Welfare is central to any discussion of the role of the state. On the most narrow of definitions it represents over half of public expenditure, while social security alone accounts for more than one third. This means that social policy is at the forefront of debates about what are appropriate and sustainable levels of public spending, borrowing and taxation. In recent years, however, the argument as to what should constitute the boundaries of the state has been given a new focus and a new intensity by the emergence of the related concepts of behavioural dependency and the underclass.

The point at issue here is the extent to which state benefits and services may exacerbate the very problems they are supposed to alleviate. The payment of more generous unemployment benefits inevitably reduces the pressures upon those who receive them to seek work or to accept whatever jobs are available. Similarly, the provision of improved access to housing and enhanced income support for one parent families must make the position of particularly the young single mother less onerous than in earlier years. There is now widespread concern that such changes have made dependency upon the state a more attractive and a more practicable alternative to self-reliance. It is also argued that any lessening of the stigma which was formerly suffered by those in receipt of welfare must lead to a corresponding reduction in the social status of those who continue to support themselves by their own efforts. The result, in the words of a former Secretary of State for Social Services, is the growth of a ‘dependency culture’ in which ‘people act in bizarre ways because they are responding to perverse incentives’.