Reframing Social Citizenship

Reframing Social Citizenship
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Reframing Social
Citizenship
Peter Taylor-Gooby
1
3
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Reframing social citizenship / Peter Taylor-Gooby.
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ISBN 978–0–19–954670–1 (acid-free paper) 1. Political culture–Europe.
2. Citizenship–Social aspects–Europe. 3. Social change–Europe. 4. Public
welfare–Europe. 5. Welfare state–Europe. I. Title.
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Preface
The crisis of the welfare state is stale news. Governments spend more on
providing for the social needs of their citizens than they ever have. If
anything, the range of needs covered by social provision has expanded.
New directions in policy are succeeding, more or less, in coping with the
immediate challenges: population ageing, the hollowing out of govern-
ment, citizen assertiveness, rapid technological change, developments in
the family and in employment, and greater ethnic and cultural diversity,
all in the context of runaway globalization. This book focuses attention
on what might be termed the second-order pressures on welfare states, the
challenges to sustainability that emerge from the new policies developed
to address the pressures of social, political, and economic change.
The dominant themes in current reforms are two:
r At the level of government, new approaches to public management

have been introduced, leading to the break-up of traditional hier-
archical and monopolistic agencies, greater use of competition, the
expansion of internal markets, and target-setting. These policies are
intended to sharpen incentives for greater cost-efficiency and respon-
siveness to users in services such as health care, education, training,
and social care.
r At the level of the citizen as service-user and benefit claimer,
the emphasis is on choice, opportunity, activation, and individual
engagement. Responsibility for outcomes is increasingly transferred
from government to individual.
Underlying both trends is a common conceptual framework rooted in the

understanding of social behaviour through the logic of individual rational
action. People’s motivations as taxpayers and citizens, as managers, pro-
fessionals, and service-providers, as users of health or social care services
or education, and as recipients of unemployment benefits or pensions,
v
Preface
are addressed in terms of the deliberative response to opportunities and

incentives. It is this approach which underlies competitive institutions,
management by targets, the shift from equality of outcome to equality of
opportunity, the self-regulating citizen, and the proactive welfare state.
The new policies work—nearly, but not quite. The New Public Man-
agement/Activation of the Citizenry combination seeks to balance three
objectives:
r A more internationally competitive and productive economy, essen-

tial in a world of headlong globalization and relentless improvement
in technology, to be achieved by mobilizing, motivating, and training
the workforce.
r Greater cost-efficiency in provision, essential in view of the insistent
pressures on provision from globalization, ageing populations, and
changes in the world of work, to be achieved through decentraliza-
tion of budgetary responsibility to providing agencies, competition
in quasi-markets, and the imposition of strict targets.
r Greater responsiveness to what people want, essential in view of
increasing public dissatisfaction with inflexible services, greater diver-
sity of lifestyles, and the expansion of choice in a wealthier society, to
be achieved through the empowerment of service-users as informed
and responsible consumers in markets where competing agencies
offer a wider variety of provision.
Welfare states have retained their competitive standing in much larger

and more open international markets. Their citizens have mostly grown
richer. Service efficiency has improved in recent years, but not as much
as protagonists anticipated. However, problems are emerging. The tradi-
tional welfare state rested on the citizenship values of reciprocity, inclu-
sion, and trust: reciprocity in the balance of contribution and benefit
between population groups at different stages in the life cycle, inclu-
sion through redistribution of both opportunities and real resources to
disadvantaged groups, and trust that services would continue to meet
the needs of vulnerable individuals in an uncertain future. Reciprocity
appears increasingly constrained within stricter definitions of what counts
as social contribution and entitlement. There is greater pressure to dis-
criminate between those to be included and excluded. Trust is increasingly
supplanted by a disenchantment with the welfare state. Taken together
these factors may erode the political credibility and the electoral sustain-
ability of the reforms.
vi
Preface
To understand how the new policy model damages social citizenship,

we examine the theoretical basis of the individual, independent rational
actor approach to why people do what they do, chart its ascendancy in
policymaking, particularly in the UK, and investigate its strengths and
weaknesses as an account of social action. The strengths lie in conceptual
economy, rigour, and the capacity to generate clear prescriptions for
policy. Problems centre on the failure to recognize the symbolic and
expressive aspects of behaviour in society, and the role these play in
reinforcing social norms and in building the commitment between service
providers and users that underlies social trust. Since a pure rational actor
approach finds analysis of a social dimension to action unnecessary, its
proponents typically fail to place much weight on these issues. The upshot
is that the new policies succeed in changing behaviour substantially,
but do so at the cost of undermining some of the key components in
the normative framework of social citizenship. Reformers run the risk
of throwing the baby out with the bathwater, and not noticing they are
doing so.
Many colleagues contributed to this book and it is impossible to thank
all of them individually. I would like to express my warm appreciation of
the work of the participants in the ESRC Social Contexts and Responses
to Risk Priority Network, (David Abbott, Andreas Cebulla, Karen Hen-
wood, Emma Hughes, Anwen Jones, Jenny Kitzinger, Jane Lewis, Graham
Loomes, Sonia Livingstone, Peter Lunt, Judith Mehta, Lynne Murray-
Cox, Philip Noden, Brian Parkinson, Nick Pidgeon, Deborah Quilgars,
Sophie Sarre, Gwenda Simmons, Peter Simmons, Noel Smith, and Dan
Venables), and especially Jens Zinn; and of Rose Martin and Andrew
Wallace who worked with me on research on Institutional Trust and
Health Care Reform and Attitudes to Social Justice. I would also like to
thank the bodies who provided the necessary finance for this work: ESRC
under grants 336-25-0001, 065-27-0002, and 000-22-1867 and the Anglo-
German Foundation as part of the Sustainable Welfare and Sustainable
Growth programme.
This book was written while I was also participating in the UK Research
Assessment Exercise. This activity enabled me to appreciate the enormous
vitality and diversity of social policy research. It also brought home to me
the difficulties that may arise when measures of output become targets
and then incentives for the actors within any institutional structure.
Peter Taylor-Gooby
University of Kent
May 2008
vii
Contents
List of Figures x
List of Tables xi
List of Abbreviations xii
Part I. Sustaining Social Citizenship in Difficult Times
1. Social Citizenship Under Pressure 3

2. Globalization: New Constraints on Policymaking 20
3. The Response of Government 33
Part II. Intellectual Foundations of Reform
4. The Assumptive World of Welfare State Reform 55

5. Individual Choice and Social Order 67
6. Rational Actors and Social Citizenship 89
Part III. A Case-study: The UK as Object Lesson
7. Putting the Theory into Practice: The UK Experience 111

8. The NHS Reforms as a Response to First-Order Challenges 130
9. Second-Order Challenges: Disenchantment, Disquiet,
and Mistrust 146
Part IV. Conclusions: Strengths and Limitations of Rational

Actor Approaches
10. Globalization, Inequality, and Diversity 163

11. Welfare Under Altered Circumstances 184
References 191
Index 213
ix
List of Figures
2.1. Social expenditure 1980–2003 as %GDP 23

3.1. Unemployment benefit replacement rates (single person) 39
3.2. Pension replacement rates (standard pension, couple) 46
8.1. Expectations that public services will improve ‘over the next
few years’ (%) 143
9.1. Newspaper coverage of the NHS 149
x
List of Tables
1.1. State welfare: pressures and responses 14

4.1. Individual agency in social context 62
7.1. The UK and Europe 113
7.2. The transition in welfare state values 118
7.3. The logic of the reform programme 125
xi
List of Abbreviations
BSA British Social Attitudes (UK)

CFMEB Commission on the Future of Multi-Ethnic Britain
COSU Cabinet Office Strategy Unit (UK)
CSR Comprehensive Spending Review (UK)
DH Department of Health (UK)
DWP Department of Work and Pensions (UK)
EC European Commission
ECB European Central Bank
EES European Employment Strategy
ESS European Social Survey
EU European Union
FSA Financial Services Authority (UK)
GDP Gross Domestic Product
IMF International Monetary Fund
ISSP International Social Survey Project
NHS National Health Service (UK)
NICE National Institute for Health and Clinical Excellence (UK)
NPM new public management
PMSU Prime Minister’s Strategy Unit (UK)
PSA public service agreement
TUC Trade Union Congress (UK)
xii
Part I
Sustaining Social Citizenship
in Difficult Times
1
Social Citizenship Under Pressure
The literature on the welfare state during recent years has largely been
a literature of responses to challenges. Policy development, involving
political conflicts and major adjustments to the structure and manage-
ment of welfare programmes, has not been easy. This book considers how
policy changes affect social citizenship and, in particular, the question
of whether shifts in direction damage the values necessary to ensure the
future sustainability of state welfare.
The first-order impact of economic, political, and demographic shifts,
taking place in the context of rapid globalization, has been extensively
discussed. Welfare state reform has been necessary to meet these chal-
lenges. However, the second-order impact of the reform programmes
pursued in most western countries has received much less attention. The
new policies which allow welfare states to continue to deliver the goods
in the face of current challenges may, in the longer term, undermine the
values essential to continuing political support for the system. Welfare
state citizenship rests on values of reciprocity, inclusion, and institutional
trust. Endorsement of these values by a substantial and politically effec-
tive part of the population is essential to ensure that the welfare state
continues in a recognizable form. The shift towards an individualization
of responsibility for welfare outcomes constrains reciprocity, contradicts
inclusion, and undermines important aspects of trust. The reform pro-
gramme has sustained the level of welfare spending and the range of
services of traditional welfare states, but at the cost of eroding the base
of public support for inclusive state provision.
In Chapters 1 and 2, we discuss key elements in the political culture
of modern welfare states, review the literature on contemporary restruc-
turing, and consider the impact of reform on the above cultural values.
We develop the argument that the assumptive foundations of welfare
3
state citizenship face both first-order challenges from economic, political,

and social shifts in the context of precipitate globalization and second-
order challenges from the impact of new policies, based loosely on an
individual rational actor theory of agency, on welfare state values. It is
the way in which globalization has sharpened and directed the pressures
of change that makes it particularly corrosive of the values of social
citizenship.
Chapter 3 analyzes reform programmes across European countries as a
response to first-order challenges and discusses the value assumptions that
underlie these policies. Chapter 4 develops the account of the conceptual
framework of reform and relates it to the main currents in social science
analysis of agency, which are then examined in detail in Chapter 5. The
implications of contrasting rational actor and normative and expressive
accounts of agency for welfare state values are discussed in Chapter 6.
Chapter 7 presents a case study of the process of reform in the context
of the UK, explaining how a rational actor approach to social citizenship
has gained ascendancy among policymakers. Chapters 8 and 9 take this
further by analysing the practical outcomes and public experience of the
new approach to public management in the reform of the UK health
service. Chapter 10 analyses the challenge to the welfare settlement posed
by globalization as rising poverty, inequality, and diversity impact on
solidarity and social cohesion. It shows how governments are able to
manage these pressures successfully, but that the shift to rational actor
policies makes a thorough-going positive response increasingly difficult.
Chapter 11 points to an important second-order outcome of the new pol-
icy logic: rising inequality, particularly, at the top end, and the failure to
open opportunities across all ethnic groups continue to damage support
for welfare values. It argues that, under current circumstances, support for
reciprocity across the mass of the population is relatively secure. However,
the social inclusion of vulnerable groups and the trust of citizens in
the chief providing institutions are subject to continuing challenge. An
unending and strenuous political commitment is necessary to sustain the
assumptive foundations of social citizenship.
Social Citizenship
Citizenship is membership of a political community. It involves rights and

obligations, typically framed in law and enforceable through a system of
justice. Social citizenship concerns the rights and duties associated with
4
the provision of benefits and services designed to meet social needs and
enhance capabilities, and also to guarantee the resources necessary to
finance them.
The rights and duties of citizenship are set in a cultural context of
beliefs, assumptions, and predispositions which influence how people
behave towards one another and how society functions. A long tradition
of political science research discusses deference, acceptance of the rule
of law, willingness to engage in and accept the outcomes of the political
process, and other factors that influence civility and the functioning of
the political system. More recently, commentators have become interested
in the expansion of political rights for women, ethnic minorities, gay
people and other groups and their cultural acceptance (Grillo 1998; Lister
et al. 2007), the impact of globalization and of greater diversity (Alesina
and Glaeser 2004), the effect of improved education and enhanced
self-confidence (Giddens 1994), and the growth of ‘dialogic democracy’
(Habermas 1984).
The cultural penumbra of social citizenship is of considerable impor-
tance in the day-to-day operation of welfare states. The law cannot be
everywhere, and is most often absent when the interests of more vulnera-
ble groups are concerned. Rights to benefits are of substantially less value
if those entitled do not claim them because they are stigmatized or if they
simply do not believe that the government is willing to meet their needs.
Entitlement to a comprehensive health-service is of less value if no one
trusts the hospitals to deliver. Redistributive tax laws achieve much less if
many people are complicit in evasion and avoidance. The welfare state as
a whole has little future if citizens are not willing to pay the high social
contributions necessary to support it.
Social citizenship concerns rights and duties in relation to benefits and
services designed to meet social needs and enhance capabilities set in
the context of the cultural beliefs and assumptions that influence their
practical operation. The financial impact of the welfare state on individual
circumstances may be understood as including two components (Hills
2005, ch. 8): ‘horizontal’ redistribution between life stages of relative afflu-
ence when incomes are adequate and family responsibilities less pressing
(early and later working life) and of relative need when incomes are lower
and pressures greater (family-building, retirement, work absence due to
unemployment or ill-health); and ‘vertical’ redistribution between richer
and poorer groups.
Three values are important in the assumptive world of social citizen-
ship: reciprocity, inclusion, and trust. Reciprocity concerns willingness to
5
support horizontal redistribution between groups among the mass of the

population. Such willingness underlies the social insurance systems that
make up the bulk of spending in most welfare states. Inclusion is the
acceptance of vertical redistribution between the mass of the population
and disadvantaged minorities. This is typically pursued in the much
smaller domain of tax-supported means-tested provision (some 10% of
social spending across EU-25 countries but over 16% in the UK, Eurostat
2007a), and also includes some services in kind.
The third component in the value basis of the welfare state operates in
a different way. Rather than legitimating particular directions of redistri-
bution, it nourishes the legitimacy of the system as a whole. Trust in this
context is the belief that the services and provisions that make up the
welfare state will actually work when you need them. It includes confi-
dence that other citizens will maintain their commitment to horizontal
redistribution when you are at the receiving end, sometimes referred to as
a ‘social contract’. It also covers trust that an inclusive benefit system tar-
gets those in need accurately. Most importantly, it embraces the capacity
of services such as health, education, and social care to operate efficiently
and effectively and to meet the needs of the individual when he or she is
not in a position to enforce any demands.
Trust in this sense is essential to continued political legitimacy in any
state other than the most authoritarian. It is particularly relevant in the
welfare arena because it determines whether citizens can be confident that
their needs will be met when they are at their most vulnerable, in relation
to both horizontal and vertical redistribution. For welfare states to func-
tion and maintain popular support, citizens must value both horizontal
and vertical distribution and trust that the services provided are capable
of fulfilling these functions. For a number of reasons, trust is increasingly
in demand and at the same time increasingly under pressure.
The cultural prerequisites of modern welfare states developed during
the evolution of industrial society and were strengthened during the
‘golden age’ of the 1950s, 1960s, and 1970s. Boix provides an overview
of explanations of the growth of public provision, grouping them into
three categories: demand-side explanations which attribute the expansion
of the public sector to the expansion of needs, political accounts that
emphasize the role of conflict in leading to redistribution, and institu-
tional models that draw attention to the role of government structures
such as bureaucracies seeking to expand (Boix 2000, p. 1). Subsequent
developments have called into question the trajectory of welfare state
development. These include
6
r technological shifts with an impact on labour markets and, as some

argue, on growth rates;
r fiscal, commercial, political, and demographic globalization;
r maturity of the most developed systems of provision coupled with
population ageing and new patterns of family life;
r cultural and social shifts associated with an advance towards equality
and social justice on the part of women; and
r the development of a more self-confident, querulous, and challenging
citizenship.
An extensive literature covers the impact of these processes on welfare

states in relation to labour market and economic factors (Scharpf and
Schmidt 2001), political factors (Baldwin 1990; Castles 1998; Pierson
2001; Schmidt 2002), and social factors (Held et al. 1999; Jessop 2002).
The analysis shows that the new pressures have not put an end to the
viability of state welfare. In fact the different types of welfare states
identified in the literature appear to continue, with some modifications.
The outcomes display a strong commonality: a transition towards a new
approach to welfare, in which governments will take a less commanding
role and individual responsibility and pro-activity will receive a stronger
emphasis (Esping-Andersen et al. 2002).
Implications of the transition to a new welfare state addressing new
social risks have been extensively discussed elsewhere (e.g. Bonoli 2005;
Esping-Andersen 1999; Starke 2008; Taylor-Gooby 2004). Here we focus
on an area which has received rather less attention; the implications
for social citizenship and, particularly, for the assumptions and beliefs
surrounding that citizenship. It is the contention of this book that the
new pro-active welfare state has the capacity to achieve welfare goals
effectively under altered circumstances, but that the new policies have
severe implications for political sustainability. It is in the impact on the
political culture of welfare rather than in the life-chances of the mass of
the population that these are to be found.
Redistribution: Reciprocity and Inclusion
Both reciprocity and inclusion denote a willingness to forego immediate

advantage in order to meet the needs of other groups, often referred to
as ‘solidarity’ in debates in continental Europe. In the case of reciprocity,
the groups are relatively large and the risk that one might experience the
7
needs oneself and thus have an interest in provision to meet them seems
to be high. For inclusion, the risks are more limited and the groups on the
sharp end more distant. Reciprocity binds together the major elements
in society, redistributing between the more comfortable and more needy
periods of a typical life cycle. Inclusion seeks to share the security of
an advantaged mass with disadvantaged minorities, typically transferring
between those with access to a relatively stable and well-paid employment
and those without, between the better-off and the poor. The two elements
provide support for horizontal and vertical redistribution and promote
social cohesion.
Horizontal redistribution across the life cycle of major population
groups underlies the social insurance systems that account for some
80 per cent of benefit spending in EU member countries (Eurostat 2007a).
Typically these systems transfer from working life to periods of retirement,
disability, sickness, need for health and social care, and unemployment.
The political process by which these systems developed has been analysed
by a number of writers from its origin in friendly societies established
by skilled workers through a politics that extended from upper working
class to mass working class and then included elements of the middle
class and employer groups keen to ensure the reproduction of skilled
labour (Baldwin 1990; Ewald 1986). This combination endorsed welfare
provision that allocated some 21 per cent of the GDP in EU-25 countries
(Eurostat 2007a) by the end of the twentieth century. ‘Enlightened self-
interest’ writ large in recognition of the social risks of normal life in
industrial society may be seen as the driving force behind them. This
is the background to the culture of reciprocity in social citizenship and
one which, at first sight, provides a ready link between reciprocity and
the greater emphasis on the rational pursuit of individual interest that
underlies much current reform.
Vertical redistribution has a history in the evolution of poor laws
designed to prevent the starvation of the destitute and to strengthen
social order (Flora 1987; Rimlinger 1971). In the early industrial soci-
ety, the chief recipients of such benefits were often seen as Malthusian
‘surplus labour’. The political economy of the early nineteenth century
suggested that provision for such groups, because they were poor, might
undermine work incentives at the bottom end of the labour market.
Concerns about social order led to a determination to regulate the ‘dan-
gerous classes’ (Piven and Cloward 1971). Religious and humanitarian
impulses promoted charity (Booth 1902; Rowntree 1922). These fac-
tors shaped stringent regulation of the conditions under which benefit
8
might be made available in order to enforce work incentives, promote

appropriate behaviour, or reward the required morality (Stedman-Jones
1971).
For the most part, these groups are seen as disreputable and undeserving
minorities whose needs are not understood as included in the typical
social risks of life in the industrial society. Vertical provision has attracted
relatively little interest and has sometimes met with active disapproval
from majorities with access to more adequate incomes, so that state
provision in this area has been limited and highly constrained (Ewald
1986; O’Malley 2000). Social insurance has little relevance to these groups
and benefits have typically been provided on a means-tested basis with
stringent requirements as to the active pursuit of paid work. Vertical
redistribution transfers from the mass to minorities because they are poor,
not between the peaks and troughs of a typical life cycle, and is markedly
less well-supported across Europe.
Recent debate in the European Union has taken up the rhetoric of social
inclusion and seeks to coordinate national anti-poverty programmes, with
strong links to entry into paid work, under this banner (Marlier et al.
2006, ch. 1). In the UK, a Social Exclusion Unit was established within
the Cabinet Office by the New Labour government, later replaced by
a Social Exclusion Task Force. This focused on opportunities in child-
hood and employment rather than cash benefits (Hills and Stewart 2005,
pp. 6–13).
Institutional Trust and Social Citizenship:

Uncertainty and Commitment
Trust is to do with the confidence that one can rely on something or

somebody, in this case the services of the welfare state and the people who
provide them. An extensive literature in various disciplines identifies four
common features of the situations in which trust is helpful: uncertainty,
future orientation, significance, and vulnerability (see Crasswell 1993,
p. 104; Dasgupta 1988, p. 51; Gambetta 1988, p. 218; Hardin 2002, 2004;
Luhmann 1979; Moellering 2006; Rousseau et al. 1998, p. 395; Sztompka
1999, p. 25). Uncertainty is at the core. If we knew that the person or
thing would act in a particular way, trust would be unnecessary (Gambetta
1988, p. 213). Future needs and possibilities are enmeshed in uncertainty.
In addition, for there to be a point to trust, something must be at stake:
‘Trust is only involved when the trusting expectation makes a difference
9
to a decision’ (Luhmann 1979, p. 24). Finally, trust involves vulnerability:

‘trust consists of placing valued outcomes at risk to others’ malfeasance.
Trust relationships include those in which people regularly take such
risks’ (Tilly 2004, p. 1; see Seligman 1997; Rousseau et al. 1998, p. 395).
For this reason trust plays a strong role in welfare transactions, where
individuals are typically weak and lack the authority to enforce outcomes
or the expertise to define what is needed but have pressing needs for
services.
A fifth theme is also significant, following from uncertainty and vul-
nerability but subject to controversy. One perspective sees trust as simply
the ability to predict another’s behaviour towards one. Trust is then one’s
estimate of the probability that the other will act in one’s interests (e.g.
Dasgupta 1988; Gambetta 1988;. Other writers (e.g. Hardin 2004; Luh-
mann 1979; Seligman 1997) argue that this is not enough. Prediction of
probability enables one to manage risk when outcomes can be assessed
with some confidence, for example through the actuarial calculations
that underlie insurance. Trust is relevant precisely when probabilities
cannot be estimated. This applies to many personal relationships and
also in considering one’s future social needs. This positive orientation
of the other towards one plays a leading role in analyses by many soci-
ologists, psychologists, and political scientists (reviewed in more detail
in Chapter 6). It is a powerful factor in reinforcing confidence that an
institution or another person will help and support one in an uncertain
future. This is a key element in the framework of assumptions surrounding
state welfare. The impact of reforms on the capacity to establish and com-
municate such a credible commitment is central to their effect on trust in
the UK.
Here we are concerned with trust at the social level of institutions. There
are many ways of managing uncertainty. Throughout history, people have
used non-rational strategies such as luck, fate, the favour of the gods, des-
tiny, commitment guaranteed by oath, attunement with cycles of nature,
and faith in a transcendental or temporal authority. More recently, uncer-
tainty has been construed predominantly as risk. This directs attention
to prediction through a range of techniques (probability theory, actuarial
science, epidemiology, demography, induction from previous applications
of a technology, micro-simulation, process modelling, etc.) coupled with
the regulatory and legal approaches available within a modern state (Beck
1992; Jaeger et al. 2002, ch. 3).
During the past few decades there has been increasing concern about
the limitations of rational approaches in managing risk and uncertainty,
10
with a consequent interest in trust. A number of factors contribute to

the decline in confidence in the capacity to deal with uncertainty: the
withering of political deference (Norris 1999), the impact of globalization
at a cultural level, ensuring that individuals are increasingly conscious
of alternatives so that choice between social arrangements becomes more
evident and pressing (Beck 1992; Giddens 1994), the difficulties faced by
government, on the one hand conscious of declining economic author-
ity as the imperatives of international markets become more powerful
(Rhodes 1997) and on the other, confronted by a more demanding and
querulous citizenry (O’Neill 2002; Power 2004).
Trust is an important component of political citizenship, since the sta-
bility of any system depends on the confidence of citizens that others will
behave in expected ways. These issues have been extensively discussed
in the literature on social capital and its contribution to social cohesion
and to economic and social progress (Hall 1999; Putnam 1993, 2000). In
relation to social citizenship, it is institutional trust writ large, trust not
only that the legal and regulatory framework will work but also that the
behaviour of those involved will be such that the institutions of welfare
will deliver the goods to the trusting citizen, that is central. Trust is
bound up with reciprocity and with political sustainability. The system
will lose support if currently advantaged groups suspect that the benefits
and services they are financing for others may not be available to them
in turn, should they need them. This logic emerges, for example, in the
idea of a generational contract in state pensions, explicit in ‘pay as you
go’ systems where the working generation finances the pensions of those
currently retired on the assumption that future workers will continue to
pay for their own pensions. It is also present in actuarial systems, since
those saving now for their own retirement are assuming that the legal
framework, the regulation of funds, and the capacity of the economy to
generate the appropriate return on the investment will continue (Myles
2002).
Trust plays an immediate and obvious role in relation to the welfare
state services provided or regulated by government. For those which
apply to the mass of the population, medical services and health care,
education, and, increasingly, social care for children, frail elderly, and
disabled people, confidence that an adequate service will be available to
oneself or one’s relatives should they need it is an important component
in support for the service. If such trust declines, individuals will seek, as
much as they are able, to provide for themselves privately, through the
market and voluntary, informal, or family provision. Support for state
11
provision will diminish and services will be at risk of withering through

lack of interest, commitment, and finance (Hirschman 1970).
For the minority services concerned primarily with social inclusion
(means-tested benefits for unemployed able-bodied people, single parents,
and other groups and services designed to regulate and support the dis-
reputable poor and promote employment), a decline in confidence on
the part of users is unlikely to have much political impact. The groups are
small and lack political organization (Field 2000; Jordan 1996). However,
if the mass of the population believes that provision is ineffective, that it
fails to reach the right groups, or that it is not appropriately regulated, the
willingness to pay the taxes necessary to finance it may decline.
The role of trust in relation to welfare state provision has become
increasingly important for two reasons. First, current reform programmes
place greater emphasis on opportunities, and responsibility for outcomes
is increasingly transferred to individuals. This process is analysed in
more detail in Chapters 3 and 4. The individualization of welfare leads
to greater uncertainty about individual outcomes. Trust is one of the
most important ways in which people handle uncertainty. The shift from
collective to individual, in policy, requires a robust confidence in the
system.
The second factor also concerns uncertainty. An influential strand in
recent social analysis argues that our social experience is increasingly
of a ‘risk society’ in which uncertainties about the risks we may face
during our life course increasingly supplant class inequalities as the key
determinant of social consciousness (Beck 1992; Giddens 1994). A con-
siderable literature debates whether risks have, in fact, increased in recent
years (for reviews, see Elliot 2002; Mythen 2004; Taylor-Gooby and Zinn
2006, ch. 1). In the majority of countries people are on balance richer,
healthier, better-educated, and longer-lived than ever before. However,
uncertainty is an endemic feature of social experience in relation to
employment (Green 2005), partnerships and family life (Lewis 2006),
and health (Denney 2005, ch. 4). In this sense, risk and uncertainty are
increasingly significant in our experience, even in the more advantaged
world. This throws greater emphasis on trust.
Social citizenship, as currently developed in Western countries, requires
reciprocity, inclusion, and public trust in institutions and in their capacity
to meet individual needs. Trust is vital to sustain reciprocity and inclusion
and is an important factor in managing uncertainty. We now go on to
consider how welfare policy responses to a range of pressures during
recent years have affected these issues.
12
Challenges to the Welfare State
An extensive literature surrounds the crisis of the welfare state during the
1970s and 1980s and subsequent transitions and developments (Bonoli,
George, and Taylor-Gooby 1999; Esping-Andersen 1996, 1999; Huber and
Stephens 2001; Jessop 2002; Kuhnle 2000; Pierson 2001; Scharpf and
Schmidt 2001; Schmidt 2002; Taylor-Gooby 2004). The pressures on the
traditional systems of welfare provision that had become established
during the long boom after the Second World War include economic,
political, and social changes, taking place in the context of concomitant
processes of globalization that constrain responses to them. The second-
order impacts of welfare state reforms, undertaken in response to pressures
from these factors, provide additional pressures, further restructuring citi-
zens’ experiences of state welfare and leading to new responses (Table 1.1).
Much of the literature has focused on the continuing changes in society
and on the context of globalization. The second-order and unintended
consequences of reform have received much less attention.
Western welfare states expanded steadily in the period after the Second
World War as the demands for military spending fell, governments dis-
covered that electorates were willing to spend a portion of the proceeds
of growth on social services, and coalitions of working and middle class
groups demanded such provision. This continued up to the first oil shock
in the mid-1970s. Thereafter, the growth rate slowed. Welfare states have
continued to expand during the past quarter century, but at a slower pace
and with periods of retrenchment.
Other changes also affected state welfare. Budgetary control became a
focus of concern. New policies were introduced to use resources more
efficiently and target them more accurately. The theme of individual
responsibility for welfare outcomes received more attention as activation
programmes to strengthen work motivation and commitment expanded,
and governments sought to promote greater choice for service-users and,
in some cases, encourage greater use of private provision. A new approach
to public sector management, emphasizing both targets and market com-
petition, grew in importance. Mass migration led to greater cultural and
ethnic diversity, generating concerns about fragmentation in the solidar-
ity that supported state welfare. The growing inequality between winners
and losers in more competitive markets led in the same direction. A
number of interacting changes at the levels of economic, political, and
social relations lay behind these shifts. These are set out in the first and
second columns of Table 1.1 and discussed in the next section.
13
Table 1.1. State welfare: pressures and responses
Level Changes Globalization First-order impacts Welfare state response Second-order impacts
on the welfare state
Economic: New technology and Fiscal and Inequality and uncertainty Activation and opportunity Individualism not
production process new management commodity world reciprocity, constraining
and labour markets market responses to first order
impacts
Political: citizen and Wealth, Declining authority Fragmenting of welfare New public management; Independence not
government self-confidence and of the nation state constituency; Limits to Quasi-markets inclusion
assertiveness government
interventionism
Social: changes and Population ageing; Mass migration Rising cost of pensions, New public management Uncertainty not trust
relationships Gender equality health and social care; and quasi-markets;
Diversity and declining Multi-culturalism;
solidarity Politics of inclusion
Economic, Political, and Social Developments
At the economic level three changes were important. First, technical

changes in production resulting from the relentless drive for greater
productivity, particularly the use of micro-processors as a substitute for
human labour and the associated introduction of more efficient new
managerial approaches (Le Grand and Bartlett 1993; Pierson 2001, ch. 4),
impacted on the workforce. Second, industrial employment declined and
service-sector employment expanded. The service sector now provides
some 60 per cent of all jobs across the expanded EU, with between 55
and 62 per cent in the larger economies of France, Germany, Italy, Spain,
and Sweden. The shift is further advanced in the UK, with 72 per cent of
employment in this sector (Urbanski 2007). Service sector employment
tends to be less well-unionized and includes jobs ranging from well-
paid actuaries, advertising executives, and journalists to insecure office
cleaners or counter assistants. Third, the capacity of the working class to
promote its interests has diminished. For those who saw class pressures
as the driving force behind the development of the industrial welfare
state, this shift signals a thorough-going transformation (Jessop 2004).
For others, the changes set the scene for more limited shifts in the
structure of the state welfare and the interests advanced by it (Huber and
Stephens 2001).
The shift in employment has also coincided with a decline in the supply
of unskilled jobs (Green 2005, pp. 32–4). This sets a higher premium
on access to education and training and expands the group of unskilled
unemployed people excluded from the labour market and in need of state
benefits. The promotion of employment for such groups became a major
concern of welfare states and led to greater commonality in policies across
European countries, for example in the EU’s ‘Lisbon strategy’ (EU 2005a).
Some writers also associate the changes across production systems with
a decline in secular growth rates (Iversen and Wren 1998). The argument
is that opportunities to improve productivity are stronger in the manu-
facturing sector than in the service sector. Technological developments
typically lead to greater efficiency in the use of labour in the former
area. In the latter, it is often access to a human worker that is the key
element in use of the service, and this is especially true in the state sector,
where availability of nursing or teaching staff is often seen as the central
component in provision. Since growth is often linked to productivity,
the transition to a service economy is associated with a secular decline
in growth rates. An expansion in welfare is easier to achieve when it
15
involves allocating the increment from growth rather than redistributing

existing resources, so welfare states come under pressure. This argument
is disputed by those who point to improvements in productivity in some
areas of the service economy as a result of new working practices and
the introduction of computers. How far these changes can be maintained
remains uncertain.
At the political level, the key underlying shift is the erosion of the tradi-
tional deference identified by Almond and Verba (1963) as an important
constituent in the political culture of successful postwar democracies.
Better acquaintance with the variety of cultures and of approaches to
social issues nationally, as well as higher standards of education and
greater access to information, leads to a better informed and more self-
confident citizenry, less deferential to politicians, experts, and profession-
als and more inclined to challenge their pronouncements and policies
(Giddens 1994). As living standards and disposable incomes rise, people
increasingly have the experience of exercising choice and consuming
products tailored to individual demand. They become more assertive
(Norris 1999) and less accepting of a one-size-fits-all welfare state (Glen-
nerster 1998). At the individual level, people are more willing to pursue
compensation for official actions with which they are dissatisfied through
the courts, so that authorities become more risk averse (Power 2004). Such
shifts demand greater responsiveness from governments. To the extent
that some groups are better-informed about their own interests, more
articulate and more influential than others, the challenge of querulous
citizens may lead to more divided welfare provision.
Social changes have affected welfare states in two main ways. These
concern population ageing and changing gender roles. First, the pop-
ulations of welfare states are ageing as birth-rates decline sharply, life-
expectancy increases, and immigration is insufficient to bridge the gap.
These developments put pressure on the services predominantly used by
older people, pensions, social care, and, to a considerable extent, health
care. The costs of health care are expected to increase from an average
of 5.7 per cent of GDP across all OECD countries in 2005 to 9.6 per
cent by 2050, assuming that current policies continue. With a range of
feasible cost-containment policies, the 2050 estimate falls to 7.7 per cent
(OECD 2006, Table II.I). These calculations take likely shifts in spending,
population structure, labour force, and productivity into account and are
regarded by the authors as ‘reasonably robust’. Long-term care costs are
estimated to triple from 1.1 per cent of GDP to 3.3 per cent without a
16
determined effort to contain spending, or up to 2.4 per cent with such

an effort. Among the main Western European countries, the combined
increase for health and social care is estimated to increase from between
7 and 9 per cent of GDP initially to between 11 and 15 per cent without
cost-containment or 10–12 per cent with it, with the UK at the lower
end of the range. Note that these estimates make allowance for expected
increases in GDP over the period. The problem is exacerbated by the fact
that the changes in the family and, particularly, the rise in the proportion
of married women in full-time paid work considered below will reduce
the pool of workers available to provide informal care, leading to further
problems.
These are substantial pressures. Pension commitments impose further
costs. In many countries pensions have expanded during the postwar
period to appease a substantial group in the electorate, and are financed
on a pay-as-you-go basis through more or less direct transfer of resources
from current workers to current pensioners. National schemes differ, lead-
ing to a wide range of probable future spending increases. For France,
Germany, and Italy, spending commitments are likely to increase from
about 12 to about 15 per cent of the GDP, for Sweden from 9 to
11 per cent, and for the UK, with its lower level of provision, from 5 to
5.6 per cent (OECD 2005b, Table 1.1).
Concerns about the impact of population ageing have generated a
vigorous response among welfare states. Pension reforms have been
achieved in most European countries, with considerable difficulty, to
cut back public commitments and (especially in the UK) place greater
responsibility on individuals (Hinrichs 2000; Taylor-Gooby and Mitton
2008). Health services have been reorganized to increase the capacity
of government to control provision, use competitive pressures to regu-
late cost-efficiency, and seek to ensure that as much treatment as pos-
sible takes place at front-line clinics rather than in the much more
expensive hospitals (Oliver and Mossialos 2005; Rico, Saltman, and
Boerma 2003; Saltman, Figueras, and Sakellarides 1998). Various measures
are designed to make employment more carer-friendly and to provide
incentives and support for informal care (Daly 2005; Lister, Williams
et al. 2007).
The second area of social change concerns the position of women.
The dominant model of family life in most welfare states during the
1950s and 1960s assumed that a male breadwinner in stable industrial
employment generated a family wage, while his wife worked part-time
17
and provided social care for children and any other dependents. The
gender distinction between productive and reproductive spheres in most
Western countries was an outcome of industrial growth and mediated
through national political systems (Lewis 1998). It began to break down
initially in Nordic countries and then across Western Europe. More
recently commitment to paid work has expanded among mothers of
young children and older women, while male employment has stagnated
or declined (Crompton and Lyonette 2006). However, progress is limited.
Women are heavily concentrated in part-time work, especially when their
children are young, a tendency particularly striking in the UK (Taylor-
Gooby 2004, Table 1.2). The improvement in women’s wages relative
to men’s across major OECD economies is slow, from 77 to 81 per cent
for full-time workers on median earnings between the mid-1990s and
2005. The pace of convergence during the late 1980s and early 1990s
has not been sustained. Women’s media full-time earnings in the UK
stood at 66 per cent of men’s in 1984, improved to 74 per cent by
1994 and then to 80 per cent by 2004. Corresponding statistics for
Germany are 70–77 per cent, and then remaining roughly constant, for
France 82–89 per cent and then constant, and for Sweden remaining at
about 85 per cent through the whole period (calculations from OECD
2008b). The gap among those with access to higher education is typically
smaller.
The move to greater equality in work has advanced demands for social
justice and for autonomy. The impact on welfare states has been in pres-
sures on education and employment and on the provision and quality
of care for children and frail elderly, whose needs were in large part
previously met within the family. It has been reflected at the European
level in the growing importance of gender politics, in gender mainstream-
ing across EU policy making, and in the assumptions of the EU Open
Method of Coordination. This sets non-binding targets for child care and
for women’s education and employment, agreed across member states
(Chalmers and Lodge 2003). The loosening of traditional family roles
has tended to weaken intergenerational solidarities and to strengthen the
idea that people are largely responsible for their own life-courses, that,
as Beck puts it, they ‘write their own biographies’. Research by Lewis
(2006), Smart (2007), and Williams (2004) indicates that people’s sense
of moral commitment in relation to family obligations remains strong
and adapts to the greater flexibility and diversity of life in sophisticated
ways. However, the range of kin ties is limited and does not provide an
18
equivalent and cross-cutting foundation for an inclusive social solidarity

to that based on social class.
All these pressures have emerged in the context of rapid globalization.
The associated changes exacerbate the pressures and limit the range of
acceptable solutions. We discuss how globalization has shaped welfare
state responses to the pressures of economic, political, and social change
in the next chapter.
19
2
Globalization: New Constraints
on Policymaking
Globalization describes the process of greater international integration at

the level of trade, fiscal markets, and production, leading to a decline of
the authority of the nation state, to greater social and cultural interac-
tion and, at the basic human level, migration. As Held and colleagues
point out, globalization is by no means unique to the recent past (Held
et al. 1999). The great empires of previous centuries, culminating in the
imperial era of the nineteenth century, created globalization in trade
and production and in population and government. The current wave of
globalization is unusual in four factors: the relative size of the economies
entering the world market; the speed of change; the rapidity with which
international transactions can take place; and the complexity of multi-
national companies and their production chains. These factors have
implications for the authority of governments over national economies,
and consequently, their capacity to resist market imperatives and pursue
independent welfare policies.
At a fiscal level, the growth of footloose capital seeking investment at
the highest return across international financial markets, which received
an important impetus from the growth of oil wealth and the relaxation of
exchange controls, has exerted a major influence on national economies.
From the 1980s onwards a number of European countries (France, 1985,
Italy, 1990, Sweden, 1991, UK, 1974, 1994) experienced destabilizing pres-
sures on national currencies as a result of speculation. One implication is
that national economic policies, including taxation and welfare spend-
ing, are increasingly constrained by the imperative of currency stability
(McNamara 1998).
At a commercial level, the expansion of world trade, lent impetus by
the dominion of the USA, the collapse of the Soviet union as a hegemonic
20
Globalization: New Constraints on Policymaking
power, and the emergence of newly industrialized countries, particularly

in East Asia, as major trading nations, adds a further imperative of com-
petitiveness (George and Wilding 2002, ch. 2; Stiglitz 2002). This has
implications both for labour costs and for the quality of the workforce
among those who wish to gain access to the higher returns available from
competition on quality rather than simply on price (Pfaller, Gough, and
Therborn 1991).
There are two particular features of current developments (OECD 2007b,
p. 2). First, very large economies are now emerging into the world market,
notably Brazil, India, Russia, and China, now the world’s third largest
exporting nation. Second, increasingly complex and sophisticated sup-
ply chains involving intricate networks of outsourcing and just-in-time
production are possible as a result of the rapid introduction of informa-
tion and communication technology. Expansion in trade in the services
directly involved in the welfare state (education and medical services),
especially in the EU, imposes further pressures on state provision. The
possibility that the World Trade Organization may limit subsidies to
government services in order to ensure competition on equal terms for
private capital may constitute a major threat to welfare state services in
the future.
At the political level, an important effect of these changes has been the
abandonment of neo-Keynesian economic management. The shift also
implies a move away from the deficit funding of welfare expenditure, in
effect using the surplus from future growth to pay for current services.
This is enshrined in the ‘golden rule’ of UK economic management, which
restricts borrowing to the finance of investment to expand future produc-
tion (HM Treasury 2008a), and in the conditions of the EU’s Growth and
Stability Pact (EU 2008). The failure of attempts at the EU level to build
an expansive Europe-wide welfare programme is discussed in Chapter 3.
Governments can no longer use exchange and interest rates to regulate
employment in the domestic economy, regardless of international pres-
sures.
Globalization has also made possible migration in search of employ-
ment and better lives, at a rate not seen since the first wave of impe-
rial globalization in the late nineteenth century. The expanded work-
force provides labour for a growing service sector, including state welfare
provision, in richer countries. It also generates complex international
patterns of resource transfers and social needs associated with family sepa-
ration and disruption (Schierup, Hansen, and Castles 2006). An important
outcome is greater ethnic and cultural diversity in the populations of
21
European countries, with recent migrants often predominantly located

at the bottom of the labour market.
One result of globalization is that governments increasingly tend to see
their social policy role as that of achieving welfare by indirect rather than
direct means. They seek to improve living standards and job opportunities
by enhancing national economic competitiveness through cost-efficiency
in welfare provision and by using welfare programmes to enhance the
adaptability and capacity of the workforce, instead of simply providing
benefits to meet needs. This shift has a strong impact on policy and on
the implications for reciprocity, inclusion, and trust.
How Globalization Shapes the Pressures on State Welfare
The resulting pressures on welfare provision are substantial and various

(see the fourth column of Table 1.1 in Chapter 1). They include labour
market shifts, economic and fiscal globalization, the retreat from neo-
Keynesian economic management, population ageing, family change,
diversity, and a more challenging citizenry. These constitute the first-
order impact of societal change and globalization on the welfare state.
Their impact has been assessed in a number of ways. Some commenta-
tors initially suggested that any disruption in the steady expansion of
social spending would simply render the possibility of expansive state
welfare obsolete (Starke 2008; Gilbert 2002). Social expenditure in the
main European countries, the USA, and the OECD as a whole varies
substantially. However, it has continued to rise during the period from the
mid-1980s to the early twenty-first century, despite some brief episodes of
retrenchment, in most cases tracking the economic cycle (Figure 2.1). The
rate of increase has in general diminished but continues to be positive.
The pattern of higher spending in Sweden and other Nordic countries,
followed by the corporatist heartland of Europe, represented by Germany
and France in the figure, and then the lower-spending UK, with the
Mediterranean and Eastern European countries endeavouring to catch up,
remains consistent over the period. Social expenditure remains a major
and distinctive component in the economies of Western countries in
comparison, for example, with the USA or the rest of the OECD. The way
in which welfare is provided has changed, with implications for social
citizenship.
Discussions of the politics of welfare states identify a weakening of the
groups that supported traditional patterns of provision and an expansion
22
France US Italy Sweden OECD total

Poland UK Spain Germany
35
30
25
20
15
10
1980 1985 1990 1995 2000 2003
Figure 2.1. Social expenditure 1980–2003 as %GDP

Source: OECD Social Expenditure Database, http://www.oecd.org/topicstatsportal/0,3398,en_
2825_497118_1_1_1_1_1,00.html
of opportunities to establish more flexible and individualized welfare sys-

tems. Mainstream political science approaches emphasize the changing
patterns of need associated with the transition and how they are expressed
in shifts in political power. A number of writers point to the importance
of the declining size and coherence of the traditional industrial working
class (Pierson 2001, chs. 9 and 10; Huber and Stephens 2001) and the
consequent limitations on its ability to secure the political representation
of its interests. More broadly, Taylor-Gooby (2004, ch. 1) and Bonoli
(2005) argue that an important component in the development of welfare
states concerns the changing social risks recognized by substantial groups
in the population.
Traditional welfare states were built around services to meet the risks
that might affect an individual during a typical life-course: loss of income
during retirement, sickness or disability, and need for health care or
education. The changes bring new social risks to the fore: lack of access
to secure employment or redundancy due to obsolete skills, inability to
supply care for children or for frail elderly relatives, difficulty in access-
ing newly privatized or targeted services, and problems in coping with
the consequences of migration. These risks are typically experienced by
minorities or by people at particular life-stages (unskilled young people
or with obsolete skills, those building families, those in deindustrializ-
ing regions or with specific needs, migrants). Unlike traditional mass
23
risks (need for health care or pensions) they fail to mobilize the mass
constituencies across the population needed to achieve governmental
response. Pressures for policies to address competitiveness are endorsed
by larger population groups and by business and tend to predominate
in the new directions in welfare. Jessop’s argument that the political
and economic changes associated with the post-industrial transition are
associated with new forms of work (service sector), political organization
(interest group coalition, not class), and social life (from breadwinner to
more diverse families) leads in the same direction (2004, ch. 1). Taken
together, the changes weaken the political structures that supported the
previously established settlement and open the way to new forms of state
welfare. Services are increasingly targeted on specific groups and seek to
change behaviour as well as meet needs; there is greater emphasis on
improving human capital and responsibility in areas like pensions is often
shifted towards the individual.
Cultural approaches are associated with the work of ‘risk society’ soci-
ologists (Beck 1992; Giddens 1994, chs. 2 and 4) and of governmentality
theorists (O’Malley 2004; Rose 1999), concerned with the development
of social systems of control and regulation. Those who identify a tran-
sition towards risk society analyse the impact of globalization in dis-
solving of the structures of social class, industrial discipline, governmen-
tal authority, traditional family roles, and stable expectations about the
life-course that ordered people’s lives. On the one hand, the new and
less regulated social circumstances of high modernity, post-traditional,
or risk society give individuals greater autonomy. On the other, they
weaken the capacity of individuals to predict developments. The out-
come is stronger pressure from citizens for engagement with govern-
ment through a more dialogic form of democracy and also greater
acquiescence with the presumed imperatives of market-centred economic
success.
An alternative, more individualist approach stresses the importance of
labour market shifts, declining growth rates, and international compet-
itiveness. These approaches understand the impact of economic global-
ization and the new industrial revolution as irreversible, and understand
them as requiring a complementary transition from welfare states. Thus
Pierson sees the outlook for welfare spending as ‘bleak’ (2001, p. 456),
trapped between continued economic pressures, expanding social and
demographic needs, and the declining capacity of governments to provide
economic support.
24
Other writers seek to retrieve a positive role for social spending in

the context of general pressures for retrenchment. Esping-Andersen more
optimistically stresses the opportunities generated by the exigencies of
competitive pressures to gain support for investment in children and
women to sustain a future workforce (2002, ch. 1). Gough (2004) expresses
concern about market-centred welfare reforms promoted by the World
Bank in Asia and South America as a response to economic pressures, and
argues that social investment provides a more attractive and politically
acceptable longer-term solution. Rieger and Leibfreid (2003) also argue
that such approaches combine a track record of economic success with
the capacity to gain widespread political support, using the example of the
traditionally high rates of social investment among the smaller European
nations more exposed to international economic forces. This viewpoint
sees welfare states as essentially resilient, rather than as a passing phase in
the interaction of democracy and capitalism. From this perspective, the
possible economic impacts of change may be viewed along a spectrum
from stringent spending constraint to policies that include a measure of
social investment, but stress cost-efficiency and ensure that the invest-
ment does not weaken work discipline. The objective in both cases is to
improve international competitiveness.
The pressures on welfare provision admit of a range of responses. The
weight of analysis favours solutions that emphasize the mobilization
and upskilling of workforces to improve competitiveness, cost-constraint
and cost-efficiency in provision for the same reason and to ensure that
expanding and insistent needs can be met, and greater responsiveness in
recognition of the pressing claims of citizens. As governmental authority
over key aspects of the economy diminishes and the political settlement
that sustained traditional welfare states dissolves, the emphasis in pol-
icymaking moves towards changing the behaviour and motivation of
the workforce. Measures to strengthen appropriate incentives offer an
attractive way to achieve this. The discussion of welfare reform pro-
grammes indicates that it is the active, individualist, and market-oriented
approaches that predominate.
The outcome is that circumstances are favourable to a retrenchment of
former structures of mass provision, a shift towards New Public Manage-
rialism, and a greater emphasis on individual responsibility and oppor-
tunity. These approaches are appealing as solutions to the problems
that confront welfare states, and the political forces likely to resist such
changes have grown weaker. Discussion of welfare reform has tended to
25
focus on changes in provision (e.g. Esping-Andersen et al. 2002; Scharpf

and Schmidt 2001) and in the politics of welfare (Ferrera and Rhodes
2000a, 2000b; Schmidt 2002; Taylor-Gooby 2004). Relatively little atten-
tion has been paid to the value-assumptions of social citizenship and the
way in which welfare state transitions impact on these. In the next section
we consider the changes from the perspective of reciprocity, inclusion,
and institutional trust.
Implications for Welfare State Values
The changes in the economic, social, and political context of the wel-
fare state impose additional pressures on the core values of reciprocity,
inclusion, and institutional trust, just at a time when the sustenance
of these values is desirable to secure a favourable transition for social
citizenship. Reciprocity may be understood in terms of the enlightened
self-interest of substantial population groups, anxious to secure good
services to meet needs which they recognize as relevant to themselves.
Inclusion concerns the relationship between advantaged majorities and
disadvantaged minorities.
The labour market shifts and changes in trade union bargaining power
associated with globalization and technical change have in general
reversed the tendency to compression of inequality during the industrial
period. Issues of social inclusion arise in connection with the extent to
which state welfare provision should ensure access for these groups to
the life-chances of the mass of the population. In general, the pressures
in a more globalized market restrain income growth among less-skilled
workers at the lowest common denominator, where international compe-
tition is fiercest, but reward those with scarcer talents, skills, and training
(Atkinson 2007; OECD 2007c). Education and training play a stronger
role in determining access to higher paid work (Green 2005). This issue is
discussed further in Chapter 10.
During the period since the oil-crisis of the 1970s, inequalities in mar-
ket incomes have grown. Atkinson’s careful work on the main OECD
countries shows a ‘fanning out’ of incomes during the past 25 years
as earnings at the top end rise and those at the bottom fall or remain
static. This is most marked in the USA and less evident in Europe and,
particularly, in Scandinavian countries. Median earnings in the UK have
risen during the last two and half decades, but those of the bottom decile
had fallen by 3 per cent by 2005, compared to their relative position
26
in 1980, whereas those of the top 25 per cent have risen by 8 per cent
and those of the top tenth have risen by 16 per cent (Atkinson 2007,
Figure 2.1). In other Anglo-Saxon countries, the fall in earnings at the
bottom end is more noticeable (by some 6% over the period in the
USA and by 10% in Australia). The top decile is also advantaged, by
16 and 10 per cent, respectively. In France and Germany, however, the
corporatist framework enables the bottom decline to escape noticeable
falls in their relative earnings, while incomes at the top end increase by
some 14 per cent. In social democratic Sweden, the fall for the bottom
decile is 7 per cent and the increase at the top is about 8 per cent. These
changes pose serious challenges for governments seeking to promote
equality. An OECD analysis shows that ‘in 16 of the 19 countries for which
data is available, the earnings of the best-paid 10 per cent of workers
have risen relative to those of the least well-paid 10 per cent since the
mid-1990s’ (OECD 2007c, p. 4). The Luxembourg Income Study reports
similar trends across the income distribution (Luxembourg Income
Study 2007).
There is a widespread concern about labour market flexibility and
increasing levels of apprehension about insecurity in the workplace
(Wainwright and Calnan 2002). Green’s research (2005, pp. 146–7) assem-
bles evidence from a wide range of sources to demonstrate that in the
USA, Britain, and Germany the risk of unemployment increases at times of
higher unemployment and decreases when unemployment is lower, but
that there has, in fact, been no secular trend to greater insecurity in work
during the past two decades. He attributes the increase in feelings of inse-
curity and uncertainty, shown by attitude surveys, to the intensification of
work and the loss of autonomy and control over the work process. At the
same time, the risks of unemployment and lack of access to well-paid work
have become more concentrated among less skilled or older minorities
(OECD 2007d, ch. 3). So far as can be seen from limited evidence, oppor-
tunities have become more unequal. People are less likely to move up (and
down) the income and social class ladder in the 1990s, when compared
with the 1970s (Blanden, Gregg, and Machin 2005; Goldthorpe 2004).
These factors may exacerbate feelings of insecurity in relation to work. At
the policy level, the result is a greater need for vertical redistribution and
for training to improve skills and the competitive advantage of the work-
force. More generally, the division between horizontal reciprocity and
vertical inclusion has grown more marked and governments have been
concerned to develop education and direct assistance more accurately
towards social inclusion.
27
Greater uncertainty in working lives may generate political pressures for

governmental action. However, more advantaged groups may tend to take
the view that the appropriate response is to ensure the competitiveness of
the economy, while support for benefits and wage-supplements may tend
to be strongest at the bottom (Taylor-Gooby and Martin 2008). The gap
between advantaged and disadvantaged widens, weakening opportunities
to construct political coalitions (Brewer, Sibieta, and Wren-Lewis 2008).
It becomes easier to see those who fail in the competition for stable
employment as a distant group, and increasingly as an irrelevant surplus
population. Since educational achievement and the effort to render one-
self employable are emphatically valued, the view that unemployment
is attributable to laziness or lack of effort becomes more widespread. In
the UK, the proportion choosing this alternative as the chief explanation
of poverty out of four options increased from 15 to 24 per cent between
1994 and 2006 while the proportion seeing poverty as the outcome of
social injustice fell from 30 to 21 per cent (Britsocat 2008). Attitudes in
different countries vary but there is a common international movement
towards individualized explanations of poverty.
These changes may tend to reduce the range of reciprocity as lives
become more flexible and the opportunities to identify and forge solidar-
ities more limited. The impact on inclusion is likely to grow more severe
as the gaps between the three main groups, the more or less comfort-
able mass in the middle, those at the bottom, and the very rich, grow
wider.
The mass migration facilitated by cheaper communications and more
open borders and promoted by more open and flexible labour markets
has led to greater diversity in the populations of most welfare states.
Some scholars argue that this militates against generous welfare provision,
because people are reluctant to support benefits for groups they see as
different and with whom they find it difficult to identify. Two prominent
writers argue that about half of the difference in welfare spending between
Europe and the USA can be explained simply in terms of the greater
ethnic diversity of the USA and use statistical methods to quantify this
claim (Alesina and Glaeser 2004). This has implications for debates on
the integration of minorities into the dominant culture as opposed to
multiculturalism (Miller 2006).
A number of other studies, using both quantitative and qualitative
methods, point out that when differences in political structures (Taylor-
Gooby 2005), cultural attitudes (Mau and Veghte 2007), and the historical
28
context of policymaking (Banting et al. 2006) are taken into account,

the relationship between diversity and low welfare spending dissolves.
Nonetheless, popular discourse in a number of welfare states often iden-
tifies particular ethnic groups as disproportionately favoured by social
provision (BBC News 2002; EUFRA 2006, p. 12; Scheepers, Gijsberts, and
Coenders 2002). These arguments lead to pressure to restrict entitlements
for high-profile migrant groups and marginalize them in the welfare
system (Burchardt 2005). The response of policymakers and politicians
to such pressures may then be crucial to the resilience of social inclusion.
The issues are discussed further in Chapter 10.
Pressures on institutional trust arise from two directions. First, an
important aspect of the challenge provided by a more self-confident and
engaged citizenry lies in the extent to which the views and policies of
politicians, experts, and professionals are increasingly called into ques-
tion. For many people state services provide the largest concentration of
professionals with whom they come into direct contact and who have
direct influence over their life-chances in areas such as health and edu-
cation. The dominant position of an audit culture in risk-management
in public and private sectors and the associated increased opportunities
for blame and punitive litigation exacerbate the erosion of trust (Hutter
2006). As Giddens points out, these arguments do not necessarily imply
the end of trust but indicate the substitution of a more active and engaged
for a passive and deferential trust. People increasingly explore and test
where it is appropriate to place their trust rather than take things for
granted (Giddens 1999). This increases the likelihood of withholding
trust, so that active trust becomes conditional and uncertain trust.
The second point concerns the experience of the limitations of the
authority of nation states. National governments have diminished power
in the economic sphere as a result of fiscal and commercial globalization
and the expansion of transnational governmental agencies such as the EU
and the World Trade Organization. Governments are less likely to pursue
universal policy goals such as full employment or equality in life-chances,
as they are aware that it is more difficult to control the impact of market
forces on outcomes in these areas (Scharpf and Schmidt 2001). Welfare
states are seen (by policymakers and increasingly by the mass public) to be
less effective in achieving welfare for their citizens by direct interventions
and must pursue these aims increasingly by indirect means. Such changes
are likely to undermine public trust in the capacity of the institutions of
welfare states to deliver the goods.
29
The Response of Welfare States
The societal changes in the context of the ongoing progress of global-

ization have constrained welfare policies and exerted pressures on the
framework of values that underpinned social citizenship. The fifth col-
umn of Table 1.1 lists the main responses by government. At the level of
economic changes, bearing on access to jobs, inequality in incomes, and
security in employment, the main directions of response have been to
stress activation and opportunity. European countries have moved away
from the defence of existing patterns of employment and the provision of
passive benefits for those unable to find work towards policies designed
to mobilize as much of the population into paid work as possible and to
improve skills and opportunities.
The economic changes have also exerted pressures on governments to
limit welfare spending, to contain borrowing and ensure that the currency
remains stable in fast-changing international money markets, and to keep
labour costs low in internationally competitive markets. One outcome
is the requirement to guarantee that the big-spending public services,
such as health care and pensions, remain cost-efficient. At the same time,
government is more limited in its capacity to use the traditional levers of
economic management (exchange and interest rates) and faces demands
from a more assertive citizenry. One solution is a move towards the New
Public Management, linked to the extension of private and market ser-
vices, and at the same time the imposition of strict targets for the various
competing agencies. The new stance seeks to cut bureaucratic costs and
make services more flexible and responsive to the demands of those who
use them.
Third, but less prominent, have been attempts to develop a stronger
politics of inclusion. This promotes greater equality across different
ethnic groups and is concerned with ensuring that the opportunities
made available by activation programmes and responsive services are
widely available. However, the growth of inequality makes the task of
enlisting widespread support for such policies increasingly difficult.
These new policies may themselves have second-order impacts on wel-
fare values, presented in the sixth column of Table 1.1. The risk now is
that the changes may recoil on support for the welfare state, so that the
solutions adopted to existing challenges may sow the seeds of further
problems. These issues are discussed in greater detail in Chapters 7, 9,
and 10. The stress on opportunity, activation, and achievement in policy
may undermine reciprocity by centring citizen aspirations more strongly
30
on advance as an individual rather than as a member of a social group. The

political climate of limited government and individual self-confidence
may promote greater independence and diminish support for the inclu-
sion of more vulnerable people. The introduction of a new market and
target systems of management may incline the providing agencies to
focus on the competitive success of their institution and on the goal set by
managers and undermine the commitment to the interests of service-users
essential to public trust. More importantly, the New Managerialism may
lead citizens to believe that providers are more interested in the competi-
tive success of the agency that employs them, than in their commitment
to the needs of service-users, thereby further eroding trust.
Conclusion
These new approaches offer a rebasing of social citizenship in terms of

the choices made by and the opportunities available to citizens as indi-
viduals, rather than the entitlements available from government, a more
active and engaged and also more individual, less solidaristic, citizenship.
Chapter 1 traced the impact of different economic, political, and social
factors on the development of welfare states and the transition of the
1980s and 1990s. This chapter shows how changes at all three levels have
come together to escalate demand on welfare states, just at a time when
the capacity of governments to meet the needs of their citizens was under
pressure from the operation of these factors in the context of global-
ization. Taken together, these factors explain why Western governments
from the late 1970s onwards embarked on major programmes of welfare
state reform. In principle, it would have been possible to respond to
the pressures through the expansion of traditional services and benefits.
The main direction in policy, however, is away from universal services
and cash benefits towards more targeted, cost-effective, and, sometimes,
private provision and activation and from directly managed state services
to decentralized and quasi-market provision. The new approach pursues
welfare ends by indirect rather than direct means. A major aspect of
this process is the transition to a new more individualized welfare state
citizenship.
The strength of the pressures provides an excellent justification for
change, although it does not necessarily prescribe that there is ‘one best
way’ to tackle the future direction of state welfare. In a more global-
ized world, where market forces are stronger and governments and class
31
solidarity weaker, the individualist solution appears increasingly appro-

priate. The responses that resolve the practical dilemmas of ensuring
that welfare provision and economic success remain compatible in an
altered world may not be the best suited to promoting the long-term
sustainability of welfare state values. We have examined the immediate
impact of the changes on the values of reciprocity, inclusion, and trust
associated with welfare state citizenship, as well as on the political con-
stituencies defending the interests of particular groups and on the scope
for government to carry out reforms. In the next chapter, we turn to
consider the response of European governments to the various challenges
and examine the policies that have developed in more detail. We then go
on to explore the intellectual foundations of the shift in welfare policy in
Chapters 4, 5, and 6, and the second-order challenges to social citizenship
generated by the new directions in state welfare in the rest of this book.
32
3
The Response of Government
This chapter analyses the responses of European governments to the pres-

sures described in Chapters 1 and 2. The main impetus for reform has been
the national rather than the EU level, although the new developments
are shaped by EU economic integration. Consequently, the differences
in national welfare regimes exert a strong influence on policy. The com-
mon themes are an emphasis on the mobilization of the workforce, an
emphasis on activation and opportunity in the labour market, and a
greater use of more directive management of services, coupled with the
extension of competitive markets to promote efficiency and choice. In the
area of migration and diversity, policy has developed piecemeal, with a
general but weakly enacted commitment to multiculturalism across much
of Europe, in tension with the development of increasingly stringent
regulation of immigration. The chief outcome is a greater emphasis on
individual choice and opportunity, whether in labour-market activation,
as a consumer in a quasi-market or as a provider bearing responsibility
for the success of a decentralized and competing agency. Risks tend to be
transferred from state to individuals, so that trust in the welfare system is
both more necessary and in shorter supply. The underlying logic of reform
rests on strong assumptions about the status of individuals as rational
deliberative actors. The dilemmas of diversity form part of the context in
which this plays out.
Pressures on the Welfare State
In the period of postwar expansion of national industrial economies,

governments were successful in managing employment and inflation to
ensure stable growth, using broadly neo-Keynesian policies. The emerging
33
challenges to the economic and political authority of the nation state set
governments a double test: to advance the international competitiveness
of their economy in a more globalized world, but to do so in a way that
retains the support of electors who valued expensive mass social provision
highly. There have been two main directions in policy. Welfare ends must
be advanced by policies that also expand the quality and availability of
labour through incentives and investments. At the same time, it must
respond to the demands of citizens in a cost-effective way. The pattern
of interests among other stakeholders is more complex. As taxpayers, citi-
zens are naturally keen to see the tax-bill contained. As service-users they
want high quality services, extended to meet the new social risks that are
becoming more salient, especially for particular groups. As increasingly
self-confident consumers, they demand services that are more responsive
to individual needs. The other groups of influential stakeholders are the
social partners, business and labour. Here there is a common interest in
economic success, while workers are likely to be concerned about the
supply of jobs, working conditions, and the stringency of incentives, and
employers in labour costs and profitability.
Taken together, these pressures imply support for education and
upskilling, the mobilization of as many people as possible into the
workforce, and efforts to contain spending and improve efficiency. At the
same time there are strong pressures to ensure that the services provided
are of a high quality and are responsive to a broader range of demands.
The results have been, on the one hand, a range of initiatives to improve
the productive capacity of the workforce through access to training and
education and to increase the proportion of the population in paid work
through ‘welfare to work’ and ‘make work pay’ programmes. On the
other hand, the management of the main welfare state services has been
overhauled to constrain spending, increase efficiency, and target and
develop new ways of engaging users. The challenges of diversity and
fragmentation have been less significant and have provoked a mixed
response in policymaking.
Developments at the European Level
The EU has made much greater progress towards economic than towards
political or social integration. Coordination of national policies in most
social areas is relatively weak, although EU directives bear on the interface
between welfare and work in the areas of equality of opportunity, working
34
conditions, and health and safety. Despite the early ambitions of leaders
such as De Lors, the EU has failed to develop towards a European welfare
state (Geyer 2001, p. 29). The high water mark of such attempts was
the ambitious Social Protection Green Paper (EU 1993a), which proposed
harmonization of national policies at a generous level of provision, and
achieved little. The White Paper on Growth, Competitiveness and Employ-
ment of the same year (EU 1993b) stressed the importance of responding to
international competition though quality of workforce and the contain-
ment of social costs and established the main direction of future policy.
Progress towards unified political institutions at the EU level, which
might have provided a forum in which the welfare policy differences
between member states could be discussed and resolved, has been sim-
ilarly fitful. Attempts to create a European constitution which would
include a place for social issues and a stronger central political direction
have failed to secure agreement. The Berlin Declaration of March 2007
stated that ‘we are united in our aim of placing the European Union
on a renewed common basis before . . . 2009’ (EU 2007), but leaves that
common basis to the uncertainty of ‘future decisions’.
The major advances of the EU have been in its forceful response to
economic globalization, establishing open markets in goods and labour,
a common currency (across most of the union) and a united central
banking system, and pursuing vigorous expansion. These moves were
much more rapid and successful than expected by any commentator in
the late 1980s. Social citizenship has been subsumed in the drive towards
economic objectives. As the European Central Bank put it:
Price stability prevents the considerable and arbitrary redistribution of wealth

and income that arises in both inflationary and deflationary environments. An
environment of stable prices therefore helps to maintain social cohesion and
stability. Several cases in the twentieth century have shown that high rates of
inflation or deflation tend to create social and political instability.
(ECB 2004, p. 42)
Economic developments have circumscribed the scope for action by

national governments. Deficit financing of activities such as welfare on
the neo-Keynesian model, already limited by the risks to currency sta-
bility in increasingly globalized and speculative financial markets, was
further limited by the rules of the Growth and Stability Pact. Social
policy initiatives became increasingly concerned either with enhancing
the international economic competitiveness of member countries or with
providing a level playing field for competition between them.
35
Measures that bear on equal terms of competition tend to have the leg-
islative force of Directives and cover such matters as equality of opportu-
nity and discrimination in relation to gender, race, sexual orientation and
disability, regulation of workplaces and conditions of work, covering such
matters as hours of work, retirement, parental leave, sickness absence,
and health and safety provisions. Most social policy objectives, however,
are now pursued through the looser and non-binding Open Method
of Coordination, which encourages convergence through agreement on
common goals and the annual review of national action plans and their
outcomes.
The first and most important such strategy is the European Employment
Strategy, developed from 1995 onwards. The ‘key components’ empha-
sized in the agreed guidelines include measures to increase the proportion
of the population in paid work, improve the flexibility of the workforce
and expand training and education, and to focus such policies more
accurately and cost-efficiently (EU 2006c, p. 2). The employment strategy
has been followed by similar policies seeking to coordinate approaches to
sustainable development, the environment, poverty and social inclusion,
pensions, and less vigorously, social care, immigration, and a number
of aspects of education (Chalmers and Lodge 2003). These are summed
up in the European Social Agenda (EU 2005b), which again emphasizes
measures both positive and negative to improve training and mobilize
the population into paid work. On the positive side, the recommen-
dations include more spending on training and lifelong learning, more
opportunities for women and younger and older workers, and accessible
social benefits that help in moving between jobs. On the negative side,
the proposals are for deregulation of employment and restrictions and
retrenchment in passive benefits.
Initiatives at the National Level
The weakness of the Open Method of Coordination measures in securing

a common direction is indicated by the analysis of the impact of the
most developed, the employment strategy. In relation to activation and
labour market policy, the EU Commission’s High Level Group concluded:
‘the European Union and its Members States have clearly themselves con-
tributed to slow progress by failing to act . . . with sufficient urgency . . . a
key issue has been the lack of determined political action’ (Kok 2004,
p. 6). In relation to poverty and social exclusion, the EU’s 2006 joint
36
report indicates disappointment with progress under the Open Method

of Coordination, by identifying ‘clear evidence of . . . an implementation
gap between what Member States’ commit to in common objectives and
the policy effort to implement them’ (EU 2006b, section 3.1).
The EU’s economic policies, establishing open markets, free movement
of labour, a common central banking system, and, for much of the EU,
a common currency, have been much more successful and effective. The
main social policy developments have taken place piecemeal, primarily at
the national level, within the loose coordination of European initiatives.
They operate, however, in the shadow of the stronger European economic
and market policies.
Levels of social spending differ between South and North and East and
West across Europe, as shown in Figure 2.1. There are also substantial vari-
ations between welfare regimes, ranging from the social insurance-based
Corporatist systems accounting for the bulk of activity on the Continent,
the Liberal, more market-oriented approach of the UK and to some extent
Ireland, the universal citizenship regimes of Nordic countries, the lower-
spending and more divided policies of Mediterranean countries, and the
expanding programmes of new members of the EU (Esping-Andersen
1990, chs. 1 and 2; see Abrahamson 1999 for a review and Kühner 2007
for more recent data).
In the key areas of employment and labour market policy (in response
to the challenges of new technology and globalized competition) and
pensions and health care (in response to the challenges of population
ageing and the pressure on spending) a common pattern has emerged,
although the pace and scope of reform varies. In the first area, the
principal concerns are to mobilize the workforce and render it more
adaptable in the face of competitive pressures by strengthening policies
that enhance work incentives and help groups who have traditionally
had lower levels of involvement in paid work into employment and
through labour-market reforms that enhance flexibility. There have also
been some attempts to improve the quality of jobs. In the second, there
has been greater stress on decentralized day-to-day responsibility within a
tight framework of budgetary and quality control, the use of markets and
private provision, and the more precise targeting and directive manage-
ment of state services. This process has become known as the New Public
Management.
These policies have in common a greater emphasis on the individual
as the bearer of risk, as increasingly active and self-directed in choosing
between the opportunities which are promoted by governments. Markets
37
and targets also impose pressures on managers and providers to operate

successfully in more competitive and constrained settings. These changes
raise the issue of how a social citizenship in which opportunity and
individual responsibility play a greater role is to sustain the core values
of reciprocity, inclusion, and trust in institutions.
National policies in relation to greater ethnic and cultural diversity
vary. The main currents are formal commitments to multiculturalism
and against discrimination, cross-cut by increasingly rigid controls on
immigration from outside the EU.
Employment and Active Labour Markets
Policy developments have proceeded through different stages and at vary-

ing speeds in different European countries, but in the same general direc-
tion: encouraging and supporting a greater proportion of the population
into paid work to achieve economic and social objectives at the same time,
seen by the EU as a ‘win-win process’. The details of activation policies are
discussed elsewhere (Armingeon and Bonoli 2006; Barbier 2004; Barbier
and Ludwig-Mayerhofer 2004; Taylor-Gooby 2004, ch. 1, 2005, ch. 1).
Here we point to some of the main features: deregulation; policies to make
work more attractive for those on low wages; cutbacks in benefit schemes
that do not require recipients to pursue jobs, such as early retirement or
sickness and disability provision; greater use of regulated social assistance
and case management; specific programmes for high-risk groups (young
low-skilled people, single-parents); and more childcare, particularly for
those on low incomes. The changes take place in the context of a decline
in the generosity of benefits for those out of work. A useful measure
is the replacement rate, the ratio of benefit to income in employment.
Careful work by Scruggs shows substantial national variation between the
more generous and less generous welfare states as the different overall
spending levels of Figure 2.1 imply (Allan and Scruggs 2004). Within
this pattern, replacement rates for those on unemployment benefit have
either remained roughly constant or declined in social democratic and
corporatist countries in Europe since the early 1980s, with Mediterranean
Italy catching up from a low starting point, and a much sharper fall in the
UK (Figure 3.1).
A key distinction is between spending on passive schemes, designed
simply to provide incomes for potential members of the workforce who
38
France Germany Italy Sweden UK US

1
0.8
0.6
0.4
0.2
0
1982 1987 1992 1997 2002
Figure 3.1. Unemployment benefit replacement rates (single person)

Source: Scruggs, Comparative Welfare Entitlements Data Set, http://www.sp.uconn.edu/∼
scruggs/wp.htm. Definition: Ratio of net unemployment insurance benefit to net income for
an unmarried single person earning the average production worker (APW) wage
are out of employment, and active programmes, which provide incentives

and support to encourage people to move into paid work. Spending
in this area is substantial and varies between the major West European
countries, influenced by policy development and the state of the labour
market. In 2005, active policies (defined to include training, incentives
for employers to recruit and workers to stay in jobs, various forms of wage
support, and direct job creation) represented 29 per cent of total labour
market spending in Germany, 35 per cent in Spain, 36 per cent in France,
40 per cent in Italy, and 72 per cent in the UK (OECD 2007e, Table J).
The major corporatist economies, France, Germany, and Italy, had ini-
tially subsidized retirement to protect the heavily unionized core work-
force from the pressure of rising unemployment. The rapid decline in such
spending during the 1990s is an indication of the weakening of the trade
union authority. Between 1993 and 2005, early retirement spending fell
from 0.3 to 0.05 per cent of GDP in Germany, 0.47 to 0.06 in France, and
0.42 to 0.1 in Italy, and stood at zero in both years in the UK (OECD 1997,
2007e).
The erosion of established rights to passive social benefits is reflected
in the amalgamation of the various insurance programmes and the much
39
greater role played by assistance—Revenue Minimum d’Insertion from 1989

and d’Activité from 2001 in France, Rentas Minimas from 1995 in Spain,
and the Arbeitslosengeld II reforms in Germany. Claimers are required to
demonstrate that they are actively seeking employment as a condition of
benefit. The right to limit the job-search to the field, the geographic area,
or the level of pay at which the claimer worked before is weakened. This
erodes the independent entitlement to passive insurance benefits that was
seen as reducing the incentive to pursue training or new opportunities
in employment. In addition, benefits are time-limited and sometimes
‘digressive’, reducing in value over time to sharpen incentives (as in the
French social insurance reforms).
Case management systems are being introduced in the Plan d’Aide
au Retour à l’Emploi programme in France and the Hartz IV reforms
currently being implemented in Germany (Starke 2008, p. 163). These
link claimants with a case officer who assesses their circumstances and
establishes a programme of training and advice to facilitate a return to
work. In the most developed systems (e.g. the UK), the officer closely
monitors the extent to which the jobless individual is active in seeking
and preparing for employment. Developments in the more liberal UK,
which always provided less generous benefits, take these measures a stage
further. Insurance benefits were abolished in 1996 and the new Job Seek-
ers’ Allowance permitted much greater regulation of unemployed people.
Case management was developed first for specific groups and then rolled
out across all claimers from 2002.
Various measures are designed to make lower-paid jobs more attractive.
The UK fell in line with most other EU members by introducing a min-
imum wage in 1999. Benefits that effectively subsidize low earnings for
selected groups have been introduced or strengthened in a number of
countries. These include the Tax Credit system introduced in the UK in
1999 and the Prime Pour L’Emploi benefit in 2001 in France.
Activation programmes are directed at specific groups. Non-working
mothers and, especially, single-parents are targeted, through specific case
management measures similar to those outlined above and also through
more general reforms designed to improve the availability of childcare
and pre-school places and extend the rights of parents in employment. In
general, spending on children and families (which includes childcare but
also child endowment benefits) has increased in lower spending countries
as a proportion of total spending but fallen slightly in the higher spending
countries (apart from Germany), leading to convergence (Taylor-Gooby
2004, Table 6). New benefits to enable low-income parents to pay for
40
childcare have been introduced in France, Germany, Spain, Sweden, and

the UK. These policies are endorsed by an EU Open Method of Coordi-
nation target that a third of children under 3 years of age should receive
childcare, and that 90 per cent of those aged 3 and above should be in
schooling, which was established in Barcelona in 2002 (see also OECD
2003).
In addition, following EU directives on Working Time in 1993, Parental
Leave in 1996, and Part-Time Working in 1997, European countries have
enacted a number of measures which extend the rights of parents, already
well-established in social democratic countries. These include extensions
to maternity and paternity leave and new rights for parents to request
leave to deal with family emergencies or more flexible working hours, for
example, in Germany, Spain, and the UK.
Regulation, Flexibility and ‘Flexi-Curity’
A traditional method of securing the jobs of existing workers is through

the use of employment protection legislation to make it more difficult to
dismiss them. In keeping with the strategy of promoting flexibility and
shifting responsibility to the individual worker, the activation approach
curtails such legislation. In general, there has been convergence. Pro-
tection in countries which previously had higher standards has fallen.
This trend is confirmed by the convergence in scores on the OECD’s
Employment Protection Index, which combines evidence on rights in
relation to regulation of procedures, direct costs of dismissal and trial, and
notice periods for temporary and more established workers. Corporatist
economies (e.g. Germany) and Mediterranean countries (e.g. Italy and
Spain) scored highest in the early 1980s, between 3.2 and 3.8 on the
index. By 2004, scores had fallen to between 1.9 and 3.0 (OECD 2004a,
2004b, pp. 63–4, p. 117) The UK’s score, always relatively low, rose slightly
from 0.6 to 0.7.
Less regulated part-time employment had expanded, to reach over a
third of the labour market in Spain by the later 1990s and through such
measures as the relaxation of employment protection and social security
contribution requirements for specific categories of jobs in Germany from
1998. Politicians in the UK value the flexibility of the labour market
highly. One feature is the weakness of the enforcement of standards
and of the minimum wage, leading to a little-researched unregulated
sector described as a ‘major’ part of the economy, possibly worth £75 bn
41
(HM Treasury 2000, p. 1). One source puts the number working in the
informal economy at between 250,000 and 750,000 (Toynbee 2007). The
number of illegal migrant workers was recently estimated at between
280,000 and 530,000 by the Home Office (Woodridge 2005, p. 3). A recent
estimate puts the total number of vulnerable workers (including many
disabled people, migrants, agency workers, and those in the unregulated
sector) whose employment status is precarious at two million (TU Com-
mission on Vulnerable Employment 2008, p. 13).
The introduction of a 35-hour week in 1998 in France is an interesting
case. While seen by some as contradicting the trend to deregulation,
this measure, in fact, encouraged more flexibility, because employers and
unions were forced to negotiate the re-organization of work on a local
basis. The approach can be seen as facilitating the kind of social pacts on
productivity, work-sharing, flexibility, and wage moderation that emerged
in a number of European countries (Pochet 2001; Rhodes 2001). Since
2004, the 35-hour legislation has been weakened.
One perspective on the new policies is that they are concerned with
enhancing negative incentives by making benefits harder to get, and to
shift the balance of power between labour and capital. Capital is already
advantaged by its more rapid geographic mobility and its capacity to shift
between sectors in a globalized and rapidly changing world. Now, as the
argument goes, it has the opportunity to shift the terms of its relationship
with the workforce.
A more benign view presents the new policies as intended to improve
the quality of work as well as the supply of workers. Here two approaches
have been emphasized: ‘flexi-curity’ and the development of skills. Flexi-
curity requires an enabling training and benefit environment, so that
individuals are able to move quickly between jobs and are willing to do so,
confident that support to enable entry into new employment is available.
Such an approach is implicit in the stress on economic dynamism and
more and better jobs in the statement of the Lisbon European Council in
2000. It is spelled out in the Employment Strategy guidelines for 2006,
which refer to facilitating ‘swift employment transitions throughout a
career’ and improving ‘the adaptability of workers and enterprises’ and
‘the crucial importance of developing the skills needed in knowledge-
based economies’ (EU 2006a, p. 2).
The case for flexi-curity is endorsed by both EU and OECD. Typically,
three points are made: first, countries with relatively high protection like
France, Germany, and Spain, are obviously not successful at achieving
high employment levels. In fact, workers often feel less secure in such
42
countries (OECD 2004a, p. 4). Second, the rate of mobility between jobs
correlates highly and positively with the employment rate. Denmark, the
UK, and the Netherlands have high employment rates. In these countries,
workers are roughly twice as likely to move between jobs in any given
year as in France, Italy, and Belgium where employment is lower (EU
2004a; Schmid 2005, p. 17). The third point concerns the exemplars
of the Netherlands and Denmark in the later 1990s and early 2000s.
These countries successfully addressed unemployment problems by relax-
ing job security and expanding activation and training, integrated with
benefits (Esping-Andersen et al. 2002, ch. 1; OECD 2004b, p. 64; Visser
and Hemerijck 1999). Most European countries, however, have failed to
develop their benefit systems in ways that facilitate movement between
jobs, by providing accessible generous short-term benefits.
The flexibility argument focuses attention on investment in the quality
of the workforce. There has been a substantial expansion of education
in most European countries, but investment in research and develop-
ment is limited, and employment in knowledge-based industries has not
markedly improved.
The proportion of the population with upper secondary education or
above rose from 56 to 66 per cent across the EU between 1995 and 2005,
with rates of 75 per cent rising to 90 per cent in ex-Soviet countries
for those aged 20–24. Higher education has expanded by 35 per cent
since 1992 and the proportion of science and technology graduates has
risen from 10.2 per cent of all graduates in 1998 to 13.1 per cent by
2003, considerably ahead of the USA and on a par with Japan (Eurostat
2007b).
However, movement towards the EU target of investment of 3 per cent
of GDP in research and development is slow. The EU average was only
1.95 per cent in 2004, against 3.15 per cent in Japan and 2.59 per cent
in the USA; the annual growth rate was 1.4 per cent against 2.2 and
0.79 per cent (Eurostat 2007c). There is some evidence of decline since
2000 (Archibugi and Coco 2004, Table 3). Employment in knowledge-
intensive manufacturing is rising, but in services has actually fallen in the
EU from 6.3 to 5.8 per cent of the workforce between 1995 and 2004.
The decline appears to be continuous, indicating that it is not simply the
result of the collapse of the dot-com ‘bubble’ in the late 1990s (Eurostat
2007c).
When individual countries are compared, the Nordic countries score
high in all areas. Most other EU countries, including the UK, are
strong in developing education but weaker in achieving high levels
43
of research investment or knowledge-intensive service employment.

Policies to improve the quality of employment seem less well developed
than those intended to expand the size of the workforce and strengthen
incentives.
Summary: Employment and the Labour Market
This brief review shows how labour market policies have shifted direc-
tion across Europe. The initial response to rising unemployment in the
1970s and 1980s (job protection, early retirement, and extra spending on
benefits) has been replaced by an emphasis on an active benefit system,
lower regulation, and greater support to mobilize those with care respon-
sibilities (mainly women) and sick and disabled people into paid work.
Both EU and OECD have promoted interventions to enhance flexibility by
supporting workers between jobs, but this has had little impact. Policies
to provide firmer guarantees of employment in a less certain world by
developing a more knowledge-based economy are only pursued vigor-
ously in a small number of countries. The main policy direction rests on
the assumption that workers and potential workers must be encouraged
to become more active in pursuing work and preparing themselves for it
and that the opportunities and incentives that bear on it must centre on
individual rather than collective responsibility. The UK retains a distinc-
tive commitment to low spending and is at the forefront of deregulation
and restructuring its benefit system to provide strong encouragement to
pursue paid work. It is markedly less successful in developing research
and the enhancement of human capital to improve the quality of jobs on
offer.
Pensions and Health Care: Cost-Efficiency, Targeting, and

Responsiveness
We now consider the impact of reform on the main services covering the
mass of the population which primarily embody the value of reciprocity.
Pensions is the largest single area of cash benefit spending and health
care the largest area of provision in kind across all European countries.
New policies have been designed to address the pressure of population
ageing, at the same time containing cost increases as much as possible
and targeting spending more accurately.
44
Population ageing as a result of rising life expectancy and lower birth

rates puts substantial pressure on pensions and other forms of provision
for older people. A recent OECD report calculates that the proportion of
over 65s, expressed as a percentage of those aged between 20 and 64
(a rough indicator of the balance between those of core working age
and the retired group), will rise from 27 to 56 per cent in the EU15
between 2005 and 2050 (the peak ranging from 70 per cent in Italy to
48 per cent in the UK), from 21 to 39 per cent in the USA, and from
29 to 72 per cent in Japan (OECD 2005a, chart 1). Concern about these
issues has led to pension reforms designed to reduce state responsibilities
across Europe (mainly during the early 1990s) and policies to encourage
employment especially among older people. Pensioners, however, remain
a substantial group in the electorate and demand provision to meet their
needs.
These goals have been pursued by various routes. The range of pension
schemes has been sharply reduced in countries where different occu-
pational groups enjoyed substantially different coverage (most notably
in France and the Mediterranean countries). In a number of countries
the method of calculation has been adjusted to reduce overall payments
by relating benefits to the ratio of contributors to pensioners (Sweden,
Germany, and Italy), increasing contribution periods for full entitlement
(Italy and the UK), weakening the link between benefits and highest years
of earning (France, Germany, and the UK), and changing the formulae
linking contribution to benefit (Sweden, Germany, Italy, and the UK).
Replacement rates have, in most cases, again fallen, rather more sharply
than for unemployment benefits, which were already generally at lower
levels. Again, when compared with the larger European countries, the UK
is distinctive in its meagre provision. It is noteworthy that the cuts did
not start to affect benefits until the early 1990s, in most cases (Figure 3.2).
Pensioners are a stronger political constituency than unemployed
people.
The pressure to sustain the levels of pension available to the retired pop-
ulation and to ensure that entitlements are linked to individual demands
opens the way to the expansion of a more individualized non-state sector.
The conclusion of the OECD study on the pension gap is blunt: ‘in nearly
all OECD countries today’s workers will have to do more on their own
to prepare for tomorrow’s retirement, even if they save throughout their
entire career’ (OECD 2005b, p. 1). New non-state schemes, in which
risks are borne by the individual contributor rather than by govern-
ment, have been introduced alongside state provision, most notably in
45
France Germany Italy Sweden UK US

1
0.8
0.6
0.4
0.2
0
1982 1987 1992 1997 2002
Figure 3.2. Pension replacement rates (standard pension, couple)

Source: Scruggs, Comparative Welfare Entitlements Data Set, available at: http://www.sp.uconn.
edu/∼scruggs/wp.htm
France, Sweden, the UK, and Germany, and various subsidies introduced
to encourage take-up.
These policies have mitigated the pressures on state pensions in most
European countries (Hinrichs 2000). They have also provided the oppor-
tunity to make some progress towards gender equity in old age by allow-
ing contribution years for time spent in child or social care to count
for pension entitlement (three years in Germany and the UK, longer in
Sweden). However, the stress on individual responsibility is likely to gen-
erate further pressures in the opposite direction, particularly for routine
and manual workers, since women are generally lower paid.
Health care systems vary substantially across European countries, par-
ticularly in their structure and generosity and the role played by govern-
ment. The EU has not pursued major interventions in this field beyond
those required to enable the operation of free labour and product markets
and to ensure that health and safety requirements are met. Across most of
Europe, governments finance access to medical care through social insur-
ance. In the UK and the Nordic countries involvement is primarily tax-
financed. Private spending varies between 15 per cent in the Netherlands
and 4 per cent in Spain (Pearson and Martin 2005, Table 1). Professional
46
groups have had varying success in influencing the development of the

system, and are particularly powerful in France and in the Mediterranean
countries (Immergut 1998). The rising demand resulting from population
ageing and the development of new possibilities for intervention, coupled
with the pace of change in the pharmaceutical and other associated
industries, imposes substantial pressures. Responses have been shaped by
the constraint of cost-containment to advance national competitiveness
within increasingly global markets.
Spending on health care has risen sharply across Europe. A number of
reforms have been pursued to curtail the rate at which spending rises
(Oliver and Mossialos 2005). These include restrictions on the capacity
of doctors to prescribe (the UK, Portugal, and Spain), the imposition
of increasingly strict budgetary limits on hospital spending (Germany,
France, and the UK), and wide-ranging programmes to promote healthier
lifestyles (Saltman et al. 1998). One development has been a tendency for
power in the systems to shift from hospitals to front-line services which
may be able to provide treatment more cheaply (Blank and Buran 2007,
pp. 7–9, Gibson and Means 2001; Rico et al. 2003).
These changes are part of a process whereby the growth of spending is
constrained and directed. A further development is the greater reliance
on market mechanisms in a wide range of countries including Germany,
Sweden, Spain, and the UK. Market competition is valued as both enhanc-
ing cost-effectiveness and ensuring responsiveness to users, cast in the
role of consumers (see, for example, Enthoven 1985, 2002). These devel-
opments follow the determination to create welfare systems that deliver
needed reforms cost-efficiently while meeting popular demands for wel-
fare. Resources are increasingly allocated through the use of market mech-
anisms to coordinate delivery agencies within a framework of tight central
control of budgets, quality, and targets, sometimes termed the New Public
Management. Again the individual as the active choice-maker is at the
centre of the shift in policy.
These policies have been developed most enthusiastically in the UK,
where the liberal welfare culture, sharpened in the early 1990s by the
doctrines of Thatcherism (see Chapter 7), promoted them, and also, inter-
estingly, in social democratic Sweden. New policy directions develop more
slowly in the corporatist countries. Choice and competition were initially
introduced in health and social care and in primary education in Sweden
by the 1991–94 centre right government. The objective was to entrench
market reforms so that any future social democratic government would
find it difficult to reverse them (Green-Pedersen 2002, p. 15). The new
47
policies gave individual choice of family doctor and hospital or clinic,

expanding opportunities for private practice. They also made it possible
to separate purchaser and provider in state financed health-care, introduc-
ing market competition. Subsequent social democratic governments have
developed aspects of these reforms as part of a programme of decentraliza-
tion and empowerment of service users, so that the thrust of the changes
has been to increase responsiveness and choice rather than to expand
the private sector (Timonen 2003, p. 119). However, they have led to
concern about undermining key principles of the Swedish welfare system
(Blomqvist 2004), also voiced in relation to a similar reform programme
pursued by the 2006 right-wing government.
While there are great differences between the various EU member states,
a common pattern of reforms directed at improving national compet-
itiveness by using welfare policy to influence the labour market and
by containing and redirecting social spending through new managerial
systems emerges. In the third area where societal changes in the context
of rapid globalization have imposed pressures on welfare states, migration,
and diversity, the challenges are more diffuse and the responses less clear-
cut. These issues are discussed in more detail in Chapter 10, which brings
first- and second-order challenges to welfare together. Here we will present
the issues in brief.
The Challenge of Diversity
The migration associated with rising incomes, more open frontiers, inter-
national inequalities, and wars that displace whole communities leads to
more culturally mixed and, it is sometimes suggested, less solidaristic soci-
eties (see, for example, Alesina and Glaeser 2004; Goodhart 2004; Soroka,
Banting, and Johnston 2004, p. 18). The argument is that high levels of
immigration will lead to more diverse populations and this will erode
both reciprocity across the mass of the population and also willingness to
include weaker members in welfare provision, when these groups are seen
as culturally distant.
The empirical evidence is controversial. While some research indicates
that diversity slows the growth of welfare spending and reduces support
for social provision, other studies paint a different picture. Most analyses
rely on cross-national comparisons, using quantitative data from OECD,
UN, Census, and other sources (e.g. Alesina and Glaeser 2004; Taylor-
Gooby 2005). Others also include policy analysis and comparisons of
48
multiculturalism and qualitative work (Banting et al. 2006; Barry 2001,

p. 8; Penninx et al. 2006; Van Oorschott and Unk 2007, p. 234).
Two factors appear relevant. First, the US experience is different from
that of Europe. Studies which centre on the USA tend to be more pes-
simistic about the impact of diversity and multiculturalism on reciprocity
and inclusion than those which do not. Second, the detail of how multi-
culturalism is pursued is significant. Those studies which seek to unravel
the scope and impact of specific policy initiatives in particular settings,
mainly in Europe and in countries where state welfare is most highly
developed, tend to be more optimistic about the capacity to sustain
welfare states in diverse societies.
This implies that diversity may erode state welfare where support is
already weak and where policies are developed to ensure equal oppor-
tunities and prevent the emergence of a migrant underclass. However,
given an appropriate level of political commitment, it is possible to retain
support for the welfare state in a more diverse society. Immigration and
greater mixing of different ethnic and cultural groups in the population
is not in itself a reason to assume that support for welfare state values
will be abandoned. However, sustaining the welfare state does require
appropriate policies and political effort.
European countries differ in their traditions of citizenship, with impli-
cations for their readiness to accept incomers as members of the civic com-
munity. Many commentators contrast the exclusionary approach of coun-
tries like Germany, where citizenship is traditionally based on descent,
the more inclusive tradition of France or Sweden, where residence is
crucial, and the discriminatory tradition of the UK or the USA, where
country of origin is a deciding factor (e.g. Sainsbury 2006, p. 231; Weil
2001, p. 17). While strong differences remain, policies across European
countries are currently moving in a common direction which combines
two elements. First, there is an emphasis on acceptance of diversity and
on multiculturalism, embodied in concerns about racism and xenophobia
(e.g. EUFRA 2007) and in the implementation of race discrimination
directives. Second, and cutting across this has been the development of
increasingly stringent measures to control immigration from outside the
EU, while borders are increasingly open within it. A detailed survey of
national policies in the early twenty-first century concludes: ‘the trend
in Europe’s immigration policies is one of convergence in two basic areas:
border control and residence rights. Everywhere in Europe, border control
is a priority, and the principle of closure to foreign workers is maintained,
except for Europeans . . . The right to entrance for family reunification,
49
students, highly skilled workers, asylum seekers, tourists with visas, and
people dependent on health care has become increasingly restricted’
(Massey and Taylor 2004, p. 293).
The dualism between the tradition of reciprocal and inclusive citizen-
ship and an increasing practical emphasis on the exclusion of outsiders
in the interests of insiders has been described by some commentators as
a ‘European dilemma’, part of a crisis of citizenship (Schierup, Hansen,
and Castles 2006, p. 5). Globalization imposes real pressures on inclusive
citizenship. Europe has cultural and political resources that may enable
it to surmount them, but that the outcome for social citizenship is by
no means certain. Migration and diversity differ from population ageing,
fiscal and commercial globalization, and greater assertiveness on the part
of citizens in the challenges they present to the welfare state. The resulting
pressures on reciprocity and inclusion form a part of the political context
in which the debates about the role of government based on solidaris-
tic commitments as opposed to the more individualized and proactive
approaches to securing welfare outcomes take place.
Conclusion
This chapter has reviewed policy developments in relation to the var-

ious first-order challenges to the welfare state that have resulted from
economic, political, and social developments in the context of headlong
globalization. Inequality and uncertainty stemming from developments
in the world of work, the limits to government action set by greater
internationalization of fiscal and economic systems, and a more criti-
cal stance by citizens pose real problems. Immigration and, associated
with it, greater cultural diversity are also high-profile issues in many
countries.
These problems have been addressed by a range of policies in different
national settings. A broad overview identifies as key themes a politics
of activation and opportunity, the development of market and target-
based managerial systems in the New Public Management, and a multi-
cultural political stance that seeks to cast diversity in a positive light,
at least in some European countries but contrasts with a policy practice
that increasingly excludes outsiders. The new approaches enable high-
spending welfare systems to continue to address a wide range of needs
for their citizens, despite the pressures. The values that underlie them
50
are rebased on a more individualist foundation in order to sustain state

welfare under altered circumstances.
The tradition of the welfare state depended on assumptions about
reciprocity, inclusion, and trust in the institutional framework. At first
sight, reciprocity and inclusion appear to conflict with a simple individ-
ualism. Both require some foregoing of immediate personal advantage in
order to achieve a common good, understood in terms of fairness and
greater equality. An individual focus, all things being equal, is unlikely
to recognize the claims of contribution or of need to the same extent
as those of personal advantage. Similarly, trust is often based on assump-
tions that hospitals, schools, and clinics, and those who manage and
staff them, are concerned primarily to meet the interests of users rather
than those of their own agency. These points suggest that current direc-
tions of reform may generate second-order problems for welfare state
values. Chapter 1 argued that the themes of reciprocity and inclusion
emerged from a more collective politics which fostered solidarities across
classes and between social groups in the face of the social risks expe-
rienced in the early part of the twentieth century. A more fragmented
politics in the twenty-first century, in a context where policymakers are
faced by the pressures of a range of societal changes and are acutely
conscious of the imperatives of currency stability and national compet-
itiveness resulting from globalization, may lead away from welfare state
citizenship.
Counter-arguments suggest that social citizenship may be re-based on
the logic of individualism. Reciprocity can be understood in terms of
an enlightened and more extensive self-interest. Rational individuals,
wishing to promote their own longer-term interests, may be willing to
establish and sustain norms of reciprocity as a means of securing the
mutual support of others. Inclusion may depend more on altruism, on
whether people happen to be willing to help the more vulnerable because
they are vulnerable rather than from sentiments of solidarity binding
together an increasingly diverse population. From the rational individual
point of view, trust in institutions may be understood as a confidence
based on judgements about track-record, the incentives facing providers
as rational actors, and the resources available. This contrasts with an
approach which also stresses the importance of shared values and the way
they are expressed in the commitments of providers. These may be more
difficult to supply convincingly within a competitive market framework,
where the guiding principle is caveat emptor.
51
The welfare state reforms increasingly treat all those involved: benefit-
claimers, service-users, professionals working in the welfare state, and
service-managers as individual rational actors, making considered choices
in the light of independent and deliberative judgements. The case for
understanding the reforms as a restructuring of welfare state citizenship so
that it may meet new challenges rests on assumptions about the extent to
which such choosers can develop reciprocity, inclusion, and institutional
trust in their social interactions. We consider these issues in the next three
chapters.
52
Part II
Intellectual Foundations of Reform
4
The Assumptive World of Welfare
State Reform
Agency and Welfare State Reform
In Chapter 3 we reviewed recent challenges to welfare states in Western

Europe and analysed the response. Despite the gloomy predictions of
some commentators about dismantling (Pierson 1994) and retrenchment
(Swank 2002, 2005), the pressures from the 1970s onwards did not lead
to abandonment of government commitment to welfare, although provi-
sion has been substantially restructured. All major attitude studies show
continuing high levels of support for the principal social services that
make up the bulk of state spending: pensions, health and social care, and
education (e.g. Hills 2005; Mau and Veghte 2007; Park et al. 2005, chs. 10
and 11). However, the new approaches embody principles that differ
sharply from the commitment to collectivism, equality, and solidarity of
the traditional welfare state.
The challenges to the existing welfare settlement resulted from changes
in economic and demographic structures and from their impact on polit-
ical and social systems in the context of headlong globalization, which
severely limited the range of acceptable options for governments. They
created a context in which a particular framework of ideas about how
welfare states should be run was able to gain a purchase. These ideas
predominated in policy debate chiefly because they offer explanations of
the shortcomings of existing systems, promises of how outcomes could be
improved within the stringent constraints of promoting cost-efficiency,
enhancing national competitive, increasing responsiveness to citizens’
demand, and addressing an expanding range of needs that the new con-
text imposed, and because they were above all practicable within that
context. They came to constitute the assumptive world of policymaking,
55
The Assumptive World of Welfare State Reform
the presuppositions, underlying ideas, and ideological framework within

which social policies were understood and discussed. At the root, the
intellectual foundations of the new policy framework rest on a particular
set of ideas about agency. To these we now turn.
The approach that foregrounds activation by incentives, market com-
petition, and management by targets places greater emphasis than the
tradition of social policy that developed during the postwar period on
the view that people’s behaviour is driven by rational and individual
motives. This constitutes a radical restructuring of policy, referred to by
some authoritative commentators as a ‘revolution’ (Bartlett, Roberts, and
Le Grand 1998). As workers and potential workers, citizens are expected
to respond to policies that increase incentives by providing support at the
lower-paid end of the labour market through such policies as minimum
wage and tax credit, restricting access to out-of-work benefits, and ensur-
ing that any benefit increases are kept below those in wages. Expanded
education and training opportunities are intended to improve opportu-
nities in employment. The individual case management of claimants via
such approaches as the French PARE, German Hartz IV, or the UK ‘Single
Gateway’ reforms is designed to improve the information available to
individuals on the incomes available in work and bring home to the
individual claimant pressures to move off benefit. This contrasts with
the traditional more passive approach that makes benefits available to
individuals because they are out of work but does not intervene directly
in relation to work incentives
A strong tradition in welfare theory, particularly powerful in Anglo-
Saxon countries, stresses the notion of dependency culture (e.g. Murray
1984). The claim is that passive welfare systems undermine work disci-
pline because claimants are able to survive on benefits and some will
choose to do so rather than work. The outcome is a greater stress on
positive and negative incentives to move into paid work, culminating
in the abolition of unemployment benefits in 1995 in the UK and their
replacement with a more conditional Job Seeker’s Allowance. A converse
analysis which leads in a similar direction replaces the idea of dependency
culture with that of captivity culture. It points out that passive claimers
are often caught in a ‘benefit trap’ from which they are unable to find
work that gives them take-home pay much above benefit levels (Dean
and Taylor-Gooby 1992, ch. 6).
The discussion of flexi-curity and the notion of an enabling labour
market, where individuals are supported in pursuing work and training,
presents a more positive approach to activation. This rests on the idea that
56
individuals seek to develop themselves through engagement in work, and

is sometimes described as a capabilities approach. Thus Begg and others
argue for a shift from a logic of ‘freedom from want’ to one of ‘freedom
to act’ in the principles governing the relationship between individual
and employment (Begg, Muffels, and Taskloglu 2002, p. 314). Activation
is about empowerment and greater opportunity.
The logic of individual rational action is also applied to those work-
ing within public services. The managers and professionals who provide
health, education, and social services are required to operate within a
more competitive setting. The New Public Management approach, mod-
elled on the trend to restructure bureaucratic hierarchies in the private
sector (Flynn 2007; Lane 2000; McLaughlin, Osborne, and Ferlie 2002;
Taylor-Gooby and Lawson 1993), decentralizes major budgetary responsi-
bility to individual providing agencies, such as schools, colleges, clinics,
and hospitals, and seeks to ensure that a substantial proportion of the
funding follows the choices of individual service users.
The new approach to service management rests on a particular diagnosis
of the changes that must be made in public policy to meet the challenges
described in the previous three chapters. This diagnosis identifies three
main issues: (a) that services are failing to make progress in advancing
cost-efficiency, (b) that service-users do not have the opportunities to
express their own needs and interests adequately, and (c) that providers
are not properly responsive to what the users want. The finger is pointed
more directly at providers by Le Grand, in a book which vigorously
endorses the use of markets in welfare: any model other than the market
system ‘has a central problem that makes it difficult to rely upon [it] . . . as
the principal basis for delivering good public services: that of the absence
of the right kind of incentives for providers’ (Le Grand 2007, p. 36).
The emphasis on user choice and control of providers stems from
developments in the intellectual analysis of policymaking from the 1960s
onwards. Writers in public administration have analysed the incentives
facing managers and providers within a traditional bureaucratic model.
One influential view is that the key incentives for such individuals are
simply to maximize their own budgets rather than pursue the public
good, because reward is linked to the size and influence of the bureau and
not its contribution to the common good. The outcome is the malignant
inflation of agencies (Niskanen 1971). This logic has led to attempts to
restrict budget growth through increasingly stringent management of
public spending (Baldock, Gray, and Jenkins 2007), of which the current
structures of regulation and cross-department targets are only the last.
57
The information revolution associated with the development of micro-

processors has facilitated the move to break up large bureaucracies in the
private sector. Rigid hierarchies regulated through rules have developed
into more flexible systems in which day-to-day authority is decentralized
to those closest to the service-users. The centre then takes on the roles of
defining strategy, promoting products, monitoring progress, and ensuring
quality control, supported by accurate up-to-date information on devel-
opments in the agencies carrying out particular tasks.
New approaches have moved rapidly to a dominant position in public
policy. The demands made on welfare states by societal changes in the
constraining context of globalization have played an important role in
facilitating developments. The individualist solution promised to tackle
the issues through policies that could be delivered by weaker national
government and which could be presented as strengthening competitive-
ness rather as an economic burden.
Rational Action and Public Policy
The new approach places much greater emphasis than the previous sys-
tem on the view that citizens behave as rational actors, weighing up alter-
natives and choosing the one they believe suits them best, and that they
do so as individuals, on the basis of their own values and of the informa-
tion available to them. This contrasts with more traditional approaches,
in which citizen entitlements were established in legislation and policy.
The assumption was that policymakers were in the best position to decide
the appropriate balance of resources and, supported by professionals and
street-level bureaucrats, to judge relative needs.
The individual rational actor view of agency has become increasingly
influential across social science (Lichbach 2003, p. 115). The idea that
independent self-regarding choices can be coordinated to the common
good by appropriate institutions is contained in Adam Smith’s oft-quoted
remark (1991, orig. 1776): ‘it is not from the benevolence of the butcher,
the brewer, or the baker that we expect our dinner, but from their regard
to their own interest. We address ourselves, not to their humanity but to
their self-love, and never talk to them of our own necessities but of their
advantages.’
If people operate primarily on the basis of individual rational choice,
public policy has a dual role: on the one hand to support choice-making
58
through the provision of information and alternatives, and on the other

to address policy objectives by providing a structure of institutions and
services that influence choices in the desired direction. In recent reforms
the object has been to encourage more people to move into paid work, to
pursue education and training, to take greater responsibility for their own
needs, and to use public services in ways that satisfy needs efficiently and
direct resources to the agencies best able to meet them. The assumption
has been that rational independent individuals will make the appropriate
choices if the structure of incentives they face and information available
to them is appropriate.
It is not difficult to understand why a shift away from the previous
more passive notion of social citizenship, which saw individuals as defer-
ential tax-payers, content to accept what government provided, towards
a more active conception that puts greater onus on the individual to
take responsibility for outcomes has emerged in the changing context of
policymaking. Social needs are expanding and citizens are increasingly
assertive in their demands. The impact of economic and fiscal global-
ization emphasizes the competitiveness imperative, so that it becomes
necessary to achieve greater cost-efficiency in publicly financed services,
to encourage citizens to take on a greater share of the burden of provision,
and to promote engagement in paid work in the national interest. The
fragmentation of the political coalitions that sustained the previous settle-
ment undermines electoral support for expanding tax-and-spend welfare.
Trust in collective institutions declines and the underlying assumptions
about reciprocity and inclusion are challenged directly.
Government finds itself caught between demands for greater cost-
efficiency and for services that are more responsive to the identified
needs of a dispersed range of groups within an institutional framework
that is more difficult to direct. The outcome is much stronger interest
in motivating and mobilizing individuals, as service providers and man-
agers, as citizens, and as individuals with a huge variety of needs and
vulnerabilities, to act in ways that advance welfare ends and national
competitiveness at the same time. The solution offered by the individ-
ualist framework becomes increasingly attractive and alternatives appear
unfeasible. Changes at economic, political, and social levels challenge
the welfare state. The imperatives of currency stability and national com-
petitiveness constrain the range of solutions. Governments tend towards
activation, incentives, markets and targets, and the individualist logic that
underlies it.
59
Individual and Social Approaches to Agency
The issue for social citizenship is how new policy directions based on
the individual rational choice approach to agency relate to the themes
of reciprocity, inclusion, and trust that underlie the whole project of
the welfare state. The attempts of social scientists to understand agency
seek to address a basic dilemma. On the one hand, it is a matter of
common experience that rational deliberation over available possibili-
ties and opportunities in relation to our own values and preferences is
an important component in the way we make decisions in relation to
significant issues. On the other, it is also clear that a range of different
factors influences how we behave, in addition to the practical obstacles
that may prevent us from meeting our interests. These include social
conventions and normative presumptions about the right way to behave
and our responses to them as active social beings.
This theme can be illustrated by family choices over the organization
of care for frail kin. As individuals, family members will have their
own personal interests. At the same time, ideas about what is right will
also influence care decisions. Complex processes of negotiation which
take both individual interest and moral principles, and the way those
involved orientate themselves in relation to them, into account shape
the outcomes. One influential study describes the process as follows:
‘the importance of negotiation in family relationships fits well with the
emphasis . . . given to the idea that kin relationships “place” a person in
the social order, because, as the social order itself changes, individuals
need to recreate and adjust their own sense of place within it . . . a sense
of the distinctiveness of kin relationships is a necessary mechanism for
continually recreating and sustaining a sense of social identity’ (Finch
1989, p. 235).
This contradiction between an individual and a social analysis of agency
may be expressed from a broader social perspective in relation to diversity
and regularity. Societies, and social groups within them, appear ordered.
Behaviour follows certain regularities, which may be seen as rules of
appropriate action—who can marry whom, who has power over whom in
what context, what counts as a contract or a bargain, when it is acceptable
to use violence, etc. These rules of behaviour appear broadly consistent
within a period of time and within particular societies. However, as Pascal
(1670) pointed out, they differ between social groups. Moreover, societies
and assumptions about behaviour within them develop slowly over time.
Within this framework, individuals may sometimes choose to behave in
60
ways that violate the established rules of their group, from Antigone to
Gandhi, from Joan of Arc to Desmond Tutu, and from Mary Stopes to
Winston Smith. Behaviour does not simply reflect social norms passively,
but expresses individuals’ beliefs and assumptions about their relationship
to those norms.
This sets theories of social behaviour a double challenge: theoretical
frameworks must explain both the fact of individual agency and the fact
of social regularity: from one perspective, the problem is one of explaining
how independent individual choices can lead to consistency in outcomes,
from another it is how a structured social system admits of innovation and
individual deviance or independent action. For rational actor decision-
theorists the question resolves to giving a consistent account for such
phenomena as ‘anomalies’ in behaviour (Thaler 1993) that seem to con-
tradict the claim that action is rooted in the rational pursuit of individual
preferences. In a social context, it is the puzzles associated with explaining
the development of reciprocity, altruism, and trust among people who
are assumed to be motivated primarily by self-regarding concerns that
has attracted most attention among writers from this perspective. For
sociological system-builders, the problem is one of explaining both social
order and individual deviance from it (Parsons 1937, 1951). People seem
to construct orderly societies through their behaviour but experience
themselves as capable of rational choice and independent action.
Social scientists have approached the relationship between the experi-
ence of individual rationality and the often (but not always) clear patterns
of consistency in the choices that people make in social contexts from
two broad directions. The first starts out from the individual experience
of choice and the second from the collective experience of social order
and responses to it. We may label these approaches to understanding how
people behave as instrumental, on the one hand, and as normative and
expressive models of action, on the other (Hargreaves-Heap et al. 1992
ch. 2). Both approaches have been developed through extensive social
science literatures, applied to choice and agency at the individual level, at
the level of immediate interactions with others, and at the wider societal
level. Key differences in accounts of the experience of agency in social
contexts are given in Table 4.1.
The instrumental model conceives of individuals as autonomous actors
who choose independently between various options in order to achieve
the ends that they, as individuals, value. Preferences are treated as given.
Their origin lies outside the concerns of instrumental rationality and is
a matter for psychology or philosophy. The other two models start out
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Table 4.1. Individual agency in social context
Analysis Status of agent Primary process Individual goals Social outcome

of choice determined by
Instrumental Free independent Rational deliberation Individual, Coordination of

actor independent the behaviour
values of self-
regarding,
autonomous
individuals
Normative Social framework Following norms Social roles, Social order and
of normative acquired through specified by pattern
principles socialization and norms maintenance
social learning
Expressive Desire to express Following social rules Symbolic Coordinated
individual that define what communication actions that
values and counts as express values
status within a expression and status
group within a social
structure
from the idea that agency is strongly influenced by the social context in
which our lives take place, and it is our response to that social setting
which contributes regularity and order to social behaviour. They examine
the forces that coordinate social action to produce an overall coherence
and the generation of opportunities for individual proactivity within that
setting. They interact with instrumental approaches, since both the desire
to follow a social norm and the desire to express a particular value position
in response to norms can furnish the goals pursued by an individual who
chooses the means to that end through rational deliberation.
The normative model focuses on the role of the setting in defining the
scope for individual action. It emphasizes the broader social context and
sees individuals primarily as social actors, whose choices are strongly
influenced by normative rules which they acquire through learning or
socialization. These rules specify both the ends of action and the appro-
priate means to achieve them.
The expressive approach stresses the part played by the multiplicity of
social interactions rather than the existence of an overall societal frame-
work, and sees the rationality underlying action as symbolic, as concerned
with communication with other members of the social group. People do
things in social contexts in order to express to others their values and
often their group identity or their individual moral commitments. Such
messages can only acquire meaning within a shared social framework.
Attempts to endow actions with meanings in an entirely independent and
62
individual setting immediately encounter the problems of establishing

significance and communicating with others through a private language
(Wittgenstein 1972). Consequently, normative and symbolic approaches
often rest on each other and are, in practice, combined. Individual actions
are seen as expressing individual values but as taking place within and
being strongly influenced by the social context.
Strengths and Weaknesses of the Models of Agency
The instrumental account of action, often termed the ‘rational choice’

model, ‘has flourished in economics and is increasingly used by other
social sciences’ such as political science and psychology (Hargreaves-Heap
et al. 1992, p. 4). It has three chief virtues: (a) it offers a precise and rig-
orous account of behaviour that lends itself to axiomatic theory-building
and to empirical testing, (b) it provides clear prescriptions (in terms of
the construction of incentives that appeal to the values of those whose
behaviour is in question) for policies designed to change behaviour, and
(c) it predicts the likely outcomes of different policy initiatives. The chief
problem lies in dealing satisfactorily with the existence of regularities
in society. These are often explained by proponents of the instrumental
approach in terms of unaccounted psychological predispositions that
humans happen to share. Thus, the explanation remains rooted in indi-
vidual rather than social factors. We have suggested that, for a range of
reasons to do with economic, political, and social changes, the influence
of this approach among practical policymakers is waxing.
The normative and symbolic/expressive theories are dominant in soci-
ology, social anthropology, social psychology, and related fields. The
strengths of normative theories lie in their capacity to explain the exis-
tence of social order. Expressive perspectives focus on the experience of
people’s individual autonomy in orienting themselves in relation to a
social order. The central problem with approaches that place too much
reliance on normative systems transmitted through socialization and con-
cerned with pattern-maintenance is that they fail to provide satisfactory
accounts of social changes and innovations and of particular individ-
ual behaviour that does not fit the pattern. Conversely, the expressive
approach may stress the individual moral response to social context at
the expense of deliberative judgement.
These points are made by critics of what is often seen as the func-
tionalism of overly structural explanations, the limitation that actions
63
become simply the creature of the social context with no place for indi-
vidual autonomy (e.g. Holmwood 2005). However, even accounts which
place considerable emphasis on the individual and expressive aspects of
social action typically retain a strong role for socialization and for social
norms in providing the framework within which individual choices may
take place and symbolic communication gain a purchase (Berger and
Luckmann 1966, ch. 1).
The weaknesses of the broadly sociological approaches lie in the dif-
ficulty of combining normative and expressive accounts of action, the
resulting complexity of the theories, and the consequent difficulties in
producing rigorous measures for the various concepts. The fact that, since
norms exist as elements in the consciousness of members of society
and expressive or symbolic actions are concerned primarily with mean-
ings, qualitative material is particularly important gives rise to issues of
interpretation and disagreement in analysing data. The resulting policy
prescriptions are helpful in drawing attention to the different impacts on
social groups with varying norms and values of a particular reform but
much weaker in suggesting policy directions likely to have an immediate
impact on the choices people make. This makes the approaches less
attractive to policymakers, especially at a time of rapid change.
Further arguments point to linkages between the two perspectives.
On the one hand, the individual rational approach concerns itself with
means. Ends are unargued and given. The normative model offers an
account of the social construction of individual goals. On the other hand,
as argued earlier, the expression of values can only take place within a
social setting in which a language community shares and attaches social
meanings to those values. A common normative framework, or at least a
measure of understanding across normative frameworks, is valuable in
enabling this. Individual and social accounts are sometimes linked in
practical analysis.
In practical terms, the argument that normative and expressive factors
play a role in influencing agency is relevant to the design of social policy:
‘design features deemed irrelevant when policy is premised on instru-
mental motivation elicit their own response by informing perceptions of
the intrinsic value of action. . . . The supply of services is sensitive to the
signal that an individual’s only motivation is monetary reward. Positive
(or negative) reciprocity is possible when policy signals the behaviour
of others’ (Jones 2008, p. 35). In other words, if people derive benefit
or meaning from being able to communicate a particular identity which
others recognize as conferring a social status, for example, as a nurse who
64
is committed to patients’ welfare or a teacher who wishes students to do

well, that source of motivation will only be tapped if the way the hospital
or school is managed allows room for personal engagement. A framework
of instrumental incentives that confines itself to rules, targets, and rigid
contracts will fail to utilize this resource (see also Akerlof and Kranton
2005).
Starting out from a more sociological perspective, Hoggett and col-
leagues chart ‘the long-term commitment to public welfare of many
professional . . . workers’, and criticizes policy approaches based on ‘mere
short-term efficacy’ as running the risk of eradicating such motivation to
the detriment of public service (Hoggett et al. 2006a, p. 703). In accounts
of interactions with service-providers phrased in terms of individual util-
ity or, conversely, social commitment, the context in which actions take
place (largely shaped by policy) plays a role in influencing behaviour
though the opportunities it allows for the expression of individual val-
ues. These require a shared framework of meaning to be anything more
than mere personal eccentricity. The concern is that a system of purely
individualized incentive-driven management obviates the possibility of
credibly expressing a commitment to the service-user.
Conclusion
Commentators have become increasingly aware of the limitations of both

individual rational and more social normative and expressive approaches.
Our everyday life decision-making brings us face-to-face with the fact
that we are capable of rational deliberation between alternative ways of
getting what we value, but also are aware of the moral principles that
govern relationships in our society and of the opportunities they give us
to express individuality or a particular social identity. At the same time, we
operate within normative frameworks and patterns of social expectations
that structure our lives. Our experiences of choices through the life-
course, from education and training to career, partnering, parenting, and
retirement, indicate that deliberative rational, normative, and expressive
factors all play a part.
The problem for analyses that start out from either of these positions
is how to devise an approach that combines both individual and social
dimensions. Two commentators on the rational actor perspective argued
at the beginning of the 1990s that ‘the future of rational choice lies
in the analysis of norms and institutions’ (Cook and Levi 1990, p. 1).
65
Conversely, a prominent sociological synthesis of the same period devel-

oped an account of society as essentially dual, as both the medium in
which individual action takes place and as a framework which shapes
action (Giddens 1994). Human beings produce society, but they do so
as historically located actors, and not under conditions of their own
choosing.
We will examine some attempts to bridge the two positions in the next
chapter. We focus on the key issue that emerges from the discussion of the
current welfare reform programme: whether an individual rational actor
logic is able to sustain a normative framework of reciprocity, inclusion,
and trust and, thus, the assumptive basis of the state welfare, or whether
a re-framing of institutions to promote individual proactivity and self-
responsibility is likely to restructure welfare values, leading to a transfor-
mation of the welfare state.
66
5
Individual Choice and Social Order
This chapter deals with theoretical approaches to agency which address

the problem of how we are to understand the obvious facts of individual
choice and social order. We will examine the problem from two perspec-
tives. One starts out from the view that the actions of people in society
are primarily a matter of individual reflective choice, the other sees them
primarily as social phenomena, constrained or endorsed by normative
frameworks and the desire to express a particular identity to others. We
focus mainly on theories that deal with social behaviour in relation to
economic choices, exchanging or sharing resources, and including others
within the sphere of allocation, or excluding them.
Academic work in the eighteenth and early nineteenth centuries made
no sharp distinction between the methods appropriate to understanding
economic and social relationships. However, the success of analytic and
more abstract approaches in providing coherent accounts of economic
relationships from Ricardo onwards led to a division between perspectives
based on historical and social methods and those which pursued a more
axiomatic and deductive analysis. The outcome of this controversy, which
came to be associated with the ‘methodenstreit’ (‘struggle over methods’,
see Haim 1996), sparked off by debates in Germany and Austria, was a
division between modern economics and more sociological and historical
approaches to economic relations.
Many writers within the emerging discipline of sociology sought to
understand the impact of the wider sphere of social relationships specif-
ically on economic interactions (e.g. Simmel in Simmel and Wolff 1950;
Weber 1999). Their approaches diverged from the understanding of eco-
nomic exchange relationships in terms of individual rational action as
developed within neoclassical economics. Sociologists set normative or
expressive notions of rationality alongside deliberative and independent
67
individualized conceptions ‘referring to allocation within the guidelines

of other principles, such as communal loyalties or sacred values’ (Smelser
and Swedberg 2005, p. 5; see Weber 1978, p. 4). These understand actions
as symbolic in the context of shared meanings, as well as instrumental.
This separation of individual and social underlies current divisions.
Rational Action and Social Norms
Reciprocity, inclusion, and trust present particular problems for individual

rational actor theories. These are exacerbated in the narrowest and most
commonly applied versions of such theories, which argue that most peo-
ple most of the time are motivated by self-interest and that this interest
is typically expressed in the pursuit of command over resources. The
approach suggests that people in market societies are driven by the ‘vast
forces of greed’ (Arrow 1972 p. 90) or even ‘exclusively self-interested’
(Fehr and Gächter 2000, p. 159). This remains the dominant approach in
economics and in decision theory (see Gintis et al. 2005, ch. 1), even in
interpretations of such non-market phenomena as relationships between
‘rich or poor persons, men and women, adults or children, brilliant or
stupid person, patients or therapists, businessmen or politicians, teachers
or students’ (Becker 1976, p. 8).
In relation to reciprocity and trust, the issue is simple. If my choices
are driven by my independent preferences as grist brought to the mill
of reason, and yours are similar, difficulties arise. How can we be sure
that our behaviour is coordinated, so that we can cooperate to mutual
advantage, or be confident that you will continue to behave in a way
that meets my needs when I am not in a position to influence your
actions? Our preferences may differ. If it is self-interest that underlies
them, conflict of interests when resources are scarce is likely.
Reliance on social norms may resolve this issue in the short tem, but
leaves us open to the problem that you or I may choose to defect from
any agreement we may make when it suits us, so that social trust has
limitations as a guarantee of cooperation. These issues emerge forcefully
in everyday life contexts, when choosing a babysitter or accepting a
cheque when selling a car to a stranger (Hardin 2004, ch. 1). The recent UK
experience in relation to policies designed to shift the bulk of pension pro-
vision from state and occupational to the private commercial sector pro-
vides an example. Pension purchasers, used to understanding provision
68
within a relatively high-trust setting, were initially easily exploited by

unscrupulous sales-people who promoted particular funds because they
paid high commissions, whether or not they suited the individual (Goode
Committee 1994).
A preference for altruism may resolve the problem from an individualist
perspective: I want your best interest and you want mine. The problem is
to ensure that such a predisposition can be guaranteed. Olson, for exam-
ple, concluded from his analysis of collective choice in modern democ-
racies that ‘unless the number of individuals in a group is quite small, or
unless there is coercion or some other special device to make individuals
act in their common interest, rational self-interested individuals will not
act to achieve their common or group interests’ (Olson 1971, p. 137.) He
argued that individuals are predominantly self-interested. Consequently,
they will only be motivated to pursue goods that can be confined to
members of their specific group. Why pay to benefit distant others? The
outcome is that people are much keener to defend group interests than
to pursue more diffuse common interests. Ethnic and cultural divisions
in an increasingly diverse society or a widening gap between affluent and
marginalized social groups in an increasingly unequal one may exacerbate
the problem. Over time, collective benefits wane and private affluence
predominates.
In this section we review some approaches that start out from the
analysis of individual rational action and seek to explain how inclusion,
reciprocity, and trust are possible. We will examine work by influential
economists, decision-theorists, and political scientists. Gintis and his col-
leagues consider the problem of achieving reciprocity in the interaction
of self-interested rational actors by examining behaviour in the stylized
setting of carefully devised games. Fehr and Gächter develop a similar
approach, although their concept of the rational individual is based more
on assumed inherent psychological differences than on an account of
the evolutionary development of predispositions. Ostrom approaches the
issue from a different direction, investigating cooperation between ratio-
nal self-interested individuals in such areas as the sharing of common
resources, where short-term self-interest would lead any individual to grab
as much as possible and exhaust the supply in a game of ‘beggar my
neighbour’. The problem is a common one: how are we to move from
self-regarding individualism to an account that includes social norms
of reciprocity and the creation of social trust, when all the pressures of
individual advantage point in the opposite direction?
69
All these approaches share an approach to agency which is at root psy-

chological and often use evolutionary accounts of psychology to reinforce
this. As we shall see, this has strengths in explaining common patterns
of behaviour within social groups, but has weaknesses in dealing with
reciprocity more broadly, with social inclusion at the level of the welfare
state, and with the public trust which might make this possible.
The Study of Games
A powerful technique for investigating the ways in which people inter-

act is through the study of carefully constructed games. The games put
individuals in contexts where they must interact with others within a
defined framework of rules and where the detail of the circumstances of
the interaction can be rigidly controlled and outcomes precisely mon-
itored. Typically games are played for cash rewards, so that real-world
incentives operate. Important initial work was supported by the US Gov-
ernment to help understand how self-centred, deliberative actors with
conflicting interests (such as warring nations) could build cooperation
in the context of arms control talks during the Cold War—a low-trust,
individualized, rational contender situation, but one in which continuing
reciprocal cooperation was in the common interest of humanity (Auman
and Maschler 1995, pp. xii–xv).
The tradition of work in this field calls into question the importance of
simple self-regarding motivation. A basic game is the ‘prisoner’s dilemma’
in which two players unable to communicate must each individually
decide whether to trust the other and stick to a mutual alibi, or defect
and turn state’s evidence. They know that trust will produce the best
outcome for each and conviction the worst but that a defector will receive
a lower penalty, in return for cooperation, than someone who repeats
a now worthless alibi. One approach is to argue that each prisoner will
reason that the other, having the same information as oneself, will defect
to avoid the worst outcome. Consequently, they may as well defect them-
selves to avoid this risk. The point is that individual rational appraisal of
alternatives does not lead to the mutually most desirable solution.
Axelrod’s influential work (1981a, 1981b) demonstrated that in repeated
prisoners’ dilemma games, after an initial period in which most players
defected from cooperation, play tended to converge on a simple and
reciprocal tit-for-tat strategy (see Poundstone 1992). If the other defects
70
in round 1, you defect and punish her or him in round 2. If, however,
he or she cooperates, then so do you. Thus, and perhaps surprisingly, it
is normally possible to build trust over time and attain the best outcome
for both players. Meta-studies of a large number of experiments dealing
with behaviour in prisoners’ dilemma and similar games show that even
in one-shot games with strangers, a substantial minority (about a third)
do not choose the immediately self-interested option; that cooperation to
reciprocal advantage is sharply increased (up to two-thirds) by opportu-
nities for communication; that it is easy to engender ‘tribalism’ (conflicts
between groups of subjects in games), by permitting in-group and pre-
venting out-group communication; and that cooperative play declines as
a series of games approaches the limit, presumably because the prospects
for future cooperation or punishment grow more limited (Camerer 2003;
Camerer and Thaler 1995; Ostrom 2000; Ostrom and Walker 1997;
Rothstein 2005, p. 96; Sally 1995). Ostrom and Walker (2003, p. 18)
conclude a recent review: ‘in addition to the normative foundations of
trustworthy behaviour, knowledge of the “other,” repeated interactions,
and the strong possibility of future interactions are strong predictors of
both trustworthy and trusting relationships.’ All this suggests that in
the kinds of interactions studied in games, people can develop ways
of stepping beyond the confines of short-term self-regarding individual
rationality.
A simple and much-studied game, the ‘Ultimatum Game’, addresses
issues of reciprocity and trust. Two players share resources held by an
umpire. ‘A’ proposes an allocation; if ‘B’ accepts, the umpire allocates
as agreed; if not, no one gets anything. The logic of pure self-regarding
motivation suggests that ‘A’ should offer the lowest possible amount
and ‘B’ should accept it. The alternative for ‘B’ is nothing. However, in
practice, only a minority of players behave in this manner. Reviews of
a large number of trials by Roth (1995) and Camerer and Thaler (1995)
show that the modal offer is an equal division and that the second player
typically rejects offers below 30 per cent.
One much-discussed study examined behaviour in 15 small-scale soci-
eties in 12 countries on 4 continents, covering a wide range of economic
and cultural conditions (nomads, slash and burn agriculturalists, settled
agriculturalists, foragers). This work extends the study of games from the
experimental laboratories of decision-theorists to social behaviour among
those completely unfamiliar with the conceptual background. The key
findings are:
71
The selfishness axiom is not supported in any society studied, and the canonical
model [lowest possible offer accepted] fails in a variety of new ways . . . group-level
differences in economic organization and the degree of market integration explain
a substantial portion of the behavioural variation across societies . . .
(Henrich et al. 2004, pp. 49–50)
The implication is that, in these differing contexts, group norms influence

how people behave more strongly than individualist rationality. When
asked to explain their behaviour, proposers typically say that they offer
more than the minimum because they are concerned that the other
player will reject their offer as unfair. Assumptions about social norms
derived from the social world outside the game influence the rationalities
dictating play within it (Gintis et al. 2005, p. 13). Again, repeated play,
alternation of roles, and, most notably, opportunities for communication
reinforce inclusive reciprocity.
A number of researchers take these issues further in work on public
goods games. Players start out with a set quantity of resources. They
have the opportunity to contribute to a common account that will be
invested and will increase in value. This account will eventually be shared
equally by all players, regardless of whether they have contributed or not.
Reciprocal investment will yield the highest return to everyone, provided
all contribute. However, an individual who makes a low contribution is in
a position to benefit as a ‘free-rider’ from the allocation of the common
pot. This appears to be the rational self-regarding approach.
In experiments, the contributions vary between 40 and 66 per cent
of players’ endowments, averaging about half (Fehr and Gächter 2000,
pp. 161–3; Ostrom 2000). Contributions sometimes fall in subsequent
rounds of repeated games, possibly as players realize the potential short-
term reward for non-participation. A further redesign of the game links
reciprocity and a form of strong altruism to reinforce the normative
framework that maintains reciprocity. A player may fine non-cooperators,
but only at the cost of a real loss to himself or herself. When this is
done, the use of fines achieves high levels of cooperation, especially
in repeated play within partner groups. Those who impose the fine are
suffering financial penalties to act altruistically in the interests of the
whole group. Fehr and Gächter (2000, p. 162) conclude that ‘there is
now little disagreement among experimental researcher about the facts
regarding reciprocal behaviour. There also seems to be an emerging con-
sensus that the propensity to punish harmful behaviour is stronger than
the propensity to reward friendly behaviour’ (see also Fehr, Fischbacher,
72
and Gächter 2002; Gintis et al. 2005; Ostrom 2000 for similar con-
clusions). Interestingly, reciprocal behaviour is maintained even when
individuals are aware that they are playing in the last round of a series
and that there is no opportunity for future punishment of ‘free riders’.
This indicates the strength of the social norms that can be constructed.
People act altruistically (in the sense that they pay the costs while the
benefit goes to others) to reinforce norms that lead to long-term group
advantage.
Work on games has established that, in these contexts at least, people
can construct social norms of reciprocity even when operating in a con-
text that immediately rewards self-regarding behaviour. Rational individ-
ualists can maintain the kind of enlightened and socially reinforced self-
interest expressed in the horizontal aspects of welfare state redistribution.
There is little evidence that this extends to the inclusion of others who
cannot contribute at any stage.
Evolutionary Psychology: The Origins

of Cooperative Norms
One explanation from an individualist standpoint of how norms of reci-

procity and cooperation can develop in social interactions is to base them
in the biological and psychological make-up of individuals. The theme
of self-regarding individualism has influenced important streams of work
in evolutionary biology, developed through theories of the selfish gene
(Dawkins 1976), socio-biology (Wilson 1975), and moral biology (Alexan-
der 1987). Gintis and his colleagues offer the alternative view that people
are by nature ‘neither self-regarding nor altruistic’. Fehr and Gächter
(2000, p. 160) take a similar but more nuanced position. They argue that
‘when the world is made up of self-interested types and reciprocal types
interacting with each other, the reciprocal types will dominate the aggre-
gate outcome in certain circumstances, while the self-interested types will
dominate . . . in other circumstances’. They go on to claim ‘the power to
enhance collective actions and to enforce social norms is probably one of
the most important consequences of reciprocity’.
The analysis offered by Gintis and his colleagues assumes an individual
basis to action in predispositions to behave in particular ways but suggests
that social context plays an important role in influencing which relation-
ships ultimately predominate. Evolution operates at an institutional as
well as an individual level. People are ‘strong reciprocators: conditional
73
cooperators (who behave altruistically as long as others are doing so as

well) and altruistic punishers (who apply sanctions to those who behave
unfairly according to the prevalent norms of cooperation)’ (Gintis et al.
2005, p. 8). Punishment is understood as altruistic because (it is claimed)
those who happen to start out with the psychological disposition to
reinforce reciprocity will be willing to make sacrifices to punish someone
who transgresses group norms.
Critics argue that altruism is necessarily ephemeral in social contexts.
There are many circumstances in which other-regarding behaviour will
fail to advance social ends (e.g. if an individual chooses to work hard for
low pay to advance the common good within a generous welfare state
while others batten on hand-outs, the outcome will not be a mutually
beneficial highly productive society; if one official is honest and others
accept bribes, they grow richer, and the upright bureaucrat achieves little,
as Rothstein 2005, p. 133, argues). Social benefit requires that all those
involved ‘play the game’. The risk for an altruist is that others will defect
from virtuous behaviour for self-regarding reasons.
Most evolutionary biologists often claim that such processes will ‘breed
out’ altruism. If a propensity to altruistic behaviour should emerge, it will
be much less likely than self-interested behaviour to be transmitted inter-
generationally. An organism that seeks to advance the interests of others
who do not carry the same genetic material will simply be exploited and
its genetic heritage will expire. However, models that take into account
the possibility that strong reciprocity, which includes the use of within-
group sanctions against defectors, may increase the survival capacity of
the group suggest that such strong reciprocity is viable in the long term
(Boyd et al. 2002). This approach argues that the ‘persistence of group
beneficial norms is easily explained. When people interact repeatedly,
behaviour can be rewarded or punished, and such incentives can stabilize
almost any behaviour. Once there is consensus about what is normative,
people conform to normative behaviour in order to gain rewards or avoid
punishments’ (Boyd and Richerson 2002, p. 287). Observation ranging
from colonies of vampire bats to primates provide empirical support
(Sober and Wilson 1998; Trivers 1971).
Further intriguing work from brain-imaging experiments examines psy-
chological processes in more detail. This shows that particular areas of the
brain are called into play in exchange relationships between human sub-
jects (McCabe 2003). The tentative conclusion is that people have access
to a ‘goodwill accounting system’, located in the pre-frontal lobes, that
is engaged in reciprocal interactions. It is this system which makes the
74
shift from short-term rational self-interest possible. Computer simulations

which seek to model the evolutionary development of the norms that
govern social interactions point to a further interesting finding. When
the simulations are extended to include opportunities for aggression and
punishment, the possibility of achieving a cooperative outcome is much
enhanced in a way that parallels Fehr and colleagues’ findings from the
analysis of games discussed above (Hanley et al. 2003). The explanation
given is that these opportunities allow an additional option in response to
non-cooperative play, other than the simple retreat achieved by defection
on one’s own side.
These analyses, which all rest on arguments about the basic psycholog-
ical make-up of individuals and its possible influence on social behaviour,
all provide ways of bridging the gap between individual rationality and
the development of a norm of reciprocity that facilitates cooperative
behaviour in society and possibly of a kind of limited altruism in connec-
tion with the maintenance of that norm. This may lead to the develop-
ment of trust in the capacity of a group to sustain stable norms. Further
evidence from work by political scientists shows how such a normative
framework may develop and be sustained in social interaction in the real
world.
Cooperation and Reciprocity: Examples from

Social Interactions
An important area of work concerns common resources which people

exploit as individuals, such as fish stocks outside national limits, fresh air,
or rivers used for irrigation. Olson’s radical individualism suggests that
the kind of collective decision-making in mutual interest which would
enable people to share such resources faces formidable obstacles. While
an enlightened individual rationality may lead people to devise a scheme
for sharing a common resource when it can be confined to a small group,
broader access makes the negotiations much more difficult. The water
flows from rivers that cross the land of a number of people and are essen-
tial for irrigation or, more broadly, an unpolluted environment when that
is exactly where everyone dumps exhaust gases and much of industrial
and domestic waste are other examples. As the pressures from depletion of
the ‘global commons’ grow ever more insistent in their impact on climate
change and in imposing limits to growth (IPCC 2007; Stern 2006) and
as the world faces more wars such as the Darfur conflict in which access
75
to natural resources is a central feature (IPCC 2007, pp. 442–3; Lind and
Sturman 2002; Nkomo et al. 2006), these problems demand resolution.
The management of public goods has been extensively analysed by
political scientists. Garrett Hardin’s influential analysis (1968) of the
‘tragedy of the commons’ points out that resources such as common
land or fish stocks risk depletion through overuse, because self-regarding
individuals will pursue their own advantage in the expectation that others
will do so. Conversely, Ostrom (1990) investigates the role of community-
regulated systems of restraints in relation to water usage in California and
shows that participation in decisions about the rules of usage together
with the monitoring of users by others who are also users can lead to a
mutually sustainable solution. Group norms play an important role.
One commentator argues: ‘based solely on personal short-term inter-
ests, people have reason to act in a non-solidaristic manner, but when
put in a situation where they must argue publicly and be held morally
accountable for their actions, the significance of common norms becomes
crucial to finding a solution to the tragedy of the commons’ (Rothstein
2005, p. 50). Whether mutually beneficial reciprocal cooperation can be
achieved on the scale of the institutions that we encounter at the level
of modern states is a central issue for our concerns, and the extent to
which people succeed in avoiding the tragedy of the commons is clearly
relevant to this. In a series of influential publications (e.g. 1990, 2000,
2002), Ostrom has gone on to analyse the conditions which encourage or
discourage such collective action. These draw on her own empirical work
and on meta-reviews of case-studies (e.g. Bromley et al. 1992) supported
by such resources as the Digital Library of the Commons at the University
of Indiana, now grown to over 45,000 citations.
Her arguments parallel those considered in the previous section: the
world contains ‘multiple types of individuals, some more willing than
others to initiate a reciprocity to obtain the benefits of collective action’
(2000, p. 138). Psychological differences are again ‘brute facts’, corre-
sponding to the individual values which decision-theorists typically use
to explain how people behave. Her analysis broadly parallels the account
of strong altruism discussed earlier, distinguishing between ‘conditional
cooperators’, who will cooperate if they think there is a reasonable chance
that others will, and ‘willing punishers’, who will make sacrifices in order
to ensure that others follow norms (Ostrom 2000, p. 142).
Case-study research identifies a number of design principles that lead
to self-organized collective actions sustained over time, in other words to
the emergence of social norms of reciprocity (2000, pp. 149–53). These are
76
the following: the existence of clear principles which enable participants

to know who is included and who is not; rules that take local conditions
into account and allocate benefits proportional to required inputs; partic-
ipation by most individuals in making and modifying the rules that apply
in their context and in enforcing them; use of graduated, proportionate
sanctions; access to low-cost local arenas to resolve conflicts; recognition
of the right to organize by government; and governance organized in
multiple nested layers for larger enterprises.
This analysis demonstrates that the strict individual rationalist critique
of the possibility of collective action and of the difficulty of sustaining
norms which nourish it does not apply in all contexts. It also raises
questions for institutions at the level of generality of the welfare state.
The logic extends to reciprocity but not to the crucial question of the
inclusion of non-reciprocators. Professional discretion is sometimes rele-
vant to establishing just who is and who is not entitled to some services.
Governance is typically the province of independent and distant officials.
It is difficult to link the problems of welfare state citizenship to analyses
of collective action at the level of the commons. Ostrom (2000, p. 147)
is equivocal about the merit of external state-centred rules. These can
work better at generating cooperation, but only when they are in line
with local norms and are effectively and equitably enforced. Otherwise
an external system may undermine the possibility of establishing local
norms.
Further examples of real-world interactions stress issues that have
already been extensively analysed where the rational actor model gives
rise to puzzles. In studies of employment contracts, Fehr and Gächter
examine some well-known issues of wage bargaining, including the fact
that employers often do not immediately cut wages in response to adverse
market conditions, as would be predicted by self-interest theory, but tend
to maintain the existing differentials. This is sometimes referred to as
the ‘stickiness’ of wages and applies particularly to higher-skilled labour
markets. Reviews of the literature and a series of studies and experiments
indicate that an important consideration is the preservation of a nor-
mative reciprocity that has advantages for both sides in reducing the
monitoring of workers necessary to maintain output. Pay negotiations
often tend to be framed within the assumption of workers’ commitments
to high quality in return for what they see as fairness in wage setting.
The work examines ‘incomplete contracts’, where the terms of the con-
tract do not completely specify the rights and duties of the parties, so that
discretion and interpretation is required. Such contracts are increasingly
77
relevant as more jobs require the exercise of ‘soft’ interpersonal skills in

contacts with consumers. They are also important in understanding social
welfare relationships where, in many areas, professionals must actively
investigate the needs of members of the public and where the general
‘citizenship contract’ underlying the whole system of taxes and benefits
is inevitably ill-defined.
The research indicates that such incomplete contracts call forth higher
levels of effort than complete contracts in comparable circumstances (Fehr
and Gächter 2000, p. 177). This relates to the finding across experimental
and social anthropological interpretative work considered in more detail
later, that exchanges where interactions in which issues are formally
identified, specified, and negotiated are often perceived as less fair than
those where the conditions are assumed as part of a reciprocal relation
(e.g. Molm et al. 2003).
In general, the research discussed above provides a solution to the prob-
lem of how deliberative self-regarding individuals can achieve reciprocal
and mutually beneficial social interactions. Some work from a rational
individualist perspective suggests that people are able to construct and
sustain the appropriate social norms, and that the capacity to enforce
them by punishment as well as to reinforce them through successful
interactions plays a major role in sustaining this process. Collective norms
which operate across a social group to advance collective group interests
become an important element in theory-building that takes as its starting
point individual rational action.
There are two limitations to this approach: its explanatory power is
limited to questions of how specific normative frameworks might arise,
predominantly of the kind of reciprocity within a group that is significant
in non-coerced interactions and an associated altruism limited to the
preservation of such norms; and the approach rests on psychological pre-
dispositions as unargued ‘brute facts’. In relation to social citizenship, the
account provides ways of addressing reciprocity at the level of immediate
and group relationships and of altruistic behaviour to maintain group
norms. However, it encounters difficulties with issues of social inclusion at
the broader level of the welfare state and public trust. Reciprocity becomes
the creature of the mix of psychological dispositions in the institutional
settings analysed by Gintis, Ostrom, and others in the work discussed
above. Inclusive policies that move beyond the interest of the group can
only be understood as altruism, as a psychological characteristic that some
groups happen to share, and are extensively discussed in this way (for a
78
review, see Ware and Goodin 1980). This begs the question of how such
dispositions, apparently more prevalent in some societies and at some
periods, arise (Mau and Veghte 2007).
Trust involves expectations about the commitments of others to one’s
interests and it is more difficult to base this on an individual rational
model. One hard-nosed solution, adopted by some prominent commenta-
tors, is simply to argue that the concept of trust in institutions rather than
individuals is vacuous (Hardin 2004; Luhmann 1979). This is unhelpful.
People certainly use and understand the conception of trust in relation to
welfare institutions. The uncertainty surrounding social risks and welfare
needs places considerable weight on trust in the welfare state as both able
to meet the needs of vulnerable groups who have little bargaining power
and as continuing to provide collective services into the future. Without
trust in its core institutions, support for state welfare diminishes.
In short, individual rational action provides the basis for a limited social
citizenship led by reciprocity but requiring specific trust between those
involved and facing difficulties in justifying the inclusion of more distant
groups. The welfare state that can be built on individual rational actor
accounts of the evolution of normative frameworks is less substantial
than that reflected in Western European experience, and we must look
beyond this approach to understand the basis for a continuing social
citizenship.
Sociological Perspectives: Social Norms

and Individual Expressivity
We now consider arguments that take the social level of analysis as

their starting point but seek to do justice to the everyday experience of
independent and individual choice. One approach, encountered most fre-
quently in sociology, and also influencing political science and social psy-
chology, starts out from the role of social norms, the rules that guide and
regulate behaviour in society (Hargreaves-Heap et al. 1992, pp. 17–20).
From this perspective, unlike those considered in the previous section the
springs of action are located outside the individual. The strength of the
approach lies in the insights it provides into behaviour in social groups
and differing societies and the meanings attached to people’s actions.
The problem now is to account for the individual features of agency as
well as for its social regularities. We know that our own choices are not
79
typically arrived at by reading off from a system of social rules and are
not completely dominated by how we will appear to others, but are aware
that such guidelines and impressions influence our views about how we
should behave.
Meaning and Action
A simple solution to the problem of understanding the plural regularities

in social action is to identify different spheres of action, each subject
to their own rationality. A strong sociological theme, often associated
with Weber, is the insistence that society can only be understood by
analysing the social actions of individuals. These actions must be inter-
preted through the meanings attached to them by the members of society.
These meanings can be interpreted through a range of different rational-
ities. Weber (1978, p. 130) identifies cultural, traditional, emotional, and
deliberative rationalities. Action can be governed and understood among
the social group as regulated by the rules obtaining within a particular
cultural framework, through traditions that establish the identity of the
group, by individual feelings, or by instrumental rationalities. These can
coexist in different spheres of action. The Western process of moderniza-
tion is inextricably linked to the rationalization expressed through such
developments as the growth of bureaucracy in the state and business and
the regimentation and regulation of the private sphere and civil society
(Burchell et al. 1991, ch. 1). At the same time, the extension of the
market stresses individual self-regarding choice. The different bases for
social action are increasingly juxtaposed.
This approach provides a powerful way of explaining individual action
within its social setting but leaves the precise relationship of setting and
action uncertain. Why, for example, do particular individuals respond
to modernization in different ways, by seeking to become civil servants,
priests, entrepreneurs, actors, or accountants? This requires a more sophis-
ticated account of the spheres of action and of the forces that sustain or
shift their rationalities. Building on the work of the classical sociolog-
ical writers, Parsons (1937) sought to develop a comprehensive theory
to explain how action is both intentional (and thus individual-centred)
and symbolic. The symbolic aspects of action emerge in the context of
interactions with others who share similar meanings, and are thus located
within social systems of rules. One problem with this approach is the
difficulty in constructing a satisfactory account of the meanings which
80
permit action to be socially symbolic and to express identity as well as

to be directed to achieve goals. The idea of a normative framework that
forms part of social structure provides an answer to this problem.
In later work he addresses this problem by analysing norms and values
as part of a social system or sub-system and as functional to its sustain-
ability and capacity to adapt to its environment (Parsons 1951). While
this approach provides a strong account of the regularity and coherence
of society and of groups within it, it faces difficulties in explaining individ-
ual instrumental or expressive actions which run counter to established
normative frameworks, a problem often discussed in relation to func-
tionalism (Giddens 1993; Holmwood 2005). It also encounters difficulties
in explaining social change. We know that norms in relation to gen-
der roles, deference to authority, religious observance, age relationships,
care responsibilities, sexuality, diet, littering, and many other areas have
shifted in the comparatively recent past. If normative frameworks are a
functional aspect of a social system, how do we understand the processes
that permit a system specifying rules to change?
One response is to attempt to build up an account of the social mean-
ings and normative contexts of action from the principles developed and
strengthened through the myriad individual interactions that make up
society. This is an ambitious project, pursued in the exchange theory of
Homans (1961) and Blau (1964). From one perspective the synthesis of
social norms from the micro-level of individual interaction may be seen
as a sociological parallel to the derivation of norms of reciprocity from
individual rational choices by decision theorists and political scientists
considered earlier.
These attempts, and later work, such as Coleman’s analysis (1990) of
social interaction on the basis of individual rational deliberation, have
generated interesting accounts at the micro-social level, examining behav-
iour in such areas as education, the influence of population structure,
and social mobility but have failed to attract a substantial following.
One important reason is their relative weakness in providing convinc-
ing explanations of macro-social phenomena, such as the persistence of
different normative frameworks in different societies, the complex and
intricate processes of change within them, and the reality, continuity, and
impermanence of social order. The mainstream of sociological enquiry
has been dominated by approaches which understand norms not as
providing an independent framework for action but as part and parcel
of other social and economic relationships. Normative frameworks thus
provide the drivers for individual action and a background of shared
81
meanings against which expressive action is possible and are open to

change through the action of external forces. Such approaches are par-
ticularly helpful in understanding social citizenship because they allow
scope for a broad range of normative principles and help in understanding
the interlinkages between change at the normative level and shifts at the
economic, political, and social levels.
Social Frameworks and Embedding
An important influence on sociological explanations of how individuals

experience social interactions as coherent wholes rather than along sepa-
rate dimensions of rational self-interest and normative value is contained
in the idea of ‘embedding’. The spheres of social norms, symbolic commu-
nication, and the rational pursuit of economic goals are not understood as
independent but as intimately and intrinsically interlinked. One impor-
tant implication is that shifts in social and economic context can lead to
shifts in the framework in which individuals interpret and attach values
to their actions. This offers an opportunity to provide an explanation
of both regularity and change. In relation to social citizenship it gives
an account of how changing economic relationships can give rise to
changing institutional relationships, and thus to shifts in the way people
behave and expect others to behave that is particularly relevant to current
issues in welfare policy.
Analyses based on the idea of embedding developed from initial work
by Polanyi in the 1940s and 1950s (Polanyi 1944; Polanyi et al. 1971; see
Granovetter 1985, p. 481). Seeking to understand the impact of economic
change on social values, Polanyi argued that ‘the human economy is
embedded and enmeshed in institutions, economic and non-economic.
The inclusion of the non-economic is vital’ (Polanyi et al. 1971, p. 250).
In other words, rational agents behave and make their choices within
a framework of institutions that contains both normative and individual
aspects. The separation of the two aspects can be understood both socially,
as a historical process, and analytically, in the development of particular
approaches in social science.
Polanyi’s work emphasizes the role of reciprocity in the traditional
normative framework of exchange. As Thurnwald (1932), Sahlins (1974),
and others point out, market exchange has been an important feature
of society since the later Stone Age. Before the development of mod-
ern mercantile and capitalist markets, these exchange relations were
82
regulated through embedded norms of redistribution or of reciprocity.

‘When reciprocity rules, acts of barter are usually . . . embedded in long-
range relations implying trust and confidence, a situation which tended
to obliterate the bilateral character of the transaction’ (Polanyi et al. 1957,
p. 61).
A distinctive feature of the experience of the nineteenth century and
the move towards a more globalized economic system was that market
interactions could be developed and thought about entirely in their
own terms, disembedded from overarching frameworks of social norms.
Polanyi (1944) analysed in detail the evolution of the expansion of long-
distance trade, separated from the regulating institutions in which mar-
ket exchange had developed, the growth of mercantile regulation by a
centralized state and its decline, the construction of a free market in
labour through the operation of the Poor Law, and the movement to
international free trade with exchange regulated by an automatic gold
standard. He argued that such institutions generate the conditions for
rapid accumulation. However, in the long term, self-regulating capitalism
is not viable, since it consumes the social and human fabric of society
and cuts away its own foundation. Economic relationships feed back in
influencing social relationships and the norms that govern them. Both
the success and the failure of the liberal market system lie in its capacity
to undermine norms of reciprocity, liberating commercial enterprise, and
erode the possibility of social cohesion.
This work incorporates both individual rational action, in the context
of market freedom, and the idea of a regulating normative framework. It
is in direct contrast to the logic of such individual models as those devel-
oped by the New Institutional Economics. This perspective attempts to
understand the evolution of social institutions on the basis of the actions
of members directed to securing individual interests and thus retrieve the
intellectual dominance of the rational actor model (Williamson 1985).
Gary Becker, for example, constructs accounts of the normative assump-
tions involved in such institutions as family life, private property, crime
and wage bargaining, starting from notions of economic rational individ-
ual action. Economic sociologists have argued that this approach tends
to reduce explanation to function, fails to provide convincing accounts
of social change, and does not address issues of power relationships
(Granovetter and Swedberg 1992, pp. 15–19).
The idea that social and economic relationships are intimately linked is
further developed in Bourdieu’s conception of habitus (see, for example,
Bourdieu 1990; 2005, p. 75). This provides an analytical framework
83
linking individual experience and agency, on the one hand, and social
frameworks, on the other, that includes power relationships and nor-
mative structures, and explains how these are sustained over time. The
approach also provides an opportunity to explain differences between
different social groups in the way they respond to choices that is not
easily available to those working from an individualized rational actor
framework.
Habitus may be understood as the ‘dispositions or propensities of a
given social group that organize rather than govern practice’ (Lunt 2006).
The point is that habitus is not imposed on an individual from above
through fixed social rules but is part of the cultural framework which an
individual acquires and into which he or she is socialized more or less
successfully as a member of a group through such practices as education,
parental upbringing, and interaction with their peers. As Aldridge puts
it, habitus is ‘a durable set of cognitive and affective dispositions, rooted
in early socialisation in the family and the school’ (Aldridge 2001, p. 5).
The socialization of different individuals and of different groups may of
course differ. One advance is the inclusion of power relationships within
the analysis, rather than as a separate and individual field of social life that
is the province of political science. These are accommodated through an
extended analysis of different forms of capital which includes economic
capital and also social and cultural capital and examines how capital in
each of these areas can influence power relations (Bourdieu 1990). The
analysis provides an account of embedding that allows for differences in
outcomes and also explains power relationships between social groups
and how they are reproduced.
An interesting illustration of how ideas of the embedding of normative
assumptions in social institutions is able to explain interactions that are
puzzling from a rational actor perspective is provided in a series of studies
which examine how reciprocal norms develop and are sustained as fair
in exchange relations (Molm et al. 2003). The authors consider evidence
relevant to two approaches to exchange which stand at opposite ends of a
spectrum: one in which the conditions of exchange are freely negotiated
and one in which they are less rigorously defined but are governed by the
normative mechanisms of reciprocity and obligation.
A commonsense view of procedural justice suggests that people will
tend to view negotiated exchanges as fairer than reciprocal exchanges.
In negotiated exchanges, the equivalence of items to be exchanged and
the terms of exchange and the possibility of recourse to adjudication
are all open to discussion. Conversely, in reciprocal exchange, there is
84
often no assumption about precise equivalence, and it is the fact of

having provided a contribution that is seen as generating an obligation
for a return. Negotiated exchange is typically formally binding whereas
reciprocal exchange is often not. One might imagine that people would
prefer the explicitly negotiated, transparent, and contract-governed ver-
sion. However, the authors conclude from the analysis of behavioural
experiments and field studies and a wide-ranging literature review that, in
practice, those participating often perceive reciprocal exchanges as fairer
than negotiated ones.
Outcomes are more easily compared in formal negotiated exchanges,
the relative costs of the exchange are more obvious, and it is easier
to attribute any perceived inequalities to the intentions of the other
party. ‘The same procedures that ostensibly make negotiated exchanges
more fair also increase the salience of the inherent conflict between
actors in exchange relations.’ Such procedures ‘can have the unintended
consequence of reducing some of the most important aspects of social
exchange—trust, affective ties and feelings of fairness’ (Molm et al.
2003, pp. 149–50). In fact, many economic transactions also involve
such factors in facilitating interactions outside strict negotiations, and
it is these that play an important role in maintaining cohesion and
ensuring stable relationships to mutual advantage (DiMaggio and Louch
1998; Uzzi 1996). Normative frameworks of fairness associated with reci-
procity are highly significant in the way people understand interac-
tions, even in a market society, and these frameworks are institutionally
embedded.
The approaches that centre on the embedding of normative principles
in institutions have many strengths in explaining how the frameworks
that regulate and endow action with social meaning provide a con-
text in which individuals interact and understand themselves to act to
achieve particular goals. Most importantly, they provide an account of the
processes which lead to developments in the context of action, rooting
these ultimately in economic changes. Two points emerge for accounts
of social citizenship: first, the development of individual-centred market
exchange does not undermine the significance of normative principles of
reciprocity, inclusion, and trust in social life, so long as we think of such
principles as bound up with the framework of meanings surrounding eco-
nomic interaction. Second, changes in social context can alter the range of
meanings attached to action and thus the potential for behaviour. Welfare
reforms need to pay attention to the possibility that new institutions may
diminish opportunities for the enactment and expression of normative
85
principles. However, the precise relationship between social and individ-

ual is still unresolved. There is no overarching theory that explains how
embedding takes place or why some social actors are more influenced
by the particular normative framework in which their lives appear to be
embedded than others. Attempts to provide a synthesis of individual and
social directions in action address these issues.
Agency and Structure
One influential approach is associated with the work of Giddens, whose

theory of structuration draws together insights also shared by other the-
orists (see, for example, Sewell 1992). In the context of previous analysis,
Giddens stresses the role of individual social actors as both the interpreters
and constructors of social frameworks. In an immediate sense, society
exists because people behave towards each other in particular ways. Their
behaviour is shaped by their understanding of the right way to behave. In
this sense, society is a ‘skilled accomplishment’ of active human subjects.
It is the medium in which individual action takes place and operates as
a framework which shapes action (Giddens 1993, p. 4). Human beings
produce society, but they do so as historically located actors and not under
conditions of their own choosing.
The implication of this logic is that human action is responsive to the
norms contained within the social framework and that this framework
may shift over time, as implied by the logic of ‘embedding’. At the same
time, people act as independent individuals, conscious of their role as
social actors. In a real sense, normative frameworks only cohere because
people sustain them through their collective actions. This gives a role
for individual rational action and for the experience of agency and, at
the same time, for a framework of norms that exerts an influential but
not determining role in shaping behaviour. Because it exists only in and
through the behaviour of the people who constitute it, the social system
is able to develop over time. External factors such as globalization or
shifts in economic relationships may introduce new elements into the
way people interpret their social life. They may do so in association with
cultural shifts which influence how people think about their behaviour
and about the right way to act. The possibility that such changes may
undermine social citizenship remains open.
This approach has many strengths in tackling individual agency and
social frameworks. There are also problems. As with previous theories,
86
the detail of how shifts in agency take place is ultimately mysterious.

However, the possibility of such shifts has a stronger role than in the struc-
tural functionalism of Parsons and others, the accounts of independent
spheres of rationality and social meanings, and the model of embedding
dominated by economic change because the shifts are mediated through
the understanding of the human subjects who construct and constitute
society.
Conclusion: Agency and Social Citizenship
In this chapter we have reviewed various attempts to analyse the relation-

ship between agency and the sustaining of normative frameworks. We
undoubtedly experience our own agency as individual and independent.
At the same time, we are aware of the constraints of social customs
and the regularities in the exercise of agency across various groups in
social life. One perspective starts out from individual deliberative choice
and explains how communities of rational and self-regulating actors can
construct normative frameworks centring on ideas about fair exchange,
entitlement, and reciprocity. Other approaches, from a more sociologi-
cal tradition, give a central role to collective normative frameworks in
shaping and giving meaning to, but not determining, behaviour. The
first approach typically rests on unargued assumptions about individ-
ual psychological dispositions, the second understands norms as embed-
ded in and reproduced or modified through human action but leaves
the precise relationship between normative rules and individual agency
open.
How do these approaches impact on social citizenship? The first offers
strong accounts of reciprocity, and an understanding of how inclusive
norms may develop, but only so long as they are helpful to the longer-
term interests of a social group. It provides a weaker understanding of
the evolution of more general frameworks of solidarity and social trust.
The second offers substantial normative accounts in all three areas. It
suggests that the norms people follow are bound up with their social
interactions. One implication is that developments in institutional frame-
works are likely to affect norms and values in the relevant area of social
life because they shape opportunities for building social relationships and
communication within shared meanings. New welfare policies may influ-
ence the scope of reciprocity, inclusion, and trust and affect the values
that underlie state welfare. Reciprocity as enlightened self-interest seems
87
secure within the bounds of a framework that places greater emphasis on

individual rational action but it is a reciprocity limited to participants who
can hope for mutual advantage in the longer term. Policies based on this
approach are likely to curtail social inclusion and weaken institutional
trust because the perspective offers no basis for sustaining these values. In
the next chapter we discuss the ways in which reciprocity, inclusion, and
trust have been understood in concrete social policy contexts by writers
from differing theoretical perspectives.
88
6
Rational Actors and Social Citizenship
We reviewed the new approaches to welfare policy in Chapter 3 and

considered the individual logic of agency on which they rest at the
theoretical level in Chapters 4 and 5. We now consider the implications
for the emerging reconfiguration of social citizenship. Chapter 5 showed
how individual approaches can sustain ideas of reciprocity but encounter
difficulties in relation to inclusion and trust. It also showed how more
sociological accounts tend to support the view that the institutions in
which people live their social lives are bound up with the values they
pursue and express. From the contrasting individual perspective, values
are more likely to be understood as brute facts, as inherent psychological
dispositions, or as the outcome of evolutionary processes. We consider
how social policy writers have understood reciprocity and inclusion from
individual and social perspectives and then turn attention to social and
institutional trust.
Reciprocity and Inclusion
A number of writers from individual rational actor perspectives use evi-

dence from the study of games, evolutionary psychology, and other
sources to demonstrate that rational individuals are able to build mutually
advantageous reciprocal relationships, despite the obstacles implied by a
strict and immediate interpretation of rationality. When risk and benefit
are assessed, the short-term interest of the other may be to defect from
a previous commitment. A longer-term perspective, which includes an
element of trust, is necessary to overcome this problem. The outcome is
a limited and specific account of solidarity, applicable between those for
whom reciprocal relationships are both advantageous and enforceable.
89
However, for outsiders, whose contribution is not obvious, reciprocity

does not provide a route to social inclusion. These are likely to contain
the most vulnerable groups from a welfare state perspective. One response
in the current literature is to expand the scope of social contribution to
embrace more groups in the ambit of reciprocity (Segall 2005, p. 331), for
example, by pointing out the contribution of unwaged care work.
Individual rational action logics tend to understand any commitment
to inclusion beyond a rationally based reciprocity as simply a brute fact of
individual psychology (e.g. Folbre and Goodin 2004, p. 25; Oord 2007).
Some people just happen to be altruistic. This contrasts with the approach
adopted in writing from a sociological perspective, which sees norma-
tive structures as part of the social framework within which individuals
acquire, develop, and express values. The fact that values are shared and
acknowledged facilitates the communication of commitments and iden-
tities in relation to those values. From this perspective, altruism operates
within a more or less inclusive social order.
The extent to which social arrangements promote or deny opportunities
for altruism is a core theme in one of the set-piece debates in social
policy, about the value of donorship rather than a commercial market in
blood. In the late 1960s, the leading UK social policy academic, Richard
Titmuss at LSE, seized on the contrast between voluntary and market
blood donorship to examine the extent to which social policies could
promote social inclusion and could, as he put it, provide a positive answer
to the question of ‘why give to strangers?’ (Titmuss 1970, p. 15).
Titmuss’s work developed the moral case for the centrality of state social
welfare and policies for social inclusion as an essential part of a good
society against instrumental arguments that assessed the value of social
interventions in terms of their contribution to economic prosperity. This
approach brought him into collision with what he saw as the selfish
individualism of market economics. He stands directly in the tradition of
Polanyi in his analysis of the damage that the spread of commercial rela-
tionships may do to the values that underpin state welfare. He wrote the
official history of the development of the welfare state during the Second
World War, pointing to the role played by social solidarity in enabling the
mobilization of all the forces of society against a common enemy (Titmuss
1950) and went on to argue for the expansion of welfare in the interests
of the most vulnerable groups in a series of influential essays and books
(especially Titmuss 1958, 1962, 1968). An important feature of his work
is his grounding of theoretical and value debates in detailed analysis of
90
the impact of social programmes on the most disadvantaged members of

society.
Titmuss (1970, p. 17) valued voluntary blood donorship precisely
because it ‘provid[ed] and extend[ed] opportunities for altruism in oppo-
sition to the possessive egoism of the market’. He wrote in direct oppo-
sition to a proposal to experiment with the use of incentive systems in a
commercial market to increase the supply of blood donors (Cooper and
Culyer 1968). He develops the argument to claim that the substitution
of market for collective services creates a more self-regarding society and
undermines social citizenship. It is the responsibility of government to
‘reduce or eliminate or control the forces of market coercion, which
place men in situations in which they have less freedom . . . to make
moral choices and to behave altruistically if they so will’ (Titmuss 1970,
p. 273).
As a number of writers have pointed out, blood donorship may not
be a helpful example on which to found the case. Titmuss’s evidence on
the impact of voluntary donorship on the quality of blood-products may
be called into question (e.g. Le Grand 2003, p. 41). Blood is unusual in
that it is a relatively costless gift, replaced by natural processes (Pinker
2006, p. 15). In any case, much donorship appears to be motivated by
reciprocity. Donors may feel an obligation because they or their family
members have received a transfusion (Titmuss 1970, pp. 342–3). The altru-
ism involved could thus be analysed in terms of extended self-interest. We
will focus chiefly on the example of voluntary social care in the discussion
below, since this is an issue of considerable and growing importance and
one where substantial burdens are involved.
Titmuss’s approach operates within a normative sociological logic. From
the individual rational perspective it is hard to see how the existence or
otherwise of opportunities for voluntary action outside the framework
of market incentives influences the balance of values in society: people
simply make choices in the light of the values they happen to have and
will continue to do so. From the collective and normative perspective
the shift towards a system in which individuals compete to advance their
own disparate values may weaken altruism in society because individual
motives are framed by the pattern of motivation embedded and expressed
in social structure. More broadly, new forms of welfare provision which
assume that individuals are driven by independent and self-interested
motives may diminish the capacity for inclusion in the welfare state.
The logic that underlies this shift may include good opportunities for
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reciprocity in terms of payment for service delivered and the direction of

provision to particular groups because they contribute to society. It offers
little place for the inclusion of non-contributors.
Intrinsic and Extrinsic Motivation
An obvious problem with individual accounts of agency in relation to

welfare is that individuals do not respond to incentives in the simple and
incremental way that a naïve reading of the theory would imply. Welfare
effort is not directly proportional to incentive. People will often make
considerable contributions to the common good for no obvious reward
and may be insulted if offered one. Others behave differently. The retreat
to the idea that people just have inherent values seems unsatisfactory.
The idea that the expression of one’s principles through one’s behaviour
is valued in the same way as a reward and that shifts in the institutional
framework may change the opportunities to express values gains purchase
in this context. One ingenious approach, starting out from a rational actor
logic, appears to offer the opportunity to square the circle of individual
motives and the influence of social institutions on behaviour. It rests on
a distinction between extrinsic and intrinsic agency.
Intrinsic agency refers to actions performed simply for the sake of the
thing itself, extrinsic agency to those performed for external rewards (e.g.,
money, status, and power) which can be thought of as incentives (Deci
1975; Frey 1997, chs. 3 and 5; see Lane 1991; Le Grand 2003, p. 53; Thaler
1993 for further discussion). In the latter case we would not pursue the
course of action without the reward, but in the former we would do it
anyway. Le Grand applies the logic specifically to social policy issues.
The central point is simply that ‘people undertake many activities sim-
ply because they like them . . . a higher monetary compensation crowds
out this inner motivation in important circumstances. To offer higher pay
then makes people less committed to their work and may reduce their
performance’ (Frey 1997, p. ix; see Taylor-Gooby 2000, ch. 2). Intrinsic
motivations may include the influence of the normative framework in
which an individual is embedded and which those operating from the
normative sociological perspective would see as providing the setting
for action. They might also include the expression of a particular value
and social identity for its own sake. Extrinsic behaviour is driven by an
external consideration which is assessed positively as a means to what
an individual values and thus functions as an incentive. This would also
92
apply to reciprocity, where the service returned rather than an inter-

nalized social norm provides the incentive. Intrinsic motivations, such
as altruism in the cases of voluntary blood donorship or informal care,
are simply dispositions of individuals. Normative frameworks are neatly
encapsulated within a logic that starts out from individual rather than
social context and remains at that level.
In one much-discussed study (Frey 1997, pp. 69–77), 305 Swiss citizens
living in communities singled out as possible sites for a nuclear waste
repository were interviewed about their willingness to accept the siting of
the dump in their immediate locality. Just over half (51%) were willing to
accept the facility. As might be expected, such factors as higher perceived
risk, the expectation of a negative economic impacts on the area, and
ownership of a home in the area all decrease willingness to host the
dump. The study went on to examine the impact of extrinsic incentives.
It asked whether the respondents would accept the dump if substantial
compensation were offered. The amounts discussed in the survey varied
in different treatments but averaged Swiss monthly median household
income. The rational actor hypothesis would suggest that, all things
being equal, rewards on this scale would increase compliance. However,
acceptance halved to 25 per cent and this pattern remained stable even
when refusers were offered higher levels of compensation.
Frey explains these answers in terms of intrinsic and extrinsic motiva-
tion. The intrinsic motivation in question is the willingness to accept the
dump as a contribution to citizenship. This is bound up with the norms
and values implicit in the membership of the community, which some
people happen to hold as internal psychological commitments. Despite
awareness of the problems of nuclear waste repositories, many people
are willing to bear some of the costs of innovations which benefit the
whole social group. The introduction of an extrinsic motive (financial
compensation) sets the whole transaction in an entirely different context
and undermines the validity of intrinsic motivation. Once the process
is presented simply as a monetary contract, a payment to compensate
for the acceptance of a burden, the citizenship motivation is cancelled
out. However, it is not the case that people are simply ‘irrational in
their responses to siting announcements. Factors such as risk, detrimental
economic effects, diminished property values, as well as wider political
considerations, lead people to oppose siting plans’ (1997, p. 76).
Supportive evidence comes from studies of tax evasion, where will-
ingness to engage in illegal behaviour that enables citizens to avoid tax
payments does not seem to relate directly to the size of penalty and
93
likelihood of suffering it, as the crude rational incentive model might sug-
gest. Instead, it varies between different societies and social groups in ways
that indicate that an intrinsic motive of commitment to the community is
involved (Frey and Torgler 2006). Frey goes on to examine such activities
as volunteering for military service, blood donation, crime prevention,
regulatory policy, and work effort to make similar points about the impact
of different assumptions about motivation. A US study of blood donorship
points in a similar direction: one group in a population study was offered
a cash payment to take part in a blood donorship programme, while
one was not. Just as in the study of willingness to accept the waste
depository, reward actually diminished willingness to participate. Those
who previously indicated lack of willingness were little influenced by the
offer, indicating that the choice is not simply a matter of compensation
(see Frey and Jegen 2001; Upton 1973).
The claim is that there is no simple direct relationship between indi-
vidual incentive and behaviour in contexts where value-commitments
are involved. This conflicts with the assumptions of the simple rational
actor model, which would view output in terms of behaviour as directly
proportional to input in terms of reward. The contribution of the distinc-
tion between intrinsic and extrinsic motivation is to separate the effect
of social institutions on behaviour from that of inherent dispositions,
without moving to the position that the institutions within which people
live structure the values they hold, the basis of Titmuss’s argument that
the introduction of the cash nexus into blood donorship would change
their moral predispositions and damage social citizenship.
Threshold Effects and Social Recognition
Le Grand develops a related argument in a slightly different way to sup-

port converse conclusions. He draws attention to the unusually costless
nature of blood as a gift or as part of reciprocal obligation and focuses
on social care as an area in which the burdens of supply fall much
more heavily and obviously on the donor. Here there have been exten-
sive studies of behaviour in relation to voluntary work and the findings
appear equivocal. Again, responses to incentives do not follow the linear
path suggested by the simple model of rational individual response to
incentives. Le Grand uses the logic of crowding out to accommodate
the suggestion that the assumptions built into policy may influence how
94
values influence behaviour, without accepting that policy forms part of

the normative world which influences what those who make it up think
of as the right way to act. Values remain as mysterious brute facts of
psychological disposition.
Voluntary work is often contrasted with market employment. However,
paid community care experiments have been highly successful (Davies
and Challis 1986). Those who provide social care (typically women acting
informally to meet the needs of frail family members: Ungerson 2000,
p. 630) often welcome payments. A study by Leat and Gay (1987) of 87,
mainly women, paid carers across a range of activities including foster
care, child minding, and agency care found that very few carried out the
activity in order to gain monetary reward but that few would have done
it without reward. As Le Grand (2003, p. 43) puts it, ‘they regarded it as
something that should not be expected of them without payment . . . the
fact of being paid was more important to them than the level of payment.’
An alternative interpretation of the same evidence might introduce the
ideas of symbolic norms and social communication and see the response
to cash payments not as the operation of a simple financial incentive
but as valued recognition by the community of the worth of caring
behaviour. Here it is the moral rather than the exchange value that is
being emphasized.
Le Grand attempts to reconcile the conflicting evidence about moti-
vation and behaviour by introducing the notion of threshold effects.
Under some circumstances, the introduction of market motives crowds
out intrinsic motivation so that the supply of the activity falls; under
others people seem to value market reward at least as recognition. The
implication is that the size of the compensation relative to the cost of the
activity as assessed by the individual actor is relevant. Thus for altruis-
tic/reciprocal actions that involve little cost (blood donorship) or moder-
ate effort (accepting a waste dump), the impact of reward on motivation
simply cancels out existing self-sacrifice among altruistic individuals. If
you provide a reward, you get no greater response, and the provision of
reward may actually frame the behaviour in such a way as to destroy
an existing value commitment. However, in cases ‘that involve large
sacrifices, people do value some form of payment, both as a form of recog-
nition and as partial compensation for the costs involved. However that
payment should not be so great as to compensate fully for the sacrifice,
for if it did there would be no satisfaction in making the sacrifice in the
first place’ (2003, p. 46).
95
The logic is that intrinsic and extrinsic motivations operate along the
same dimension of individual incentive but are independent and not
cumulative. When one is introduced, it cancels any prior effect of the
other. If stronger it may produce greater output but will not add its force
to that from the different kind of motive. This approach ingeniously
reconciles both knightly intrinsic and knavish self-regarding motivations
and goes some way to explaining how people respond in the real world to
different equilibria of reward and sacrifice. It is developed by Le Grand and
others into a broader theory of welfare state motivation. The possibility
that reforms which restructure the social world may themselves lead to
an adjustment of values does not enter the model. From this perspective,
intrinsic values are given as a property of the individual. The difficulty
with this approach is that it presupposes the existence of a shared nor-
mative framework in which care is valued for its own sake, so that a
low payment can count as recognition rather than as exploitation. Jones
develops the argument that opportunities to express particular values may
influence behaviour so long as the status and commitment to a particular
identity (caregiver, foster-parent, social entrepreneur, mentor) are valued.
His discussion demonstrates the outcomes in terms of individual reward
matrixes and points out that institutions which enable such expression
can provide socially beneficial positive sum solutions (Jones 2007). Poli-
cies which emphasize or diminish the social recognition of these identities
can influence outcomes.
An alternative strand in research on social care and in the motivations
applying to voluntary carers is concerned with developing understand-
ing in terms of social factors operating outside the individual psyche.
These interact with individual motivations rather than simply providing
motives as grist to the mill of reasoned judgement. This approach includes
both the social framework which supplies the values and the point made
forcefully by Giddens and others that, from this viewpoint, it is individ-
ual social actions which sustain and sometimes modify the norms on
offer. This returns us to Titmuss’s argument that changes in policy may
impact on the normative framework because they are part of the social
structure within which people live and shape their choices. If you have
fewer opportunities to express altruism, self-regarding behaviour may
bulk larger and appear more socially sanctioned on your moral agenda.
Thus, policies designed simply to alter the balance of incentives operating
against extrinsic motivations in Frey’s language may also affect the basis
of the intrinsic motivations. The shifts in policy become part of a shifting
framework of social action.
96
Inclusion, Social Care, and Social Values
In social care, considerations of individual rational choice appear to oper-

ate in the context of normative assumptions about appropriate behav-
iour, and these may vary between different social groups. They are often
hedged about by processes of negotiation or other less formal interactions
between family members and are influenced by moral commitments as
well as assessment of interests.
Finch (1989, p. 178), in a path-breaking study, puts it as follows: ‘nor-
mative guidelines are an important feature of how people understand
obligations and duties to their relatives, they are guidelines of a particular
type . . . that express the criteria one should use in deciding what to do,
rather than specifying precisely what one should do.’ Her overall point is
that ‘all assistance between relatives must be the subject of negotiations
about what is to be given, by whom, for how long, and on what terms’
(Finch 1989, p. 55). In these, obligation, need, and the capacity to supply
the service are carefully weighed up and discussed. Rational deliberation
is involved but it takes place within normative assumptions that may be
understood as embedded within the family interactions of those involved.
Summing up various more recent research, Deacon and Williams
comment:
moral reasoning based on care informed the way people attempted to balance their
own sense of self with the needs of others. What it means to be a good mother,
father, grandparent, partner, ex-partner, lover, son, daughter or friend is crucial to
the way people negotiate the proper thing to do. In working through their dilem-
mas, certain practical ethics . . . emerge . . . which enable resilience, which facilitate
commitment and lie at the heart of people’s interdependency. They include being
attentive to others’ situation, accommodating one’s own needs to those of others,
adaptability to others’ changing identities, and being non-judgemental and open
to reparation . . . (2004, p. 387)
All of these are personal characteristics and attaching value to them

requires a normative framework.
In a national study of social care, Duncan and Edwards conclude that
particular social and ethnic groups are more likely to stress the primacy
of care over paid work as the appropriate role for the mother. These
values exert a substantial influence on responses to the incentives offered
to encourage single parents into paid work in diverse ‘gendered moral
rationalities’ (Duncan and Edwards 1999). In a different context, Duncan
and Irwin’s discussion of a series of studies of how mothers make choices
97
between mother-care and paid work in the context of ‘welfare to work’

programmes shows the influence of normative assumptions about the
acceptable way to behave:
mothers take decisions about how parenting might be combined with paid work,
how children should be cared for and how tasks should be divided with partners,
with reference to moral and socially negotiated norms . . . People do not view
care simply as a constraint on paid work . . . How this responsibility is under-
taken . . . will vary between particular social groups and geographical areas . . . cost-
benefit analyses of childcare and labour market possibilities may be important but
they are not separable from moral and normative assessments.’ (2004, p. 397)
This finding is reinforced by the evidence of Iacovou and Berthoud (2000,

p. 8), derived from analysis of British Household Panel Survey data, that
‘for both lone and couple mothers, the age of the youngest child and
“readiness for work” are among the most important predictors of moves
into employment. For many women there are times when they feel
they cannot, or are not willing to, leave their children.’ Such motives
predominate over perceived financial incentives. The reality of choices in
family lives is more likely to reflect a ‘compassionate realism’ in which
people strive to work out what is best under the circumstances, than
a disconnected individualism (Williams 2004). Lewis draws similar con-
clusions from an interview study which examined how people handle
uncertainties in partnerships (Lewis 2006).
A corresponding logic may be applied to care practice more generally.
From this perspective, individual rational choice can only be a partial
account of agency. People are active in the way they construe and negoti-
ate moral values, but they are constrained in their opportunities to act in
ways that are not always conscious, explicit, and subject to deliberation.
In addition, their notions of ‘the proper thing to do’ are embedded in their
social relationships. These include reciprocity and normative assumptions
about altruism and inclusion. For example, shared values about obliga-
tions to provide social care for kin (Ungerson 1987), to prepare for and
pursue paid work (Dey 2006, p. 685; Dean and Taylor-Gooby 1992), or
the authority of law (Hobbs 2001) may shape the life-course and influence
choices.
The point that emerges from these studies is that in the field of social
care, people understand themselves as deliberating about care responsi-
bilities, and as negotiating choices within a moral framework. It is not
possible to read off, either from the interests expressed in negotiation or
from a set of normative principles about different degrees of relationship,
98
what the outcome will be. People make choices but not in circumstances
of their own choosing. Individuals are not simply independent choosers
responding to an agenda of intrinsic and extrinsic preferences but are
active in negotiating with others and developing their own ideas about
what is right within a framework of rules. Their actions and opportu-
nities for action may also shape the moral framework so that a new
policy agenda underscoring independent rational action may also shift
the balance of behaviour that people understand as driven by normative
considerations. Commitment to normative values is not a psychological
predisposition of the individual but a feature of the society in which they
live and subject to change as that society develops.
Reciprocity and Inclusion: Emerging Points
The above discussion points to different ways of understanding the

motives that underlie altruistic and inclusive behaviour. Both the indi-
vidual and social perspectives are able to provide ways of understanding
reciprocity and inclusion in concrete policy contexts, but the analysis in
each case leads to rather different conclusions. For those starting out from
individual rational approaches, reciprocity is based on the possibility of
pursuing mutual advantage, and inclusion can be analysed as a particular
altruistic disposition or preference that some people happen to have,
for whatever reason. Inclusion is always the poor sister of the interests
engaged within reciprocity. For those starting out from the normative and
expressive position, the issue is how normative frameworks accommodate
reciprocity and inclusion and support or constrain the expression of
such values by individuals. This permits a broader range of reciprocity
and inclusion in different social settings. It also opens up possibilities of
promoting altruism through more inclusive social policies.
The development of the individual logic through the distinction
between intrinsic and extrinsic motivation enables this perspective to
accommodate the complexity of motivation in this area. What the more
social approach does is to provide a basis for accounts of the experience
of caring and of making choices in care that appears to correspond to the
experience that people report. Such evidence is qualitative and unlikely to
convince those who require precise measurement to enable the modelling
and prediction of responses. We have two ways of understanding behav-
iour in this area. There is a significant difference in how they understand
the likely impact of current reforms.
99
The individual approach locates motivations firmly within the individ-

ual’s psychological make-up as preferences, as the given values that deter-
mine response to extrinsic incentives or influence intrinsic motivations.
Since values are within the province of individual psychology, they are
not affected by social arrangements. The social approach suggests that
major policy shifts may influence the social framework, the values that
people share, and the meanings others will attach to behaviour. It is
this possibility of feedback from policy to social values that concerned
Titmuss in his critique of the introduction of commercial elements into
voluntary blood donorship and which bears on the current introduction
of a rational individual logic to policy.
We now consider the third element in social citizenship, social and
institutional trust.
Trust and Social Citizenship
Trust has been a topic of great interest among social scientists in recent
years (e.g. Hardin 2004; Luhmann 1979; Moellering 2006; Rothstein 2005;
Seligman 2000; Sztompka 1999). The theoretical debates merit more dis-
cussion than they have received so far and will now be considered in some
detail. We argued in the first chapter that institutional trust is an essential
component in welfare state citizenship, for two reasons:
r First, whether or not social life is becoming more risky, it is undoubt-

edly perceived as more uncertain by many people. Uncertainty is a
problem, especially in a social world which assumes a high degree of
pro-activity, because it makes it difficult for people to know how to
make choices. Trust is an important way of overcoming uncertainty
because it allows us to operate in a less predictable world.
r Second, the institutions of the welfare state must command a measure
of public trust if they are to gain support. This is particularly relevant
as globalization advances and the nation state retreats. The bottom
line is that in a competitive party democracy, withdrawal of public
support will ultimately lead to funding cuts. This directly affects
welfare states, since welfare services engage immediately with citizens
and it is their experience of the success with which services meet
their needs, not just the question of whether the state institutions are
efficient and meet targets, that sustains their viability. Authoritarian
100
states rule by compulsion, democratic states by consent, but welfare

states need trust.
The discussion of trust in Chapter 1 emphasized four themes across the

literature: uncertainty, future orientation, significance, and vulnerability.
It also identified a fifth theme which provokes more controversy: orienta-
tion to others and commitment to their interests.
The capacity to manage uncertainties in relation to needs and vulner-
abilities is central to concerns about trust and state welfare. As we argued,
people increasingly believe they face uncertainty in many aspects of their
working and family lives and often rely on the welfare state to address
those uncertainties. Now more than ever citizens are less willing to place
blind trust in public services but are more concerned to demand public
services that they feel they can trust. In this debate, the issue of whether
the trusted person is seen to be committed to the truster’s interests comes
to the fore. This raises the question of whether the new stress on an
increasingly competitive policy environment and on individual rational
judgement, choice, and responsibility for the outcomes of one’s choices
erodes the capacity to express and to rely on commitment. We will now
discuss recent research on trust from the perspectives of psychology,
political science, and sociology.
Analysing Trust
Hardin is one of the leading political scientists to examine trust from the
perspective of individual rational action. The notion of trustworthiness is
central to his work: ‘to say that I trust you in some context simply means
that I think you to be trustworthy towards me in that context’ (Hardin
2004, p. 6). This leads directly to reasons for judging someone trustwor-
thy: ‘the most important . . . is trust as encapsulated interest. . . . You value
the continuation of our relationship, and you therefore have your own
interest in taking my interests into account. That is, you encapsulate my
interests in your own interests’ (2004, p. 6). The notion of encapsulation
elegantly summarizes a key theme that reaches beyond more naïve ratio-
nal individualist perspectives on trust.
The simplest rational actor account rests on a simple mutuality of
interests. For example, Gambetta writes: ‘when we say we trust someone,
we . . . mean that the probability that he will perform an action that is
beneficial to us . . . is high enough for us to engage . . . in co-operation with
101
him’ (Gambetta 1988, p. 213; see also Dasgupta 1988, 2002). However,
Hardin points out that coincidence of interests is essential but not suffi-
cient. Trust ‘further requires that the trusted values the continuation of
the relationship with the truster and has compatible interests, at least in
part for this reason’ (2004, p. 7). It is more than the deliberative prediction
of another’s behaviour. Probabilistic prediction does not do justice to the
capacity of trust to negotiate an uncertain future. It is the element of
confidence in the commitment of the other that enables trust to do work
that prediction founded on reason cannot. The concern is not simply with
the reasonable expectation that someone will behave in a certain way, but
also that that behaviour will be important in a continuing relationship to
which both parties have a commitment, presumably because this will lead
to an advantage for them. It is this social commitment that is difficult to
guarantee when people are aware that many partnerships end in divorce,
pension payouts are subject to stock market fluctuations, and pay and
house prices are determined in an increasingly global market.
The rational model of trust takes centre stage in the new approach
to public policy. However, the reform framework stresses alignment of
interests against commitment to a continuing relationship or orientation
towards the values and needs of the public. The assumption is that insti-
tutional changes will structure the incentives facing suppliers (front-line
professionals and their managers) so that their interests correspond to
those of service-users. If budgets are directly related to demand for the
services of the school or clinic, providers have a very strong motivation
to act in ways that meet demand. The case for individual rational actor
reforms is that output will then tend to follow the interests of users and
trust will continue to develop.
This analysis fails to take seriously Hardin’s point that continuing com-
mitment is also an essential ingredient in trust. A user or policymaker can,
in principle, carry out a probabilistic analysis of the incentives facing both
parties and fine-tune them. However, a New Public Management target or
market logic cannot ensure that the provider has a continuing interest
in the consumer beyond the desire to meet the targets set or advance
the competitive success of their organization. The institutional framework
makes this explicit. Care, commitment, and concern about the user as a
person enters over and above what is encompassed by the market incen-
tives. The user has no basis for confidence that the providing agency has
a trustworthy commitment to the user over and above its commitment to
its own interests set by the framework of provision. It is unclear how the
providing agency can plausibly express such commitment.
102
Other approaches place greater emphasis on a broader range of non-

rational factors. An important stream of work in psychology and social
psychology uses the general concept of affect—positive or negative
feelings towards what is trusted—to summarize these. In sociological
accounts the logic is more concerned with normative frameworks and
value commitments. Psychology tends not to analyse the social bases
of affect but from a sociological perspective it is embedded normative
frameworks that are likely to supply such feelings.
A useful review that integrates developments in psychology and social
psychology is provided by Poortinga and Pidgeon (2003). Trust is typically
understood as multidimensional. Work by Hovland and others in the
early 1950s used statistical analysis to identify the main factors underlying
the various items contributing to trust in institutions and clustered along
two dimensions, which were labelled competence and care (Hovland et al.
1953). We trust someone because we believe they are able to do what we
need done. However, that is not enough. We have to also believe they will
care for our interests, an issue reminiscent of Hardin’s commitment.
Subsequent work in social psychology has developed and refined
the components of trust, typically using factor analytic techniques on
responses to batteries of items in questionnaires, for example, Renn and
Levine (1991) and Metlay (1999). These analyses follows Hovland in
separating the issue of whether the trusted party is capable of carrying
out the action from that of whether she is committed to do so in the
trustor’s interests. This division corresponds to Hardin’s stress on com-
mitment as well as capability. Further research refines the method but, in
general, continues to establish the broad distinction between competence
and commitment. One development is the use of statements generated
by respondents rather than those prepared by academics to form the
research instrument (Eiser et al. 2002; Frewer et al. 1996). This indicates
that in institutional trust, accountability emerges as important. People
want to be in a position to check on commitment, not just have it
asserted.
Other work by psychologists on trust parallels analysis by political
scientists and economists which stresses the limitations of individual
decision-making capacity and the importance of heuristics (cognitive
rules of thumb) as labour-saving devices in a complex and uncertain
world. For example, Cvetkovich and Earle (1997) stress the importance
of a general sense of sympathy with the institution, whether you feel
they are ‘on your side’, as a short-cut to trust in everyday life. This
parallels the notion of an ‘affect heuristic’ influencing risky choices (Slovic
103
et al. 2004), or ‘quick trust’ (Alaszewski 2003, p. 238), or ‘facework-

based trust’ (Cook, ch. 1 in Kramer and Cook 2004). Viklund (2003) and
Rohrmann (1999, p. 145) stress the role of cultural factors in account-
ing for otherwise puzzling cross-national differences in levels of trust in
relation to parallel developments, but this is relatively unexplored by
psychologists.
A parallel account of trust is provided by political scientists who exam-
ine trust in institutions. Here the analysis typically distinguishes ‘system’
from ‘personal’ efficacy (see, for example, Pattie and Johnston 1998;
Curtice and Seyd 2003, p. 95). The former corresponds to the competence
dimension, whether citizens believe government can meet its objectives.
The latter is much more concerned with the extent to which the individ-
ual feels their own interests are taken seriously within the system.
Sociological research stresses the role of social norms and of the val-
ues embedded in them and the opportunities they provide for express-
ing individual commitment. Calnan and Rowe summarize a review of
recent literature: ‘Trust has been characterized as a multi-layered concept
primarily consisting of a cognitive element, grounded on rational and
instrumental judgments, and an affective dimension, grounded on rela-
tionships and affective bonds generated through interaction, empathy
and identification with others (Mayer et al. 1995; Lewicki and Bunker
1996; Gambetta 1998; Gilson 2003)’, (Calnan and Rowe 2004, p. 1; see
also Taylor-Gooby 2006 and Schee et al. 2006 for comparable accounts).
Anheier and Kendall in the related field of voluntary organizations make
similar points (2002, p. 354). Page’s overview of IPSOS-MORI attitude
studies on UK health services shows that ‘there is a very strong corre-
lation between the extent to which patients feel they are treated with
care and respect and their overall perception of the hospital’ (Page
2004). Barbalet develops the argument for the significance of the non-
rational side on the grounds that ‘emotion is the only human faculty
able to deal with fundamental uncertainty’ (Barbalet 2005, p. 8; see also
Barbalet 2002).
The interest in such issues as care and respect for or commitment to
the interests of others locates elements of trust in a moral order, which,
in turn gives, rise to the normative component of trust. For many writers
this is located within the moral framework of society. Seligman suggests
that a basic form of trust is the simple reliance on the ordered workings
of existing institutional arrangements (Seligman 1997, p. 25). Sztompka
points out that it is the current diversity and uncertainty of normative
arrangements that focuses attention on trust and implies a deficit of trust
104
in modern society (Sztompka 1999, pp. 24–8). The idea of trust as a bet
against the future leads to approaches that see trust as implying a ‘leap of
faith’ (Moellering 2006). It is the normative and affective component in
combination with the rational element that makes this leap possible.
Trust: Emerging Points
We have reviewed accounts of trust that range from the rational assess-
ment of the alignment of interest in the context of commitment to a
continuing mutual relationship, through psychological approaches that
place greater emphasis on an affective dimension and on the quality of
care or commitment, as well as competence, to more sociological perspec-
tives in which the normative frameworks that regulate social behaviour
and provide a context for the expression of values are predominant.
This discussion shows that trust, like rationality and inclusion, can be
understood from two directions. Individual rational actor models present
trust as to do with judgements of competence, resources, track record,
regulation, and related factors. Trust can be secured by a transparent
alignment of interests and this is what the current policy direction seeks
to do, through choice in competitive markets combined with a quality
control framework of inspection and targets. The more social approach
locates trust additionally in values, emotions, and norms. The feeling that
someone is committed to your interests, is on your side, and the belief
that the normative framework which they inhabit will reinforce actions
which meet your needs also contribute to trust. Here expressed values,
relationships, and moral commitments are important.
The rational actor logic provides a fragile and partial account of trust
that fails to find a place for the evidence on the role of norms and
expressed values in the psychological and sociological literature and is
difficult to apply in contexts of uncertainty where the interests of the
actors under changing circumstances cannot be safely predicted. Norma-
tive and affective approaches give a richer and broader account that fits
the evidence from social psychology and from studies in such areas as
health and social care. These accounts suggest that trust can be built in
contexts where individuals do not have the energy, competence, and
interest to make a well-formed rational judgement. The retreat to the rad-
ical individualist position, that trust only applies in the case of individual
interactions where one can know the other’s intentions (Hardin 2004,
p. 3), is avoided.
105
This returns us to the point made earlier in relation to reciprocity

and inclusion: the institutional frameworks established through welfare
policies may limit or enhance the possibilities for establishing social trust.
If policies enable providers to express commitment to the interests of
users in a way that is convincing, this is likely to promote trust relation-
ships. Competitive and target-driven approaches direct provider interests
outwards to the market or upwards to the target-setter and away from
the needs of the service user. Trust becomes vulnerable. However, the
rational actor logic does not recognize this possibility. It confines analysis
to rational actor accounts which place normative and expressive factors
in a subordinate role. The diminution of normative commitment and the
opportunity to express it fails to enter the analysis and is disregarded.
Trust can be damaged and the damage goes unrecognized.
The point that reforms that focus purely on ensuring competence and
capability may fail to secure the warmth of commitment is made pow-
erfully by O’Neill in a critique of New Public Management: ‘perhaps the
culture of accountability that we are relentlessly building for ourselves
actually damages trust rather than supporting it’ (O’Neill 2002; see Rayner
2004; Rothstein et al. 2006; Neuberger 2005). The outcome is likely to be
a growing sense of uncertainty and disquiet across the area of welfare
provision, irrespective of whether the new policies, in fact, succeed in
improving provision in the short term.
The New Social Citizenship
In this chapter we have reviewed some of the evidence on shifts in welfare

state citizenship implicit in recent policy developments in the UK. Both
new and traditional approaches provide coherent accounts of inclusion,
reciprocity, and trust. The main differences are that the former focuses
much more on reciprocity as the core of the welfare state. The accounts
of inclusion and trust are more limited and suggest that the rational actor
welfare state will struggle to secure these. The latter explains how inclu-
sion, reciprocity, and trust are nourished by the social settings in which
they are located and can be strengthened by an appropriate institutional
structure.
A key difference is that the more normative approaches also imply that
the introduction of new policies bearing on incentives and behaviour will
modify the values embedded in a social fabric which is sustained and
modified through continuing social action. This leads to a basic problem
106
of welfare reform. The new rational actor logic may deliver the goods
in terms of cost-efficiency. It safeguards the possibility of continuing
state welfare provision in a world that has grown more challenging and
competitive. It also provides a continuing basis for reciprocity. It does
very little for the normative aspect of social inclusion or trust and may
undermine these components of the welfare state. At the same time,
it inhibits recognition of the problem so that the sustainability of the
welfare state may be undermined by policies designed to advance welfare
in a changing world.
In the next chapter we make the case for using the UK as exemplar of the
new directions in state welfare. Chapters 8 and 9 consider more detailed
evidence of the impact of the new policies on welfare state citizenship in
this setting.
107
Part III
A Case-study: The UK as Object Lesson
7
Putting the Theory into Practice:
The UK Experience
The new policy developments discussed in Chapter 3 lead in two main

directions: the activation and upskilling of the labour force by a variety
of means, and the development of new public managerial systems to
make welfare policy more cost-efficient and more responsive to consumer
demands. Both areas have been vigorously and self-consciously pursued
by successive UK governments, and for a number of constitutional, polit-
ical, economic, and serendipitous reasons the process of reform has been
particularly rapid and far-reaching. Experience in this country offers a use-
ful object lesson in the potential contribution of the individual rational
actor programme to resolving welfare problems in the European context,
and also of its limitations.
In this chapter we discuss the political and policy discourse surrounding
the reframing of social citizenship under recent UK governments and
trace the key developments in relation to activation and the New Public
Management. Activation policies in relation to cash benefits, labour mar-
ket participation, and incentives bear heavily on reciprocity and inclu-
sion. The management of the main services in kind is also relevant to
these themes, but has its strongest impact on institutional trust. We go on
to examine the case for the new policies advanced by its proponents in
the government to show how the reform programme is based in a rational
actor logic.
The UK as Exemplar of the New Policy Directions
The UK provides an excellent context to examine the shifts in welfare pro-

vision and their impact on welfare state citizenship. In fact, as pointed out
111
Putting the Theory into Practice: The UK Experience
in Chapter 2, the country is a relatively low welfare spender (Figure 2.1),

has less generous systems of pensions and other social benefits, and a
relatively cheap health care system compared with other large European
countries. One might expect the pressures for cost-efficiency and spend-
ing constraint to bite less insistently and the demand for the reframing
of social citizenship to be less urgent. However, the changes have been
particularly rapid, for reasons to do with the political economy of the
country and with its constitutional arrangements. Governments in the
UK are able to move more rapidly in reform than in most other European
countries. Once in power, parties from different political traditions have
responded to the processes of societal change discussed in Chapter 1 by
pursuing radical (and overlapping) programmes of welfare state reform
quickly and without effective opposition.
The background factors that provide the impetus for reform are impor-
tant in almost all welfare states. The peculiarities of the UK incline
it to develop a rational actor solution with a distinctive enthusiasm
even though, in an objective sense, the immediate pressures for change
are more limited. This approach, which is influential in reforms across
Europe, is worked through with peculiar clarity in the UK context.
The settlement between public policy and the capitalist market is widely
regarded as more liberal in the UK than in the other main European
economies. It is a ‘liberal’ rather than a ‘coordinated’ market economy,
in Soskice’s analysis (1999). Its industrial relations are based on ‘com-
petitive’ rather than ‘constructive’ flexibility (Teague and Grahl 1992).
Its welfare state is liberal, rather than corporatist or social democratic
(Esping-Andersen 1990). The liberal bias has been strengthened in recent
years by political developments and also by the underlying processes of
transition to a post-industrial society. These are relatively advanced in
the UK, so that, although the costs of maintaining the traditional welfare
settlement are moderate, the political forces that might defend it have
grown weaker. Consequently, the UK economy is more open to interna-
tional competition than that of other large European countries and this
position is highly valued by politicians and policymakers, influencing the
pace of response.
As Table 7.1 shows, the UK (which once proclaimed itself the ‘workshop
of the world’) is no longer a substantial manufacturing economy. There
has been a rapid decline in the sectoral contribution of manufacturing
to the GDP and a shift of the workforce towards service sector employ-
ment. The UK is increasingly a post-industrial work-centred society with
a high proportion of the population in paid employment. The substantial
112
Table 7.1. The UK and Europe
France Germany Italy Spain Sweden UK
Manufacturing sector (% GDP)

1995 16 23 22 19 22 21
2005 13 23 18 16 20 13
Employment in services
1995 69 61 59 61 71 71
2005 73 68 65 65 76 76
Employment
2007 63 73 59 67 76 72
Women’s participation rate
1995 60 62 43 46 76 66
2005 65 67 51 58 76 69
Foreign direct investment, 2006 ($bn)
Inflow 81 43 17 20 28 140
Outflow 115 80 42 90 24 80
Sources: Manufacturing Sector and Employment: OECD (2008a); Participation Rates: OECD (2007a), Table 20;
Trade and GDP: OECD (2008c); Foreign Direct Investment: OECD (2007f, p. 62).
proportion of women participating in the labour market gives an indica-

tion of the social shifts that go hand in hand with the policies described
earlier.
Other countries among the major European economies have experi-
enced similar shifts—France in the reduction of significance in manufac-
turing, Sweden in service sector employment, Sweden and Germany in
the proportion of the population in employment, and Sweden in women
working. However, none of them parallels the UK in the pace of change
across all the areas. The economic, political, and social shifts which are
the driving forces of the reframing of social citizenship are particularly
forceful in this country.
The response here, as elsewhere, has been to prioritize flexibility and
competitiveness. For example, the Treasury’s recent analysis of long-term
economic performance claimed
over the past decade this shift [the expansion of the service sector] has been larger
in the UK than in any other G7 country. The UK economy’s flexibility means that
while its share of world goods trade has fallen in the context of the growth of the
emerging economies, it is the only G7 country that has achieved a rising share of
global trade in services. . . . Product market flexibility is enhanced by competitive
markets with appropriate regulation. The UK’s competition regime generally scores
highly in international comparisons. (HM Treasury 2008b, p. 5)
Similarly, the International Monetary Fund argues ‘the United Kingdom

has absorbed domestic and global shocks well, thanks to the economy’s
113
flexibility and the strong positioning of macroeconomic and financial

policies’ (IMF 2007).
The high value placed on flexibility and competitiveness and the rela-
tive weakness of other centres of power such as trade unions and regional
interests render policymaking peculiarly exposed to the imperatives of
globalization. The importance of global openness and the success of the
policies in making the UK attractive to overseas investors are indicated
by the evidence on the inflow of foreign investment, higher than any
other OECD country apart from Belgium and the USA, and just over a
fifth of the total for the entire OECD (OECD 2007f, p. 62). The view that
societal changes in the context of globalization diminish the capacity
of government to intervene successfully and create a context in which
labour market flexibility and cost-efficiency (the key strengths claimed
for the new approaches) are particularly rewarded becomes compelling.
The outcome is that social policymaking is strongly influenced by the
individual rational theory of agency.
The UK is peculiarly fitted by its constitutional framework to carry our
reforms precipitately. As Lijphart and others have pointed out, the West-
minster first-past-the-post system allows the government, once elected,
to pursue its programme with relatively little interference from social
partners, courts, regional authorities, or other powers (Lijphart 1999).
Various recent developments, including the success of the Conservative
government in the 1980s in reducing the influence of trade unions, and
of New Labour in the 1990s in continuing this process and in curtailing
its own left wing, have strengthened central authority. Recent prime
ministers have taken the centralization of power further, by weakening
the limited authority of the second chamber and of local government
and establishing bodies such as the Prime Minister’s Strategy Unit (from
2002) under their direct control (Baldock, Gray, and Jenkins 2007). These
programmes have been understood and presented by policymakers and
politicians across the political spectrum as the modernization and restruc-
turing of provision to meet economic and social challenges, rather than
as a piecemeal response to circumstances.
The centralization of power in the Westminster model tends to influ-
ence the democratic process in a particular direction. Schmidt (2002,
ch. 1) points out that in more consensual systems, political dialogue is
in large part concerned with negotiation and reassurance for the various
actors whose views need to be discussed and aligned to make progress
possible. These actors will in part take on the role of communicating
agreed policy directions to their various constituencies and engaging their
114
support. In the more directive majoritarian system, government is freer to

pursue its programme without marshalling a consensus between stake-
holders but must justify its policies to the electorate. Political dialogue
is more a process of top-down communication. In the UK, the most
centralized of European democracies, political discourse is concerned with
the critique and justification of a relatively coherent set of policies, so that
clues as to the logic of reform can be gathered from that dialogue. Discus-
sion of the rationale for change is widely available from various political
standpoints (e.g. Castles 2004; Pierson 2001; Snower 1993; Swank 2003;
Willetts 1998). The pronouncements of policymakers and the analyses of
academics both indicate that it is the individual rational actor logic that
has predominated in the UK.
Welfare state reforms in the UK have been precipitate. Since 1990,
governments in the UK have
r radically reformed the benefit systems, abolishing insurance provi-
sion for unemployed people and reorganizing assistance to create an
entirely new systems of benefits, with extensive case-management;
r completely restructured state involvement in the labour market to
promote incentives for low-waged workers, including the introduc-
tion of a statutory minimum wage (1999), a substantial tax credit
system (from 1998), and the New Deal from 1998 as the centrepiece
of New Labour policies;
r restructured child care support and also elder care provision and
radically expanded employment rights for parents and others;
r reformed pensions with an expanded role for the private sector and
cut-backs in commitment from the state system; and
r undertaken the most substantial restructuring of the national health
care system since its inception in 1945, explicitly in order to promote
responsiveness and cost-efficiency.
We move on to discuss the reform process under different governments in

more detail, paying particular attention to the way in which policymakers
understood and justified the new, more individualist approaches.
The Reframing of Social Citizenship
During the past three decades, reforming governments have restructured

welfare policies in the UK. New policy directions were pursued by a
115
radical, market-centred right wing Conservative government from 1979

to 1997 and continued by an equally radical New Labour centre left gov-
ernment from 1997 onwards. Mrs Thatcher, Conservative Prime Minister
from 1979 to 1990, famously declared ‘there is no such thing as society’
(Keay 1987, p. 8). Citizenship was to be concerned with the choices of
individuals to distribute their resources as they wished: ‘we want people
to keep more of what they earn and to have more freedom of choice about
what they do for themselves, their families and others less fortunate . . . we
will give people greater choice and responsibility over their lives’, as the
1987 Manifesto (Conservative Party 1987, pp. 8 and 27) put it. State inter-
vention was to be curtailed. The repudiation of a neo-Keynesian economic
strategy, summed up in the blunt statement that ‘public spending lies
at the heart of Britain’s economic difficulties’ (HM Treasury 1979, p. 1),
sharpened the impact of the transition.
The government did not, in fact, roll back the welfare state, although
it did constrain the expansion of spending after 1985, at a time of
rising demand, as shown in Figure 1.1. Two directions in welfare state
policy are particularly relevant to citizenship. First, privatization policies
were pursued in a number of areas, most importantly and effectively in
social housing and less successfully in pensions, with various measures
to substitute private for state provision from 1989 onwards. Privatization
in other welfare areas, for example a scheme to pay private school fees
for a small number of selected students and tax subsidies for private
health insurance, had relatively little impact. The shift towards non-
state management of social housing and the aspiration to move pensions
decisively into the private sector remained a central part of policy under
the succeeding Labour government.
The second policy direction concerned a negative and directive labour
market activation. Short-term benefits for those capable of work were
increased at a rate below wage inflation and constraints on benefit enti-
tlement strengthened in order to sharpen work incentives. The means-
tested supplement of the incomes of families on low wages was expanded.
Insurance and means-tested unemployment benefits were amalgamated
in the Job Seeker’s Allowance, time limited to six months for each period
of entitlement and with strict work requirements.
The Labour Party emerged from an 18-year period out of office re-
modelled as ‘New Labour’, with its left-wing elements firmly under con-
trol. Social citizenship was reframed as a component of the limited state
intervention necessary to create a modern, competitive, and successful
economy (Commission on Social Justice 1994). The chief argument was
116
that the objectives of the left could no longer be achieved in a more glob-
alized and market-centred world through direct state provision and ser-
vices directed at equality of outcomes. Instead, social justice and national
economic success could both be attained at the same time by improving
the quality and capacity of the workforce and ensuring that the market
provided opportunities for individuals that were both equal and attrac-
tive. Educational opportunity, fair access to employment and careers, and
benefits precisely targeted to meet the needs of those minorities unable
to participate in the labour market were the central themes (Driver and
Martell 2002, 2006, p. 49).
Competitive quasi-markets were introduced or expanded within state
services. Benefits were increasingly targeted, new policies to expand pri-
vate pension provision developed, and further support to encourage the
mobilization of the work force implemented. Activation policies targeted
those on low wages, low-skilled school-leavers, long-term unemployed
people, older redundant workers, carers, single parents, and other groups
on the margins of employment through a combination of directed ben-
efits and programmes to combine training with labour force entry (most
importantly, the New Deal), and ensure that claimants were unable to
escape the obligation to take up work opportunities (Millar and Austin
2006; Pierson 2006).
The New Labour programme is currently continuing to develop and
is thus hard to assess. Commentators point out that real progress has
been made in reducing poverty among children and pensions (but not
among those of working age without children or among asylum-seekers),
in improving opportunities for women and for Indian and black but not
Caribbean, Pakistani, or Bangladeshi minorities, in expanding education,
and in the targeted areas of health care, such as mortality from heart
disease and cancer (Hills and Stewart 2005, ch. 15).
The then prime minister, Tony Blair, summed up the key principles of
the New Labour approach under four headings; equal worth, opportunity
for all, responsibility, and community (Blair 1998, pp. 5–6). These pro-
grammes substituted equality of opportunity for equality of outcome as
the objectives of the Centre Left, combined with an individualization of
responsibility, so that individuals were equipped with relevant skills and
prospects but expected to take responsibility for exploiting the oppor-
tunities open to them. The approach to welfare is active rather than
passive, appropriate to a more flexible working and family life and a
more confident, better-educated, and demanding public. The emphasis
on targets and on levels of service implies an individualized contractarian
117
basis for citizenship. The reference to community seeks to re-introduce

notions of solidarity and social cohesion into the welfare arena. Here, the
concern is with mutual support and responsibility for the achievements
of others as well as oneself (Driver and Martell 2006, p. 50).
The stress on community is reflected in a range of programmes such as
those for deprived neighbourhoods and the Social Exclusion Units Neigh-
bourhood Renewal Strategy. Some progress has been in the establishment
of Sure Start day-care provision and in the New Deal for Communities, but
inequalities in mortality and crime rates are growing (Hills and Stewart
2005, pp. 335–6). How far it is possible to construct policies that con-
tain the tension between community and individualized responsibility
to pursue initially equal opportunities is unclear. One outcome is that
the communitarian aspects of the New Labour approach appear to rest
largely on the strand in political philosophy which bases such relation-
ships within civil society and absolves government of responsibility for
advancing them (e.g. Putnam 1993). This may be contrasted with the
alternative view that sees state interventions as capable of making a major
contribution to social capital (Rothstein 2005).
Table 7.2 summarizes the transition in the values of welfare state citizen-
ship. The New Labour programme retains but reshapes the social demo-
cratic commitment to a welfare state citizenship based on the principles of
reciprocity, inclusion, and trust. It incorporates some of the individualist
perspectives developed by the previous Conservative government. The
sphere of reciprocity shrinks as social insurance benefits contract and
more individualized provision develops alongside the welfare state. In the
Table 7.2. The transition in welfare state values
Traditional welfare state Reformed welfare state

Based on Achieved by Based on Achieved by
Inclusion Collective support Polices to Individual success Equal opportunity +

redistribute responsibility
Reciprocity Interests of large Horizontal Tax payment for Efficient provision of
population groups redistribution mass services services in
competition with
alternatives
Trust Commitment of Resources Rational Provision of
providers to users allocated to evidence-based information,
meet need judgements competition
that providers regulation of
will meet needs performance by
targets
118
case of pensions, this is provided by the private sector. Education policy

emphasizes more diverse and specialized schooling. Policies to enhance
choice and personal control over budgets are pursued in health and social
care. Individualized themes of opportunity and aspiration rather than
collectivism and solidarity become more important in political discourse.
Aspiration is a key topic in the legislative programme (see, for example,
the Queens Speech 2007).
Inclusion remains a strong theme in policy discourse, and the opportu-
nity agenda demands positive action on behalf of more vulnerable groups.
However, the stress on individual success, aspiration, and opportunity
directs attention to individual achievement rather than social outcomes
as the objectives of policy. Trust is also central to restructured social
citizenship. The emphasis on inclusion demands trust in government and
focuses attention on the deservingness of the groups seen as beneficiaries.
Trust, however, is redefined. The role of service user is combined with that
of consumer, so that provision involves choice. The onus lies on providers
to earn trust by providing services that attract users in competition with
other providers, rather than through their professional status and exper-
tise and their commitment to serve the interests of vulnerable groups.
Trust becomes a matter of deliberative assessment by the service-user of
whether what is offered serves individual interests.
The radical right in the 1980s confronted social citizenship with a pro-
gramme resting on a straightforward market individualism. The approach
of New Labour combines existing themes and reshapes them. Mutualism,
inclusion, and trust are redefined. Underlying the concepts is a stronger
sense of individual responsibility, as a condition of mutual support, as
the mechanism for inclusion, and as the standpoint from which the
judgements underlying the decision to apportion a critical trust are made.
The Implementation Process
The process whereby government controls and directs reform is embedded

in an assumptive world of policymaking, in which rational actor theories
provide the background to implementation, recognition of problems, and
assessment of success (Taylor-Gooby 2008a). The centralized majoritarian
democracy of the UK ensures that authorities are able to direct and follow
through this process with particular rigour and clarity. Since this has been
thoroughly developed and extensively discussed we will consider it in
some detail.
119
Institutional and practical factors in three areas have enabled UK pol-

icymakers in recent years to establish a framework based on a logic of
individual rational action. These are the character of the UK polity and
the authority it gives to the party of government, the centralization of
the government machine, and the authority of the Treasury within it and
particularly of an individual long-serving Chancellor from 1997 to 2007,
Gordon Brown, who went on to become prime minister. As chancellor, he
was unusually concerned with social policy issues of poverty, opportunity,
and the quality of public services, rather than simply maintaining the
stability and competitiveness of the economy.
At the heart of the New Public Managerialism in the UK is the Compre-
hensive Spending Review, established in 1997 and described by the Trea-
sury as a ‘step-change’ in the way public spending is managed (HM Trea-
sury 2006a). The Review sets targets for identified aspects of departmental
provision linked to the resources that are to be made available. It provides
the precise standards by which performance will be judged, making this
information publicly available on the Treasury website. The targets set
were initially extremely detailed, and included such areas as performance
in educational tests, literacy and numeracy levels, and improvements in
NHS waiting lists and mortality rates from major diseases (HM Treasury
2006c).
From 2007 onwards, the procedure has been simplified, stressing the
measurement of progress towards a reduced range of targets by trans-
parent publicly available indicators and giving a greater role to broader
targets that promote cross-departmental coordination (HM Treasury
2007b). The complexity of the cross-government coordination required
may undermine the drive to simplification. For example, Public Service
Agreement Eight, which sets the target of halving child poverty by 2010–
11 and abolishing it by 2020–21, involves at least 19 separate types
of agency. 1 Similarly, PSA 18 concerned to promote ‘better health and
wellbeing for all’ involves some 30. 2
1
Job Centres, the New Deal for Lone Parents, the Learning and Skills Council, Office for
Disability Issues, the Cities Strategy, the Department for Children, Schools and Families, HM
Revenue and Customs, Local Government through school and housing responsibility, the
Housing Commission, Sure Start and the Childcare Act (2006), the Treasury, the Disability
Carers’ Service, GPs, Health Centres, the Child Support Agency/Child Maintenance and
Enforcement Commission, DEFRA, and a range of other agencies in relation to fuel poverty
and various agencies in devolved administrations.
2
Local Authorities and Primary Care Trusts, the NHS Cancer Plan, the NHS Cardio-Vascular
programme with its associated framework agreements, DH nationally, the Suicide Strategy,
the Health Inequalities programme, the Department of Communities and Local Government
in relation to Race Equality in Mental Health, Neighbourhood Renewal, Equality and Social
Cohesion strategies, Department for Children, Schools and Families, the Ministry of Justice,
120
The PSAs are set within the framework of Service Transformation Agree-
ments designed to tailor public services more to ‘the needs of people
and businesses’ (HM Treasury 2007a) so that the process of dealing with
government departments is simplified through the introduction of one-
stop shops, improvements to websites, and better links between depart-
ments. While there are 30 overarching Public Service Agreements, there
are over 400 subsidiary targets for individual agencies and groups within
the overall PSAs. The reduction in top-down regulation is more limited
than is sometimes implied by government commentators, although the
cross-departmental approach does reduce the tendency of agreements to
narrow the focus of departmental action to the specific objectives set for
that department. However, the emphasis on targets remains strong. Meet-
ing the targets remains entrenched as a powerful incentive for managers
of public sector services.
This approach brings the environment in which social policy institu-
tions operate closer to that of a modified competitive market, in which
the targets play a regulating role, establishing incentives for managers
to ensure that measures to attract users and to constrain spending do
not damage basic common standards. The recent shifts give a stronger
role to competition. One outcome is that the interests of the managers
and professionals of hospitals, schools, and similar agencies become more
closely identified with that of their own institution in the market in which
it operates. As rational actors they are expected to strive harder to ensure
both that targets are met and that the institution is attractive to potential
users and thus protects its budget.
A further aspect of individual rational action is the stress on con-
sumerism. As taxpayers, citizens are expected to demand value for money.
One aspect is the policy of expanding non-state provision, which has been
pursued most vigorously in relation to social housing and pensions, as
mentioned earlier. In the former area, much of social housing provision
has been sold to individual tenants, in the latter new forms of non-state
provision, most importantly stakeholder pensions, have been introduced.
These are required to meet conditions as to management fees and uprat-
ing after retirement. The new regulatory bodies, the Financial Services
the Department for Environment, Food and Local Affairs, the Department for Transport,
Department for Work and Pensions and Food Standards Agency, the Comprehensive Tobacco
Strategy, HM Treasury in relation to duties on alcohol, tobacco and other products, the
DH National Service Framework for Older People, the Improving Access to Psychological
Therapies programme (in collaboration with Job Centres), the Healthcare Commission and
Commission for Social Care Inspection, and a number of smaller agencies strategies and
programmes.
121
Authority and the Pensions Regulator, set up in the wake of pension miss-
selling scandals in the 1990s increasingly interpret their role in terms
of informing consumers to enable them to make satisfactory choices, so
that direct regulation of the market can be less burdensome. As the then
Director of FSA’s consumer relations puts it: ‘prevention is better than
cure, and . . . having better informed, more financially literate, consumers
is the best way to achieve an environment in which normal market
mechanisms can work to drive up quality and value’ (Farnish 2000,
Paragraph 2).
While the new policy framework has been extensively discussed, the
authority of the Treasury in leading policy discourse and implementing
the procedures for putting it into practice has received less attention
(Parry and Deakin 2003; Deakin and Parry 2000 are notable exceptions).
Economic policy always and everywhere dominates social policy. From
the 1970s onwards the Treasury has developed an increasingly rigorous
and directive system for constraining and controlling public spending, of
which social spending is by far the largest component (Baldock et al. 2007,
pp. 278–83). The Comprehensive Spending Review is the current and
most stringent development in the process of control. The striking feature
of CSR is that the Treasury does not simply enforce spending limits, it uses
spending controls to direct the detail of services, the goals set for them,
and the way in which they are delivered. This has involved an expansion
of Treasury staff to provide the expertise necessary for realistic supervision
across the range of areas (see Talbot 2006a, 2006b).
Two further developments are important. Firstly, much policy forma-
tion is carried out through authoritative policy reviews led by experts
appointed by the Treasury to Treasury terms of reference. Thus the
consensus-building necessary to secure stakeholder assent to reforms is
pursued under Treasury auspices. The intellectual frameworks shaping the
proposals produced by this method tend to reflect the individual rational
actor approach dominant among economists. Examples are the Gershon
review of public service efficiency (2004), which stresses the importance of
achieving efficiency savings by requiring departments to submit detailed
plans specifying targets, and then ensuring that the success with which
those targets are met is monitored; the Wanless report, which makes the
case for extra NHS spending, and links this to further managerial reforms
and an emphasis on ‘setting national standards’ and ‘ensuring the right
incentives and targets’ (HM Treasury 2002 ch. 6, Paragraphs 6.23–6.37);
Barker (2004) on housing, which argues for policies which will encourage
rational actors to participate in ‘a more flexible housing market’ (Barker
122
2004 Summary, Paragraph 10); and Stern (2006), a report with consid-
erable international impact, which addresses climate change through
carbon-trading and additional fiscal and regulatory measures, mainly
Treasury-led (Stern 2006 Summary, p. ix). The framework of ideas within
which innovation is discussed by policymakers is dominated by the
Treasury approach, and that is dominated by the analytics of individual
rational action which occupy a central place in current economic theory.
Secondly, a similar point applies to many of the developments in practi-
cal policy already discussed. Increasingly, these take place under the direct
control of the Treasury rather than the spending departments, simply
because the policies are based on fiscal subsidy and regulation rather
than direct spending. This applies particularly to non-state pensions (tax-
subsidized and fiscally regulated) and the tax-credit system, which plays
the leading role in welfare for the working population and for low-income
pensioners and in the new child care strategy.
We move on to consider the framework of ideas that informs and
legitimates the new policies.
The Logic of the New Approach: Targets,

Competition, and Choice
The new approach to public service provision draws together successful

initiatives across different policy fields. It is summarized in an influential
discussion paper from the Prime Minister’s Strategy Unit which stresses
two main themes: the regulation of public sector staff through targets
and incentives and the empowerment of users as individual consumers,
making active choices between competitive providers:
Increased spending on key public services [has been] . . . accompanied by a con-

siderably sharpened top-down performance management regime . . . targets, regu-
lation and performance assessment/inspection. These top-down approaches have
increasingly been complemented by horizontal pressures (of competition and
contestability), bottom-up pressures (of user choice and voice) and measures to
build the capacity and capability of public services . . . (PMSU 2006, p. 21)
A further aspect of the reform programme discussed more briefly also rests
to some extent on an individualized approach to agency. This concerns
the introduction of more flexible pay schemes and bargaining structures
and greater adaptability in work but is primarily concerned with orga-
nizational reform, management, and leadership. The overall objective is
123
a dynamic ‘self-improving’ system in which the pressures from all these

sources tell in a benign direction.
The importance of the individual model is apparent in the pattern of
reform and in the diagnosis of possible problems. In all three areas those
concerned are assumed to be motivated by individualized instrumental
motives and directly responsive to positive and negative incentives. From
the top-down perspective, the actions of managers and service providers
can be constrained to advance cost-efficiency and responsiveness and
enhance quality through the imposition of targets, regulation, and inspec-
tion, while rewards and sanctions are applied to sharpen incentives. Com-
petitive pressures are seen as automatically rewarding those who offer
what service-users as consumers want and do so cost-effectively, provided
that funding follows service-users and the suppliers cannot discriminate
the less attractive customers. Choice and voice offer a further stimulus to
the operation of competition and allow users to express their wants. The
logic follows models developed by social scientists who start out from an
individual, rational, and instrumental model of agency, applied in the
social policy context (Enthoven 2002; Dixit 2002; Preker and Harding
2002).
Table 7.3 summarizes the key aspects of the approach, using the exam-
ples of health care and education. The third column includes examples
of the particular directions in policy and the fourth the key principles
underlying them. The fifth column deals with the problems which the
approach is intended to address. The sixth lists issues which receive
less recognition in the framework but may be important unanticipated
outcomes.
The system of Public Service Agreements for central target-setting, reg-
ulation, inspection, and intervention has already been described. The
recent reductions in the number of targets and broadening of their cross-
departmental scope has three objectives. Firstly, there is a risk that close
targets may restrict the autonomy and initiative of service providers so
that they become demoralized and less engaged in their work (Hoggett
et al. 2006a, 2006b; John and Johnson 2008, p. 106). Secondly, precise
targets may generate perverse incentives, so that, for example, teachers
teach only to the test or hospitals refuse to admit patients whom they
cannot treat within the stipulated four-hour maximum waiting period in
an Accident and Emergency Centre (see Bevan and Hood 2006a, 2006b).
Thirdly, top-down approaches may undermine networking and coordina-
tion between agencies (PMSU 2006, p. 59, Frey 2000). The paper argues
that the evidence for demoralization is limited and that the move away
124
Table 7.3. The logic of the reform programme
Policy Main Examples Key Identified Unidentified problems

components principle problems
Top-down Targets; regulation; Cancer strategy; Agency with inspection Perverse incentives; Providers’ interest tend to focus
inspection; Ofsted; NICE; and intervention demoralization of (and be seen to focus) on the
intervention failing schools powers staff competitive success of their
initiative agency and on achieving
Horizontal Competition Commissioning; Separation commissioner Level playing field; externally imposed targets, not
open access to from provider; funds adequate market; on the interests of users; users
school places follow users cream skimming; and the general public tend to
cost of creating a focus on individual advantage
market rather than general provision; the
bases of social inclusion and of
trust in the commitment of
providers to user interests are
weakened
from top-down to more horizontal approaches will resolve this issue and
will mitigate the others.
Current directions in policy place most emphasis on the horizontal
approaches involving competition and choice (Le Grand 2007, ch. 2). The
key issues in this area are that the service must be reorganized into sepa-
rate agencies and that funding must follow service-users. Examples are the
system of open enrolment and budget-holding schools financed mainly
on the basis of pupil numbers and the development of Trust Hospitals and
other agencies in the NHS, where fund-holding, commissioning, and now
‘choose and book’ schemes allow users or their proxies to choose between
providers. Prices are set for each procedure carried out by the Trust on a
national basis.
The objectives are to construct incentives for cost-efficiency and respon-
siveness, since the schools and Health Trusts must attract users for their
services to gain resources and must educate and treat them within budget
to remain viable. The problems identified are to do with cream-skimming,
since schools or hospitals may actively discriminate in favour of particular
prestigious, low-cost, or attractive users, with achieving a level playing
field in the market-place for all suppliers and users, and with ensuring
that an adequate range of suppliers exists for the market to function.
Solutions include penalizing suppliers who refuse particular users and
increasing payment for some more costly groups, such as pupils with
learning difficulties.
Choice is also a central aspect of the market and quasi-market sys-
tem. Choice is valued in itself and as a means of driving change in the
direction endorsed by service users. Here, the key problems identified
are to do with the level of information and the support for weaker
groups in putting choices into practice. The greater public availability
of performance data, league tables and inspection reports, the extension
of services like free school transport and the patient mobility scheme,
and the re-introduction of Educational Maintenance Allowances to help
lower income students stay on at school or college are all seen as
facilitating choice. Issues of voice are not discussed at any length in
the document, although developments like parent governors, annual
school meetings, and the greater use of consumer satisfaction surveys are
mentioned.
The document identifies a number of problems but pays little attention
to some other issues discussed in the literature, such as the problems in
achieving equal access in quasi-markets (Propper et al. 2006, p. 554), the
126
difficulties in attracting high-calibre staff to increasingly onerous manage-

rial positions (Hoggett et al. 2006b; Education Data Surveys 2007, p. 145;
Finlayson 2002), in addressing persistent education inequalities (Moore
2004, ch. 1, Taylor 2007), or in ensuring that new providers deliver value
for money (House of Commons Health Committee 2006). The impact of
changes at the level of values is considered only in relation to demoral-
ization of staff. Here the evidence is seen as equivocal (John and Johnson
2008) and a matter for leadership and incentives. The interaction of the
new policies with normative frameworks among the broader public is not
considered.
The impact of the reforms on the values of social citizenship and further
problems that might arise, which are not discussed in the document, are
listed in the sixth column of the table. These follow from the conceptual
analysis of the strengths and limitations of rational actor approaches to
agency in previous chapters, applied in a concrete policy context. There
are two main issues, to do with the impact of the new approaches on
those working within the services and on how the principles they embody
influence the welfare state values of the general public.
In the first area, the combination of regulation by top-down targets
and the imposition of market incentives may strengthen responsiveness
and cost-efficiency but may also weaken the capacity of the providers to
pursue and express an ethic of care and engagement with the interests
and needs of users. When a service is self-consciously driven by individ-
ual incentives linked to the success of the agency, it becomes unclear
how the providers can credibly express commitment to the interests of
users rather than those of their employers. This may not only lead to
the demoralization discussed above, it may also weaken the capacity to
communicate the values of active concern with the user and commitment
to public interest rather than the competitive success of the particular
agency.
From the perspective of user and general public, the move towards the
status of a customer is likely to reinforce a critical approach to provision.
It accentuates the association between individual interest and discrimi-
nating choice and weakens the link with the collective benefits of a social
group. Customers tend to focus exclusively on their own outcome and
opportunities for discussion of collective interest are diminished. Social
inclusion stands on the sidelines of debate.
More individualized approaches shift the balance in provider concerns
towards the agency that employs them or which they manage, and away
127
from general public interests, and in user concerns from collective to

individual interest. As argued in Chapter 5, reciprocity appears relatively
easy to sustain in this context. However, the capacity to maintain values
of social inclusion is constrained and the opportunities to express con-
vincingly the sympathetic engagement and commitment that contributes
to institutional trust in welfare institutions curtailed. The values of social
citizenship conflict with the logic of welfare individualism.
Conclusion
This chapter has discussed the recent shifts in welfare policy in the
UK, the assumptions that lie behind the reforms, and the process by
which they were achieved. The UK faces similar pressures from societal
change to those affecting other European nations but is particularly
responsive to the imperative of competitiveness associated with global-
ization. Policymakers are able to move rapidly in an individualist direc-
tion because of the country’s centralized and authoritative constitutional
framework, the declining authority of countervailing institutions, and
the succession of recent governments which, for various reasons, were
committed to thorough-going reform. Implementation may not always
measure up to aspiration. The groundwork for more individualized and
market-centred approaches to citizenship in which state welfare insti-
tutions play a diminishing role was established during the 1980s and
early 1990s. The elements of privatization reduced government commit-
ment to income redistribution and the strengthening of work incentives
through ‘make work pay’ policies were continued into the late 1990s
and beyond by New Labour. They became part of a new social citizen-
ship that stressed equality of opportunity, not outcome, and individual
responsibility.
Spending on major state services continued to grow, for the most part
sluggishly, and market systems were increasingly used to combine cost-
efficiency with responsiveness. Targets were established both to enable
central authorities and service users to evaluate the quality of provision
and to direct the allocation of resources. The new approach seeks to
change the behaviour of individuals by creating circumstances in which
they become more responsible for the welfare outcomes they experience
and behave increasingly as customers in a competitive market. The values
of reciprocity, inclusiveness, and trust continue as aspects of social citizen-
ship, but individual aspiration and responsibility now play much stronger
128
roles. As we argued in Chapter 5, the logic of individual agency is likely to

come into conflict with social inclusion and with trust in public services,
so that reforms designed to address first-order problems of cost-efficiency
and responsiveness may lead to second-order problems by eroding the
values that sustain state welfare. In the next two chapters we examine
the impact of the new policies at first- and then second-order level in the
context of UK health service reforms.
129
8
The NHS Reforms as a Response
to First-Order Challenges
Chapters 8 and 9 seek to anchor the theoretical arguments of earlier

chapters in a concrete policy context by considering the impact of recent
reforms in the field of health care in the UK. This chapter discusses the
first-order challenges to health care resulting from changes at economic,
political, and social levels and assesses the new policies. The reform pro-
gramme follows many of the precepts of the New Public Management
and rests on an individual rational actor approach to agency. It appears
to be more successful in sustaining good quality provision for the mass
of the population but is weaker in addressing issues of inequality and
inclusion and public trust in the service. Chapter 9 will take analysis of the
impact of health care reform further by reviewing evidence on people’s
experience and understanding of and responses to the new policies. It
considers the second-order challenges to welfare values that result from
the assumptions implicit in the reforms, an aspect of the new programmes
that receives less attention than it merits.
The NHS: At the Heart of Public Sector Reform
The recent reforms are high-profile, far-reaching, and arguably neces-

sary. They take place in the context of a highly valued service which is
widely seen as a core element in welfare provision. The NHS provides
a good context in which to examine the impact of the reforms for six
reasons.
First, the NHS is the most salient of welfare state services in the UK.
When asked to define what they mean by the welfare state, members
130
The NHS Reforms as a Response to First-Order Challenges
of the public typically emphasize the health service (Park et al. 2005).
In every annual round of the British Social Attitudes survey since it
started in 1983, the NHS has been chosen by the largest group (never
fewer than 80% of those interviewed) as the highest priority for addi-
tional tax-financed spending. The Labour government, concerned with
targeting resources where they were most needed, most likely to meet
public demands, and most attractive to voters, has increased expendi-
ture on the NHS more rapidly than on any other service. There was
sufficient confidence in the attractiveness of spending in this area to
justify the political risk of a 1 per cent increase in National Insurance
contributions in 2001 to finance part of the rise. This was achieved
without any of the opposition that normally greets tax increases in
the UK.
Second, it is a service closely associated with an ideology of care and
commitment, bound up with public conceptions of health service staff
as highly skilled professionals attentive to the interests of the public.
Medical practice involves the application of highly developed technology
and expertise and also involves the intimate and personal care of highly
vulnerable people. Concerns about the human side of care are juxtaposed
with concerns about technical efficiency, so that both aspects of the
meanings associated with the welfare state discussed in previous chapters
(the rationality of cost-effectiveness and the rationalities of emotion and
social values) come to the fore.
Third, the NHS reform programme has been one of the most thorough-
going in any service area. In the late 1970s, the UK health service was
the largest centralized bureaucracy in western Europe, with more directly
employed staff than any agency apart from the Soviet Army (Baggott
2007; Klein 2000; see Flynn, Williams, and Pickard 1996, pp. 4–8). Bud-
getary responsibility is now for the most part devolved to over 400 trusts
providing hospital and ambulance services and primary, social, and men-
tal health care. A range of private and voluntary agencies are also financed
by the NHS. Patients are given much more information on the quality
and outcomes of the services offered by different providers and a greater
degree of choice between them.
The other main contender as an exemplar of quasi-market reform in
an area of highly valued and nearly universal provision is schooling. The
NHS, however, enables the impact of reform to be examined more clearly
since access to the service is more open and more uniform. The state
school system offers a quasi-market in which funding follows the student,
131
but government has introduced a range of different types of institutions,

including specialist schools and academies, with different emphases in
provision, involvement of non-state stakeholders, and funding, inspec-
tion, and management regimes. Different types of state schools vary in
their capacity to choose students (DCFS 2008) so that different class and
ethnic groups appear to have privileged access to some schools (Ball 2008;
Burgess et al. 2005, p. 1027). It is hard to see how the service can offer the
open and freely competitive market required by New Public Management
theory (Manning and Pischke 2006).
Fourth, health care is at the centre of the current pressures on welfare
state spending. New treatments, often involving expensive pharmaceuti-
cals, impose pressures on costs. The general tendency for incomes to be
related more closely to skill in an increasingly globalized economy also
ratchets up the cost of professional medical personnel. As a result the
costs of providing health care rise much more rapidly than inflation and
than general government spending. Older people consume much more
health care than other people, so that demographic shifts further increase
pressures on expenditure and on cost-efficiency.
Fifth, other social changes impose further demands. As they experience
rising standards in the private sector and the degree of choice that grow-
ing real incomes confer, people are less willing to accept waiting lists,
out-of-date buildings, and the general status of a client deferring to the
judgements of professionals (Glennerster 1998, pp. 310–11). They are
more demanding of a responsive service oriented towards their needs and
are better informed about what those needs are and what standards are
available elsewhere.
Finally, the service engages all three aspects of social citizenship. It
is mainly tax-financed and for most users located chiefly in the sphere
of reciprocity. Social inclusion applies in universal coverage and com-
mitment to treat all free at the point of demand. Trust is particularly
salient since uncertainty plays a strong role in medical needs (Alaszewski
2003).
For all these reasons, the salience of the service in public imagination
as an icon of the UK welfare state, leading to a relatively benign financial
climate (in the short term), the combination of care and efficiency in
the practice and imagery of the service, the scope of the reforms, the
exigencies of financial pressures, the strength of consumer demand for
responsive provision, and its centrality to welfare state values, the NHS
constitutes an excellent field in which to consider the implications of
rational actor reforms on welfare state citizenship.
132
The Reform Programme
The NHS reforms involve four processes:

r The break-up of a large centralized state bureaucracy with the intro-
duction of much greater budgetary autonomy for individual primary
trusts and hospitals or groups of hospitals.
r A shift in control of patient care budgets from the secondary to
the primary sector so that purchasers and providers of services are
strictly separated. The primary sector purchases care from clinics and
hospitals, who now face the incentives of a competitive market. In
some areas, shifting budgetary control further to the service-user is
under consideration.
r The creation of new mechanisms to establish targets, to provide
quality control, and give overall direction to the services.
r Better information for both managers and users of the service on
health care and health needs and the range and quality of provision,
to empower consumers and ensure that choices in the new quasi-
market are appropriate.
Scotland and Wales have both chosen to retain more centralized provi-
sion, at the new higher levels of spending. The core ideas behind the
reforms were derived from the advocacy of markets in health care by
Enthoven (1985, 2002), on the grounds that the market is better able than
central direction to transfer resources efficiently to where they were most
wanted.
These approaches were cautiously developed under the Conservative
government from the 1990s and gathered pace under New Labour, partic-
ularly since 2002, when they were also facilitated by higher spending on
the service. The main direction of Conservative reform was to shift power
from hospitals to front-line general practitioners through fund-holding,
so that individual GPs held budgets which were then used to purchase
services from hospitals. This resulted in market competition between
hospitals and clinics in a range of areas, but the logic of the market was
never pursued to the extent that less efficient hospitals were allowed to
fail. More recently, Labour created Primary Care Trusts, bringing front-line
providers together to strengthen facilities for treatment outside hospitals
and develop expertise in purchasing services.
Primary trusts commission the bulk of services in a system of ‘payment
by results’, whereby payment is made for each patient treated. By 2008–9,
133
90 per cent of all hospital services will be financed in this way, with the
commissioning bodies only paying for the actual treatment carried out by
providers (DH 2002, p. 20). Prices are now set at a national average level
for each procedure, whereas previously most payment had been through
block contracts which gave access to a range of services but did not
specify the volume of work. The new system imposes tighter competitive
pressures and incentives to improve quality and pursue cost-efficiency.
Savings can be retained, but simple price-competition is removed by the
fact that there is a common national tariff (Pollock and Talbot-Smith
2006, p. 96). The objective is to ‘offer the right incentives to reward
good performance, to support sustainable reductions in waiting times for
patients and to make the best use of available capacity’ (DH 2002, p. 20)
The cost regime for hospitals has grown more rigorous with the result
that Hospital Trusts experienced budgetary deficits at the end of the year
in 2005 and 2006, especially in the more expensive South-East.
Health care standards are monitored through inspection and other
means by the Healthcare Commission and (for Foundation Trust Hos-
pitals) Monitor, with the outcomes widely published by the NHS and
the media. Summary information on the standards attained by trusts
is produced in terms of star ratings in order to guide public choices
and to encourage improvement. Decisions on the pharmaceuticals and
other procedures to be financed under the service are made by the
National Institute for Health and Clinical Excellence on the basis of
expert judgement, now developing authority in relation to social care
provision. More recently, public pressure through political interven-
tions and legal decisions (e.g. in the case of Herceptin, an unproven
and expensive drug adopted by Ministerial fiat in 2006 in advance of
NICE assessment as a result of media pressure) has influenced outcomes
(BBC 2006).
From the late 1990s government imposed rigid targets as part of the
quality control mechanism and to provide overall direction for the agen-
cies competing in the market (see the NHS Plan, DH 2000). The overall
targets included cutting deaths from heart disease by 40 per cent, from
cancer by 25 per cent, and from suicide by 20 per cent by 2010, and
reducing the politically salient waiting times, initially to three months
for outpatients and six months for inpatient treatment by 2005, later
changed to eliminating waiting lists altogether (DH 2000, Annex 3, HM
Treasury 2007a). Inequalities in mortality between the most deprived
areas and the rest of the country were to be cut by 40 per cent for
heart disease and 6 per cent for cancer. Further overall targets concerning
134
reductions in smoking, controlling obesity, access to primary care, support

for living in the community for frail elderly people, and other matters
were established and translated into more detailed targets for particular
agencies through the Public Service Agreements of the Comprehensive
Spending Review. For example, some 62 national targets were set for
Primary Care Trusts in 2007.
The new governance framework subjected managers to rigorous perfor-
mance requirements and was widely detested within the service. Bevan
and Hood lampooned the regime as ‘targets and terror’ comparing it to
the authoritarianism of Stalinist direction of state agencies (2006a). They
argued that it led to unintended consequences such as keeping emergency
patients waiting in ambulances in hospital car-parks, so that the start
point for the measure of waiting time to see a doctor was not triggered.
More recently, the number of targets has been cut back, to allow more
freedom for local decisions (Pollock and Talbot-Smith 2006, p. 109). The
emphasis is increasingly on the use of market forces to promote efficiency
and responses. This follows the shift from top-down to more horizontal
and bottom-up processes in the framework of the PMSU paper discussed
in Chapter 7.
The original logic established GPs and Primary Care Trusts as the cus-
tomers whose choice and payments drive the market. The new choose
and book scheme, to be rolled out nationally by 2008 despite teething
problems, offers individual patients the option of at least four providers
for cases of non-urgent surgery. This brings home consumer sovereignty
to the individual in need of care. At the same time the development
of the NHS Direct web and phone information service is intended to
offer accessible authoritative advice on health conditions and needs, to
complement the reports and other information on the availability and
quality of provision. The overall objective is to enable people to become
more informed as service-users and to support them in making confident
choices and also to encourage them to take greater responsibility for their
own health.
The NHS has also established non-state (mainly commercial) providers
to sharpen competition with NHS Trusts, paying an 11 per cent premium
on fees to encourage new players to enter the market. These Independent
Sector Treatment Centres dealt with some 250,000 cases a year by 2005.
The intention was to expand provision to cover some 15 per cent of
all operations by 2008 (Baggott 2007, p. 169). However, more recent
experiences, particularly of cases where such centres were unable to attract
the expected volume of work, plus a critical report from the House of
135
Commons (House of Commons Select Committee on Health 2006) led to

the cancellation of the commissioning of the third wave of Centres by the
Secretary of State in 2007 (Guardian 2007) and much greater caution in
the development of the system.
Taken together these reforms constitute a wholesale restructuring of
the NHS, from a service that was often taken as an exemplar of mono-
lithic, centralized, bureaucratic state provision to one which is moving
rapidly towards the kind of flexible quasi-market system advocated by
commentators such as Enthoven and Le Grand. The reforms are based
on the idea that the various actors within the system—professionals at a
range of levels in the community and in clinics, practices, and hospitals,
their managers, and the users for whom the service is provided—are
best treated as rational deliberators, taking initiatives on the basis of
individual judgement. The requirement to meet targets in order to gain
resources and advance careers, and, more importantly, the incidence of
effective demand in quasi-markets are applied as the primary drivers for
those working in the services. As the service is divided up into units
competing with each other, the interests of professionals and managers
are increasingly bound up with the success of their unit within it. The
intended outcome is that the choices made by and on behalf of those
using the NHS, empowered by better information and by the fact that
resources follow these choices, will play the dominant role in determining
the pattern and development of provision.
We now move on to assess the impact of the changes from the point of
view of citizenship.
The Impact of the Reforms
The reforms may be analysed from two perspectives: the objective view-
point of what has been achieved in terms of quality and availability
of provision and the subjective aspect of how people think about and
respond to them. We will consider the first area in this chapter and move
on to examine how concrete achievements are viewed in the context of
assumptions and values associated with the health service by ordinary
citizens in Chapter 9.
The NHS reform programme has achieved real gains in some areas.
These can be assessed in four ways: relative to past performance, in
comparison with experience in Wales and Scotland, which have received
similar resource increases without applying a quasi-market logic, in terms
136
of the productivity gains, which indicate whether the new policies actu-
ally achieve greater cost-efficiency, and by considering the responses of
users.
The Trajectory of Improvement
In the first area, improvements over time, the clearest evidence comes
from the achievements in relation to the headline targets: the objective
of ending waiting times longer than three months for outpatients was
effectively achieved by the end of 2005. For inpatients, waiting times for
almost all cases fell below six months by early 2006. Overall mortality
from heart disease, stroke, and related illness had fallen from 141 per
100,000 (under 75) in 1995–7 to 97 by 2002–4 and from cancers also from
141 to 122 over the same period. The inequality gap between the bottom
fifth of areas by health and deprivation indices and the population as
a whole had fallen from 37 to 28 per cent for the first cause of death
and 21 to 19 per cent for the second (actually achieving the 2010 target).
Targets for reducing the maximum wait in accident and emergency to four
hours, ensuring access to a GP within 48 hours, and choice in booking
targets have also all been met. Smoking, teenage conceptions, and deaths
from suicide (which, in fact, initially rose) have fallen but not at the rate
required to meet the target (HM Treasury 2007b). These achievements are
considerable and perhaps merit more attention than they receive in public
debate.
The most striking difficulty has been in reducing the obstinate inequal-
ities between more and less privileged groups. The point is reinforced by
the most recent ONS analysis, referring to 2001–3, which shows ‘little
change in health inequalities since 1991–93, when working age men
in unskilled manual jobs had 2.9 times the risk of death of those in
professional occupations’ (ONS 2005). The King’s Fund policy briefing
on the first decade of New Labour states baldly: ‘the government is not
on course to meet its targets to narrow the gaps in life expectancy and
in infant mortality that exist between the bottom socio-economic groups
and the rest of the population’ (King’s Fund 2007a). This is in the context
of the overall improvement in national averages noted earlier and the
growing gap in life expectancy between the poorest areas and the rest
of the population. These changes are further examined in the study
by Hills and Stewart, which notes that the issue of social inequality is
now recognized at the policy level but points out, rather harshly, that
137
there are ‘few improvements in health inequality outcomes attributable to

policy’ (2005, p. 333). Comparative evidence from the USA indicates that
‘institutional design is critical’ in introducing competitive forces and that
the incentives of current ‘payment by results’ schemes may damage the
interests of high severity patients (Propper et al. 2006, p. 554).
Despite critical comments about the unintended impact of some targets
in distorting the behaviour of professionals to meet indicators (Bevan and
Hood 2006a, 2006b), most expert commentators agree that the NHS as a
whole is performing at a substantially higher level than in the past. The
King’s Fund’s 2007 review states that ‘the NHS is now in better shape than
in 2002 to deliver improved quality and increased productivity, although
huge challenges remain around commissioning and choice, competition
between providers, the balance between targets, standards and incentives
and between central direction and local discretion, and the shift towards
the local provision of care’ (2007a, p. xxviii). Its earlier Independent Audit of
the NHS 1997–2005 concluded that ‘the results . . . are very positive . . . has
there been a step-change? If step change means a change of gear with
more and better services, then yes, there has’ (King’s Fund 2005). Toynbee
and Walker in a more journalistic summary give a generally favourable
verdict: ‘By 2007, Britain was a richer and fairer society than in 1997.
It was healthier, safer and in many respects better governed’ (2005,
p. 327).
Scotland, Wales, and Northern Ireland
The second area of analysis concerns comparisons between England and

the devolved nations. In relation to comparisons with Wales, Scotland,
and Northern Ireland, which did not introduce the system of markets
and targets, the balance of evidence is in favour of England. The Welsh
Assembly abolished targets and retained the division between purchasers
and providers but focused on the promotion of cooperative working. The
outcome was a sharp increase in waiting lists, up from 11 per cent waiting
longer than a year to 16 per cent for planned surgery between 1999 and
2003, and no improvement in ambulance response times, despite oper-
ating within the same funding regime (Bevan and Hood 2006b, Auditor-
General for Wales 2006).
Further evidence, quoted by Le Grand (2007, pp. 25–6), and all to the
detriment of Wales, concerns comparisons between hospitals on either
side of the England Wales border in levels of activity and mortality
138
rates. A study by Alvarez-Rosette and others emphasizes the difficulty of

establishing satisfactory indicators after devolution and concludes that
Northern Ireland, Scotland, and Wales do not ‘have more activity, better
population health, or higher levels of public satisfaction. . . . The most
striking differences between 1996 and 2002 are in the reported reductions
in waiting in England’ (2005, p. 7552). Further work by Propper and
colleagues indicates that the ‘targets and terror’ regime in fact succeeded,
on balance, in creating more rapid improvements in England than in
Wales and Scotland (Propper et al. 2007). Taken together these studies
strengthen the case for claiming that the policy reforms in England have
had a real impact on outcomes and that similar progress has not been
achieved under more traditional regimes elsewhere.
Productivity Gains
The third area of interest is productivity. The achievements discussed

above have been gained in the context of considerable increases in
resources and also in demand. The NHS is always seeking to hit a moving
target. Quasi-market reforms are designed to enlist competitive pressure
to enhance cost-efficiency. This raises the question of whether improve-
ments are primarily to be attributed to extra spending or to the success
of the new institutional framework in ensuring that resources are used to
the best effect.
The NHS is now doing substantially more than ever before. Between
1998 and 2005 planned admissions to hospital rose by 11 per cent, with
a 20 per cent increase in day case treatments, driven by the continuing
expansion in the range of treatments, the fall in waiting times, and the
extra pressures of population ageing. GP consultations rose by something
like a third between the early 1980s and 2005, and activity in community
services also expanded. However, emergency admissions (probably as a
result of lower waiting times and also changes in GPs out of hours cover)
rose by 25 per cent (King’s Fund 2007a, p. xxi).
Between 2002–3 and 2007–8, health spending rose by 7.4 per cent a
year in real terms, the largest sustained spending increase in the history of
the NHS and one that takes the proportion of the gross domestic product
devoted to health spending to between 9 and 10 per cent, close to the
EU average, as pledged by the then prime minister in 2000 (Appleby
2000). The pay of health service professionals rose by about a quarter,
and, coupled with improvements to conditions of service, drove staff costs
139
to roughly a third of the overall spending increase. While difficulties in

filling some posts have virtually disappeared at a time of real expansion
in staff numbers, the King’s Fund concludes that there is as yet ‘very
little robust evidence’ of benefits from the pay deals (2007b, p. xix). The
evidence of improvements in output in many areas at a time of rising
demand and substantially greater resourcing throws emphasis on produc-
tivity. Are the new competitive and target-driven procedures succeeding
in improving the cost-efficiency of health care spending?
Here the evidence is equivocal, partly because productivity in a human
service like the NHS is hard to quantify. Analysis using official measures
produces estimates across a range of from −7.5 to +8.5 per cent for the
period from 1999 to 2004. The wide range results mainly from conceptual
problems about what it is appropriate to count as inputs to and outputs
from the service and is also affected by lack of precision in measurement
of costs in mental health and community services. Following the rec-
ommendations of the Atkinson Review and including ‘adjustments for
quality change and the increasing value of health’, the overall conclusion
is that NHS productivity rose ‘on average by between 0.9 and 1.6 per
cent per year over the . . . 1999 to 2004 period’ (Lee 2004, Para 18). The
adjustments take into account the falls in waiting time, higher survival
rates, and the improvements in access to services and also impute a
higher value to health on the grounds that the value of activities it makes
possible has risen at the rate of general growth in the economy. The
weighting of these factors, and particularly the last, is controversial. If
it is omitted, the range of estimated productivity change diminishes to
between +0.2 and −0.5 per cent a year (Lee 2004, Figure 2).
The King’s Fund welcomes these developments but points out that
the service has failed to achieve the annual reductions in unit costs of
0.75–1 per cent a year which the government assumed would take place
between 2002–3 and 2007–8 as a result of the injection of extra resources
(2007a, p. xxv). Thus, the service appears to be achieving real gains in
terms of a higher quality of output for those it treats and is treating
more people, but it is not succeeding in reducing the cost of treating
each patient. The problem is that demand and expectations are likely
to continue to rise. However, as the King’s Fund points out, government
policy envisages a reduction in the rate of spending increase to about
3 per cent a year in the next spending round. It is unclear how the
current improvements in output can be maintained unless productivity
also rises sharply. Alternatively, if continued improvements require the
indefinite application of exceptional increases in spending, the question
140
of the political acceptability of reform becomes pressing. The new policies

are treating many more people but are not achieving the anticipated gains
in cost-efficiency. Considering the scale of these reform programmes, the
figures and especially the possibility of a real decline in productivity are
disappointing
The User Perspective
In relation to the fourth area, patient attitudes, the evidence is equivocal.

Patient satisfaction is indicated by behaviour and through opinion sur-
veys. Statistics on the use of private medical insurance as an alternative
to the NHS are difficult to obtain for the recent period. However, there
is some indication of a decline in private medical insurance between
1996 and 2001 from nearly 18 to 15.5 per cent of adults, slightly faster
among those paying directly for cover rather than simply being included
in employers’ schemes (Wallis 2004, p. 48). This follows a 20-year period
of sustained expansion. Coverage remained static in 2002 (Laing and
Buisson 2007). This trend, at a time of rising real incomes, especially
among the more privileged social groups, may indicate declining enthu-
siasm for exit from the NHS.
Surveys of public attitudes commissioned by the NHS show that, from
the viewpoint of those using the service, during the period 2002–7 ‘care
has improved significantly in some important respects . . . but . . . the ser-
vice as a whole is still far from patient-centred’ (Picker 2007, p. 2). Ipsos-
Mori has also been commissioned to examine health care attitudes by the
Department of Health and local Health Trusts. Local area studies, such
as those in the Black Country and Newham, show high and rising levels
of satisfaction among service users (Ipsos-Mori quoted in Le Grand 2007,
p. 49) with rather lower satisfaction among the population as a whole.
The surveys indicate that satisfaction with the service stood at between
55 and 60 per cent during the early 2000s. For inpatient services the
2003 figure was 47 per cent among the general population and 71 per
cent among those with immediate experience as patients. For outpatients,
corresponding statistics are 55 and 68 per cent, and for GP services, 82 and
83 per cent (Ipsos-Mori 2004, pp. 4, 5).
British Social Attitudes data parallels these findings. The proportion of
the general population reporting satisfaction with the NHS as a whole
rose from 34 to 46 percent in New Labour’s honeymoon period between
1997 and 1999, then fell back to 38 per cent by 2001. Thereafter, it has
141
steadily increased, as funding rises and the improvements noted above

feed through, to 49 per cent by 2006 (Britsocat 2008; Park et al. 2005,
p. 302). More detailed analysis shows that the extent of patient care and
the availability of resources such as staff, equipment, and good quality
buildings contribute to satisfaction, which is also influenced by a range of
socio-demographic factors. Attitudes in both areas have moved in a pos-
itive direction more rapidly in England than in Scotland (Taylor-Gooby
2008c). This is reinforced by a careful study by Appleby and Alvarez-
Rossette (2005). However, multivariate analysis suggests that the availabil-
ity of choice is not as strong an influence on patients’ attitudes as objec-
tive indicators of resourcing and respect for patients: ‘satisfaction with
the NHS overall suggests that improving patient choice may have little
impact . . . improving GP appointment systems, the time GPs give patients
in their consultations and the waiting times in accident and emergency,
as well as reducing waiting times for an outpatient appointment may well
have a significant impact’ (2005, p. 129; see also Taylor-Gooby 2008c).
The Healthcare Commission’s annual surveys show a mixed picture. Over
the period between 2001 and 2007, ‘it is clear that many aspects of care
targeted by the government have improved significantly’ (2007b). Patient
satisfaction is high, particularly in relation to improvements in waiting
times and access to advice. However, there are real concerns about GP
out of hours service, the quality and cleanliness of NHS facilities, and the
paternalism of clinicians who fail to communicate clearly (Picker Institute
2007, pp. 26–7). The impact of the new choice agenda is limited. Only
27 per cent of service users were offered choice of hospital in 2006, the
most recent year for which statistics are available (Healthcare Commission
2007a, p. 68). Studies of the progress of the patient choice programme
suggest a slow start. Three-quarters of this small group, however, were
satisfied with the treatment they received.
Ipsos-Mori’s quarterly measure of the state of the public services shows
a less optimistic picture. More people think the NHS will deteriorate than
think it will improve throughout the period from 2003, apart from a
brief surge of optimism in mid-2005 and in early 2008 (Figure 8.1). The
close relationship between views of the NHS and those on Britain’s public
services as a whole confirm the status of the health service as a bellwether
for the welfare state. These findings raise the question of what contributes
most to patient satisfaction: informed choice in itself as a component
in the exercise of individual rational deliberation, or improvements in
provision which result from more resources and competitive pressures
on providers with the balance between the two unclear. This takes the
142
25
NHS Education Britain’s Public Services
15
5
May-02
Nov-02
Jan-05
Sep-03
Mar-04
Sep-05
Jul-06
Mar-06
Mar-08
May-04
Jul-04
Sep-04
Jul-03
Jan-04
Jan-06
May-06
Jul-07
Jan-08
Nov-04
Jul-05
Sep-06
Sep-07
Mar-05
Mar-07
Jan-03
Nov-03
May-05
May-07
Nov-05
Nov-06
Sep-02
Mar-03
Jan-07
May-03
Jul-02
Nov-07
Mar-02
−5
−15
−25
−35
Figure 8.1. Expectations that public services will improve ‘over the next few years’ (%)
Note: Statistics are net measures: those who think the service will ‘get better’ minus the percentage who think it will ‘get worse’.
Source: Ipsos-Mori Delivery Index (Ipsos-Mori 2007).
question back to the sustainability of the improvements. The Ipsos-Mori

findings indicate that, irrespective of current satisfaction, most people do
not view the future with optimism and there is a persistent disquiet about
developments in the health service. Taken together with the evidence
that most people do not see the centre-piece of reform, the revolution in
choice, as a major issue, this raises questions about the long-term political
acceptability of the new NHS policies.
Conclusion: Rising Standards, Inequality, and Equivocal Trust
NHS performance has undoubtedly improved across most of the key

indicators established by the government, especially since the reform
programme got underway from 2002. The comparisons with Wales and
Scotland indicates that the specific English regime, based in large part
on the assumption that individual rational action is an important driver
of behaviour, played a strong role in this. However, there is evidence
that the new framework is failing in two areas. It is not addressing
persistent problems of inequality, and it is not delivering anticipated
improvements in cost-efficiency. This suggests that the new social citi-
zenship in the context of the NHS may do reasonably well in terms of
provision for the bulk of the population, provided they remain willing to
bear the rising costs. It lives in the house of reciprocity. In terms of the
more effective inclusion of the more vulnerable groups, progress is more
limited.
In relation to the third area of citizenship, trust in the institutions
that make up the welfare state, the situation is more complex. From a
rational perspective, trust is founded on the expectation that the service
will serve the trustor’s interests. Such expectations may be based on the
available evidence on resources and their use and on assumptions about
the incentives facing providers, as rational actors. For the bulk of the
population there is every indication that the experience of using the
NHS will be positive. Policymakers, operating predominantly in terms
of a rational actor logic, have every reason to believe that trust in the
service will rise. However, to the extent that trust also reflects less rational
factors, concerning feelings, values, and beliefs about the commitment of
providers, the impact of the reforms is less clear. The level of satisfaction
in relation to the NHS among those who are not service-users (but are,
of course, voters and tax-payers) also lags behind that of those with
immediate contact with the service, as it always has.
144
The NHS has improved its services by a number of measures during the
past decade, especially in England, where target and market reforms have
been given free rein. It has not achieved overall gains in productivity or
reversed the entrenched social inequalities. The general public remains
concerned about the NHS. Such concerns are likely to erode public trust.
They will play a role in influencing the responses of the electorate. This
raises issues about the longer term sustainability of the new policies as
public finances become increasingly straitened in a bleaker international
economic climate and as productivity stubbornly fails to improve. We
move on to examine more detailed evidence on people’s experience of
the reformed NHS. This will enable us to consider whether the reform
programme itself generates second-order challenges to the values sustain-
ing the welfare state.
145
9
Second-Order Challenges:
Disenchantment, Disquiet,
and Mistrust
The values of social citizenship are expressed in policy design and in

official pronouncements. They are also contained in the assumptions and
experience of ordinary members of society. In this chapter we consider
how people think about and respond to the health service reforms as
they understand them. The key question is whether the reforms gen-
erate second-order challenges to the structure of values that supports
state welfare. Perceptions and assumptions about objective factors such
as waiting times and staffing levels are relevant to electoral responses
and thus to the political sustainability of the new policies. The impact
of the new policies on perceptions of the service provides a strong
indication of whether market reforms shift assumptions about the val-
ues and commitment of those involved in a way that damages public
trust.
Information on people’s responses to the reform programme comes
from three main sources: national and local attitude surveys such as
the Ipsos Mori, BSA, and Picker Institute surveys discussed in Chapter 8,
treatment of the issues in popular discourse as reflected in the mass media
and the comments of politicians who are concerned for electoral reasons
to ensure that they address the issue uppermost in the public mind, and
more detailed qualitative surveys, which examine the structure of mean-
ings attached to the various themes of NHS reform. Work in all three areas
indicates the complexity and ambivalence of public perceptions of and
responses to the current policy directions. It also suggests real limitations
to the acceptability of the new directions in welfare.
146
Second-Order Challenges: Disenchantment, Disquiet, and Mistrust
Attitudes to NHS Reform
The attitude studies examined earlier indicate that general public satisfac-
tion is improving. Further issues arise. Firstly, while studies of trust and
confidence in the NHS are rather less numerous than studies of satisfac-
tion with output, the indications are that trust lags behind satisfaction.
British Social Attitudes data from the 2001 survey indicates a moderate
level of trust in the NHS, 12 per cent of those interviewed trusting the NHS
to spend tax payers’ money ‘wisely in the interests of patients’ ‘a great
deal’ and some 40 per cent trusting ‘quite a bit’ (Taylor-Gooby and Hastie
2002). However, trust in the private sector is a few percentage points
higher. A different question about trust asked in the 2002 survey found
that 77 per cent of nurses and 66 per cent of hospital doctors were trusted
to put the interests of patients above the convenience of the hospital
at least most of the time, while in the case of hospital managers only
21 per cent were found (Britsocat 2008). Trust is markedly lower in rela-
tion to the actors whose role in controlling the service is highlighted in
the reforms.
Secondly, trust in the NHS is strongly affected by the impact of the
value and emotional factors identified in sociological and social psycho-
logical work on trust examined in previous chapters as well as by ratio-
nal considerations. Page’s overview (2004) of MORI studies shows that
‘there is a very strong correlation between the extent to which patients
feel they are treated with care and respect and their overall perception
of the hospital’. Reviews of the literature stress the importance of the
expression of values of care and commitment alongside technical com-
petence (Calnan and Rowe 2004, p. 1; Hall et al. 2001). A postal survey of
confidence in health care conducted in 2002–3 focuses on relationships
with professionals rather than at the institutional level. It indicates that
the ‘most significant dimensions were . . . the extent to which the doctor is
patient-centred . . . and the level of professional expertise . . . ’ (Calnan and
Sanford 2004, p. 96), in other words, care and respect for persons, and
competence. The latter reflects the cognitive dimension, the former the
value-laden affective aspect.
Thirdly, a number of studies expand on the indication that the new
public management policies have had little effect in shifting public atti-
tudes. Work indicating that choice is a relatively unimportant influence
on people’s responses in relation to both satisfaction and trust compared
to other objective (staffing-levels and waiting times) and subjective factors
147
(the commitment to care of the front-line staff) was discussed in the

previous chapter. One counter-argument rests on analysis of a series of
questions included in the BSA for 2004-5 that are sometimes treated as
direct measures of demand for choice, and thus going to the heart of the
reform agenda as it confronts service-users (e.g. Le Grand 2006a, 2006b).
These questions ask ‘how much say’ NHS patients should have over
the kind of treatment, the timing of out-patient admission, and which
hospital they go to, and how much say they feel they do have. The
survey shows that between half and two thirds of the sample feel they
should have more say, but only between 10 and 20 per feel they do
have adequate say (Taylor-Gooby 2008b). Interestingly, the demand for
greater say is slightly stronger among working class than among middle
class respondents, although it is the middle class who is, in general, more
assertive in dealings with officials and professionals.
Some commentators interpret this as demand for a stronger role for
the market and treat the question as if it had been phrased in terms of
consumer choice. However, the market is only one means of extending
individual ‘say’. From Hirschman (1970) onwards, voice has been under-
stood to embrace a range of possible courses of action and sometimes
counterposed to choice. It may be that different forms of consultation and
engagement are more appropriate than market consumerism to express-
ing peoples’ needs. This has been a strong theme in discussion of reform
(Elstub 2006, p. 17; IPPR 2005; Lawson 2007).
Evidence of public satisfaction from those participating in choice exper-
iments in the NHS is also relevant (e.g. Le Grand 2007, pp. 55–60). People
like greater choice when it leads to quicker and better provision. They
are willing to travel to more distant hospitals to receive care. However,
these pilot schemes included preferential arrangements for the finance of
visits, transport, and the accommodation of companions which will not
be available when the scheme becomes national. Propper (2006, p. 547)
points out that the great majority of users do not exercise opportunities
for choice in comparable schemes in other countries such as Sweden,
which does not include such arrangements.
The Mass Media and the NHS
Real concerns emerge in media coverage of the NHS reform and in

associated public discourse. Individuals are best understood not simply
as passive recipients of the pronouncements of news-makers and astute
148
NHS in trouble Funding issues Waiting issues

Equality issues Reform issues Confidence issues
500
400
300
200
100
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Figure 9.1. Newspaper Coverage of the NHS. ‘NHS in trouble’ includes refer-
ences to NHS and chaos or problems. ‘Funding issues’ includes references to NHS
and spending, funding, or resources. ‘Waiting issues’ includes references to NHS
and waiting lists or waiting times. ‘Equality issues’ includes references to NHS and
equality or inequality or social class. ‘Reform issues’ includes references to NHS
and targets or markets or choice class. ‘Confidence issues’ includes references
to NHS and confidence or satisfaction or public support. The alternatives are
inclusive to avoid double-counting. References measured are in the headline or
at the start of the article, to limit the recording of minor references. The analysis
covers all broadsheet newspapers for which information is conveniently available:
Independent, Independent on Sunday, Guardian, Observer, Times, Sunday Times, and
Daily Telegraph
Source: Lexis-Nexis database consulted January 2008.
politicians but also as playing an active role in interpreting, accept-

ing, rejecting, and responding to the messages they receive (Eldridge,
Kitzinger, and Williams 1997; Petts, Horlick-Jones, and Murdock 2001).
Mass media imagery only gains a purchase when it engages with popular
assumptions. The Sun newspaper has the highest circulation in the UK.
It is courted by politicians as an opinion leader among the electorate. It
repeatedly uses the epithet ‘dead duck’ in leading articles to describe the
NHS (Sun 2006a, 2006b, 2006c).
Figure 9.1 summarizes an analysis of the treatment of the NHS by
the main broadsheet newspapers during the period from 1997 to 2007. 1
All things being equal, one would expect a range of perspectives to
be expressed across these papers, given their different political orienta-
tions and different readerships, but one that is reasonably well-based in
informed comment and factual material. The analysis summarizes a count
1
Andrew Wallace made a major contribution to the Lexis-Nexis analysis.
149
of references to key topics in the headline or opening sections of the

article so that it contains only issues which play a major part in discussion.
The analysts anticipated that the number of references would rise in the
election years of 2001 and 2005, and particularly 2001, since the NHS was
particularly salient in political debate at that time. However, the pattern
does not appear to be markedly affected by the electoral cycle, suggesting
that the issues are not simply the product of political conflicts but reflect
continuing concerns.
The analysis shows that general disquiet, expressed in the view that
the NHS is ‘in trouble’, rises gradually over time, and that perceptions of
the nature of the problem shift. Waiting list issues peaked in the early
2000s and have declined since, an indication that government success in
this area is acknowledged in public discourse. Concerns about resource
issues rose in the early part of the period, then declined sharply after the
highly-publicised spending rises, including the hypothecated 1 per cent
National Insurance contribution increase of 2002, and have since fluc-
tuated. The main themes in reform—markets, targets, and choice—rose
to become highly salient by 2001–3 but have fallen back somewhat and
now fluctuate in a pattern similar to that of funding issues. Equality issues
are recognized by the public and interest in this area is growing slowly.
Confidence in the NHS displays a similar pattern. The relatively smaller
number of references to equality and class issues may reflect the fact that
these are not directly relevant to the immediate interests of most readers
of broadsheet newspapers.
Newspaper treatment of health service issues indicates considerable
and widespread public concern about the NHS. The debate focuses on
the reforms and, to a slightly lesser extent, on resource issues. The new
policies are seen to have enjoyed success in relation to waiting lists,
but other issues are unresolved. It is in the areas of social inclusion
and trust in the service as a whole that most problems emerge, while
the issues in provision for most people which underpin reciprocity may
have declined. Unfortunately it is difficult to analyse trust issues directly
since the method confuses references to NHS Trusts with those to trust
in the service. Reciprocity, social inclusion, and related terms receive
relatively few references throughout the period.
One of the most significant encounters between the media and the
NHS surrounds the treatment of Patricia Hewitt who, as Health Secretary,
incautiously claimed that the NHS was ‘enjoying its best year ever’ in
addressing an audience of nurses at their annual conference in April 2006.
This led to barracking at a level which prevented her from continuing
150
her presentation and forced her to leave the room, an unprecedented

response at such an event. The Secretary of State believed that the evi-
dence on improvements in relation to targets (coupled with a substantial
recent pay award) would ensure that her statement was applauded, and
was dumbfounded at the response. Particularly noteworthy is the media
treatment of the incident. Both papers traditionally supportive of the
government and those opposed suggested that there was a real problem.
Representative headlines the day after read: Something Rotten at the
Heart of the NHS (Telegraph); Labour Fantasies and NHS Realities (Mail);
Life, Death and Paperwork (Guardian); and Living Proof that our NHS is
Failing (Sun).
More recently, NHS issues played a prominent role in the 2005 general
election. This was at the time when concern that the NHS was in trouble
was rising towards the peak of 2006. The NHS received substantial atten-
tion in the manifestoes of both the major parties. Choice was a key theme
in both, occurring 16 times in Labour and 8 times in the Conservative
manifesto in a short section on the NHS, which was concerned chiefly
with attacking the record of the party in power. Local feeling over re-
organization plans led a number of single-issue candidates to stand on
NHS issues. In Kirklees, the ‘Save Huddersfield NHS’ party (a local front
for the minor left-wing Socialist Worker grouping) enjoyed sufficient
success in local elections in 2006 to encourage others to stand and to
raise concerns among the government (Le Grand 2007).
Understanding Reform: Qualitative Interviews
So far we have reviewed evidence that indicates both that the NHS reforms
are achieving success across many, but not all, relevant areas, and that this
is broadly recognized in gradually improving levels of public satisfaction.
However, there is also considerable evidence of disquiet, particularly in
relation to institutional confidence and trust, and indications that it is
not the new agenda of choice that is valued so much as the improvements
in service associated with higher spending. This directs attention to the
intransigence of productivity noted in Chapter 8 and the assumptions
that spending increases cannot be indefinitely maintained. The third area
to be examined, qualitative work which contributes to understanding of
people’s feelings and of the conceptual frameworks and assumptions that
shape their views in this area, gives a more complex picture.
151
Relatively little material is available. Here we discuss key findings from

qualitative interviews with 48 individuals from a study carried out with
a general population sample in mid-2007. 2 Such a study cannot claim to
be statistically representative of the country. Its contribution is to help
unravel the relationship between the attitudes and feelings of members
of different social groups.
The interview schedule started out from general discussion of the NHS
and then moved on to consider perceptions of the current reforms, and
particularly of spending, choice, competition, regulation and targets, and
people’s responses to the reform agenda as they understand it. The NHS
as a topic always provokes a lively response from the public and our
respondents expressed their views confidently and at length.
The Values of the NHS
The interview started out with a general discussion of the values associ-
ated with the NHS. Ideas of fairness and social justice played a central role.
Social justice can be understood from two perspectives. One is formal and
rule-bound. Justice is blind and simply concerned with treating like cases
alike. The second approach stands outside the formality of legal tradition.
It is concerned with treating the individual in a way appropriate to his or
her needs, and is person-centred, committed, and human. The contrast
lies between the liberal conception of justice as equity (Hart 1961, p. 155)
and the more Kantian concept of justice as bound up with respect for
persons and their individual needs (Plant 1991, pp. 207–9).
Perhaps more than any other UK institution, the NHS stands at the
boundary between these two approaches and offers a bridge between
them. On the one hand, health care is available equally to all. On the
other, the care provided must be appropriate to the needs of the indi-
vidual; very different resources are deployed in different cases. Concerns
about the impact of the reform agenda and the erosion of the values
embodied in the traditional practices of NHS staff were expressed force-
fully by those we interviewed. Fairness as universal access and fairness as
2
The survey sample contained equal numbers of routine working class and professional
managerial workers, of women and men, and of young adults, under 30, without family
responsibility, families with children, and people over the age of 55 without children. Inter-
viewees were recruited from three geographical areas: a metropolitan area, a provincial town,
and a small village in South-East England. For more details, see Wallace and Taylor-Gooby
(2008).
152
care are often linked in people’s conception of the values of the NHS. More
than three-quarters of those interviewed (38 out of 48) saw the service in
this way, with most of the remaining simply believing that health care
for those who needed it and especially those who could not afford it was
something that should be provided in a civilized society.
The values are that it is fair and free. People make contributions but not everyone
uses it in the same way. The idea is to make a level playing field where it doesn’t
matter if they have contributed for one year or 10 years they have access to the
same level of care. (Patrick, D, family) 3
The NHS is essential. If we didn’t have that we would have to have everybody sign
up for some sort of private treatment . . . and I don’t think that is necessarily fair.
Don’t think this country would be as good a country as it is without the NHS. We
are very reliant on the NHS and I think it has the potential to be a very good and
caring organisation. (Jones, C1, post-family)
NHS values are directly associated with the principles of the welfare
state and are seen as running counter to inequalities of social class.
Absolutely, its kind of the cornerstone of the welfare state, I think isn’t it. If we
didn’t have the NHS I think a lot of other things would have to change.
(Jemima, C1, post-family)
The NHS symbolizes that we are a caring bunch and we do want to help others.
We do believe there should be a state system. There are rich and poor, there is
every class, but this way, we are all the same. This might be the only time there is
a classless society. (Adrian, C1, pre-family)
Universality is also strongly supported by data from the national atti-

tude surveys. For example, the 2006 British Social Attitudes found that
less than 10 per cent of the sample endorse the idea of limiting the
service to lower income groups. Those on lower incomes were themselves
disproportionately represented within the 10 per cent, indicating that
they may well have seen themselves as net gainers from means-testing.
The implication is that to meet people’s demands and achieve high levels
of trust across the population, the health service has to do two things.
It has to live up to the ideal of fair and universal treatment and also
to deliver the service in a way that caters to the needs experienced by
specific individuals so as to demonstrate respect for and a commitment
to personal care for that person. This duality is neatly summed up in the
3
Reference information on the respondent’s pseudonym, social class group, and family
stage (pre-family, family, or post-family) is given in parentheses after each quotation.
153
heading to the health section in the 2005 Labour Manifesto: ‘the NHS: free
to all, personal to each’. This understanding of the NHS as a universal and
caring welfare state service provides a partial explanation for the mixture
of satisfaction and unease in public responses to the reform programme.
It may be doing relatively well in one area but not in the other.
The Reform Agenda
The interviews moved on to discuss perceptions of the current reforms

and the principles behind them. Most of those we interviewed had a
limited awareness of the reform agenda but expressed concerns about
targets, the quasi-market, and patient choice. Even the minority (13) who
believed that targets might have some value qualified their views and
expressed concern that the incentive to meet targets might undermine
care for the individual:
You need to have targets, but my concern is that people are seen as statistics rather
than patients . . . because healthcare should be what it says, caring for people’s
health, not treating them as statistics. (Enzio, C2, pre-family)
[Targets do] a good thing by providing an incentive. It will improve people’s
treatment and quality of life ultimately. But if you can’t hit targets, you might
lose out. But there has to be more staff to deal with extra patients, otherwise the
customer might be disappointed by rushed service. ‘Target plus service’ is what
matters. (Richard, C2, pre-family)
Concern that the new policies might well advance cost-efficiency, but
did so at the cost of contradicting core NHS values of care and individual-
ized commitment predominated in the interviews. The reforms were seen
to promote the treatment of people ‘as statistics’ as the first interviewee
above puts it. The introduction of a target culture was associated with a
move away from patient-centred care by 35 of those interviewed. This was
put particularly forcefully by one respondent:
It is too money-oriented. It feels like there is no humanity left in the NHS . . . there
is not human compassion, it is just you are a piece or meat of a pound sign, or a
number . . . (Zenna, D, pre-family)
A minority (7 out of the 48 interviewed) expressed some support for

the introduction of markets and competition. Again this was typically
qualified. Competitive systems were seen as likely to produce piecemeal
and uneven improvements, damaging universality:
154
So, I can see good and bad points. Just can’t see it actually being able to work.
What is going to happen to the less popular hospital? Is it going to close down?
And the popular place can’t cope with demand so queues get bigger. Do they get
more money for treating more people? Is this how they are paid nowadays? . . . So
one will go downhill and the other will get better. Can see the logic but not sure it
will work. (Adrian, C1, pre-family)
It would improve a lot of hospitals although some would lag behind and would go
into the background and maybe not be used and be wasting money. It is a good
idea because . . . it would improve the motivation to improve. It would improve
their effectiveness and use of money. (Sammy, C2, pre-family)
Patient choice only attracted the support of 9 out of the 48 on similar

grounds:
I don’t agree that you should be given a choice—everywhere should be the same
standard give or take personality differences but the budget should be the same
and the waiting list should be the same. (Ramona, D, family)
The concerns about the reform agenda are reflected in a broader juxta-
position in the minds of those we interviewed between the universality
and the commitment to caring of the NHS model, on the one hand, and
the pursuit of targets, cost-efficiency, and competition, on the other. It
is this opposition between values seen as essential to the service and an
impersonal dehumanizing finance- and target-driven agenda that under-
lies much of the dissatisfaction and disquiet, summed up by the respon-
dent who complained about being treated ‘like a pound sign’. Only seven
of those interviewed saw any value in the introduction of competition
between hospitals. Both older and younger and middle and working class
interviewees made similar points:
And all the problems with management and the sort of structure of it and I think
it is not about health anymore, it is about numbers. It is not about caring, it is not
about health. (Susanne, C1, post-family)
These hospitals are being run by managing directors and the thing is it hasn’t made
people feel any better or feel any more comfortable. All they want to do is get seen
to and a bit of respect, a bit of dignity, a clean hospital and seen quick and . . . they
put targets out and I haven’t noticed I feel happier when I use the hospitals and
stuff. (Phineas, C1, pre-family)
The NHS used to have values—putting the patient first, proper nursing, but now it
seems to be paper pushing, reports on reports that kind of thing. . . . No, they have
got to think this through. Think about the people and the whole system and what
it was set up for. They have completely forgotten the value of the NHS which is for
the people. (Ronald, D, post-family)
155
The Imagery of Care: Matrons and Managers
The distinction between the traditional NHS values linking universality

and care, and the particular and institution-driven incentives of the
reform agenda were embodied in the imagery associated with those
staffing the service. Most respondents made a strong division between
the front-line staff who provide care directly to service users and the
managers, responsible for allocating resources and monitoring targets.
Respondents typically locate NHS values directly in the behaviour of pro-
fessional nursing and medical staff. The majority of those we interviewed
(39) were, on balance, dissatisfied with the service. At the same time they
felt strongly that those delivering it embodied and expressed the core NHS
values which our respondents saw as lying at its heart. Front-line staff
members were typically seen as trapped between their normative commit-
ment to patients, expressed through individual care and engagement with
patients, and the instrumental requirement to meet targets and enhance
the competitive performance of their hospital or clinic.
They [staff) know they haven’t got the funding and work all hours to fill three
jobs . . . Doctors are frustrated because they haven’t got theatres or nurses to do
operations as much as they would like. Also not as many ward nurses, so not as
much one to one patient care. Not having equipment must be frustrating.
(Chantel, C1, family)
Staff are just doing their job, although there is maybe not enough money or too
much pressure so they can’t do their job properly. Their personal values might
not mean a thing because there is not enough facilities for them to do their job
properly. (Martin, C1, pre-family)
I have family who work for NHS so I know how they want to treat you and what
they try to do, but . . . they can’t spend the time with you because they have got 5,
6, 7, 8, maybe 10 or 12 people screaming for their attention at the same time and
not enough nurses to send off to each one. (Peter, D, family)
The gap between the professional staff, seen as motivated by a norma-

tive commitment to patient care and patient interests, and managers,
who are seen as remote from service-users, constrained by an instru-
mental agenda of targets and regulation and often of poor quality, is
a key element in the way many people across different groups among
those interviewed expressed their response to NHS reform. It is the latter
group which symbolizes the new managerial approach and is the focus of
mistrust.
156
I trust the actual practitioners in the NHS, but the management: big question mark.
[Why do you distinguish between the two?] Because they are no longer the same.
In the old days there used to be a matron and the likes of matrons, but now you
have got people who are paid extortionate sums of money for running it and
certainly in this area they are not doing very well and therefore, frankly, should be
out. (Ronald, B, post-family)
They have got to make themselves more open and allow them to make their point
of view and the point of view is listened to . . . I mean sometimes you see the heads
of these trusts on the TV and quite frankly I want to wring their blasted necks
because they are sitting at the top of the tree and telling you how wonderful they
are . . . they have got to tell the truth, involve the public in their areas far more,
make themselves more open and then the members of the public will trust them
a lot more. They call themselves a trust, they need to be trusted.
(Gina, C1, post-family)
Seven out of the 24 middle-class respondents expressed a guarded

sympathy for NHS management in its response to the pressures under
which it operates. This may result from experience of similar managerial
frameworks in their own working lives or from a broader understanding of
the logic of the reforms. However, even in cases where those interviewed
expressed awareness of the forces that constrain managerial behaviour,
the emphasis on the conflict between institutional demands and the
interests of individual patients remained. Crucially, patient interest is seen
as over-ridden rather than advanced by the new managerialism.
Obviously they have these government-driven stats that they have to adhere to as
well, which maybe stops them giving patient-driven care. You know if they have
to make these targets or they don’t get any funding . . . then maybe they lose sight
of what is important. (Shulamith, B, family)
Priorities are quicker turnaround time, quicker treatment, getting through the
waiting list and through the door. Patient’s interests rank quite low. It’s all about
waiting times and you feel like you are being rushed in and out the door ’cos all
emphasis is on time. (Jane, B, family)
This opposition between the values of the old and the new NHS was
often expressed through archetypes. The juxtaposition of the traditional
matron, seen as both caring and committed and enforcing high profes-
sional standards in the interests of patients, and the managerial bean-
counter, obsessed with the competitive success of the institution but
relatively unconcerned with the outcomes or quality of treatment for
individuals, was one of the dominant themes in many of the interviews
157
(Wallace and Taylor-Gooby 2008). This sense that a rational actor-driven

reform programme damages the capacity of professionals to act in the
interest of the public also underlies much of the concern among those
delivering New Public Management services (see also Hoggett et al.
2006a; Smith 2001). The interests of managers are necessarily focused
upwards on the success of their clinic, hospital, or trust in relation to
targets set nationally or to other players in a competitive market. Front-
line staff members actually delivering the service are trapped between
pursuit of these interests and commitment to the needs of immediate
service-users.
The over-riding impression gained from the qualitative work was one
of a strong commitment to the NHS as a symbol of a universal yet caring
welfare state, but one whose current direction arouses concern. This is
shared across social groups. The most appropriate term to summarize
the underlying ambivalence between awareness of positive aspects of the
reform and concerns about the direction of the service would be disquiet.
The NHS is undoubtedly highly valued. It may be improving in many
areas and there is certainly public awareness of achievement in areas like
waiting lists. The concern is about a reform programme which prioritizes
the competitive success of particular agencies over building trust and in
doing so erodes the capacity of the NHS to achieve the twin goals of
universal fairness and a commitment to the interests of individual service-
users.
Conclusion: The Ambivalent Success of Welfare Reform

and the New Paternalism
In this chapter and the previous one, we have discussed NHS reforms
and the way people experience them as an exemplar of the impact of
the new policy agenda in the welfare state. This programme is driven
by a rational actor logic at all levels. That logic has been powerfully
articulated by some of its protagonists (Enthoven 1985; Le Grand 2003,
2007). At the objective level, the outcomes appear broadly positive. Some
of the most pressing problems in the NHS have been effectively addressed,
most obviously that of waiting lists. Other concerns remain, most notably
continuing social inequalities in health and mortality and the failure to
achieve the increases in cost-efficiency that will secure the sustainability
of the reforms. The achievements are real, particularly when viewed in a
158
context of sharply increased pressure on the service and rapid expansion

of activity at a wide range of levels.
The reform programme, however, while generating a gradually rising
level of satisfaction, does not attract the kind of whole-hearted public
endorsement that might make its advocates confident of future support.
Here two issues are relevant. First, much of the progress appears to be
partly due to a sharp increase in resources that is unlikely to be indefi-
nitely sustained. Secondly, there is considerable evidence of ambivalence
and disquiet in relation to provision. These issues reflect the division in
the discussion of citizenship from individual rational and more social and
value-driven directions that parallels the logics underlying reformed and
traditional welfare states.
Examination of the impact of the new policies and of how they
are understood by the general public indicates that the reform pro-
gramme has been most successful in areas which correspond to the needs
of the mass of the population, the broad field of reciprocity. It is less
impressive in relation to the more intractable issues of inequality and
inclusion. Public trust in the new institutional framework requires not
only the rational expectation that individual needs will be met but also
the belief that the values embodied within the structure of provision and
expressed by those providing the service will include commitment to and
active concern about the needs of the users. It is in this latter area of the
second-order impact of reform that the new programme experiences some
of its most difficult problems.
One of the most incisive criticisms of the Fabian tradition in social
policy in the UK was the claim that it imposed solutions in accordance
with the preconceptions of experts and professionals, regardless of citi-
zens’ preferences. The new independent rational actor approach stresses
choice and empowerment. However, the systems of targets and competi-
tion determines many of the objectives centrally. User choice can only be
expressed within the limitations of the framework, and this is experienced
at the sharp end as the demands of a remote and uncaring management.
Choice becomes a ‘new paternalism’ in which the availability of a patient-
centred service, a high priority for users, does not figure on the agenda of
providers.
Reforms in health care, as in other areas, erode the values underly-
ing trust in public services. The new policies were developed to address
problems resulting from economic change, popular demands for greater
responsiveness to individual needs, and population ageing. Policymaking
159
has been shaped by the processes of economic and cultural globalization.

In Chapter 10 we move on to consider the direct challenges which the
greater inequality and ethnic diversity resulting from globalization pose
for social citizenship. While governments are able to develop policies to
address these problems, the individual rational action logic limits their
capacity to do this effectively.
160
Part IV
Conclusions: Strengths
and Limitations of Rational
Actor Approaches
10
Globalization, Inequality, and Diversity
In Chapters 1 and 2 we developed the argument that the assumptive

foundations of welfare state citizenship face both first-order challenges
from economic, political, and social shifts in the context of precipitate
globalization and second-order challenges from new policies based on an
individual rational actor theory of agency. Chapter 3 discussed the present
reforms in EU countries as a response to first-order challenges in EU coun-
tries. Chapter 4 analysed the assumptions behind the main new policy
direction, and these were then examined at a theoretical level in Chapter 5
and in the context of social policy debates in Chapter 6. This discussion
showed that individual rational actor approaches can provide a basis for
reciprocity but are much weaker in relation to social inclusion and social
trust. In these areas the reform programme has generated second-order
challenges to social citizenship. Chapter 7 presented a case-study of the
new policies in the context of the UK, the European state which has most
rigorously pursued the rational actor logic. Chapters 8 and 9 focused on
New Public Management reforms in the health service. While the new
policies have had a number of successes, progress in relation to inclusion
is slow and public responses are permeated by disquiet.
Economic globalization restricts the ability of European welfare states
to respond to the various pressures they face through traditional neo-
Keynesian economic management. One outcome is that the individual
rational actor approach, pursued most vigorously in the UK, has become
a more attractive policymaker. The greater inequality and ethnic and cul-
tural diversity associated with globalization may also constrain reciprocity
and undermine inclusion. Both developments bear particularly on the
UK, where migration is high, the labour-market relatively open, and
a relatively high proportion of GDP is derived from international
trade.
163
The migration associated with rising incomes, cheaper travel, growing

international inequalities, and war leads to more culturally mixed and,
it is suggested, less solidaristic communities, increasingly indifferent to
vulnerable members. One commentator argues forcefully that migration
poses
. . . an especially acute dilemma for progressives who want . . . both . . . generous

welfare paid out of a progressive tax system, and diversity, equal respect for a
wide range of peoples, values and ways of life . . . the left’s recent love affair with
diversity may come at the expense of the values and even the people that it once
championed.
(Goodhart 2004, taken up in the Guardian, 2004, Economist, 2004,
New Statesman, and elsewhere)
Soroka and colleagues draw together evidence that ‘the human com-
ponent of globalisation may increasingly constrain welfare states that
seemed fully consolidated two decades ago’ (Soroka, Banting, and John-
ston 2004, p. 18, see also Boeri et al. 2002).
The ‘fanning out’ of inequality, associated with the twin pressures of
international wage competition among the less skilled and the expanded
opportunities for the most skilled in a global market, may dilute sym-
pathy between the latter and the former (Freeman 1995; Johnson 1997).
This process has been characterized as the ‘race between technology and
education’ (Tinbergen 1975). The least skilled workers are supplanted by
new technology or lower-waged workers elsewhere on the planet, while
the most educated are able to attract rewards for their scarce skills in a
larger market. Hills (2005), Sefton (2005), Johns and Padgett (2008), and
others point to the impact of greater inequality on support for public
services. One much-used text book argues: ‘the growth of a global econ-
omy requires the driving down of costs in order to compete in economic
markets, and this has made it very difficult for governments to expand
welfare expenditures and sometimes made it necessary to cut them. Glob-
alisation . . . may have brought to an end the golden age of the welfare
state’ (Baldock, Manning, and Vickerstaff 2007, p. 25, see also Esping-
Andersen et al. 2002). The concern is that governments will abandon
the commitment to welfare as public attitudes move against redistributive
policies.
In this chapter we show how the rational actor reframing of welfare
policies diminishes the capacity to resist such pressures, a further second-
order challenge to social citizenship.
164
Migration and Diversity
The UK ceased to be a net exporter of migrants in the mid-1980s. The

net balance of immigration has since fluctuated but generally tended to
increase. The Office of National Statistics revised its assumption of average
net inflow upward to some 190,000 a year in 2007 (IPPR 2007, p. 4,
ONS 2007). While the traditional old and new Commonwealth countries
continue to supply substantial numbers of migrants, immigration from
the EU, and especially from the new member states in East and Central
European countries which have joined recently, has risen to almost equal
them. Immigration from the rest of the world also provides roughly a
third of incomers (IPPR 2007, Figure 3.2). The proportion of the popula-
tion of the UK born overseas doubled from 4.2 to 8.3 per cent between
1951 and 2001 and continues to rise (Rendall and Salt 2005).
The 2007 ONS estimate predicted a population increase of 4.4 million
during the decade to 2016, of which some 2.1 million would be foreign-
born migrants. The population of the country is estimated to rise from
60.6 million in 2006 to 71.1 million by 2031 with a range between
69 million and 73 million (ONS 2007). The implications of these statistics
have been hotly debated. On one side, it is argued that immigration
provides needed workers, will compensate for the ageing of Britain’s pop-
ulation, and has made a major contribution to the economic expansion
of recent years (e.g. IPPR 2007, pp. 43–5). Conversely, those opposed to
immigration argue that the economic benefits are limited and that estab-
lished UK residents lose in the competition for employment (e.g. Coleman
2007). Political pressures from minority racist parties reinforce this. One
outcome has been a new immigration regime based on a points system
which will effectively bar unskilled immigrants from non-EU member
countries. EU directives on mobility of labour largely prohibit the control
of European migrants (Home Office 2006).
As we pointed out in Chapter 2, diversity has attracted consider-
able attention as a threat to state welfare (Alesina and Glaeser 2004;
Banting and Kymlicka 2004; Mau and Burkhardt 2007; Taylor-Gooby
2005). Alesina and Glaeser consider why the USA, despite its commitment
to democratic forms of government, differs from European societies at
broadly similar levels of development in that it has failed to develop a wel-
fare state. Their work follows arguments developed by other researchers
(e.g. Gilens 1999, p. 3) but is particularly influential because it uses robust
statistical models to relate social spending precisely to the degree of
165
diversity in different countries. They also spell out the implications of

the argument that greater diversity means less welfare:
The recent rise of anti-immigrant politicians in Europe illustrates our claim that
US-Europe differences have more to do with the racial divisions than with deep
cultural differences. As Europe has become more diverse, Europeans have increas-
ingly been susceptible to exactly the same form of racist, anti-welfare demagoguery
that worked so well in the United States. We shall see whether the generous
European welfare state can really survive in a heterogeneous society.
(2004, p. 181)
The authors argue that diversity has played a central role in weakening
support for state welfare in the USA for two reasons. It functions as an
obstacle to the development of a collective politics of redistribution, and it
is an important constituent in a dominant ideology that portrays welfare
statism as primarily redistributing from the majority to minorities who are
culturally, racially, and ethnically different and distant from the mass of
the population. Similar rhetorics have emerged in debates about migrants,
refugees, and asylum-seekers in Europe, strengthening the argument that
mass immigration damages welfare states (EUFRA 2007, ch. 6, Modood
2005a, pp. 35–7). From an individualist perspective, the claim is that
diversity weakens altruism; from a more collective one, it is that the
various identities of ethnic groups hamper the formation of a common
political consciousness along class or labourist lines.
The statistical model constructed by Alesina and Glaeser includes a
number of relevant variables: measures of racial ‘fractionalization’ or
diversity, GDP, population of working age, majoritarian political structure,
and dummies to represent whether the country is included in Latin Amer-
ican, Caribbean, or Asian groups. It is applied across 56 countries. The
fractionalization variable is the only significant predictor and accounts
for some 43 per cent of the difference in spending between Europe and
America, an estimate described as ‘conservative’ (Alesina and Glaeser
2004, p. 145). All things being equal, the suggestion is that as Europe
moves closer to the USA in population structure, it will also move closer
in welfare provision.
Similar arguments are developed by Soroka et al. (2004), who show that
social spending grows more slowly in countries with higher immigration
rates. Sanderson produces further evidence of a negative link between
ethnic heterogeneity and social spending (Sanderson 2004). However,
Banting and his colleagues find in a more supportive Canadian study that
while high levels of ethnic diversity reduce social trust, there is no relation
166
between diversity and a range of attitudes supportive of state welfare.

Turning to immigration they find no relationship between immigration
and social spending across a large number of OECD member countries,
although spending appears to be slow in countries with very rapid immi-
gration (Banting et al. 2006).
European Experience
Europe differs from America in its political traditions and institutions.

These may enable European countries to adapt to migration and max-
imize the economic benefits from the movement of people and from
globalization, while retaining a commitment to social welfare. Alesina and
Glaeser’s model has been re-analysed by Taylor-Gooby, who replicated the
original data-set and also included in the analysis the political factors that
the work of Castles (2004), Huber and Stephens (2001, Tables 3.2 and 3.3),
Swank (2002), and Boix (2000) show to be important predictors of welfare
spending. When these are taken into account, the racial fractionalization
variable ceases to be significant and the proportion of left members
in the cabinet (a commonly used proxy for political balance) emerges
as an important influence on social expenditure (Taylor-Gooby 2005,
Table 3).
Van Oorschott and Unk (2007) and Mau and Burkhardt (2007) use data
from the European Social Survey and from national studies to examine
the impact of the proportion of foreigners in the population and of
ethnic heterogeneity on attitudes to welfare spending. They find that the
proportion of non-nationals has a relatively weak but significant effect,
less important than such factors as federalism, unemployment, or welfare
regime. Interestingly, the relation between heterogeneity and attitudes is
complex: ‘societies which are relatively heterogeneous are neither more
negative as far as the redistributive activities of the welfare state are
concerned, nor more prone to object to the inclusion of foreigners’ (Mau
and Burkhardt 2007, p. 22).
This last point mirrors van Oorschott and Unk’s finding (2007, p. 234)
that greater diversity does not appear to undermine solidarity but that
much depends on national context: ‘living in a culturally diverse country
may have a socialising effect that is conducive to the understanding
of others, and teach people to deal and live with them without feel-
ing threatened’. This argument contradicts Barry’s warning, based on
argument from first principles and a review of UK developments, that
167
‘a politics of multiculturalism undermines a politics of redistribution’

(Barry 2001, p. 8). Banting and colleagues examine this issue further in
a detailed study of 16 countries from 1970 to 1998. The conclusion is
that ‘countries that adopted such programs did not experience an erosion
of their welfare states or even slower growth in social spending than
countries that resisted such programs. Indeed, the countries with the
strongest multiculturalism policies seem to have done somewhat better
than others, providing a hint that perhaps multiculturalism policies may
actually ease any tension between diversity and social spending’ (2006,
p. 12). Similarly, at the regional or city level, local policies developed
in areas of greater diversity often appear better able to ‘cope with the
problems . . . or . . . maximise the opportunities inherent in immigration’
than those of national governments (Penninx et al. 2006, p. 160).
In the UK, policy has developed during the post-war period from
assimilation through integration to multiculturalism (Solomos 2003).
Various migrant groups have differed in their achievements within the
labour market and education. While a number of studies point to low
or downward mobility in the first generation followed by upward or
sideways mobility in the second (Heath and McMahon 2005, p. 411),
more recent analyses emphasize that ‘racial disadvantage is declining
and the circumstances of minority groups are diverging’ (Modood 2005b,
p. 288). The evidence from the 2001 census shows that Black Africans,
Chinese, and Indians are more likely to have degrees and to be better
qualified than the White British population, and Bangladeshis less likely.
There is also a strong trend to polarization between well-qualified and
more poorly qualified groups among Pakistanis and Bangladeshis (2005b,
p. 305). These differences are reflected in employment and in life-chances
more generally (Cabinet Office 2003, pp. 4, 5).
Since the late 1980s the dominant theme in UK policy has been multi-
culturalism, recognizing the existence of different cultural communities
within a common framework of law and national identity, and with
guaranteed access to equal opportunities (Kymlicka 1995; Parekh 2000,
p. 6). This contrasts with the emphasis on the centrality of one national
culture, for example, in France. It fits with the liberal individualist theme
of valuing personal freedom of choice and seeking to create the condi-
tions for equal capacity to pursue that choice. As in many countries,
the development of multiculturalism internally has been paralleled by
the construction of stronger barriers to immigration (Schierup et al.
2006).
168
Recent debates have led in two directions, both concerning the ade-
quacy of the equal-opportunity multicultural approach. First, there is a
strong concern about the extent to which current policies succeed in
achieving equal recognition for different cultural communities, and about
what this means in terms not only of equal rights, but of an equal capacity
to exercise those rights (Parkeh 2005, chs. 7 and 8). The second debate
concerns the scope of multiculturalism, following from the landmark
Runnymede Trust report (CFMEB 2000), and particularly with the extent
to which political discourse is adequate to deal with the creation of a
culture of British Pluralism (Modood 2005a, pp. 186–7). The conflicts and
anxieties about Islamic terrorism, following the various wars undertaken
by the UK in support of the USA against countries with substantial Muslim
populations, and about racism against Muslims, make this issue both
more pressing and more difficult to resolve.
A number of commentators have pointed to the ‘lack of consistency’
(Layton-Henry 2004, p. 331) or weakness in the use of state power (Lieber-
man 2005, p. 515) in the UK. British policies create a relatively open
setting in which some groups are able to succeed, but others apparently
are not, and yet others become polarized. The country has not developed
the affirmative policies found in the USA, which is striking because the
centralization of UK government gives it greater power to pursue a clear
policy direction, should it wish to do so. Lieberman points out that this
limitation is associated with the lack of effective political mobilization
of minorities (Lieberman 2005, p. 516). Minorities find it difficult to
organize successfully in the majoritarian polity of the UK, and national
politics fails to create the kind of ‘discursive space’ in which issues of
cultural difference and the extent to which these are incompatible can be
effectively debated (Alibhai-Brown 2000; Modood 2005a, pp. 185–209).
As policy is increasingly framed within the individualist bias of equality
of opportunity, the relevance of such developments is obscured.
The UK pursues openness to the global market with enthusiasm. It
has a relatively high level of immigration, and fears about the impact
of migrants are well-articulated at the political level. One response to
the resulting pressures is to erect barriers that operate effectively against
some groups but not others (Sales 2007, ch. 6), and this is what has
happened. The logic of opportunity provides the basis for policies which
have had considerable success with the minorities equipped to benefit
from them. However, the emphasis across policymaking on individual-
ism constrains the development of strong positive policies advocated by
169
Parekh to benefit less advantaged minorities. Some minorities advance,

but others do not or are divided. The need to enable political debate in
which the boundaries of social and legal diversity can be established and
the balance between openness to migration and the concerns of some
cultural groups can be addressed goes unrecognized.
These findings indicate the complexity of the relationship between
diversity and welfare. The one may (under particular circumstances) dam-
age support for social spending. However, that is not the end of the
story. Countries which deliberately shape their policies in response to the
pressures appear capable of responding in ways that reconcile support for
continuing welfare provision with openness to migration. This requires a
commitment to support all ethnic minorities. The combination of open-
ness and opportunity with failure to follow through with strong equality
policies indicates the strengths and limitations of the UK’s individualist
policy logic.
Inequality and Poverty
Poverty and inequality have been brought to the fore by the commitment
of New Labour ‘to end child poverty forever’ (Blair 1999), setting targets of
a 50 per cent cut by 2010 and abolition by 2020. Policies to reduce poverty
and inequality lie at the heart of the traditional welfare state. From
the rational actor perspective, both are obvious barriers to equality of
opportunity. The individualist approach, while enabling the development
of policies to expand opportunities in work and education, weakens the
capacity of government to mount a response to these issues that places
redistribution and social cohesion at the centre stage. The proportion
of the total population with below half average income had fallen from
about 10 per cent in 1961 to about 6 per cent by 1977. It then rose rapidly,
touching a peak of just over 20 per cent in 1991, the highest level in
Western Europe, with the sharpest increase among those of working age
with children. Inequality as measured by the Gini coefficient also rose,
from 0.23 in 1978 to 0.34 by 1991 (Hills and Stewart 2005, Figures 1.1
and 1.2).
Poverty fluctuated about the 1991 level through the early and mid-
1990s and has since fallen but not fast enough to meet the targets.
More strenuous policies involving higher public spending will be required
if they are to be achieved (Centre for Economic Performance 2007;
170
Sharma and Hirsch 2007). Similarly, inequality (as measured by the Gini
coefficient) ‘has fluctuated slightly since 1994/95, but has shown evidence
of a marginal rise . . . since 2004/05’, according to official data (Depart-
ment for Work and Pensions 2007, p. 6). The coefficient stood at 0.33
in 1994 and has now risen to 0.35 (Brewer et al. 2008, Figure 1). One
long-term study, which uses broader definitions, concludes that ‘Britain is
moving back towards levels of inequality in poverty and wealth last seen
more than 40 years ago’ (Joseph Rowntree Foundation 2007, see Dorling
et al. 2007).
The Treasury Select Committee’s 2008 review of progress towards the
2010–11 target of halving child poverty accepted that some real progress
had been made. Of the 3.4 million children estimated to be in poverty in
1998–9, some 600,000 had been lifted above the poverty line and a further
200,000 would attain that status as a result of Child Tax Credit reforms.
Expansion of employment for low-income parents might address the issue
for some others, but many are likely to remain below the target level
unless spending is increased very substantially. The Committee expressed
concern that ‘the Government may have drawn back from a whole-
hearted commitment to meeting this target. A failure to meet that target
would represent a conscious decision to leave hundreds of thousands of
children in poverty’ (2008, p. 62).
Concerns about inequality at the bottom end and rising incomes at the
top are brought into relief in recent work by the Institute for Fiscal Studies
using the Survey of Personal Incomes, which is based on tax returns. This
shows that for the bulk of the population (those whose incomes fall below
the top 10% but above the bottom 10%) there has been a modest trend
towards greater equality in recent years. Those right at the bottom have
not shared in this increase, while those at the top have enjoyed much
more rapid income growth (Brewer et al. 2008, Figure 2).
An authoritative cross-national analysis which focuses on earnings
shows how the growing dispersion of labour market rewards is an impor-
tant element in rising inequality during the whole period. The challenges
to a government seeking to contain such trends are particularly severe
in the UK, compared with other European countries. Median earnings
in the UK have risen during the last two and half decades, but those of
the bottom decile had fallen by 3 per cent by 2005, compared to their
relative position in 1980, whereas those of the top 25 per cent have risen
by 8 per cent and those of the top tenth by 16 per cent. These figures are
close to those of the USA, while in other European countries, including
171
corporatist France and Germany, Mediterranean Italy and Portugal, and

social democratic Sweden, the growth in earnings during the period is
less marked. Only in post-socialist Poland, where the strains of entry into
a globalized market have been particularly severe, has earnings inequality
grown more rapidly (Atkinson 2007, pp. 49–54).
Poverty is a central and emphatic theme in New Labour approaches. The
new policies have clearly had some impact on both poverty and inequal-
ity (at the bottom end) under difficult circumstances. Commitment to
the success of the City of London as a leading financial centre and the
desire to attract international capital preclude measures which will erode
the privilege of the wealthy (Paxton and Taylor 2002). The pressures of
international economic change lead to a fanning out of inequalities in
many countries and in some of them, particularly those with Anglo-
Saxon welfare regimes, an increase in poverty, especially among the most
deprived (Sefton 2004, p. 615). The new developments in Tax Credit,
minimum wage, and other provision in the UK have gone some way to
addressing the problem for poorer groups, slowing the impact of more
intense global wage competition and of the increased demands for scarce
skills. They are unlikely to meet the child poverty targets and have no
impact on the rapid growth of top-end inequality.
These trends raise obvious questions about both the importance and
the feasibility of redistributing from the better off to the poor. As the gap
between the affluent and the excluded grows, the solidarity necessary for
social inclusion may be threatened by divisions related to income just as
much as by divisions related to ethnicity and culture. However, incomes
for the comfortable mass of the population have not diverged greatly and
the scope for reciprocity within this group remains strong.
Inequality and Mobility
The political impact of the trend towards greater inequality is strength-

ened by declining rates of social mobility. A number of studies have
examined opportunities to ascend both the class and income structure.
Much of this work is based on the major longitudinal studies, the 1958
and 1970 National Cohort Studies, which provide information on class
and income background, education experience, and outcomes in terms
of occupation and income for those born in those years, as well as other
information. Most experts agree that it is early childhood and education
that have the strongest influence on mobility.
172
The 1958 study was last interviewed in 1999 and the 1970 one in 2004–
5, so the first of these data-sets provides information on the trajectories
through schooling and into employment for individuals educated in the
1960s and 1970s and the second for those educated during the 1980s
and 1990s. The studies enable us to examine the effect of the policies of
the Conservatives during the 1980s but not those of more recent gov-
ernments (Blanden and Machin 2007, pp. 1–2). Less comprehensive data
from the British Household Panel Study, starting in 1991, but including
households with younger members so that a viable cohort with a year of
birth of 1976 can be constructed, and the Millennium cohort, starting
in 2000–1, provide some indications about the impact of more recent
developments.
Studies of the 1958 and 1970 cohorts focusing on income (Blanden,
Gregg, and Machin 2005) and on social class mobility (Goldthorpe 2004)
indicate that intergenerational mobility declined between the periods
at which the first and second of these cohorts attained their adult
status in their early 30s. For example, 30 per cent of sons born into
the lowest income quartile and 35 per cent of those born into the
highest quartile remained in that quartile in the 1958 study. Twelve
years later the proportions had risen to 37 and 45 per cent (Blanden
and Machin 2007, Table 1). The income study shows that mobility
among daughters had also decreased but not to the same extent, whereas
Goldthorpe’s work indicates a slight increase in class mobility among
women. The educational achievement of women in this period, espe-
cially among the middle class, would explain this. Women are increas-
ingly in a position to compete effectively with men, especially in areas
where intellectual skills and qualifications are relevant. Attention now
focuses on the barriers which prevent women from achieving correspond-
ing representation at higher levels within those professions (Crompton
2007).
The analysis faces a number of problems: the years of the cohorts
are relatively close and the studies rely on a comparison between only
two observations (one from each study) so any discussion of trends is
uncertain. There are difficulties in assessing the class position of women
on a comparable basis with that of men since the occupational structure
has changed, weakening Goldthorpe’s analysis. In any case, research based
on analysis of the impact of schooling in the 1980s and 1990s cannot
tell us whether the policies of the current government, which stress
expectation, aspiration and mobility, have met with any success (Ermisch
and Nicoletti 2005). Blanden and Machin’s work is designed to address
173
this issue. All commentators find a very strong relation between educa-
tion attainment and career outcomes. A recent study uses this insight to
examine social mobility on the basis of education attainment and other
factors, understood as intermediate outcomes, indicating the direction of
people’s life-trajectory.
This work indicates that achievement (and by implication, mobility)
changed little between 1991 and 2006: ‘unless changes in intergenera-
tional mobility have been driven by very different forces in more recent
years, these results suggest that we might expect to observe little change
in . . . mobility for the cohorts born from around 1970 onwards’ (Blanden
and Machin 2007, p. 16). These findings fit with the evidence from
inequality and poverty studies. Things grew worse for the poor and better
for the rich up to the early 1990s. They then improved slightly and finally
stabilized. More recently policies directed at low-income groups have
contained many of the pressures which might weaken their position but
have been unable to improve it in relative terms. As we ascend the income
scale, the position of advantaged groups continues to grow stronger and
they are able to entrench their status, so that their opportunities to sustain
privilege are consolidated and access to mobility among the groups below
remains limited. This poses a considerable challenge to a social citizenship
based not only on reciprocity within the mass of the population but also
on the inclusion of the most vulnerable.
This discussion shows that the twin progeny of a more globalized and
technologically sophisticated economy, diversity and inequality, pose real
challenges to the welfare state. There is some substance to the argument
that state welfare will have a diminishing role in a more globalized world.
However, it is entirely possible to address these pressures. Those Euro-
pean countries with the best-developed welfare states provide examples
of success in such policies. The UK government has made up much of
the ground in the disastrous increase in poverty of the preceding period
and has been more successful in arresting the trend to greater inequal-
ity among poorer groups than some other European countries. As Hills
and Stewart (2005, p. 346) put it, ‘the tide has turned and . . . policy has
contributed to turning that tide’. However, it appears unable to tackle
widening inequalities between richer groups and the mass of the popula-
tion, to restore social mobility, or to achieve its poverty targets. Similarly,
policy can and does make a difference in relation to the impact of diversity
on social cohesion. The UK has again enjoyed some success but does not
pursue effective policies to reduce the disadvantage of some ethnic groups
or to tackle the trend to polarization within them.
174
The combination of rational actor logic and emphasis on individual

opportunity weakens the ability of government to pursue vigorous inter-
ventions, especially in ensuring that less advantaged groups by income
or ethnicity have the same access to mobility as those most successful in
grasping opportunities. There are also less evident limits to its effective-
ness in redistributing from one to the other.
Future trajectories of inequality and diversity depend to a significant
extent on the values and beliefs of citizens. We move on to consider how
people perceive and respond to the issues of inequality and migration,
using evidence from recent surveys. It is not possible to demonstrate that
an individual and rational policy logic has causal authority in shifting
popular values. We can, however, examine the trends in the ideas that
have accompanied recent shifts in policy and which contribute to the
shaping of new developments.
Three points emerge from work on attitudes to poverty, inequality, and
social citizenship:
r First, people express concern about both but tend to see deprivation
in a country like the UK as resulting primarily from individual choices
and outside the domain of public policy, in keeping with the individ-
ual rational logic.
r Second, support for welfare state intervention to meet the needs of
those at the bottom appears to have declined during the past quarter-
century. The conception of fairness as equal opportunities is widely
supported, but there are some indications that equality of outcome is
more strongly endorsed among manual workers.
r Third, while most people endorse the idea of reciprocity between
the insiders who maintain a rough balance between use of ser-
vices and contribution during their lifetime, their conceptual frame-
works are limited. They fail to make a strong link between tax
and social spending. They do not include the contribution of
informal care work when thinking about reciprocity. Consequently,
ideas about inclusion, redistribution, and gender balance remain
uncertain.
The upshot is a defensive reciprocity among comfortable insiders that

does not extend to more distant and vulnerable groups.
Opinions are also divided about the impact of migration and cultural
diversity on the interests of the mass of the population. Many people,
especially more middle class groups, accept the economic benefits of
175
migration. However, there is a parallel underlying concern about pressures

from migration on opportunities for the resident population.
Inequality and Affluence
Perceptions of poverty and inequality have shifted markedly since the

1980s in the UK. Much of the change has taken place in the last decade.
Rising average incomes are certainly reflected in the fact that people feel
better off. 1 In 1986, 24 per cent of those interviewed in the British Social
Attitudes survey said they felt they were ‘living comfortably’ while 26 per
cent were finding it ‘difficult or very difficult’. By 1994, corresponding
statistics were 29 and 21 per cent, while by 2006 the ‘comfortable’ group
had expanded sharply to 41 per cent, and those finding things difficult
had fallen to 14 per cent (Taylor-Gooby and Martin 2008, p. 239). The
proportion thinking of an unemployed couple as ‘really poor’ fell from 12
to 4 per cent and for a pensioner couple from 19 to 9 per cent.
These shifts may well reflect an experience of growing affluence among
the majority. They do not imply that people no longer recognize poverty
and inequality as issues of social justice. For example, 79 per cent state
in 1987 that the gap between high and low income was ‘too large’.
This had risen to 87 per cent by 1995 but fell back to 76 per cent by
2006. Correspondingly, the proportion sharing the view that ‘ordinary
people don’t get their fair share of the nation’s wealth’ rose slightly
from 64 to 66 and then fell somewhat to 55 per cent during the same
period.
The Role of Government
More than three-quarters of the population think inequality is a problem

and over half think it is an issue of social justice. What appears to have
changed is how people think the issue should be tackled. The portion sta-
ting that ‘government is responsible for reducing differences in income’
fell from 62 per cent in 1987 to 43 per cent in 2004, while support for
the view that ‘government should spend more on welfare benefits for the
poor’ fell from 55 to 35 per cent between 1987 and 2006, and that it
1
The discussion of attitude data draws on work by Peter Taylor-Gooby and Rose Martin
financed by the Anglo German Foundation.
176
‘should redistribute income from the better off to those who are less well
off’ fell from 45 to 34 per cent over the same period (see also Johns and
Padgett 2008, p. 208).
Poverty and inequality remain issues recognized by the majority of
the population although they have become less pressing in individual
lives. Most people no longer believe that it is the job of government
to tackle them. Further multivariate analysis of attitude shifts during
the period between 1996 and 2006, when most of the change seems to
have taken place, demonstrates that it cannot be explained by changes
in socio-demographic factors which have some influence on general atti-
tudes to welfare, such as population ageing, improved levels of educa-
tion, or trends in income distribution (Taylor-Gooby and Martin 2008,
pp. 245–50). By far the most important explanatory factor is the change
in attitudes to the role of government. Only a minority now think the
state should redistribute to reduce inequalities. This fits with the view
that globalization weakens the independent authority of the nation state
and requires a new focus on individual aspirations rather than collective
provision.
The basis of poverty is increasingly located within the individual.
A series of questions which are very widely used in international sur-
veys investigates popular explanations for poverty (see Economic and
Social Data Service 2008 for questionnaires and further details). In 1994,
29 per cent of those interviewed in the British Social Attitudes survey
attributed poverty to ‘injustice in society’, 48 per cent put it down to
such factors as ‘bad luck’ or ‘inevitability in modern society’, and only
15 per cent to individual characteristics like ‘laziness or lack of willpower’.
By 2006 laziness was seen as the prime factor by 27 per cent, while
injustice had fallen to 21 per cent, and bad luck was roughly the same
at 44 per cent. If poverty is a matter of personal failings rather than injus-
tice or the operation of modern capitalism, state intervention may seem
inappropriate.
International surveys add further weight to the view that attitudes to
poverty and inequality and to the role of government in this area are
changing. Responses to a question in the European Social Survey about
whether ‘government should reduce differences in income levels’ show a
gradual decline in support between 2002 and 2006, from 62 to 57 per cent
of those interviewed in the UK. Support for the idea that the issue is
really one of individual effort, and that the role of government should
be confined to ensuring that the playing field is level (‘it is important that
177
people are treated equally and have equal opportunities’), has strength-
ened, from 66 to 73 per cent (ESS 2008). The International Social Survey
project includes questions on both perceptions of inequality and beliefs
about whether it is the role of government to address the issue. While
inequality is seen as too high by between 70 and 90 per cent of those
interviewed in the European countries covered between 1987 and 1997,
support for redistributive government policies declined markedly during
the period (ISSP 2008).
Similarly, qualitative interviews and focus groups conducted by Pahl,
Rose, and Spencer (2007) show that most people are well aware of the
growth and scale of inequality. However, they are now more likely to
think in terms of differences in lifestyle rather than income and to under-
stand social change in terms of individualism and choice rather than class
inequality. Government becomes almost irrelevant to inequality since
it is viewed as a matter of consumption pattern, personal choice, and
aspiration.
Our focus group work 2 on perceptions of fairness in society showed an
emphasis on equality of opportunity rather than equality of outcome as
often the first component mentioned when the participants were asked an
introductory question about their conception of a ‘fair society’. Typical
responses were phrased in terms of ‘opportunity for all’; ‘every single
person has access to every part of society if they want or need it’; ‘you
have got to earn your standard of living don’t you? . . . [but] . . . with an
equal society you have to have been given the opportunity’ (Martin
2007, p. 1). However, while equality of opportunity finds some support
among almost everyone interviewed, there are differences of emphasis.
This interpretation of fairness is advanced much more strongly by the
middle class respondents: ‘equality of outcome is more extensively and
sympathetically discussed among the working class groups, with far more
consensus on the merits of equal outcomes than in the case of the middle
class’ (Martin 2007). Once again, the task of government is to enhance
opportunities rather than redistribute income and guarantee equal out-
comes.
2
Eight focus groups were carried out in contrasting areas in the Midlands and South-East
to examine attitudes to social justice, fairness, equality, and social provision in 2007–8. The
groups were balanced to include equal numbers of older and younger middle and working
class participants and of women and men. The work was funded by the Anglo-German
Foundation. Rose Martin made a major contribution to the analysis.
178
Tax, Spending, and Reciprocity
Recent quantitative and qualitative studies demonstrate the significance

of reciprocity in attitudes to social welfare. Sefton re-analyses the 2004
British Social Attitudes data-set to show that it is endorsed by just over
half the population: ‘there is general support for the principle of the
welfare state as a system that supports people when they need help—
whether or not they have enough money to pay—and that spreads the
cost of doing so according to people’s ability to pay.’ This is coupled with
‘resentment of those seen as abusing the system by not contributing what
they reasonably can and drawing out more than they reasonably need’
(Sefton 2005, p. 27).
Similar themes emerge from cluster analysis of a range of questions on
attitudes to tax and benefits which take into account moral principles of
desert and entitlement. In addition to majority support for reciprocity,
the study identifies two other groups, each accounting for about a quarter
of the sample. These are the ‘rugged individualists’ who believe people
should be self-reliant, responsible for meeting their own needs, and that
the state should have a minimal role, and the ‘Samaritans’ who endorse
redistributive welfare on the basis of need (Sefton 2005, p. 23).
Qualitative researchers add a further insight into how the framing of
social interests from an individualist perspective limits reciprocity. Hedges
used focus groups and discursive interviews to examine understanding
of fairness and welfare. The model that emerges combines exclusion and
reciprocity. People should get help when they need it, provided they make
every effort to help themselves, but the cost of the services should be
spread approximately according to the ability to pay. There are many
criticisms of service provision. Some individuals unfairly claim benefits
to which they are or should not be entitled and should be punished. The
most common account of why someone did not deserve support referred
to a failure to contribute to the common ‘pot’ when one could (Hedges
2005, p. 5). However, the scope and inclusiveness of such reciprocity is
heavily constrained.
When they think about taxation and social spending, most people
treated them as independent areas and failed to connect the two. Tax is
an unpleasant topic and taxes are generally resented. Welfare spending,
on the other hand, provides services that are valued. The conceptual
disconnection is confirmed in other work. A Fabian Society study based
on a national survey and qualitative interviews concluded: ‘the link has
179
collapsed in people’s minds both between themselves and the taxes they
pay, and between those taxes and the public services they are being spent
on’ (Commission on Taxation and Citizenship 2000, p. 55). The British
Social Attitudes survey asks separate questions about tax and spending.
The proportion of those interviewed who want spending on health and
welfare to be increased rather than cut or kept constant has fluctuated
around half since the early 1980s. Conversely, most people think tax is
too high, especially for low and middle earners. This applies even among
those who endorse more welfare spending. The percentage of those who
favour higher spending, who nevertheless think tax is too high or about
right, even for high earners, has grown from 45 per cent in 1987 to 56
per cent in 2006. Most people want lower taxes and more spending at the
same time. They are steadily abandoning any support for tax and spend
as an instrument of redistribution.
The Contribution of Unwaged Care-Work
A further aspect to reciprocity concerns the provision of informal care and

other ways in which individuals may contribute to the general welfare.
Estimates of the value of informal care for frail elderly relatives and young
children varies. A common approach seeks to calculate the cost of such
services at market rates or in terms of the cost of corresponding state
provision. One report values the contributions of each carer at some
£25,000 annually in 2005 on this basis (Buckner and Yeandle 2007).
Such approaches are likely to be imprecise because they do not take into
account the impact of vastly greater activity on unit costs or the difficulty
in recruiting sufficient paid staff (Glendinning 2007, p. 411). However,
they convey a strong impression of the scale of the issue.
Informal care is provided mainly by women and can be thought
of as ‘compulsory altruism’, as Land and Rose point out (1985). One
argument is that the logic of reciprocity should take into account such
uncosted contributions as balancing entitlement. Reciprocity is an impor-
tant factor in understanding ideas about care within the family, as the
work of Finch (1989), Williams (2004), and others reviewed in Chapter
6 shows. Although there have been moves towards more equal shar-
ing of care, informal provision remains principally the responsibility
of women (Crompton and Lyonette 2008, pp. 54–5; Harkness 2003,
p. 150). The advance towards gender equality in this area, as in wages, is
slow.
180
There are some indications that the role played by informal carers
is increasingly acknowledged in welfare state policies. The provision
whereby carers of young children are not subjected to the work require-
ments imposed on other claimers and for the rolling in of up to three years
of childcare and of elder care towards entitlement to the State Second
Pension go some way in this direction. However, the contribution of
unwaged care did not emerge in the focus groups and national surveys
as a factor which should be taken into account in thinking of the balance
of entitlement and contribution. These issues do not yet seem to play a
major role in the discourse of most people.
Diversity and Inclusion
The main finding in research on responses to diversity is of a tension

between two perspectives. One is clearly divisive, the view that migrants
damage the interests of the community by undercutting local wages and
by claiming welfare benefits for which they have not contributed. On
the other hand, migrants are also seen as making a positive contribution
through their willingness to work. Both perspectives on immigration are
also evident in quantitative analyses. The European Social Survey study
for 2002 shows that a substantial minority of those interviewed in the
UK sample see immigrants as ‘bringing down wages and salaries’ (37%)
and ‘taking more out of the welfare state than they put in’ (26%). Fully a
third think migrants should not have the same entitlement to social rights
as the host population. However, the minority with a university degree
or above (about a quarter of the 2000 interviewed) were markedly more
open. Corresponding figures are round about half those for the general
population: 20, 11, and 18 per cent, respectively.
Analysis of the British Social Attitudes survey shows a further com-
plexity, to do with assimilation to social citizenship. Evidence from the
2004 survey indicates that contributing through work for as little as two
years may be seen as making a difference in areas like entitlement to NHS
treatment or basic state pensions (Sefton 2005, p. 26). The strength of
feeling is also brought out in the focus groups by the fact that migration
emerged unprompted as a strong issue in response to questions about the
general fairness of the welfare state.
Respondents displayed a complex mix of negative and positive atti-
tudes. On the one hand, wage levels were a prominent issue, particularly
among the working class groups. As one put it, ‘stopping our lads from
181
getting jobs because they will work for a lot less money and they undercut
these local builders, they can’t survive.’ On the other, migrants are seen
as contributing to the economy, particularly by the middle class groups:
‘it’s generally considered to be a very good thing for the economy . . . a lot
of them are, in fact, very hard working because they come from coun-
tries where there is, and always has been an incentive to work and also
they want to make money and leave’; ‘if there is a shortage in dentistry
or whatever and they can’t fill the places for medicine—doctors, nurses or
whatever—then maybe we should open it up.’
Conclusion: Defensive Reciprocity Versus Limited Inclusion
Public opinion is ambivalent and further confused by widespread igno-

rance about the incidence of taxation and social spending (Taylor-Gooby
and Hastie 2002). The overall pattern is of a limited reciprocity between
defined groups. There is a general retreat from the idea of the state as
an agent to mitigate inequality. While most people endorse reciprocity
within the group of contributing citizens, their capacity to extend to
vulnerable outsiders or to think in terms of positive tax-financed redistri-
bution is inhibited by the dominant currents in their ideas. The capacity
to extend reciprocity to the unwaged contribution of care-work is also
constrained. Similarly, there is a recognition of the economic contribution
of migrants, cross-cut by concern about the impact on employment.
The discussion in Chapter 5 demonstrated that even a rigorous individ-
ual rational actor logic can include reciprocity within a group. However,
there is also scope for punitive attitudes towards those who breach group
norms, once these are established. Such reciprocity is ambivalent. From
the perspective of a self-regarding group member, reciprocity is simply
mutual support in the interests of the group and thus the individual.
From that of the individual taxpayer, service-user, citizen, voter, or sur-
vey respondent, group membership does not obviously apply. Immediate
interest is to defect and free-ride, to get as much as possible in the way
of services for oneself, and pay as little tax as possible. When survey
questions offer such a frame of reference, by separating poverty, tax, and
social spending, people respond as rational individuals. They fail to link
poverty and redistributive state spending, or social provision and the tax
necessary to finance it. In a similar way, they remain ambivalent between
the collective interest of the economic contribution of migrants and the
182
individual interest of control over jobs. Migrants’ willingness to work is

both welcomed and begrudged.
The upshot is a defensive reciprocity, which sustains mutual provision
across the group of known contributors but limits support for outsiders.
Inclusive social citizenship requires a broader frame of reference. An
important contribution to this is precisely the commitment of a collective
standpoint by government which the immediate individualism of the
rational actor logic makes it difficult to supply. In the next chapter we
consider the implications of the approach which currently dominates
policymaking in the UK for social citizenship.
183
11
Welfare Under Altered Circumstances
European welfare states have faced substantial pressures from a variety

of sources during the past quarter century and have successfully weath-
ered them, more or less. Despite the more gloomy pronouncements of
some commentators, government social spending continues to expand
(although more slowly) and the range of service areas covered is, if any-
thing, broader than before. The immediate issues lie not in the scope and
standing of the welfare state but rather in the means used to deliver its
services and in the assumptions about social citizenship that underlie
current policies. First-order challenges to welfare state values have been
more or less successfully addressed in most countries. It is the second-
order challenges generated by an important new direction in policy,
typified by developments in the UK, that now cause the most intransigent
problems. These both lead to problems in sustaining trust and render it
difficult to develop a more inclusive welfare state.
In this chapter we bring together the arguments of the book and
consider their implications for the future of social citizenship. We have
developed three linked arguments:
r Sustainable state welfare requires a social citizenship resting on accep-

tance of reciprocity and social inclusion and public trust in welfare
state institutions.
r Increasingly, welfare states are pursuing policies based on a logic of
individual rational action rather than a commitment to shared social
values.
r Theoretical analysis indicates that this approach can sustain reci-
procity within a group on a basis of enlightened mutual self-interest.
Group members can establish and defend the boundaries of such reci-
procity effectively. However, the rational actor perspective precludes
184
recognition of the importance of credible commitment to shared

values in building public trust and of endorsement of a collective
rather than an individualist approach in promoting social inclusion.
This analysis is supported by empirical evidence from studies of UK experi-

ence. Reliance on targets, competition, and incentives in the management
of public services appears to enhance cost-efficiency but damage trust.
While most people support a limited reciprocity, the success of even
a determined Centre Left government in advancing social inclusion is
limited. Individual citizens are ambivalent between a pure self-regarding
rationality and more collective approaches. Commitment to an individual
rational actor model of agency makes it more difficult for government to
provide the leadership which will support an extensive social citizenship.
This raises the question of how the assumptive underpinnings of state
welfare can be sustained by governments which must also address the
pressures of constrained resources and expanding demands discussed in
Chapter 1.
Most people remain enthusiastic in supporting the main welfare state
services which they think they may need during their life course. As
globalization restricts the choices available to governments in managing
national economies, the individualist approach that has been pursued
most vigorously in the UK appears increasingly attractive to policymakers.
While reform processes differ markedly between European countries, a
common pattern may be discerned. Labour market, training, and social
security polices have been adapted to contain spending and promote
engagement in paid work, on the grounds that this will contribute to
national competitiveness. Escalating state pension commitments have
largely been curbed, and some of the burden shifted to individual savings.
The major services in kind such as health care and education are being
restructured using New Public Management techniques, so that adequate
standards are maintained, costs are constrained, and provision becomes
more responsive to popular demands. The idea that citizens are respon-
sible for choosing, managing, and funding a greater proportion of their
social provision is gaining ground.
So far so good for the shift to a social citizenship based loosely on valu-
ing and empowering individual agency against more collective solutions.
UK experience indicates that the new approach generates problems in two
areas:
r The destabilization of public trust and the growth of disquiet with
welfare state institutions.
185
r Difficulties in developing policies to address the outcomes of global-

ization that weaken social citizenship, most importantly from greater
inequality and social diversity.
Current European restructuring of the welfare state inclines to the logic

of individual rational action, most clearly evident in Britain. Theoret-
ical discussion (Chapter 5) shows that this approach can provide the
foundations for a limited and continuing reciprocity across the mass of
the population. It is much weaker in sustaining a value basis for social
inclusion and in developing trust beyond the rational calculation of
coincidence between one’s own and another’s interests. It is difficult to
sustain values of commitment and care starting out from a self-regarding
exercise of reason, however enlightened and long-sighted. The individual
rational actor welfare state encounters a growing deficit of popular trust
and runs the risk of public concern and disquiet in relation to its policy
initiatives (Chapters 8 and 9). It is weakened in the resilience and scope
of reciprocity, the reach of social inclusion, and the vitality of public trust
(Chapter 10).
The shift from equality of outcome to equality of opportunity result-
ing from the liberal emphasis on individual choice provides a strong
foundation for insistence on broadening opportunities and on provision
to tackle the disadvantages faced by members of the more vulnerable
groups, provided they are then willing to take responsibility for their
own future welfare careers. Such policies have also been deployed with
considerable success at both national and EU level. However, the model of
equal opportunities for independent and rational individuals undermines
any attempt to address inequalities of outcome at the top end. This, in
turn, limits the scope of reciprocity, as both privileged and vulnerable
groups are detached from the mutual community of service-users and
contributors. It also makes it harder to establish the strong affirmative
policies necessary to advance the least privileged ethnic minorities.
After all, everybody starts with similar chances. The opportunities
available in a more global market enable groups advantaged by skill or
background to expand their wealth. While greater inequality should, all
things being equal, be accompanied by greater mobility both upward and
downward, since it opens up the range of positions to which individuals
may move, this appears not to happen. Governments are able, if they
choose to do so and pursue their policies with sufficient commitment,
to offer protection to some at least of those at the bottom. Advantaged
groups are equally free to mobilize their privileges to benefit themselves
186
and their children. The mass public increasingly sees the inclusion of
those at the bottom as a secondary concern for government and the
trajectories of those at the top as entirely beyond the domain of state
intervention: ‘Good luck to them!’
The deficiencies of these policies in addressing both the expansion of
a relatively privileged high income group and poverty among those who
cannot be included in the labour market result from the overvaluing of
aspirations and the constraints on redistribution. A liberal multicultural
policy risks the creation of maintaining inequalities by benefiting most
those who are best fitted to grasp opportunities, unless there are strong
measures to ensure that all groups are fully included.
The Dilemma of Value-Commitment and Cost-Efficiency
All theoretical perspectives open up particular ways of understanding

social issues but divert attention from others. The rational and individual
approach to social agency offers a conceptual framework that precludes
full recognition of the role played by social values in the nourishing of
social trust, at the same time as the policies based on that framework
diminish the opportunities to pursue and express the commitment to the
values of social welfare that advances trust. The framework also provides
the basis for the promotion of opportunity and individual responsibility
rather than outcome and redistribution as the goals of policy, so that
the advantage of privileged groups becomes entrenched and problems
of inclusion more difficult to address. Social citizenship benefits from
vigorous policies that expand the domain of reciprocity and extend social
inclusion. An individualist logic tends to limit reciprocity to the mutual
advantage of a comfortable group of assured contributors. It prevents
government from broadening inclusion much beyond support for greater
access to opportunities.
Under these circumstances, the capacity for debate between those
whose primary concern is a social citizenship based on redistribution and
trust and advocates of the new policies is curtailed. The latter simply do
not recognize the framework of shared values and action which expresses
and reinforces them as important in sustaining public trust and in provid-
ing the basis for a more far-reaching reciprocity and for social inclusion.
The extension of individualist and directive target-driven procedures
in welfare policies has energized debates about welfare state citizenship.
A common element in these debates is the insistence on the extension
187
of democratic engagement. A number of writers, perhaps most impor-

tantly Habermas (1984–7), have recognized that modernity removed the
constraints of traditional morality but introduced new restrictions on
freedom. People’s social worlds become increasingly delimited by their
status in such roles as consumer, employee, carer, entrepreneur, claimer,
professional, or manager. The debates about democracy and welfare share
an emphasis on enabling service-users, particularly members of weaker or
more vulnerable groups, to press home their interests to providers and,
more generally, in a broader social discourse.
Lister argues for the extension of ‘solidarity in difference’ across social
groups to enable the development of an effective and inclusive gender
politics (2003, p. 199). Beckett follows this approach by stressing the
importance of ‘bridging ties’ in enabling different vulnerable groups to
develop shared struggle against disempowering procedures (2006, p. 198).
Ellison points to the possibilities for ‘defensive engagement’ by service-
users as their interests are threatened (1997). Beresford (2003) and Lawson
(2007) promote the engagement of the most vulnerable service-users as
full stakeholders in provision, with a right to share in management. Elstub
(2008) analyses the processes of deliberative democracy among voluntary
sector groups. Howell and Pearce (2001) argue that liberal individualism
weakens the capacity of groups in civil society to organize and develop an
oppositional discourse to official practices.
It is difficult to see how those responsible for state provision can sustain
a credible trustworthiness unless the community using the services has a
degree of collective involvement in their management and control. The
break-up of large bureaucracies and decentralization of services that have
been actively pursued in the state sector in recent years bring providers
closer to users but do not enhance accountability, unless the sharing of
control discussed by the writers mentioned above is also pursued. Social
citizenship must tackle the problem of trust by providing opportunities
for the expression of commitment and care within the structure of welfare
services. Consultations with users, training of service providers, and the
management of public provision in more sensitive and responsive ways
may seek to convey that engagement with users is valued. The difficulty
lies in ensuring that commitment is credible. The privileged status of
central targets and market imperatives undermines this. The extension
of local democracy into the management of social provision may offer a
way of demonstrating responsiveness to citizen need.
One benefit of the individualist approach is that it points to an auto-
matic mechanism for reconciling the competing demands of different
188
groups. This is supplied by the hidden hand of the market. Government

sets quality standards and budgets and then steps back from intervention
in the detailed operation of services. Day-to-day policy is decided by
managers and professionals in different agencies in response to expressed
demand. The approach offers advantages in elegance and cost-efficiency.
As we have seen, it runs the risk that public trust will be undermined. It
may also reinforce the tendency for citizens, treated entirely as individu-
als, to take a self-regarding rather than a broader overview of tax and social
provision. They may seek (as is perfectly rational) to avoid responsibility
for contributing to the finance of the services which they nonetheless
wish to use. They will also narrow the scope of reciprocity to include
only groups they are confident will be mutual contributors. The result
is a straitening of the domain of welfare.
Social citizenship requires a degree of leadership by government to
establish a broader perspective on social responsibility, just as inclusive
state welfare requires a collective frame of reference. However, the con-
tinuing pressures from the increasingly competitive and globalized inter-
national economy that provides the setting for the rise of individualist
approaches are unavoidable in any country that seeks to remain open to
the world market. Solutions must be cost-efficient. This discussion points
to two dilemmas of welfare reform. On the one hand, there are strong
arguments for greater involvement of service-users in order to build trust
in provision shaped by shared values, while on the other there is an equal
need for government to set the tone in values, in order to ensure that
dialogue reaches out to include more expansive reciprocity and social
inclusion. On the one hand, there is a need for the greater efficiency
in deploying resources in response to individual wants that the hidden
hand can provide, and on the other there is a parallel need for democratic
process to ensure that the system addresses collectively recognized social
needs.
These twin dilemmas can only be addressed through political debate.
They require involvement by government in committing itself to estab-
lish standards of inclusion that move beyond access to opportunities to
cover service entitlements and expectations and also to ensure that all
individuals are able to contribute to debates about the values embodied
in provision. The debate about resources and cost-efficiency must be
extended to recognize the pressures and take both the implications for
tax and social contribution and the outputs people want in discussion
of alternatives and priorities. Greater democratic involvement cannot
expand resources so that all demands can be satisfied. It can do two
189
things: ensure that there is involvement in and commitment to the range

of provision that is agreed and seek to include as many members of the
community as possible in support for those services. In short, it cannot
guarantee social provision at the level that all groups would like. It can
help sustain social citizenship in hard times by offering a space in which
the shared values that underlie broader reciprocity, inclusion, and public
trust may be constructed. The retreat to individualism and the hidden
hand of the competitive market goes hand in hand with the absence of
opportunities for such public dialogue and the failure to recognize their
worth.
Sustainable Social Citizenship
The wave of reform currently working through welfare states buys survival
at a cost. That cost is a shift towards new forms of provision in which tax-
financed services for the mass of the population enjoy considerable public
support, but other aspects of social citizenship become vulnerable. Public
services operate increasingly in a low-trust environment in which political
legitimacy is progressively more conditional and insecure. The public
and government commitment to support those at the bottom which
underlies social inclusion falters. Collective defences against the impact
of inequality and ethnic plurality on social cohesion are weakened.
The pressures of globalization will not disappear. The welfare state faces
an increasingly uncertain future. Sustaining the values that underlie it
requires political determination to enhance competitiveness by reducing
the privileges of advantaged groups and extending the inclusion of the
weakest and to rebuild public trust by extending democratic engagement
in social provision. The UK provides an object lesson of the strengths and,
perhaps more importantly, of the shortcomings of policies that reframe
social citizenship within the confines of the logic of individual rational
action.
190
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211
Index
agency 55–66 Blank 47

expressive 62 Blomqvist 48
individual 60–4, 69–73, 89–107, 121–2, blood donorship 90–2
174–6, 184, 190 Boeri 164
instrumental 61 Boerma 17
knavish 96 Boix 167
knightly 96 Bonoli 7, 23
normative 62 Bourdieu 83–5
social 60–4 brain-imaging 74
Akerlof 64 Brazil 21
Alaszewski 103 British Household Panel Survey 98
Alesina 5, 28, 48, 167–8 British Social Attitudes Survey 141, 146,
Alexander 73 177–8, 180, 181
Alibhai-Brown 169 Brown, Gordon 119
altruism 69, 71–5, 90–2, 95–6, 166 Buckner 180
Alvarez-Rossette 142 Buran 47
Appleby 139, 142 Burgess 132
Arrow 68 Burkhardt 167
Atkinson 26, 171–2
Atkinson Review 140 Cabinet Office 168
Auman 70 Calnan 104, 147
Austin 117 Camerer 71
Austria 67 cash nexus 94
Axelrod 70 Castles 50, 115, 167
CFMEB 169
Baggott 131, 135 China 21
Baldock 57, 122, 164 choice 47, 57, 123–8, 135, 155, 175
Ball 131 citizenship, social 3–19, 59, 85–8, 89–107,
Banting 48, 49, 164, 166 111, 115–19, 132, 188–90,
Barbalet 104 sustainable 190
Barker report 122 Cold War 70
Barry 49, 167–8 Coleman 81
Bartlett 15 Commission on Social Justice 116–17
Beck 12 Commission on Tax and Citizenship 180
Becker 69 commissioning 133
Beckett 188 commitment 103–5, 187–9
Beresford 188 community 117
Berger 64 competition 47, 56, 102, 123–8
Berthoud 98 Comprehensive Spending Review 122–3,
Bevan 124, 135, 138 135
Blair, Tony 117–18, 170 consumerism 121, 127
Blanden 173–4 Cook 64, 104
213
Index
Cooper 91 Ferrera 26
cooperation 75 Financial Services Agency 122
cost-efficiency 44–8, 111, 126, 184, 187–9 Finch 60, 97–8, 180
Crompton 173, 180 Finlayson 127
Culyer 91 first-order 3, 130–45, 184
flexi-curity 41–4, 56
Darfur 75 Flynn 57, 131
Dasgupta 9 Folbre 90
Dawkins 73 France 15, 17, 23, 27, 39, 40, 41, 42, 43, 45,
De Lors 35 46
Deacon 97 free riding 73
Deakin 122 Freeman 164
Dean 56 Frewer 103
Deci 92 Frey 92–6, 124
democracy 189 Fehr 68–70
Department of Children, Schools and
Families 132 Gächter 68–70
European Social Survey 177–8 Gambetta 9, 101, 104
dependency culture 56 games, study of 70–5
diversity, ethnic 38, 48–50, 163–83 Gay 95
Dixit 124 Germany 15, 17, 23, 27, 39, 40, 41, 45, 46,
Dorling 171 67
dot-com bubble 43 Gershon report 122
Driver 117–18 Gibson 47
Duncan 97 Giddens 5, 11, 65, 81, 96
duties 5 Gilens 167
Gilson 104
Economic and Social Data Service 177 Gini coefficient 170
education reform 131–2 Gintis 68–73
education 34 Glaeser 5, 28, 48, 167–8
Edwards 97 Glendinning 180–1
Eiser 103 Glennerster 132
Eldridge 149 globalisation 3, 13, 20–32, 59, 86, 113,
Elstub 148, 188 163–83, 185
embedding 82 Goldthorpe 173
employment 113 Goodhart 48, 164
contracts 77–8 Goodin 90
mobility 43 Gough 25
part-time 41 GP fund-holding 133
protection 41–2 Grahl 112
Enthoven 47, 124, 133, 135, 158 Granovetter 82, 83
equality 18, 117, 163–83, 185 Gray 57
Ermisch 173 Green 15
Esping-Andersen 7, 112, 164 Gregg 173
EUFRA 49, 168
European Central Bank 35 Habermas 5, 188
European Social Survey 177, 181 habitus 83–5
European Union 9, 34–7 Hagreaves-Heap 60, 63, 79
Growth and Stability Pact 35 Haim 67
Lisbon Council 15, 42 Hanley 75
evolutionary psychology 73–5 Hansen 50
Hardin, G. 76–7
facework 103 Hardin, R. 9, 10, 69, 79, 101–3
fairness 78, 84, 152, 175 Harding 124
214
Index
Harkness 180 Kranton 64

Hart 152 Kymlicka 167–8
Hartz reforms 40
Heath 168 labour force 34
Hedges 179 labour market 27, 37, 38–44, 187–8
Held 7 activation 38–40, 56, 111, 116
Henrich 71 Land 180
Hewitt, Patricia 150 Lane 57, 92
Hills 9, 55, 118, 164, 170 Lawson 57, 148, 188
Hinrichs 46 Layton-Henry 169
Hirsch 171 Le Grand 15, 57, 91, 92–6, 126, 135, 138,
Hirschman 148 148, 150, 158
Hoggett 64, 124, 127 Leat 95
Holmwood 63, 81 Lee 140
Home Office 167 Levi 64
Hood 124, 135, 138 Lewicki 104
Horlick-Jones 149 Lexis-Nexis 149
Hovland 103 Lichbach 58
Howell 188 Lieberman 169
Huber 13, 30, 167 Lijphart 114
Linker 91
Immergut 47 Lister 5, 17, 188
incentives 56 Luckmann 64
inclusion, social 5, 30, 50, 68, Luhmann 9, 10
89–92, 97, 99–100, 163, Lyonette 180
182, 190
income inequality 26–7, 170, 1 Machin 173
international comparisons 171–2 Manning, A. 164
India 21 Manning, N. 132
individual rational action (see agency, market economy
individual) liberal 112
Institute for Fiscal Studies 171 co-ordinated 112–13
International Social Survey Project 176–7 Martell 117–18
IPCC 75 Martin 177, 178
IPPR 148, 167 Maschler 70
Ipsos-Mori 104, 141, 143, 146 Mau 55, 79, 167
Irwin 97 Mayer 104
Italy 15, 17, 23, 39, 40, 41, 45 McLaughlin 57
McMahon 168
Jegen 94 McNamara 20
Jenkins 57 Means 47
Jessop 24 methodenstreit 67
Job Seeker’s Allowance 56 migration 28, 21–2, 42, 49–50, 164–7, 176,
John 124, 127 181
Johnson 124, 127, 164 Millar 117
Johnston 48 Mitton 17
Jones 64, 96 mobility, social 27, 172–4
justice (see fairness) Modood 166, 168–70
Moellering 9
King’s Fund 137, 138 Molm 78, 84–5
Kitzinger 149 moral biology 73
Klein 131 motivation
Kok 36 extrinsic 92–4
Kramer 104 intrinsic 92–4
215
Index
multi-culturalism 48–50, 168–70 Petts 149

Murdock 149 Pickard 131
Murray 56 Picker Institute 141, 146
Pidgeon 103
national cohort studies 172–4 Pierson 15, 55, 115
National Health Service 130–60 Pinker 104
Healthcare Commission 134, 142 Pischke 132
improvement 137–8 Plant 152
in England, Scotland, Wales and Northern Pochet 42
Ireland 136, 138–9 Polanyi 82–6
Independent Sector Treatment Pollock 134
Centres 135 Poortinga 103
mass media and 148–51 population ageing 17, 45
matrons and managers 156–7 Poundstone 70
NHS Direct 135 poverty 170, 172
NICE 134 power, centralisation of 114
Plan 134 Preker 124
productivity 139–40 Primary Care Trust 133
reform 131–6, 147–8 Prime Minister’s Strategy Unit 114,
targets 134–5, 139 123–5
waiting times 137, 138, 150 Prime Pour l’Emploi 40
needs, social 5, 59 prisoner’s dilemma 70
New Institutional Economics 83–4 private medical insurance 141
new paternalism 158–9 Propper 126, 138, 148
New Public Management 13, 30, 50, 57, public attitudes 141–2
102, 106, 120–1, 132, 147, 156–8, disquiet 146–60, 150
184 qualitative research 151–9
new social risks 23 satisfaction 147–8
Nicoletti 173 to NHS reform 154–6
Niskanen 57 to poverty and inequality 176–8
nuclear waste 93 to universality 153
public goods 76–9
O’Malley 9 Public Service Agreement 119–20, 124
OECD 17, 22, 23, 26, 27, 43, 45, 48, 113, Putnam, R. 11
166
Olson 69–73 quasi-market 117, 131, 135
Office for National Statistics 167
Oord 90 racial ‘fractionalisation’ 166–7
Open Method of Co-ordination 36 rational choice 63
opportunity 12, 117 rationality 80
Ostrom 71–3, 76–9 reciprocity 5, 51, 63, 73–9, 78–9, 87–8,
89–92, 99–100, 119, 150, 163, 175,
Padgett 177 184
Page 104, 147 defensive 182, 188
Pahl 178 redistribution, 7–9
Parekh 168–70 horizontal 5, 8
Park 55, 131, 142 vertical 5, 8
Parry 122 Rendall 167
Parsons 60, 80–1, 87 research and development 43
Pearce 188 responsibility 44–8, 46, 111, 117, 126
Penninx 49, 168 Rhodes 26, 42
pensions 44 Rico 17, 47
reforms 47–8 rights 5
216
Index
rising living standards 171 Swedberg 68, 83

risk society 24 Sweden 15, 17, 27, 39, 41, 45
Rose 178, 180 Sztompka 9, 104
Roth 71
Rothstein 71, 118 Talbot-Smith 134
Rowe 104 targets 44–48, 56, 102, 123–8
Russia 21 tax avoidance 93–4
Tax Credit 40, 171, 172
Sahlins 82 taxation 121
Sainsbury 49 Taylor-Gooby 7, 12, 13, 17, 23, 40, 48, 56,
Sally 71 92, 104, 121, 142, 148, 158, 167–8,
Salt 167 177
Saltman 17 Teague 112
Sanderson 166 Thaler 71, 92
Sanford 147 Thatcherism 47, 116–17
Scharpf 7, 13, 26 threshold effect 94–6
Schee 104 Thurnwald 82
Schierup 50 Timonen 48
Schmidt, V. 7, 13, 26, 114 Tinbergen 164
second-order 3, 146–60, 184 Titmuss 90–2, 96
Sefton 164, 172, 179, 181 Torgler 94
Seligman 104 Toynbee 138
Sharma 171 Treasury Select Committee 171
Simmel 67 trust 5, 6, 10, 29, 50, 59, 68, 70–2, 83–4,
Slovic 103 87–8, 100–7, 119, 144–5, 147,
Smelser 68 184
Smith, Adam 58
Snower 115 UK 15, 17, 23, 27, 39, 41, 43, 45, 46, 47,
social care 60, 96, 97–9 111–29
social cohesion 11 Conservative government 133
social justice (see fairness) Conservative party 116–17
social meaning 81–2 general election, 2005 151
social recognition 94–6 New Deal 117
social spending 22, 34 New Labour 116–18, 154
social values 97, 184 Social Exclusion Unit 9
Socialist Workers’ Party 150 Treasury 119–21
societal change ‘golden rule’ 21
economic 15–16 welfare reforms 115
political 16 ultimatum game 71
social 16–17 uncertainty 12, 28, 100
socio-biology 73 Unk 49, 167
Solomos 168 US 39, 41, 43, 45, 70
Soroka 48, 164, 166 Upton 94
Soskice 112
Spain 15, 17, 23, 39, 41, 67 Van Oorschott 49, 167
Spencer 178 Veghte 55, 79
state 29 Vickerstaff 164
Stephens 13, 30, 167 voluntary work 95
Stern report 75, 123
Stewart 9, 118, 170 Wainwright 27
structure, social 86–7 Walker 71, 138
Sun newspaper 149 Wallace 158
Swank 55, 115, 167 Wallis 141
217
Index
Wanless report 122–3 Williams 17, 97, 131, 149, 180

Weber 60, 67, 68, 80 Wilson 73
Weill 49 World Bank 25
welfare state
reforms 14, 55–8, 111–15 xenophobia 49
market-centred 25, 47–8
pressures on 14–6 Yeandle 180
welfare values 119
Westminster model 114 Zinn 12
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r At the level of government, new approaches to public management

Underlying both trends is a common conceptual framework rooted in the

are addressed in terms of the deliberative response to opportunities and

r A more internationally competitive and productive economy, essen-

Welfare states have retained their competitive standing in much larger

To understand how the new policy model damages social citizenship,

Part I. Sustaining Social Citizenship in Difﬁcult Times

1. Social Citizenship Under Pressure 3

Part II. Intellectual Foundations of Reform

4. The Assumptive World of Welfare State Reform 55

Part III. A Case-study: The UK as Object Lesson

7. Putting the Theory into Practice: The UK Experience 111

Part IV. Conclusions: Strengths and Limitations of Rational

10. Globalization, Inequality, and Diversity 163

2.1. Social expenditure 1980–2003 as %GDP 23

1.1. State welfare: pressures and responses 14

BSA British Social Attitudes (UK)

state citizenship face both ﬁrst-order challenges from economic, political,

Citizenship is membership of a political community. It involves rights and

support horizontal redistribution between groups among the mass of the

r technological shifts with an impact on labour markets and, as some

An extensive literature covers the impact of these processes on welfare

Redistribution: Reciprocity and Inclusion

Both reciprocity and inclusion denote a willingness to forego immediate

might be made available in order to enforce work incentives, promote

Institutional Trust and Social Citizenship:

Trust is to do with the conﬁdence that one can rely on something or

to a decision’ (Luhmann 1979, p. 24). Finally, trust involves vulnerability:

with a consequent interest in trust. A number of factors contribute to

provision will diminish and services will be at risk of withering through

Challenges to the Welfare State

Economic, Political, and Social Developments

At the economic level three changes were important. First, technical

involves allocating the increment from growth rather than redistributing

determined effort to contain spending, or up to 2.4 per cent with such

equivalent and cross-cutting foundation for an inclusive social solidarity

Globalization describes the process of greater international integration at

power, and the emergence of newly industrialized countries, particularly

European countries, with recent migrants often predominantly located

How Globalization Shapes the Pressures on State Welfare

The resulting pressures on welfare provision are substantial and various

France US Italy Sweden OECD total

Figure 2.1. Social expenditure 1980–2003 as %GDP

of opportunities to establish more ﬂexible and individualized welfare sys-

Other writers seek to retrieve a positive role for social spending in

focus on changes in provision (e.g. Esping-Andersen et al. 2002; Scharpf

Implications for Welfare State Values

Greater uncertainty in working lives may generate political pressures for

context of policymaking (Banting et al. 2006) are taken into account,

The Response of Welfare States

The societal changes in the context of the ongoing progress of global-

on advance as an individual rather than as a member of a social group. The

These new approaches offer a rebasing of social citizenship in terms of

solidarity weaker, the individualist solution appears increasingly appro-

This chapter analyses the responses of European governments to the pres-

Pressures on the Welfare State

In the period of postwar expansion of national industrial economies,

Developments at the European Level

Price stability prevents the considerable and arbitrary redistribution of wealth

Economic developments have circumscribed the scope for action by

Initiatives at the National Level