Welfare provision, finance and choice

The changing role of the state in relation to what may be broadly considered ‘welfare’ is a theme that threads through all of the policy areas considered in this book. In some domains, such as early childhood, involvement of the state has increased significantly over the past two decades, while in others, such as housing, it has shrunk. Moreover, change has taken place along several dimensions – not just in terms of expenditure, but also in relation to forms of provision, the degree of regulatory control and user choice. This complexity means that a straightforward diagnosis of ‘privatisation’ is not helpful or perhaps even meaningful. As Powell and Miller (2013, p 1058) note: ‘The term privatization is multidimensional, and definitions and operationalisations of the term are often implicit, unclear, and conflicting.’ Instead, what we offer in this chapter is an account of some of the changes in policy in relation to the role of the state and their consequences for the distribution of spending – public and private – on welfare activities in the period from the eve of the financial crash to the present day.

To provide a structure for this task, we build on a framework developed by Burchardt, Hills and Propper (1999) and subsequently applied by Smithies (2005), Edmiston (2011) and Hills (2011). The framework comprises three dimensions – provision, finance and decision – each of which may be public or private, and which may occur in any combination (see Figure 10.1). The ‘pure public’ segment is what we might consider to be the archetypal post-war British welfare state – tax-financed, provided by a publicly owned and run organisation, and with little or no choice on the part of the beneficiary about how much or from whom to receive the service. Emergency treatment in an NHS hospital is an example. At the opposite corner, the ‘pure private’ sector is activity undertaken by individuals at their own initiative and purchased in the free market, such as private medical insurance.