulation. Burchardt and Obolenskaya (2016) have updated the Burchardt (1997) typology, pointing out that public spending on publicly provided services accounted for 44% of total welfare activity in 2013/14, down from 48% in 2007/08, while private spending on private provision rose from 34% to 39%. However, this overall figure is heavily influenced by housing, and excluding this sector changes the 2013/14 public finance/public provision figure to 60%. They conclude that the overall picture of public/private activity in most policy areas is one of continuity with previous trends rather than abrupt change. While their analysis suggests that changes have been relatively minor, the contributors to this volume (Chapters Three to Eight; and see further discussion later) broadly claim that there have been many important changes in the MEW and SDW under recent governments. The most relevant terms for the MEW from the analysis of Bochel and Powell (2016) that explores the variations between recent governments are approach, mixed economy, mode and expenditure. In terms of approach, the policies of the Coalition government appear to have been significantly closer to the ‘deregulator’ approach of the New Right than to the ‘investor’ approach of the Third Way. For example, the deregulatory approach appears to fit in education, with the Coalition’s determination to remove or reduce the powers of local authorities through a major increase in the number of academies and the creation of ‘free

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schools’; in local government, through major spending cuts being accompanied by an emphasis on ‘localism’; and in health care, through the changes introduced by the Health and Social Care Act 2012, including opening up the NHS in England further to private and not-for-profit providers; and in the relaxation of controls on how individuals use their pension investments. Turning to the mixed economy, the Coalition appeared to have a marked preference for provision by the private and not-for-profit sectors, including social enterprises and voluntary organisations. In particular, the ‘localism’ and ‘Big Society’ narratives clearly point towards a much smaller state. In health care, the project allowing the private operator Circle to run Hinchingbrooke hospital was initiated by Labour, but continued by the Coalition, until Circle handed back the hospital to the NHS. In housing, social housing rents have been allowed to rise to 80% of market levels (so-called ‘affordable’ housing), but this makes it more attractive to develop new rented housing. The Coalition’s Work Programme extended the contracting model and the role of private providers in the delivery of previous welfare-to-work programmes, but funded providers on a payments-by-results basis structured in relation to initial attachment to the programme, job outcomes and job sustainability, with additional payments made for higher-performing contractors. The dominant mode appears to be competition, with the importance of choice and competition between autonomous providers stressed in health (foundation trusts, independent providers) and education (including free schools). The Coalition continued with personal budgets in health and social care, which may result in ‘zombie personalisation’ (a pale and potentially sinister imitation, but with any genuine scope for innovation watered down as the old system seeks to reinvent itself). Finally, in terms of expenditure, the ‘deficit reduction programme’ and the austerity agenda has seen significant reductions in public expenditure in many (but not all) sectors, with differential cuts between spending departments, nations and groups. In particular, the scale of the cuts faced by local government has been unprecedented, with one prominent council leader talking of ‘the end of local government as we know it’. As in 2010, the 2015 Conservative manifesto stressed the need to reduce the national deficit and debt, and the July 2015 budget signalled more savings from the ‘welfare budget’. All this represents something of a puzzle. The quantitative approach of Burchardt and Obolenskaya (2016) (mentioned earlier) suggests little change, while the contributors here generally point to more far-reaching changes (compare Box 10.3). There are a number of possible reasons for this. First, the contributors to this text examine changes to the SDW as well as the MEW. Second, they largely focus on ‘qualitative’ policy changes and mechanisms rather than quantitative expenditure data. Third, changes to expenditure data may take some time as the results of policy changes ‘kick in’, while the contributors here point to changes

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that may in a ‘thin end of the wedge’ fashion lead to far-reaching changes in the future (such as the private finance initiative [PFI] and public–private partnerships [PPPs]). Lastly, the quantitative data does not examine the dimension of regulation, in which some fundamental changes have occurred.

Box 10.3: The modern MEW, stressing the importance of nonstate welfare The Conservative politician at her surgery listens to her constituents’ complaints about PFI hospitals; being forced to ‘go private’ as their dentist does not offer NHS treatment; not finding a place for their child at a ‘free school’; their school being supported by raffles held by Parent Teacher Associations; being unable to find accommodation in the Housing Association housing that was formerly owned by the local authority; their local playgroup failed to get any funding from the National Lottery; their problems of spending personal budgets; being forced to pay privately for IVF treatment; considering selling the family house as the drugs they need are not available on the NHS; watching a lifetime’s savings being spent to pay for residential care (while the person in the next room receives free care); being forced to sell their house to finance long-term residential care; the closure of a chain of private residential homes which mean that their elderly parents have to find new accommodation; balancing employment and caring, with impacts on their own health; a letter saying they must hand back overpaid tax credits; that the vice chancellor at the university where they work receives large sums in ‘fringe benefits’ while claiming that they can’t afford to pay the lowest paid staff a living wage; a complaint that their private pension is not secure (unlike those of MPs).

The three-dimensional MEW We saw in Chapter One (Table 1.1) that a one-dimensional view of the MEW is inadequate, in that it neglects the dimensions of finance and regulation. Much recent writing has focused on moves from state to market such as privatisation, marketisation or commodification (eg Morgan, 1995; Drakeford, 2000; Leys, 2001; Pollock, 2004). However, privatisation is an overloaded term, with limited analytical power (Le Grand and Robinson, 1994; Drakeford, 2000). For example, with reference to the NHS, Powell and Miller (2014) state that the term ‘privatisation’ is multidimensional, and definitions and operationalisations of the term are often implicit, unclear and conflicting, resulting in conflicting accounts of the occurrence, chronology and degree of privatisation. It is more fruitful to examine changes in the MEW as movements from origin to destination cells. The most far-reaching moves would involve all three dimensions

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(eg from 1a to 6b), from the core or heartland of the welfare state public provision, finance and regulation to private finance and provision with limited or no public regulation. It follows that ‘privatisation’ could involve the three-dimensional move described earlier (1a to 6b), but might also cover any move down from the top row (eg 1 to 5; 2 to 10 and so on), any shift to the right from the first column (eg 1 to 2; 5 to 7 and so on) or any shift from high to low regulation (any a to b). For example, Knapp (1989, p 226) discusses in more detail consumer charges (cell 5), contracting out (cell 2) and market allocations, ‘the quintessence of privatisation’ (cell 6). ‘The private provision of public welfare’ (Papadakis and Taylor-Gooby, 1987) strictly refers only to cell 2. In some ways, it might be preferable to differentiate destinations such as privatisation (towards column 2 or row 5), voluntarisation (towards column 3 and row 9), and informalisation (towards column 4 and row 13). This could be linked with dimensions such as deprovided, definanced and deregulated, but ‘deregulated voluntarisation’ or ‘deprovided informalisation’ are ugly, but perhaps useful, terms. It is possible to point to some examples of movement between cells. For Labour’s Third Way, students in England now have to pay tuition fees for higher education (cell 3 to cell 7). In social care, ‘Direct Payments’ users have a budget to spend on social care (cell 1 to cells 2 or 3). For health care, under the ‘Concordat’ between state and private medicine, NHS patients can choose to be treated free at point of use in private hospitals, or in Independent Sector Treatment Centres (ISTCs) (cell 1 to cell 2). There are ‘Compacts’ between state and voluntary sector (cell 1 to cell 3). There are PPPs under the PFI where the state leases newly built facilities such as hospitals from private companies, which has been likened to paying for your mortgage on a ‘credit card’ with a high rate of interest (sometimes to companies based in tax havens and so not paying UK tax) (cell 1 to cells 2). In turn, the Coalition’s Big Society encourages the formation of neighbourhood and community groups, who may take over the running of threatened local services such as libraries (cell 1 to cells 4 or 16). Some state-run organisations have ‘spun out’ to become mutuals or cooperative organisations, along the lines of the ‘John Lewis model’ (cell 1 to cell 3). Service academies provide pre-employment training for unemployed people, delivered by third sector and private organisations on the basis on largely outcomes-based payment (cell 1 to cells 2 or 3). Academy or ‘free’ schools can be set up by local citizens, similar to the Swedish model or US charter schools (cell 1 to cells 3 or 4). There is some continuity for examples from the Coalition’s Big Society. This includes thematic continuities such as a shared emphasis on a greater use of third sector and private providers, on localism and decentralisation, and on the duties and responsibilities of citizens. There are also some policy continuities such as academy schools, and the Third Way’s ‘New Deal’ and the Coalition’s ‘Work Programme’.

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However, there may also be some discontinuities. For example, the age of austerity, may mean that the ‘state financed’ voluntary sector might be replaced by the ‘real’ voluntary sector, where finance is raised through public contributions rather than central or local government grants (cells 11 and 16 not cells 3 or 4). The Big Society potentially has profound consequences for the MEW in the form of increased individual risk, increased inequality, ‘DIY welfare’ and a move back to the future of more pluralist welfare before the ‘welfare state’ (Corbett and Walker, 2013). More broadly, there have been changes in all three dimensions. First, in terms of ownership/provision, PFI/PPP schemes effectively transfer public assets such as schools and hospitals into private ownership (Chapters Three and Four). Similarly, some local authority (or ‘council’) housing has been transferred to social landlords. Second, there have been recent moves in finance. In some cases, finance has been privatised, with the financial burden moved from the state to the individual. Many schools and hospitals are increasingly reliant on charitable (including National Lottery) rather than state funding. Introducing or increasing user charges in state services (eg increasing prescription charges) involves moves from cell 1 to cell 5. Many people now cannot find a dentist willing to treat them under the NHS and so are forced to ‘go private’, either paying directly or taking out a private subscription scheme. In some cases, people unable to afford private fees have resorted to ‘DIY dentistry’ involving the household toolbox or a piece of string attaching the tooth to a door. Despite a manifesto pledge from as long ago as 1997, and many subsequent commissions, policies and promises, some elderly people in England still have to sell their houses to pay for private residential care. There have been some cases of people selling their houses in order to finance operations or drugs privately. Students in England now have to pay ‘top-up’ tuition fees in higher education. New Labour abolished the Conservatives’ means-tested ‘Assisted Places Schemes’, whereby parents were given state financial support to enable them to send their children to private schools, but it introduced a superficially similar ‘choose and book’ scheme in health, where patients in England can now opt to be treated free at the point of use in private hospitals or ISTCs. Third, turning to regulation, as we saw in Chapter One, it is generally claimed that the importance of regulation has increased to form a ‘Regulatory State’ or ‘Audit Society’, where governments ‘steer rather than row’, or indeed where government has moved to governance, with ‘more control over less’ (see Box 10.4; see also Chapters Four and Eight). In terms of Table 10.1, this represents a broad move from b (low regulation) to a (high regulation). However, there are many instances of regulatory failure (see Powell and Hewitt, 2002), or what Moran (2003, p 171) terms ‘the age of fiasco’. It might be said that there are too many regulators who carry out insufficient regulation.

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Table 10.1: Recent moves in the MEW Provision

Finance

State

Market

Voluntary

Informal

State

1a (high reg.) 1b (low reg.)

2a 2b

3a 3b

4a 4b

Market

5a 5b

6a 6b

7a 7b

8a 8b

Voluntary

9a 9b

10a 10b

11a 11b

12a 12b

Informal

13a 13b

14a 14b

15a 15b

16a 16b

This three-dimensional account shows that it is misleading to look at one dimension such as provision in isolation. This means that a simple ‘rolling back’ (or ‘rolling forward’) of the state thesis fails to do justice to a complex situation. There have been moves backward and forward on all dimensions, and the overall balance may vary between sectors (cf Burchardt and Obolenskaya, 2016): perhaps two steps forward and one back in one sector, but vice versa in another. It follows that it remains difficult to come to any clear judgement about state control (direct ownership and finance against indirect regulation) and any effects on distributional impact (see further discussion later in this chapter).

Analysing the MEW It has been argued here that it is difficult to analyse complex situations with simplistic terms such as ‘privatisation’. Privatisation has been used to cover many different strategies. However, there are many different ‘routes to market’ (Clarke, 2004), with different origins and destinations across different dimensions (Table 10.1). Moreover, some of the ‘privatisation’ debate has been limited and confusing. Wright and Deakin (1990: 1) claim that instead of a drive for better public services, the right has launched a drive for fewer public services, relying on the Orwellian incantation of ‘public bad, private good’. This claim is a little oversimplified, and it is possible to claim the converse, with some commentators assuming ‘public good, private bad’. It appears rather a sweeping assumption that the state is always better at everything under all circumstances. Indeed, some elements within the left have been highly critical of state services. As the London Edinburgh Weekend Return Group (1980, pp 9, 52) put it, the claim that state services are better than private services is true, but only up to a point. Sometimes, state provision leaves a bad taste in our mouths, and ‘our experience belies the myth of the welfare state’.

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From a consumer point of view, it is possible to contrast the more successful privatisation of telecoms with the tragedy or farce of water privatisation, while it may be difficult to choose between privatised rail services and the nationalised British Rail. The debate is sometimes dogged by a poor grasp of history. Claims that the NHS is being ‘privatised’ forget that Aneurin Bevan’s NHS since 1948 has allowed general practitioners to be independent contractors or ‘small shopkeepers’, consultants to work in the private sector, and private practice in NHS facilities. This means that, against the ideals of the Socialist Medical Association, Bevan built ‘privatisation’ into the very core of the NHS. Similarly, the ‘Beveridge welfare state’ was built on the concept of a voluntary or private ‘superstructure’ or ‘extension ladder’ on top of a state base. For example, Beveridge supported independent pensions if they supplemented an adequate national minimum (Powell and Hewitt, 1998). The debate is sometimes insular in that any comparative examples are limited to private medicine in the USA rather than apparently successful mixed systems in Europe. In other cases, the debate is problematic because issues are confused or conflated. For example, Gabriel and Lang (2006, p 178) claim that privatisation makes public services contingent on the ability to pay confuses production and finance. Not all public services are free at point of use (eg council houses; NHS prescriptions), and it is possible that privately owned but publicly funded services can be free at the point of use. The argument is often based on the ‘thin end of wedge’ argument that privatisation leads to commodification. In other words, privatisation is the first stage in a process of charging for services (eg Crouch, 2003; Pollock, 2004).

‘The ghost at the feast’: the MEW’s links to other debates Although the MEW and SDW have not featured heavily in recent debates in social policy, they may be seen as the ‘ghost at the feast’ in other recent debates (Box 10.4) that have clear links with the MEW and SDW, but tend not to draw on them.

Box 10.4: Debates not linked to the MEW Citizenship and consumerism A number of writers claim that consumerism has partially or wholly replaced citizenship, and that users of welfare services have become ‘citizen-consumers’ (eg Crouch, 2003; Gabriel and Lang, 2006). Services have become privatised, marketised, commercialised or commodified (Leys, 2001; Pollock, 2004), and there is a greater reliance on public–

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private partnerships, resulting in the decline of the public realm (Clarke, 2004; Marquand, 2004) and moves from ‘political to economic man’; voice to exit, and voice to choice. Civil society Giddens (1998) writes that the ‘Third Way’ involves a renewal of civil society, and state and civil society acting in partnership. Similarly, the ‘new mixed economy’, looks for a synergy between public and private sectors, utilising the dynamism of markets, but with the public interest in mind. Turning to ‘positive welfare’, ‘the state should step in only when those institutions [church, family and friends] don’t fully live up to their obligations’ (1998, p 112). He goes on to claim that ‘the theme that “welfare state” should be replaced by the “welfare society” has become a conventional one in recent literature on welfare issues’ (1998, p 117). Governance Rhodes (1997) regards governance as a broader term than government, where services are provided by any permutation of government and the private and voluntary sectors. However, the boundaries between public, private and voluntary sectors have become shifting and opaque, and even meaningless. The government, or ‘regulatory state’, substituted regulation for ownership, and attempts to ‘steer rather than row’. New public management Governments need no longer own all facilities, but can finance and regulate rather than provide (‘the enabling state’). Osborne and Gaebler (1992) claim that governments should ‘steer rather than row’. This means that they are concerned with performance and audit. Risk Beck (1992) and Giddens (1994) argue that we now live in a ‘Risk Society’. The traditional welfare state managed risks collectively, but a consumer society has seen moves towards the individualisation or privatisation of risk of ‘DIY social policy’ (Klein and Millar, 1995; see also Kemshall, 2002) with major problems if, for example, private or occupational pensions fail. Partnership Partnerships can involve relationships between two or more different sectors within an MEW, including public–public, public–voluntary, public–community and public– private. They have a long history, with some pre-dating the ‘welfare state’ (Powell and Glendinning, 2002, p 4). Public service ethos It is claimed that treatment is necessarily better in public institutions because the staff who work in them have a ‘public service ethos’. In other words, a ‘public’ doctor

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is superior to a ‘private’ doctor. To use the language of Le Grand (2005), the former are ‘knights’ while the latter are ‘knaves’. It follows that ownership matters: finance (paying for treatment in private facilities) and regulation are inferior to a state-owned facility. However, some question the existence of the public service ethos (PSE) (see discussions in IPPR, 2001; Moran, 2003). Some staff, such as medical consultants, often work in both sectors: does that mean that they are transformed from knights to knaves when they enter the door of a private hospital? Public ownership did not prevent poor treatment in some cases, including major scandals over treatment of patients at some long-term hospitals. Of course, it is difficult to see the counterfactual: whether conditions would have been worse in private facilities. Big Society The Conservatives aimed to heal ‘Broken Britain’ by the ‘Big Society’ replacing ‘Big Government’, which had driven out personal initiative, personal responsibility and kindness. It was a radical plan to introduce new powers to help communities save local facilities and services threatened with closure, and to give communities the right to bid to take over local state-run services. Corbett and Walker (2013) see links to New Labour communitarianism, ‘Red Toryism’ and ‘Blue Labourism’. However, there are also shades of Thatcherite neoliberalism, which promoted idealised versions of ‘communities’, and seeks to restore a version of the lost world of mutualism, voluntarism and community solidarity. It also has parallels with the ‘welfare society’, where the informal sector resources expand to take the place of the retreating statutory ones, but which lead to further increases in social and economic inequalities through the increased commodification of public life, the shrinking of the state and the enhanced dominance of the market.

The brief overviews in Box 10.4 necessarily oversimplify more complex debates, but they should be sufficient to indicate the potential links with the MEW and SDW, and suggest that both debates might be improved by drawing on alternative perspectives.

The impact of the MEW and the SDW As the MEW and SDW vary over time and space, so their distributional impact also varies. We saw in Chapter One that Rose and Shiratori (1986) argue that ‘total welfare’ is the sum of state, market, voluntary and informal sources, but Mishra (1990, pp 110–14) claims that a focus on ‘total welfare’ is not simply the ‘sum of the parts’, as the components ‘cannot simply be regarded as functional equivalents’ as they are based on different principles and they differ in scope. In our wider terms, the debate is whether the total welfare is the additive sum of the components or a non-additive function of them. In short, the two possibilities are:

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TW = S + P + I + V + O + F Or TW = f(S,P,I,V,O,F) Where TW = total welfare; S = state; P = private; I = informal; V = voluntary; O = occupational; and F = fiscal. The view here is that total welfare cannot be analysed in terms of simple additions, just as you cannot add apples and oranges. The different components are based on different entitlement rules, and will result in different distributional impacts. For example, a transfer from state to informal (read: female) care leads to increasing gender inequality and ignores entitlement (citizenship) as no ‘right’ to charity exists. Analysing recent distributional impacts is problematic as two distinct but related processes have occurred simultaneously. First, there are the changes in the MEW and SDW that have already been described. Second, there have been changes in delivery mechanisms of ‘choice and voice’. Putting the two together, there have been some moves from state to market, but also moves from voice to choice, or from citizenship to consumerism, within state services. The traditional view tends to be that state services are associated with greater equity. In other words, in the MEW private, voluntary and informal sectors are more inequitable than the state, while in the SDW occupational and fiscal welfare is more inequitable than statutory welfare. All this suggests that any move away from the state will result in greater inequity. However, Le Grand (1982) argues that state welfare may be regressive in that it gives more to rich rather than poor citizens (but see Powell, 1995). The political right have used the Le Grand thesis as ammunition, arguing that the welfare state has failed and so should be privatised. The political right and some elements within the left have argued for the renewal of civil society, favouring decentralist, voluntarist, mutual or associational solutions over state ones (see Box 10.4). Similarly, it is generally argued that statutory provision is more progressive than fiscal or occupational provision (eg Titmuss, 1963). However, while it is difficult to see how occupational welfare might be progressive (Brunsdon and May, Chapter Eight), it is possible that fiscal welfare (eg tax credits) has the potential for progressive design (Sinfield, Chapter Seven). Turning to delivery mechanisms, Klein and Millar (1995, p 303) write that ‘One of the most significant trends of recent decades has been the growing importance of do-it-yourself social policy: i.e. individuals constructing their own welfare mix both within the public sector and in private markets.’ The optimistic reading is that this allows the exercise of choice and transforms passive clients into active citizenconsumers. Advocates of ‘market socialism’ such as Le Grand (2005) argue that

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choice systems can be progressive, giving examples such as differential vouchers and capitation formulas that favour poor people. The pessimistic argument is that like all DIY jobs, it can go disastrously wrong (Powell and Hewitt, 2002). Greater choice can easily result in the transfer and individualisation of risk (see Box 10.4) resulting in inequality between good and bad choosers. However, it is not a question of choice disrupting a situation of existing perfect equity. It is likely that both choice and voice are linked with inequality, and it is an empirical question of the levels of inequality associated with both forms, and whether different people will be affected. Neither is it wise to put one’s full trust in the state: there are many cases of women retiring with inadequate pensions, partly due to poor or no advice about pension decisions during their working lives.

Conclusions It is worth emphasising once again, that the MEW and SDW are important but neglected concepts in social policy. While a sole emphasis on state provision might have been inaccurate, although excusable, during the period of the ‘classic welfare state’ from about the mid-1940s to the 1970s, this would be very misleading for times before and after that period in the UK, and for many other countries in the world. In other words, a narrow focus on the welfare state misses out a great deal in social policy. As well as varying over time and space, the mix within the MEW also varies by sector. For example, in the UK health care remains largely provided, while the state has always been a much less important provider of housing. All this means that it is necessary that any analysis of social policy must look beyond the state to the other elements of the MEW– private, voluntary and informal, and beyond statutory services to the other components of the SDW– occupational and fiscal. It follows that wellbeing does not depend solely on politicians, but also on individuals acting as purchasers or carers, voluntary organisations and employers. In many ways, people make their own social policies, but not in circumstances of their choosing. It is clear that the traditional concern of welfare state provision is an inadequate focus for the study of social policy that must also consider finance and regulation. Welfare is more than the welfare state, but while welfare state provision is not the only way to provide social policies, there are continuing debates about the best way to provide them. However, in order to engage with these debates, we must break out of the cell (Table 10.1) of state provision in order to examine critically the wider worlds of the MEW and SDW.

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Summary

• • • •

The study of social policy must involve exploring welfare beyond the ‘welfare state’. The MEW has seen some significant moves under Labour’s ‘Third Way’ and the Coalition’s ‘Big Society’. Although the study of the MEW has perhaps fallen out of fashion, it may be used to inform a number of other concepts and debates in social policy. A three-dimensional account of the MEW suggests that a simple ‘rolling back’ of the state thesis fails to do justice to a complex situation, as there has been some variation in the direction and degree of movement overall, and between sectors.

Questions for discussion

• • •

How can an understanding of the MEW inform other debates in social policy? Place recent moves in the MEW onto Table 10.1. Is the MEW in Britain moving towards the MEW before the ‘welfare state’ or towards the MEW in some other nations?

Further reading Bochel and Powell (2016), Lupton et al (2016) and Toynbee and Walker (2015) provide details of recent policy changes related to the MEW under the UK Coalition government. Two of the most cited texts on social policy – Esping-Andersen (1990 and 1999) – are interesting for what they say, and do not say, about the MEW.

Electronic resources As mentioned in Chapter One, Paul Spicker’s website has information on the SDW and on the provision of welfare: http://www.spicker.uk/ Prezi presentation by Nick Jenkins on the SDW: https://prezi.com/c24sh0ji_amv/the-socialdivisions-of-welfare/ James Bartholomew’s book The Welfare State We’re In provides a critical view of the welfare state, and more support for other parts of the MEW: https://iea.org.uk/multimedia/video/ the-welfare-state-we%E2%80%99re-in

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References Beck, U. (1992) Risk Society: Towards a New Modernity, London: Sage. Bochel, H. and Powell, M. (eds) (2016) The Coalition Government and Social Policy. Restructuring the Welfare State. Bristol: Policy Press. Burchardt, T. (1997) Boundaries between Public and Private Welfare, CASE paper 2, London: LSE. Burchardt, T. and Obolenskaya, P. (2016) ‘Public and private welfare’, in R. Lupton, T. Burchardt, J. Hills et al (eds) Social Policy in a Cold Climate, Bristol: Policy Press, pp 217–43. Clarke, J. (2004) ‘Dissolving the public realm?’, Journal of Social Policy, vol 33, no 1, pp 27–48. Corbett, S. and Walker, A. (2013) ‘The Big Society: rediscovery of “the social” or rhetorical fig-leaf for neo-liberalism?’, Critical Social Policy, vol  33, no  3, pp 451–72. Crouch, C. (2003) Commercialisation or Citizenship: Education Policy and the Future of Public Services, London: Fabian Society. Dahlberg, L. (2005) ‘Voluntary and statutory social service provision in Sweden’, Social Policy & Administration, vol 39, no 7, pp 740–63. Drakeford, M. (2000) Privatisation and Social Policy, Harlow: Pearson. Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism, Cambridge: Polity. Esping-Andersen, G. (1999) Social Foundations of Post-industrial Economies, Oxford: Oxford University Press. Finlayson, G. (1994) Citizen, State and Social Welfare in Britain 1830–1990, Oxford: Clarendon Press. Fraser, D. (2003) The Evolution of the British Welfare State (3rd edn), Basingstoke: Palgrave Macmillan. Gabriel, Y. and Lang, T. (2006) The Unmanageable Consumer (2nd edn), London: Sage. Giddens, A. (1994) Beyond Left and Right, Cambridge: Polity. Giddens, A, (1998) The Third Way, Cambridge: Polity. Harris, B. (2004) The Origins of the British Welfare State, Basingstoke: Palgrave Macmillan. Hewitt, M. and Powell, M. (1998) ‘A different “Back to Beveridge”? Welfare pluralism and the Beveridge welfare state’, in E. Brunsdon, H. Dean and R. Woods (eds) Social Policy Review 10, London: Social Policy Association, pp 85–104. HMG (2011) Open Public Services White Paper, Cm 8145, London: The Stationery Office. IPPR Commission on Public Private Partnerships (2001) Building Better Partnerships, London: Institute for Public Policy Research.

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Kemshall, H. (2002) Risk, Social Policy and Welfare, Buckingham: Open University Press. Klein, R. and Millar, J. (1995) ‘Do-it-yourself social policy: searching for a new paradigm?’, Social Policy & Administration, vol 29, no 4, pp 303–16. Knapp, M. (1989) ‘Private and voluntary welfare’, in M. McCarthy (ed) The New Politics of Welfare, Basingstoke: Macmillan, pp 225–52. Le Grand, J. (1982) The Strategy of Equality, London: Allen and Unwin. Le Grand, J. (2005) ‘Inequality, choice and public services’, in A. Giddens and P. Diamond (eds) The New Egalitarianism, Cambridge: Polity, pp 200–10. Le Grand, J. and Robinson, R. (eds) (1994) Privatisation and the Welfare State, London: George Allen and Unwin. Leys, C. (2001) Market-driven Politics, London: Verso. London Edinburgh Weekend Return Group (1980) In and Against the State, London: Pluto. Marquand, D. (2004) The Decline of the Public: The Hollowing Out of Citizenship, Oxford: Blackwell. Mayo, M. (1994) Communities and Caring: The Mixed Economy of Welfare, Basingstoke: Macmillan. Mishra, R. (1990) The Welfare State in Capitalist Society, Hemel Hempstead: Harvester Wheatsheaf. Moran, M. (2003) The British Regulatory State, Oxford: Oxford University Press. Morel, N., Touze, C. and Zemmour, M. (2016) Fiscal Welfare and Welfare State Reform: A Research Agenda, LIEPP Working Paper, Paris: SciencesPro. Morgan, P. (ed) (1995) Privatization and the Welfare State, Aldershot: Dartmouth. Natali, D. and Pavolini, E. (2014) Comparing (Voluntary) Occupational Welfare in the EU: Evidence from an International Research Study, OSE Research Paper 16, Brussels: European Social Observatory. Osborne D. and Gaebler, T. (1992) Reinventing government, Reading, MA: Addison-Wesley. Papadakis, E. and Taylor-Gooby, P. (1987) The Private Provision of Public Welfare, Brighton: Wheatsheaf. Pollock, A. (2004) NHS plc: The Privatisation of our Health Care, London: Verso. Powell, M. (1995) ‘The strategy of equality revisited’, Journal of Social Policy, vol 24, no 2, pp 163–85. Powell, M. and Glendinning, C. (2002) ‘Introduction’, in C. Glendinning, M. Powell and K. Rummery (eds) Partnerships, New Labour and the Governance of Welfare, Bristol: Policy Press, pp 1–14. Powell, M. and Hewitt, M. (1998) ‘The end of the welfare state?’, Social Policy & Administration, vol 32, no 1, pp 1–13. Powell, M. and Hewitt, M. (2002) Welfare State and Welfare Change, Buckingham: Open University Press.

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Powell, M. and Miller, R. (2014) ‘Framing privatisation in the English National Health Service’, Journal of Social Policy, vol 43, no 3, pp 575–94. Rhodes, R. (1997) Understanding Governance, Buckingham: Open University Press. Rose, R. and Shiratori, R. (1986) ‘Introduction’, in R. Rose and R. Shiratori (eds) The Welfare State East and West, Oxford: Oxford University Press. Sinfield, A. (1978) ‘Analyses in the social division of welfare’, Journal of Social Policy, vol 7, no 2, pp 129–56. Taylor, A.J.P. (1970) English History 1914–1945, Harmondsworth: Penguin. Titmuss, R. (1963) Essays on ‘the Welfare State’ (2nd edn), London: George Allen and Unwin. Toynbee, P. and Walker, D. (2015) Cameron’s Coup: How the Tories took Britain to the Brink, London: Guardian Books. Toynbee, P. and Walker, D. (2017) Dismembered. How the Attack on the State Harms Us All, London: Guardian Books. Wright, A. and Deakin, N. (1990) ‘Introduction’, in N. Deakin and A. Wright (eds) Consuming Public Services, London: Routledge, pp 1–16.

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Index References to boxes, figures and table are in italics

A Abram, P. 115 active citizenship 99 Adema, W. 188 Age UK 122, 123 Alcock, P. 2, 136, 147 Allen, P. 82–3 Anderson, S. 69 Anheier, H.K. 185 annual allowances (pensions) 144, 144, 145, 146, 173, 174 anti-collectivists 43 Anttonen, A. 124, 194–5 any qualified provider (AQP) 81, 82, 84 any willing provider (AWP) 80, 82 Arksey, H. 114–15, 116 Arts, W. 187 Ascoli, U. 151 austerity   and inequalities 145, 146   and local government 50, 211   and occupational welfare 169, 171   and voluntary and community welfare 34–5, 95, 103, 105, 214 Aves Committee (1969) 99

B Bahle, T. 199 Bambra, C. 191 Bank of England 48, 149 Barnardo’s 95 Barr, N. 147 Barrientos, A. 4, 187 Beck, U. 217 Béland, D. 44 benefits, tax relief 139, 140 benefits-in-kind 53–4, 55, 116 Bennett, F. 143 Bentham, J. 46 Bettio, F. 194 Bevan, A. 44, 53, 216

Beveridge, W. 26, 33, 35, 44–5, 97, 98–9, 190, 216 Bew, J. 44 Big Society 3, 50, 100–2, 104, 119, 209, 213–14, 218 Black, C. 176, 177 Blair, Tony 50, 117 Bochel, H. 34–5, 210 Bonoli, G. 190–1, 197–8 Bouget, D. 125, 127 Boyle, S. 79 Bozeman, B. 13, 69–70 Bradley, K. 34 Bradshaw, J. 197 Brexit 55–6, 57, 103 Briggs, A. 47 Bruce, M. 21 Brys, B. 150 Burchardt, T. 2, 11, 47, 48, 65–6, 70, 71, 77, 121, 126, 210, 211 Burke, E. 43 Burns, J.H. 46

C Cameron, David 29, 52, 92, 209 capacity building 100 capital gains tax 139, 140 Care Act 2014 119–20, 123 care insurance 196 Care Quality Commission 81, 128 care support services, workplace 165–6 carer subsidies 199 carers see informal welfare Carers Action Plan 2018–2020 120 Carers and Disabled Children Act 2000 117 Carers at the Heart of 21st-century Families and Communities 118 Carers (Equal Opportunities) Act 2004 117 Carers (Recognition of Services) Act 1995 117 Carers’ Strategy: Second National Action Plan 2014–2016 119

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Carers Trust 123 Carers UK 119, 122, 123, 128 Caring and Family Finances Inquiry: UK Report 128 Caring for Carers 117 Caring for People 117 Castles, F. 2, 188 Chard, J. 83 charities see voluntary and community welfare Chartered Institute of Personnel Development (CIPD) 176–7 cherry picking 75, 76 Child Benefit 139, 140, 143, 146 child care 147, 170, 197–8 Child Poverty Action Group 33 child tax allowance 140 Child Tax Credit (CTC) 139, 141, 140–3 children and young people, voluntary and community welfare 95–6 choice 11, 80, 81, 82, 219–20 citizenship 32, 99, 216–17 city regions 51 civil society 9–10, 217   see also voluntary and community welfare Clinks 97 Clohesy, A.M. 46 Coalition government (2010–15)   approach to MEW 210–11   Big Society 3, 50, 100–2, 104, 119, 209, 213–14, 218   and families 29   fiscal welfare 142, 145   Help to Buy 48   informal welfare 119–20   and local government 50   market welfare 31, 81   NHS privatisation 81   occupational welfare 168, 169–71, 174, 177–8   open public services 209–10   voluntary and community welfare 34, 92, 100–2, 104, 106   welfare definition 47 Colombo, F. 125, 126, 127 community care 114, 115, 116–17, 127 competition 74–5, 83–4, 211   see also market welfare Conservative government (1979–97)   informal welfare 116–17   and local government 49–50   market welfare 31, 80   NHS privatisation 80   and the state 27, 99

226

  voluntary and community welfare 34, 99–100, 218 Conservative government (2015–)   fiscal welfare 143, 145, 146   informal welfare 120–1   and local government 50   markets 31   occupational welfare 168, 171, 174, 175, 178–9   and the state 56   voluntary and community welfare 102–3, 106 conservative regime 184, 185, 187, 191, 193 consumerism 216–17 contractual benefits 162, 163–7, 169 Cooper, Z. 84 Corbett, S. 117, 218 corporatist (conservative) regime 184, 185, 187, 191, 193 Cribb, J. 45 criminal justice, voluntary and community welfare 97, 102 Crosland, C.A.R. 12 Curtice, J. 52

D Daly, M. 199 Davidson, R. 33 Davies, W. 56 Davis, E.B. 149 Deakin, N. 138, 215 decommodification 124, 125, 184, 207 dedomestication 125 defamilisation 124, 207 defined benefit schemes 172, 173, 174, 175 defined contribution schemes 172, 173, 174, 175 delivery mechanisms 219–20 Denmark 198 devolution 52 Diamond, P. 147 Disabled Persons (Services, Consultation and Representation Act) 1986 117 discretionary benefits 162, 163–7, 169, 171 diversity, and solidarity 46 do-it-yourself social policy 219–20 Duncan Smith, Iain 45 Dunleavy, P. 72

Index Conclusion

E East Asia 185, 194 Edmiston, D. 11 education   expenditure on 48   historically 23, 45   and local government 50   public and private 69, 70, 78 Education Act 1944 23 education and training (occupational welfare) 164, 169, 170 Elliott, M. 52 Ellison, N. 3 employment   precariat 45   Work Programme 101–2, 104, 211   Working Families Tax Credit (WFTC) 140–1   Working Tax Credit (WTC) 139, 141, 142, 143   see also occupational welfare employment termination payments 147–8 Engels, F. 42 Esping-Andersen, G. 6, 7, 14, 116, 124, 125, 126, 193, 199–200, 207   regime theory 184–5, 187 ethical socialism 42, 44 EuroCarers 121, 125–6, 127 Evers, A. 94

F Fabians 42–3 families   changing nature and size of 28, 29   child care 147, 170, 197–8   occupational welfare 161, 163, 165, 166, 168, 169–70   parental guidance 29   and regime theory 185   and social care 193–9   tax credits 140–3   welfare provision historically 27–30   see also informal welfare Family Action 95 Family Resource Survey 121–2 Farmer, P. 178 Farnsworth, K. 8 feminism 10, 22, 207 Ferrara, M. 193 Field, F. 1, 10 finance (as dimension of MEW) 10–13, 14, 214, 215 Finch, J. 10, 114 Finch, N. 197

Fine, M. 115 Finlayson, G. 5, 14, 22, 32, 35 fiscal welfare 7, 8–9, 135–52   comparative perspective 149–50   forms and scale of 136–40   and inequality 145, 150–1   for retirement 143–7   tax credits 140–3   and welfare state 147–9 Fit For Work scheme 177–8 Fitzpatrick, T. 2 foster care 78 fragmentation of services 76 Fraser, D. 21, 206

G Gabriel,Y. 216 Gaebler, T. 51, 217 Gash, T. 84 Gelissen, J. 187 gendered division of labour (care) 10, 114, 121, 122, 126–7, 128, 199, 207 general election (2017) 56 George,V. 42, 43 Germany 198 Giddens, A. 2, 10, 217 Gift Aid 148 Gilbert, B. 5 Gilbert, N. 5 Gingrich, J.R. 77 Gini coefficient 54, 55, 55 Glasby, J. 115, 117, 119, 127 Glendinning, C. 114, 115, 116, 217 Glennerster, H. 34 Goodwin, M. 55 Goose, N. 32 Gorsky, M. 22, 31, 33 Gough, I. 124, 186 governance 51–2, 217 Gray, J. 56 Grayling, Chris 102 Greater Manchester 51 Green, D. 10 Green, M. 122 Green, T.H. 42, 44 Greenlees, J. 32 Greer, I. 71–2 Greve, B. 2 Griffiths Report (1988) 117, 127 Groves, D. 10, 114 Guardian 54 Gyford, J. 50

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H Hacker, J.S. 137, 150 Hansmann, H.B. 93 Harris, J. 4, 26, 43, 56 Hart, H.L.A. 46 Hayek, F. 43 Haynes, P. 196 health care   comparative perspective 191–3   expenditure on 48, 79, 82, 192   founding of NHS 26, 44   and local authorities 25–6   markets 31, 78–84   occupational welfare 164–5, 175–9   role of the state 191–2   typology of systems 192–3   voluntary hospitals 33 Health,Work and Wellbeing 168, 176 Heath, O. 55 Hellowell, M. 83 Help to Buy 48 Hendrick, H. 25, 29 Her Majesty’s Revenue and Customs (HMRC) 138–9, 146, 148, 149 Heseltine, Lord 51 Heuer, J.-O. 4 Hill, C.E. 42 Hills, J. 5, 11, 46–7 Hirst, P. 10 HMRC 138–9, 146, 148, 149 Hoggett, P. 50 Hood, C. 12, 51 Horden, P. 28 House of Commons Committee of Public Accounts 83 House of Commons Treasury Committee 83 House of Commons Work and Pensions Committee 118 housing   control mechanisms 45   expenditure on 47, 48, 48, 78   and local government 50–1   mortgage interest relief 139, 140   private landlords 54, 56 housing services, workplace 166 Hughes, G. 147 Humphries, R. 123 Hunt, Jeremy 120 Hunt, T. 49

I Iacobucci, G. 82 idealist theory 42–3 Improving Lives:Work, Health and Disability 178

228

in-kind benefits 53–4, 55, 116 income distribution/redistribution 52–5, 55 income maintenance 187–91 income protection 163 income tax 137, 139, 140, 147, 148–9   see also tax reliefs Independent Sector Treatment Centres (ISTCs) 80, 82–3 inequality 52   and choice 220   and fiscal welfare 145, 150–1   and income distribution 55, 55   and move away from state 219   and privatisation 76   see also women, as carers informal welfare 113–29   after Care Act 2014 123   care gap 128   characteristics of carers 122   comparative context 123–7   definition 114–15   extent of 126   gendered division of labour 10, 114, 121, 122, 126–7, 128, 199, 207   history of 115–21   impact on carers 122, 127–8   intensity of caring 126   numbers of carers 121–2, 126, 127, 128   in three-dimensional MEW 10–14, 14, 212–15, 215   unmet need 122–3   value of contributions 114 innovation 74 inspection 11–12 Institute for Economic Affairs 104 Institute for Government 84 Insurance Premium Tax (IPT) 170, 171 Invalid Care Allowance 116

J Jacobs, K. 49 Jenson, J. 113 Johnson, N. 3, 113, 114, 115, 116 joined-up governance 51–2 Jones, L. 82–3

K Kaufmann, F. 52–3 Kendall, J. 93, 96, 100 Klein, R. 5, 217, 219 Klikauer, T. 51–2 Knapp, M. 93, 213 Krachler, N. 71–2

Index Conclusion

Kraus, M. 125 Kröger, T. 125

L Labour party/government 12, 25–6, 27, 32, 47, 49   see also New Labour Lamb, N. 119 Land, H. 114 Lang, T. 216 Laville, J.-L. 94 Laws, D. 47 Le Grand, J. 72, 218, 219–20 Lebeaux, C. 7 Lecours, A. 44 Lectures on the Principles of Political Obligation 42 Leisering, L. 53 Letwin, S.R. 49 Levene, A. 27 Lewis, J. 5, 22, 114 liberal regime 184, 185, 187, 191, 193, 197, 199 lifetime allowances (pensions) 144, 144, 145, 146, 173, 174 Lister, R. 124 Loach, K. 44 Lobbying Act 2014 104 local government   and austerity 50, 211   autonomy of 49, 50–1   historically 24–6, 49   housing 50–1   pensions 172, 174   and welfare pluralism 49–51 local government pension schemes (LGPS) 172, 174 localism 50–1 Löfstedt, R. 177 London Edinburgh Weekend Return Group 215 long-term care (LTC) 125, 126–7, 195–6 Lyberaki, A. 114, 124

M Maarse, H. 68, 73 Maile, S. 50 Major, John 99 managerialism 51–2 mandatory benefits 160, 161–2, 163–7 Manzi, T. 49 market failure 9, 30–1 market welfare 65–86, 215–16

                         

arguments for privatisation 74–5 concept of 65–8 concept of ‘private’ 68–72, 70 concept of publicness 69–71, 70, 72 concerns about privatisation 75–7 market failure 9, 30–1 market-public mix 66–8, 67 and NHS in England 78–84 and privatisation 71–3 public sector markets 84 quasi-markets 10, 50, 72, 99 spending mix 66, 77–8 in three-dimensional MEW 10–14, 14, 212–15, 215   trends over time 77–8   welfare provision historically 30–2   Wheels of Welfare framework 70–1, 71 marketisation 71–2, 83–4 Marshall, T.H. 22, 53 Marx, K. 42 May, M. 161 May, Theresa 56, 106 Mayo, M. 206 McDaniel, P.R. 138 McKee, K. 52 Means, R. 115, 116 Mettler, S. 2 Meyer, T. 189 Millar, J. 140, 141, 217, 219 Miller, C. 12 Miller, R. 6, 212 minimum wage 143 Minns, R. 149 Mishra, R. 6, 218 Mitchell, D. 188 mixed economy of welfare (general)   analysing 215–16   components of 4, 9–10   impact of 218–20   invisibility of 2–4   links to other debates 216–18   and social division of welfare over time and space 206–8   and social policy 4–6   three dimensional view 4, 10–14, 14, 212–15, 215   see also informal welfare; market welfare; state; voluntary and community welfare mixed economy of welfare, comparative perspective 183–201, 207–8   health care 191–3   income maintenance 187–91   regime theory 184–7   social care 193–9

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mixed economy of welfare, historically 21–36, 206–7   and devolution 26   the family 27–30   fictional cases 23–4   Liberal reforms (1906–14) 25   local government 24–5, 26   market 27, 30–2   state’s role 24–7   voluntary and community welfare 32–5 Moran, M. 11, 214 Morel, N. 8, 208 Morgan, F. 114 Morgan, N.J. 49 mortgage interest relief 139, 140 Mortimer, J. 122 mutualism 9–10, 43, 98

N Natali, D. 8, 208 National Audit Office 83, 138, 147, 148, 149 National Council of Voluntary Organisations (NCVO) 94–5 National Employment Savings Trust (NEST) 173 National Insurance Contributions (NIC) 139, 146, 147–8, 170, 171 neoliberalism, and the state 43 Neville, J. 33 New Labour government (1997–2010)   and education 50   and the family 29   foster care 78   informal welfare 117–19   and local government 50   markets 31, 80–1   NHS 31, 80–1   occupational welfare 168–9, 170, 172–4, 175–7   pensions 144, 145   social expenditure 55   tax credits 140–2   Third Way 2–3, 209, 213, 217   voluntary and community welfare 34, 92, 100   see also Labour party/government new managerialism 51–2 new philanthropy 34 new public management 99, 217 New Right 29, 31, 34 new social risks 190–1 Newmark, Brooks 104 NHS see health care

230

NHS Confederation 79 No Stone Unturned: In Pursuit of Growth (Heseltine) 51 non-mandatory benefits 161, 162, 163–7, 169 Northern Ireland 26 Nozick, R. 43 NSPCC 25, 28

O Obolenskaya, P. 2, 11, 47, 48, 65–6, 70, 71, 77, 210, 211 occupational health 175–9 occupational welfare 7, 8, 159–80, 208   comparative perspective 208   conceptual difficulties 159–60   definition 160–2   historically 162   main fields of 162, 163–7, 168   methodological difficulties 160   recent developments 168–71   workplace health care 175–9   workplace pensions 144, 145, 146, 147, 172–5, 208 Ochiai, E. 124 OECD 136, 150, 188–9, 195–6 Office for Civil Society (OCS) 102 Office for Tax Simplification (OTS) 138 older people   as carers 122   long-term care 125, 126–7, 195–6   unmet need 122–3 O’Neill, B. 56 ONS 53–4 open public services 101, 209–10 organic theory 42–3 Orloff, A.S. 124 Osborne, D. 51, 217 Osborne, George 47

P P90/P10 ratio 55 Papadakis, E. 213 parental guidance 29 Parke, G. 117, 128 Parry, R. 138 partnerships 217 Pavolini, E. 8, 208 pensions   auto-enrolment 173, 174–5   comparative perspective 188–90   fiscal welfare 8, 143–9, 173, 174   income maintenance 188–90   triple lock 45–6

Index Conclusion

  workplace pensions 172–5, 208 Pensions Acts 2007 & 2008 173 Pensions Commission (2000) 173 Pensions Regulator 173 Pensionwatch 145 personal freedom 75 philanthropy 97–9 Pinker, R.A. 6 Plantenga, J. 194 Platt, L. 150 Pollock, A.M. 83 Poor Law 25, 27, 30, 116 poverty rate 45 Powell, M. 34–5 Prasad, M. 2, 5, 8 predistribution 54 prime contracting 101–2 private finance initiatives (PFIs) 80, 83, 213, 214 private landlords 54, 56 private medical insurance 79 private pensions 145, 146–7 private welfare class 66 privatisation/private sector see market welfare probation services 102 problem families 29 profit motive 75 Propper, C. 66 Public Accounts Committee (PAC) 138, 149 public choice theory 74 Public Health Responsibility Deal (PHRD) 177 public sector markets 84 public sector organisations, occupational welfare 162, 169, 173–4 public service ethos 217–18 publicness 13, 69–71, 70, 72 purchaser–provider split, comparative perspective 198–9

Q Quantitative Easing 48 quasi-markets 10, 50, 72, 99 Qureshi, H. 116, 128

R Razavi, S. 124 Reber, F. 197 Recognised,Valued and Supported: Next Steps for the Carers Strategy 119 redistribution of income 52–5, 55 regime theory 184–7, 191 regressive benefit 7, 8, 137, 143, 145, 147

regulation 11–13, 14, 71, 212–15 reluctant collectivism 42 renting, private landlords 54, 56 retirement see pensions retrenchment 187 Rhodes, R. 51, 217 Ridley, Nicholas 50 risk 190–1, 217 Robinson, R. 72 Rochester, C. 23, 34 Roos, T. 84 Rose, H. 114, 128 Rose, R. 6, 218 Rummery, K. 115

S Salamon, L.M. 93, 185 salary sacrifice 146, 168, 170, 171, 173, 174 Saltman, R.B. 192 Scotland 26, 52 Seldon, A. 6 Sellick, C. 78 settlements 34 Shiratori, R. 6, 218 Siaroff, A. 193 Sinclair, S. 2 Sinfield, A. 7, 8, 9, 205 Sipila, J. 124 Smith, R. 28 Smithies, R. 11 social care   comparative perspective 193–9   expenditure on 48, 77–8   public and private 71   purchaser–provider split 198–9   typology of systems 193–5, 193 social democratic regime 99, 184, 185, 187, 191, 193, 199 social division of welfare   concept of 7–9   impact of 218–20   international dimensions 208   links to other debates 216–18   neglect of 2, 3   over time and space 206–8   see also fiscal welfare; occupational welfare social enterprise 10 social policy, and the welfare mix 4–7 social risks, new 190–1 social security 45–6, 48 Social Tax Expenditures (STEs) 8–9, 208 Spicker, P. 1, 2, 6, 7, 11 Spies-Butcher, B. 9 Starr, P. 72–3

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state 7, 9, 41–58   Brexit 55–6   and devolution 52   distribution/redistribution of income 52–5, 55   and health care 191   historically 24–7   idealist/organic theory 42–3   neoliberalism 43   new managerialism 51–2   regime theory 184–7   state spending on welfare 47–8, 48   in three-dimensional MEW 10–14, 14, 212–15, 215   welfare mix 46–8, 57   welfare pluralism and local government 49–51   welfare state 44–6 State of Caring survey 122 Stebbing, A. 9 Stevenson, D. 178 Stoker, G. 50 Surrey, S.S. 138 Sweden 127, 198

T Tawney, R.H. 53 tax allowances 137, 139, 140, 144–6, 147 tax breaks for social purposes 136 tax credits 137, 139, 140–3, 150 tax expenditure 136 tax reliefs 7, 8, 136–40, 139   impact of 148–9   pensions 143–9, 173, 174 taxation see fiscal welfare Taylor, A.J.P. 207 Taylor-Gooby, P. 190, 213 Thane, P. 5–6, 33 Thatcher, Margaret 99, 116–17 third sector see voluntary and community welfare Third Way 2–3, 209, 213, 217 Timmins, N. 169 Tinios, P. 114, 124 Titmuss, R. 1, 6, 7, 22, 26, 43, 115, 136, 147, 150, 159, 161 Tombs, S. 50 Torgersen, U. 47 total welfare 6, 218–19 Toynbee, P. 209 Trifiletti, R. 125 TUC 145

232

U Ungerson, C. 10, 199 United States 8–9, 149–50 Universal Credit (UC) 142–3 university settlements 34 upside-down benefits 8, 137, 140, 143–4 utopia 43

V Voluntary Action (Beveridge) 97, 98 voluntary and community welfare 9–10, 91–108, 207   challenges facing 103–5   charity Gift Aid 148   definition 92–4   future prospects 105–7   historical development 22–3, 25, 32–5, 97–100   income of 95, 96, 97, 103   policy context 100–3   regime theory 185   scope of 94–7   spending on welfare 96   in three-dimensional MEW 10–14, 14, 212–15, 215   voluntary hospitals 33   volunteers 94–5, 99, 167 von Otter, C. 192

W Wales 26 Walker, A. 116, 117, 128, 218 Walker, D. 209 Wanless, D. 115 Webb, Sidney 42–3, 206 Weber, M. 42 Weisbrod, B.A. 93 welfare, concept of 46–7 ‘welfare mix’   components of 186, 186   and local government 49–51   and social policy 4–7   and the state 46–8   see also mixed economy of welfare (general) welfare pluralism see welfare mix Welfare Reform Act 2012 142 Welshman, J. 29 Wendt, C. 192–3 Wheels of Welfare framework 70–1, 71 Whiteford, P. 188 Wilding, P. 42, 43 Wilensky, H. 7 Willetts, David 46

Index Conclusion

women, as carers 10, 114, 116, 121, 122, 126–7, 128, 199, 207   see also families Wood, G. 186 Work and Equalities Act 2006 117 Work Programme 101–2, 104, 211 Working Families Tax Credit (WFTC) 140–1 Working Tax Credit (WTC) 139, 141, 142, 143 workplace see occupational welfare workplace pensions 172–5, 208 Wright, A. 215

Y Young, Michael 47

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2nd

edition Praise for the first edition:

“…   offers a coherent and comprehensive account of MEW in Britain both in policy and in policy studies, while offering useful insights to other conceptualisations. Presented in a very accessible way and including teaching and learning tools, it is of interest both to academics and students ...” Social Policy, vol 37, no 3 “The   authors and editors are to be congratulated on maintaining an accessible style throughout, and in their clear explanations and critiques of the political thinking behind New Labour’s ‘Third Way’ approach to welfare … I would recommend this book.” Journal of Advanced Nursing, vol 60, no 4

As the state withdraws from welfare provision, the mixed economy of welfare – involving private, voluntary and informal sectors – has become ever more important. This second edition of Powell’s acclaimed textbook on the subject brings together a wealth of respected contributors. New features of this revised edition include: • An updated perspective on the mixed economy of welfare (MEW) and social division of welfare (SDW) in the context of UK Coalition and Conservative governments • A conceptual framework that links the MEW and SDW with debates on topics of major current interest such as ‘Open Public Services’, ‘Big Society’, ‘any qualified provider’ (AQP), ‘private finance initiative’ (PFI) and ‘public-private partnerships’ (PPP)

Understanding the mixed economy of welfare

“This   book provides an up-to-date account of welfare pluralism that is both accessible to students and likely to revitalise an important debate within social policy. A must-read for academics and students alike.” Kirk Mann, University of Leeds

Containing helpful features such as summaries, questions for discussion, further reading social policy, social welfare and social work at both undergraduate and postgraduate level.

Understanding welfare: Social issues, policy and practice

ISBN-13: 978-1-4473-3322-7

www.policypress.co.uk PolicyPress

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Edited by Martin Powell

suggestions and electronic resources, this will be a valuable introductory resource for students of

Edited by Martin Powell

Understanding the mixed economy of welfare 2nd edition