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Reframing Social Citizenship

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Reframing Social Citizenship Peter Taylor-Gooby

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3 Great Clarendon Street, Oxford OX2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © Peter Taylor-Gooby 2009 The moral rights of the author have been asserted Database right Oxford University Press (maker) First published 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Taylor-Gooby, Peter. Reframing social citizenship / Peter Taylor-Gooby. p. cm. 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. JA75.7.T39 2009 306.2094–dc22 2008031131 Typeset by SPI Publisher Services, Pondicherry, India Printed in Great Britain on acid-free paper by Biddles Ltd., King’s Lynn, Norfolk ISBN 978–0–19–954670–1 10 9 8 7 6 5 4 3 2 1

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 government, 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:

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At the level of government, new approaches to public management have been introduced, leading to the break-up of traditional hierarchical 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 responsiveness to users in services such as health care, education, training, and social care. 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, professionals, 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 Management/Activation of the Citizenry combination seeks to balance three objectives:

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A more internationally competitive and productive economy, essential in a world of headlong globalization and relentless improvement in technology, to be achieved by mobilizing, motivating, and training the workforce. 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 decentralization of budgetary responsibility to providing agencies, competition in quasi-markets, and the imposition of strict targets. Greater responsiveness to what people want, essential in view of increasing public dissatisfaction with inflexible services, greater diversity 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 traditional welfare state rested on the citizenship values of reciprocity, inclusion, and trust: reciprocity in the balance of contribution and benefit between population groups at different stages in the life cycle, inclusion 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 discriminate 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 sustainability 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 Henwood, Emma Hughes, Anwen Jones, Jenny Kitzinger, Jane Lewis, Graham Loomes, Sonia Livingstone, Peter Lunt, Judith Mehta, Lynne MurrayCox, 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 AngloGerman 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

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Contents

List of Figures List of Tables List of Abbreviations

x xi 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 Index

191 213

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 management 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 challenges. 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 effective 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 programme 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 restructuring, and consider the impact of reform on the above cultural values. We develop the argument that the assumptive foundations of welfare

3

Social Citizenship Under Pressure

state citizenship face both first-order challenges from economic, political, and social shifts in the context of precipitate globalization and secondorder 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 policy 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 importance in the day-to-day operation of welfare states. The law cannot be everywhere, and is most often absent when the interests of more vulnerable 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 affluence 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 citizenship: 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 redistribution, 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 confidence 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 targets 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 function 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 institutional 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


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technological shifts with an impact on labour markets and, as some argue, on growth rates; fiscal, commercial, political, and demographic globalization; maturity of the most developed systems of provision coupled with population ageing and new patterns of family life; cultural and social shifts associated with an advance towards equality and social justice on the part of women; and 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 selfinterest’ 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 society, 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 ‘dangerous classes’ (Piven and Cloward 1971). Religious and humanitarian impulses promoted charity (Booth 1902; Rowntree 1922). These factors 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 childhood 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 vulnerability 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; Luhmann 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 sociologists, 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 communicate 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, destiny, commitment guaranteed by oath, attunement with cycles of nature, and faith in a transcendental or temporal authority. More recently, uncertainty 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 authority 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 stability 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 disreputable 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 considerable 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 secondorder impacts of welfare state reforms, undertaken in response to pressures from these factors, provide additional pressures, further restructuring citizens’ 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 discovered 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 competition, grew in importance. Mass migration led to greater cultural and ethnic diversity, generating concerns about fragmentation in the solidarity 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

Economic: New technology and production process new management and labour markets

Globalization

Fiscal and commodity world market

First-order impacts on the welfare state

Welfare state response

Second-order impacts

Inequality and uncertainty

Activation and opportunity Individualism not reciprocity, constraining responses to first order impacts

Political: citizen and government

Wealth, Declining authority self-confidence and of the nation state assertiveness

Fragmenting of welfare constituency; Limits to government interventionism

New public management; Quasi-markets

Independence not inclusion

Social: changes and relationships

Population ageing; Gender equality

Rising cost of pensions, health and social care; Diversity and declining solidarity

New public management and quasi-markets; Multi-culturalism; Politics of inclusion

Uncertainty not trust

Mass migration


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 wellpaid 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 manufacturing 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 traditional 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 selfconfident citizenry, less deferential to politicians, experts, and professionals 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 (Glennerster 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 populations of welfare states are ageing as birth-rates decline sharply, lifeexpectancy 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, leading 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 regulate cost-efficiency, and seek to ensure that as much treatment as possible 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 (TaylorGooby 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 pressures 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 mainstreaming 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 interaction 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 multinational 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 pressures on national currencies as a result of speculation. One implication is that national economic policies, including taxation and welfare spending, 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 competitiveness (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 supply chains involving intricate networks of outsourcing and just-in-time production are possible as a result of the rapid introduction of information 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 production (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 pressures. Globalization has also made possible migration in search of employment and better lives, at a rate not seen since the first wave of imperial globalization in the late nineteenth century. The expanded workforce 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 separation 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 neoKeynesian economic management, population ageing, family change, diversity, and a more challenging citizenry. These constitute the firstorder impact of societal change and globalization on the welfare state. Their impact has been assessed in a number of ways. Some commentators 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

Globalization: New Constraints on Policymaking France Poland

35

US UK

Italy

Sweden

Spain

Germany

OECD total

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 systems. 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 accessing 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 deindustrializing 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’ sociologists (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 transition towards risk society analyse the impact of globalization in dissolving of the structures of social class, industrial discipline, governmental 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 outcome is stronger pressure from citizens for engagement with government 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 competitiveness. These approaches understand the impact of economic globalization 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 investment 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 policymaking 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 programmes 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 Managerialism, and a greater emphasis on individual responsibility and opportunity. 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 attention 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 welfare 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 competition 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 market 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) assembles 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 insecurity 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, opportunities 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 workforce. 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 oneself 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 solidarities more limited. The impact on inclusion is likely to grow more severe as the gaps between the three main groups, the more or less comfortable 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 (TaylorGooby 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 identifies 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 question. 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 education. 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 globalization have constrained welfare policies and exerted pressures on the framework of values that underpinned social citizenship. The fifth column 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 services, 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 welfare 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 inclusion 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 competitive 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 individuals, 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 globalization. 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 globalized world, where market forces are stronger and governments and class 31


solidarity weaker, the individualist solution appears increasingly appropriate. 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 constituencies 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 pressures 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 common 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

The Response of Government

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, citizens 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 Employment of the same year (EU 1993b) stressed the importance of responding to international competition though quality of workforce and the containment 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 similarly 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 stability 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 legislative force of Directives and cover such matters as equality of opportunity 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’ emphasized 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 recommendations 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 contributed 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 variations 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 lowerspending 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 management 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 varying speeds in different European countries, but in the same general direction: 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

The Response of Government France

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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 initially subsidized retirement to protect the heavily unionized core workforce 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 Seekers’ 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 minimum 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 Coordination 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. Protection 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 Commission 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. Flexicurity 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 knowledgebased 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 relaxing 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 development 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 knowledgeintensive 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 direction 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 responsibilities (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 vigorously 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 distinctive 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 occupational 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 population 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 government, have been introduced alongside state provision, most notably in 45

The Response of Government France

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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 opportunity to make some progress towards gender equity in old age by allowing 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 generate 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, particularly in their structure and generosity and the role played by government. 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 insurance. In the UK and the Nordic countries involvement is primarily taxfinanced. 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 enhancing cost-effectiveness and ensuring responsiveness to users, cast in the role of consumers (see, for example, Enthoven 1985, 2002). These developments follow the determination to create welfare systems that deliver needed reforms cost-efficiently while meeting popular demands for welfare. Resources are increasingly allocated through the use of market mechanisms 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, interestingly, 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, introducing market competition. Subsequent social democratic governments have developed aspects of these reforms as part of a programme of decentralization 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 competitiveness 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 clearcut. 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, international inequalities, and wars that displace whole communities leads to more culturally mixed and, it is sometimes suggested, less solidaristic societies (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; TaylorGooby 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 pessimistic about the impact of diversity and multiculturalism on reciprocity and inclusion than those which do not. Second, the detail of how multiculturalism 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 opportunities 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 implications for their readiness to accept incomers as members of the civic community. Many commentators contrast the exclusionary approach of countries 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 citizenship 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 solidaristic 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 various 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 critical 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 targetbased managerial systems in the New Public Management, and a multicultural 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 highspending welfare systems to continue to address a wide range of needs for their citizens, despite the pressures. The values that underlie them

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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 individualism. 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 assumptions 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 directions 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 experienced 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 competitiveness 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.

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The welfare state reforms increasingly treat all those involved: benefitclaimers, 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.

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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 provision 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 political 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 context 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 competition, 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 ensuring that any benefit increases are kept below those in wages. Expanded education and training opportunities are intended to improve opportunities 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 AngloSaxon countries, stresses the notion of dependency culture (e.g. Murray 1984). The claim is that passive welfare systems undermine work discipline 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 working 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, modelled 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 responsibility 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 microprocessors 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 developments 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 competitiveness rather as an economic burden.

Rational Action and Public Policy The new approach places much greater emphasis than the previous system on the view that citizens behave as rational actors, weighing up alternatives 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 information 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

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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 deferential 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 globalization 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 settlement 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 costefficiency 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 managers, 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 individualist 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 competitiveness constrain the range of solutions. Governments tend towards activation, incentives, markets and targets, and the individualist logic that underlies it.

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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 possibilities 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 decisiontheorists the question resolves to giving a consistent account for such phenomena as ‘anomalies’ in behaviour (Thaler 1993) that seem to contradict 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 experience 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 61

The Assumptive World of Welfare State Reform Table 4.1. Individual agency in social context Analysis

Status of agent

Primary process of choice

Individual goals determined by

Instrumental

Free independent actor

Rational deliberation

Individual, independent values

Normative

Social framework of normative principles

Social roles, specified by norms

Expressive

Desire to express individual values and status within a group

Following norms acquired through socialization and social learning Following social rules that define what counts as expression

Symbolic communication

Social outcome

Coordination of the behaviour of selfregarding, autonomous individuals Social order and pattern maintenance Coordinated actions that express values and status 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 appropriate 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 framework, 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 rigorous 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 individual 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 sociology, social anthropology, social psychology, and related fields. The strengths of normative theories lie in their capacity to explain the existence 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 concerned with pattern-maintenance is that they fail to provide satisfactory accounts of social changes and innovations and of particular individual 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 functionalism of overly structural explanations, the limitation that actions 63


become simply the creature of the social context with no place for individual 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 difficulty 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 meanings, 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 instrumental 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 colleagues 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 utility 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 values. 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 lifecourse, 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 developed 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 selfresponsibility is likely to restructure welfare values, leading to a transformation of the welfare state.

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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 perspectives. 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 specifically on economic interactions (e.g. Simmel in Simmel and Wolff 1950; Weber 1999). Their approaches diverged from the understanding of economic 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

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Individual Choice and Social Order

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 people 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 provision from state and occupational to the private commercial sector provides an example. Pension purchasers, used to understanding provision

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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 example, concluded from his analysis of collective choice in modern democracies 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 colleagues 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 rational 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?

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All these approaches share an approach to agency which is at root psychological 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 interact 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 monitored. Typically games are played for cash rewards, so that real-world incentives operate. Important initial work was supported by the US Government 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 themselves 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

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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 opportunities for communication; that it is easy to engender ‘tribalism’ (conflicts between groups of subjects in games), by permitting in-group and preventing 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 societies 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:

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Individual Choice and Social Order 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 shortterm 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 consensus 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 conclusions). 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 context that immediately rewards self-regarding behaviour. Rational individualists can maintain the kind of enlightened and socially reinforced selfinterest 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 reciprocity 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 (Alexander 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 aggregate 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 relationships 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 intergenerationally. 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 withingroup 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 psychological processes in more detail. This shows that particular areas of the brain are called into play in exchange relationships between human subjects (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 psychological 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 connection with the maintenance of that norm. This may lead to the development 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 essential 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 communityregulated 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 interests, 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’, corresponding 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; participation 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 relevant 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 normative 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 contract 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 problem 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 predispositions 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

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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 commentators, 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 frequently in sociology, and also influencing political science and social psychology, 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

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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 interpreted through the meanings attached to them by the members of society. These meanings can be interpreted through a range of different rationalities. 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 modernization 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 sophisticated account of the spheres of action and of the forces that sustain or shift their rationalities. Building on the work of the classical sociological 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 sustainability 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 individual instrumental or expressive actions which run counter to established normative frameworks, a problem often discussed in relation to functionalism (Giddens 1993; Holmwood 2005). It also encounters difficulties in explaining social change. We know that norms in relation to gender 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 meanings 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 behaviour 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 convincing 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 particularly 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 separate dimensions of rational self-interest and normative value is contained in the idea of ‘embedding’. The spheres of social norms, symbolic communication, and the rational pursuit of economic goals are not understood as independent but as intimately and intrinsically interlinked. One important 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 modern 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 longrange 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 longdistance trade, separated from the regulating institutions in which market 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 developed 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 assumptions involved in such institutions as family life, private property, crime and wage bargaining, starting from notions of economic rational individual 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 normative 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 version. 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 reciprocity are highly significant in the way people understand interactions, 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 context 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 economic 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 individual 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 theorists (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 structural 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 relationship 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 sociological 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 individual psychological dispositions, the second understands norms as embedded 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 longerterm 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 frameworks 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 influence 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.

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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 evidence 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.

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Rational Actors and Social Citizenship

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 normative 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 identities 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 relationships 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

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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 opposition to the possessive egoism of the market’. He wrote in direct opposition 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 altruism 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 simply 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 internalized 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 motivation. 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 willingness 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 suggest. 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 individual 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 distinction 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 support 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 extensive 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

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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 motivation 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 altruistic/reciprocal actions that involve little cost (blood donorship) or moderate 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 recognition 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).

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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 normative 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). Policies 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 understanding 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 individual 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 operate in the context of normative assumptions about appropriate behaviour, 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: ‘normative 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 dilemmas, 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 undertaken . . . will vary between particular social groups and geographical areas . . . costbenefit 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 conclusions 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 negotiate 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 obligations 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 responsibilities, 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 opportunities 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 individual 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 behaviour 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 individual’s psychological make-up as preferences, as the given values that determine 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 discussion 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

r

100

First, whether or not social life is becoming more risky, it is undoubtedly 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. 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


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: orientation to others and commitment to their interests. The capacity to manage uncertainties in relation to needs and vulnerabilities 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 trustworthy: ‘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 rational 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 sufficient. 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 institutional 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 commitment 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 incentives. 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 nonrational 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 commitment 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 ‘faceworkbased trust’ (Cook, ch. 1 in Kramer and Cook 2004). Viklund (2003) and Rohrmann (1999, p. 145) stress the role of cultural factors in accounting 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 examine 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 individual feels their own interests are taken seriously within the system. Sociological research stresses the role of social norms and of the values embedded in them and the opportunities they provide for expressing 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 relationships 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 correlation 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 nonrational 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 assessment 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 perspectives 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. Normative 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 radical 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 relationships. 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 powerfully 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 inclusion, 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.

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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, political, economic, and serendipitous reasons the process of reform has been particularly rapid and far-reaching. Experience in this country offers a useful 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 market participation, and incentives bear heavily on reciprocity and inclusion. 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 provision 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 spending 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 important 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 ‘competitive’ 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 international 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 employment. The UK is increasingly a post-industrial work-centred society with a high proportion of the population in paid employment. The substantial 112

Putting the Theory into Practice: The UK Experience Table 7.1. The UK and Europe France

Germany

Manufacturing sector (% GDP) 1995 16 23 2005 13 23 Employment in services 1995 69 61 2005 73 68 Employment 2007 63 73 Women’s participation rate 1995 60 62 2005 65 67 Foreign direct investment, 2006 ($bn) Inflow 81 43 Outflow 115 80

Italy

Spain

Sweden

UK

22 18

19 16

22 20

21 13

59 65

61 65

71 76

71 76

59

67

76

72

43 51

46 58

76 76

66 69

17 42

20 90

28 24

140 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 indication of the social shifts that go hand in hand with the policies described earlier. Other countries among the major European economies have experienced similar shifts—France in the reduction of significance in manufacturing, 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 relative 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 Westminster 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 restructuring 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 influence 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 stakeholders 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. Discussion 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 r

r r r

radically reformed the benefit systems, abolishing insurance provision for unemployed people and reorganizing assistance to create an entirely new systems of benefits, with extensive case-management; completely restructured state involvement in the labour market to promote incentives for low-waged workers, including the introduction 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; restructured child care support and also elder care provision and radically expanded employment rights for parents and others; reformed pensions with an expanded role for the private sector and cut-backs in commitment from the state system; and 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 government 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 intervention 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 nonstate 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 entitlement strengthened in order to sharpen work incentives. The meanstested 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 remodelled as ‘New Labour’, with its left-wing elements firmly under control. 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 globalized and market-centred world through direct state provision and services 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 attractive. 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 private 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 benefits 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 programmes 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 opportunities 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 Neighbourhood 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 contain 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 relationships 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 citizenship. The New Labour programme retains but reshapes the social democratic 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 Based on Inclusion

Collective support

Reciprocity

Interests of large population groups

Trust

Commitment of providers to users

118

Reformed welfare state

Achieved by

Based on

Achieved by

Polices to redistribute Horizontal redistribution

Individual success

Resources allocated to meet need

Rational evidence-based judgements that providers will meet needs

Equal opportunity + responsibility Efficient provision of services in competition with alternatives Provision of information, competition regulation of performance by targets

Tax payment for mass services


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 opportunity 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 expertise 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 programme 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 policymakers 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 Comprehensive Spending Review, established in 1997 and described by the Treasury as a ‘step-change’ in the way public spending is managed (HM Treasury 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 transparent 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,

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The PSAs are set within the framework of Service Transformation Agreements 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 onestop shops, improvements to websites, and better links between departments. 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. Meeting the targets remains entrenched as a powerful incentive for managers of public sector services. This approach brings the environment in which social policy institutions 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 consumerism. 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 uprating 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.

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Authority and the Pensions Regulator, set up in the wake of pension missselling 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 formation 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 considerable 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 practical 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 (taxsubsidized 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 considerably sharpened top-down performance management regime . . . targets, regulation 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 organizational 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 inspection, while rewards and sanctions are applied to sharpen incentives. Competitive 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 examples 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, regulation, inspection, and intervention has already been described. The recent reductions in the number of targets and broadening of their crossdepartmental 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 coordination 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 components

Examples

Top-down

Targets; regulation; inspection; intervention

Horizontal

Competition

Cancer strategy; Ofsted; NICE; failing schools initiative Commissioning; open access to school places

Key principle

Identified problems

Agency with inspection and intervention powers

Perverse incentives; demoralization of staff

Separation commissioner from provider; funds follow users

Level playing field; adequate market; cream skimming; cost of creating a market

Unidentified problems

Providers’ interest tend to focus (and be seen to focus) on the competitive success of their agency and on achieving externally imposed targets, not on the interests of users; users and the general public tend to focus on individual advantage 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 separate 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 responsiveness, 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 system. 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

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difficulties in attracting high-calibre staff to increasingly onerous managerial 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 demoralization 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 individual 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 discriminating 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

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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 convincingly 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 globalization. Policymakers are able to move rapidly in an individualist direction 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 institutions play a diminishing role was established during the 1980s and early 1990s. The elements of privatization reduced government commitment 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 citizenship 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 costefficiency 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 citizenship, 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.

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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 programme 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 necessary. 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

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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 additional 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 expenditure 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 thoroughgoing 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). Budgetary responsibility is now for the most part devolved to over 400 trusts providing hospital and ambulance services and primary, social, and mental 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,

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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, inspection, 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 pharmaceuticals, 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 growing 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 commitment 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 r

r r

The break-up of a large centralized state bureaucracy with the introduction of much greater budgetary autonomy for individual primary trusts and hospitals or groups of hospitals. 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. The creation of new mechanisms to establish targets, to provide quality control, and give overall direction to the services. 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 quasimarket are appropriate.

Scotland and Wales have both chosen to retain more centralized provision, 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, particularly 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 Hospitals) 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 interventions 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 agencies 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 performance 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 customers 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 monolithic, 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 viewpoint 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 actually 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 inequalities 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 operating within the same funding regime (Bevan and Hood 2006b, AuditorGeneral 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 improvements 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 productivity. 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 recommendations 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 surveys. 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 enthusiasm 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 service as a whole is still far from patient-centred’ (Picker 2007, p. 2). IpsosMori 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 positive direction more rapidly in England than in Scotland (Taylor-Gooby 2008c). This is reinforced by a careful study by Appleby and AlvarezRossette (2005). However, multivariate analysis suggests that the availability of choice is not as strong an influence on patients’ attitudes as objective 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

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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 citizenship 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 sustaining the welfare state.

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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 generate 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 values 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 meanings 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.

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Second-Order Challenges: Disenchantment, Disquiet, and Mistrust

Attitudes to NHS Reform The attitude studies examined earlier indicate that general public satisfaction is improving. Further issues arise. Firstly, while studies of trust and confidence in the NHS are rather less numerous than studies of satisfaction 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 relation 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 psychological work on trust examined in previous chapters as well as by rational 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 competence (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 attitudes. 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

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(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 understood 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 expressing 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 experiments 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

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Figure 9.1. Newspaper Coverage of the NHS. ‘NHS in trouble’ includes references 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, accepting, 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 orientations 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.

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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 fluctuated. 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 evidence 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 attention 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 reorganization 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 associated 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 individual; 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 forcefully 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. Interviewees 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).

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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 attitude 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.

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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 individualized 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

Second-Order Challenges: Disenchantment, Disquiet, and Mistrust 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 juxtaposition 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 underlies much of the dissatisfaction and disquiet, summed up by the respondent 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)

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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 professional 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 commitment 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 normative commitment to patient care and patient interests, and managers, who are seen as remote from service-users, constrained by an instrumental 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.

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Second-Order Challenges: Disenchantment, Disquiet, and Mistrust 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 professional standards in the interests of patients, and the managerial beancounter, 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

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(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. Frontline 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 serviceusers.

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

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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 indefinitely 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 programme 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 citizens’ preferences. The new independent rational actor approach stresses choice and empowerment. However, the systems of targets and competition 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 patientcentred 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 underlying 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

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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.

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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 countries. 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 neoKeynesian 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 cultural 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.

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Globalization, Inequality, and Diversity

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 component of globalisation may increasingly constrain welfare states that seemed fully consolidated two decades ago’ (Soroka, Banting, and Johnston 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 sympathy 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 economy 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. Globalisation . . . may have brought to an end the golden age of the welfare state’ (Baldock, Manning, and Vickerstaff 2007, p. 25, see also EspingAndersen 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 secondorder challenge to social citizenship.

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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 population 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 foreignborn 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 population, 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 established 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 considerable 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 welfare 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

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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 increasingly 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 American, 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 immigration (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 maximize 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 feeling 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 multiculturalism, 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 conditions 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).

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Recent debates have led in two directions, both concerning the adequacy 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 (Lieberman 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 individualism constrains the development of strong positive policies advocated by

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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) damage 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 openness 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 mid1990s 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;

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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 (Department 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 wholehearted 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 important 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

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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 inequality (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 AngloSaxon 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 strengthened 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 governments (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, especially among the middle class, would explain this. Women are increasingly 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 corresponding 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 education 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 intergenerational 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 European 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 inequality 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 population, 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 interventions, 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 effectiveness 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:

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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 individual rational logic. Second, support for welfare state intervention to meet the needs of those at the bottom appears to have declined during the past quartercentury. 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. Third, while most people endorse the idea of reciprocity between the insiders who maintain a rough balance between use of services and contribution during their lifetime, their conceptual frameworks 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 stating 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.

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‘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 attitudes to welfare, such as population ageing, improved levels of education, 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 surveys 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 injustice 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

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people are treated equally and have equal opportunities’), has strengthened, 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 understand 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 outcomes.

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.

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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

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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 important 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 sharing 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 requirements 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 complexity, 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 attitudes. 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 countries 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 ignorance 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 redistribution 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 individual 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 survey 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.

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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 weathered 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 anything, 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 secondorder 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:

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

Welfare Under Altered Circumstances

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 experience. 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 responsible 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 valuing and empowering individual agency against more collective solutions. UK experience indicates that the new approach generates problems in two areas:

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The destabilization of public trust and the growth of disquiet with welfare state institutions. 185


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Difficulties in developing policies to address the outcomes of globalization 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. Theoretical 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 resulting 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 providing 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 importantly 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 serviceusers 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 automatic 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 individuals, 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 continuing pressures from the increasingly competitive and globalized international 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 establish 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 taxfinanced 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.

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211


Index

agency 55–66 expressive 62 individual 60–4, 69–73, 89–107, 121–2, 174–6, 184, 190 instrumental 61 knavish 96 knightly 96 normative 62 social 60–4 Akerlof 64 Alaszewski 103 Alesina 5, 28, 48, 167–8 Alexander 73 Alibhai-Brown 169 altruism 69, 71–5, 90–2, 95–6, 166 Alvarez-Rossette 142 Appleby 139, 142 Arrow 68 Atkinson 26, 171–2 Atkinson Review 140 Auman 70 Austin 117 Austria 67 Axelrod 70 Baggott 131, 135 Baldock 57, 122, 164 Ball 131 Banting 48, 49, 164, 166 Barbalet 104 Barker report 122 Barry 49, 167–8 Bartlett 15 Beck 12 Becker 69 Beckett 188 Beresford 188 Berger 64 Berthoud 98 Bevan 124, 135, 138 Blair, Tony 117–18, 170 Blanden 173–4

Blank 47 Blomqvist 48 blood donorship 90–2 Boeri 164 Boerma 17 Boix 167 Bonoli 7, 23 Bourdieu 83–5 brain-imaging 74 Brazil 21 British Household Panel Survey 98 British Social Attitudes Survey 141, 146, 177–8, 180, 181 Brown, Gordon 119 Buckner 180 Buran 47 Burgess 132 Burkhardt 167 Cabinet Office 168 Calnan 104, 147 Camerer 71 cash nexus 94 Castles 50, 115, 167 CFMEB 169 China 21 choice 47, 57, 123–8, 135, 155, 175 citizenship, social 3–19, 59, 85–8, 89–107, 111, 115–19, 132, 188–90, sustainable 190 Cold War 70 Coleman 81 Commission on Social Justice 116–17 Commission on Tax and Citizenship 180 commissioning 133 commitment 103–5, 187–9 community 117 competition 47, 56, 102, 123–8 Comprehensive Spending Review 122–3, 135 consumerism 121, 127 Cook 64, 104

213

Index Cooper 91 cooperation 75 cost-efficiency 44–8, 111, 126, 184, 187–9 Crompton 173, 180 Culyer 91 Darfur 75 Dasgupta 9 Dawkins 73 De Lors 35 Deacon 97 Deakin 122 Dean 56 Deci 92 democracy 189 Department of Children, Schools and Families 132 European Social Survey 177–8 dependency culture 56 diversity, ethnic 38, 48–50, 163–83 Dixit 124 Dorling 171 dot-com bubble 43 Driver 117–18 Duncan 97 duties 5 Economic and Social Data Service 177 education reform 131–2 education 34 Edwards 97 Eiser 103 Eldridge 149 Elstub 148, 188 embedding 82 employment 113 contracts 77–8 mobility 43 part-time 41 protection 41–2 Enthoven 47, 124, 133, 135, 158 equality 18, 117, 163–83, 185 Ermisch 173 Esping-Andersen 7, 112, 164 EUFRA 49, 168 European Central Bank 35 European Social Survey 177, 181 European Union 9, 34–7 Growth and Stability Pact 35 Lisbon Council 15, 42 evolutionary psychology 73–5 facework 103 fairness 78, 84, 152, 175

214

Ferrera 26 Financial Services Agency 122 Finch 60, 97–8, 180 Finlayson 127 first-order 3, 130–45, 184 flexi-curity 41–4, 56 Flynn 57, 131 Folbre 90 France 15, 17, 23, 27, 39, 40, 41, 42, 43, 45, 46 free riding 73 Freeman 164 Frewer 103 Frey 92–6, 124 Fehr 68–70 Gächter 68–70 Gambetta 9, 101, 104 games, study of 70–5 Gay 95 Germany 15, 17, 23, 27, 39, 40, 41, 45, 46, 67 Gershon report 122 Gibson 47 Giddens 5, 11, 65, 81, 96 Gilens 167 Gilson 104 Gini coefficient 170 Gintis 68–73 Glaeser 5, 28, 48, 167–8 Glendinning 180–1 Glennerster 132 globalisation 3, 13, 20–32, 59, 86, 113, 163–83, 185 Goldthorpe 173 Goodhart 48, 164 Goodin 90 Gough 25 GP fund-holding 133 Grahl 112 Granovetter 82, 83 Gray 57 Green 15 Gregg 173 Habermas 5, 188 habitus 83–5 Hagreaves-Heap 60, 63, 79 Haim 67 Hanley 75 Hansen 50 Hardin, G. 76–7 Hardin, R. 9, 10, 69, 79, 101–3 Harding 124

Index Harkness 180 Hart 152 Hartz reforms 40 Heath 168 Hedges 179 Held 7 Henrich 71 Hewitt, Patricia 150 Hills 9, 55, 118, 164, 170 Hinrichs 46 Hirsch 171 Hirschman 148 Hoggett 64, 124, 127 Holmwood 63, 81 Home Office 167 Hood 124, 135, 138 Horlick-Jones 149 Hovland 103 Howell 188 Huber 13, 30, 167 Immergut 47 incentives 56 inclusion, social 5, 30, 50, 68, 89–92, 97, 99–100, 163, 182, 190 income inequality 26–7, 170, 1 international comparisons 171–2 India 21 individual rational action (see agency, individual) Institute for Fiscal Studies 171 International Social Survey Project 176–7 IPCC 75 IPPR 148, 167 Ipsos-Mori 104, 141, 143, 146 Irwin 97 Italy 15, 17, 23, 39, 40, 41, 45 Jegen 94 Jenkins 57 Jessop 24 Job Seeker’s Allowance 56 John 124, 127 Johnson 124, 127, 164 Johnston 48 Jones 64, 96 justice (see fairness) King’s Fund 137, 138 Kitzinger 149 Klein 131 Kok 36 Kramer 104

Kranton 64 Kymlicka 167–8 labour force 34 labour market 27, 37, 38–44, 187–8 activation 38–40, 56, 111, 116 Land 180 Lane 57, 92 Lawson 57, 148, 188 Layton-Henry 169 Le Grand 15, 57, 91, 92–6, 126, 135, 138, 148, 150, 158 Leat 95 Lee 140 Levi 64 Lewicki 104 Lexis-Nexis 149 Lichbach 58 Lieberman 169 Lijphart 114 Linker 91 Lister 5, 17, 188 Luckmann 64 Luhmann 9, 10 Lyonette 180 Machin 173 Manning, A. 164 Manning, N. 132 market economy liberal 112 co-ordinated 112–13 Martell 117–18 Martin 177, 178 Maschler 70 Mau 55, 79, 167 Mayer 104 McLaughlin 57 McMahon 168 McNamara 20 Means 47 methodenstreit 67 migration 28, 21–2, 42, 49–50, 164–7, 176, 181 Millar 117 Mitton 17 mobility, social 27, 172–4 Modood 166, 168–70 Moellering 9 Molm 78, 84–5 moral biology 73 motivation extrinsic 92–4 intrinsic 92–4

215

Index multi-culturalism 48–50, 168–70 Murdock 149 Murray 56 national cohort studies 172–4 National Health Service 130–60 Healthcare Commission 134, 142 improvement 137–8 in England, Scotland, Wales and Northern Ireland 136, 138–9 Independent Sector Treatment Centres 135 mass media and 148–51 matrons and managers 156–7 NHS Direct 135 NICE 134 Plan 134 productivity 139–40 reform 131–6, 147–8 targets 134–5, 139 waiting times 137, 138, 150 needs, social 5, 59 New Institutional Economics 83–4 new paternalism 158–9 New Public Management 13, 30, 50, 57, 102, 106, 120–1, 132, 147, 156–8, 184 new social risks 23 Nicoletti 173 Niskanen 57 nuclear waste 93 O’Malley 9 OECD 17, 22, 23, 26, 27, 43, 45, 48, 113, 166 Olson 69–73 Office for National Statistics 167 Oord 90 Open Method of Co-ordination 36 opportunity 12, 117 Ostrom 71–3, 76–9 Padgett 177 Page 104, 147 Pahl 178 Parekh 168–70 Park 55, 131, 142 Parry 122 Parsons 60, 80–1, 87 Pearce 188 Penninx 49, 168 pensions 44 reforms 47–8

216

Petts 149 Pickard 131 Picker Institute 141, 146 Pidgeon 103 Pierson 15, 55, 115 Pinker 104 Pischke 132 Plant 152 Pochet 42 Polanyi 82–6 Pollock 134 Poortinga 103 population ageing 17, 45 Poundstone 70 poverty 170, 172 power, centralisation of 114 Preker 124 Primary Care Trust 133 Prime Minister’s Strategy Unit 114, 123–5 Prime Pour l’Emploi 40 prisoner’s dilemma 70 private medical insurance 141 Propper 126, 138, 148 public attitudes 141–2 disquiet 146–60, 150 qualitative research 151–9 satisfaction 147–8 to NHS reform 154–6 to poverty and inequality 176–8 to universality 153 public goods 76–9 Public Service Agreement 119–20, 124 Putnam, R. 11 quasi-market 117, 131, 135 racial ‘fractionalisation’ 166–7 rational choice 63 rationality 80 reciprocity 5, 51, 63, 73–9, 78–9, 87–8, 89–92, 99–100, 119, 150, 163, 175, 184 defensive 182, 188 redistribution, 7–9 horizontal 5, 8 vertical 5, 8 Rendall 167 research and development 43 responsibility 44–8, 46, 111, 117, 126 Rhodes 26, 42 Rico 17, 47 rights 5

Index rising living standards 171 risk society 24 Rose 178, 180 Roth 71 Rothstein 71, 118 Rowe 104 Russia 21 Sahlins 82 Sainsbury 49 Sally 71 Salt 167 Saltman 17 Sanderson 166 Sanford 147 Scharpf 7, 13, 26 Schee 104 Schierup 50 Schmidt, V. 7, 13, 26, 114 second-order 3, 146–60, 184 Sefton 164, 172, 179, 181 Seligman 104 Sharma 171 Simmel 67 Slovic 103 Smelser 68 Smith, Adam 58 Snower 115 social care 60, 96, 97–9 social cohesion 11 social justice (see fairness) social meaning 81–2 social recognition 94–6 social spending 22, 34 social values 97, 184 Socialist Workers’ Party 150 societal change economic 15–16 political 16 social 16–17 socio-biology 73 Solomos 168 Soroka 48, 164, 166 Soskice 112 Spain 15, 17, 23, 39, 41, 67 Spencer 178 state 29 Stephens 13, 30, 167 Stern report 75, 123 Stewart 9, 118, 170 structure, social 86–7 Sun newspaper 149 Swank 55, 115, 167

Swedberg 68, 83 Sweden 15, 17, 27, 39, 41, 45 Sztompka 9, 104 Talbot-Smith 134 targets 44–48, 56, 102, 123–8 tax avoidance 93–4 Tax Credit 40, 171, 172 taxation 121 Taylor-Gooby 7, 12, 13, 17, 23, 40, 48, 56, 92, 104, 121, 142, 148, 158, 167–8, 177 Teague 112 Thaler 71, 92 Thatcherism 47, 116–17 threshold effect 94–6 Thurnwald 82 Timonen 48 Tinbergen 164 Titmuss 90–2, 96 Torgler 94 Toynbee 138 Treasury Select Committee 171 trust 5, 6, 10, 29, 50, 59, 68, 70–2, 83–4, 87–8, 100–7, 119, 144–5, 147, 184 UK 15, 17, 23, 27, 39, 41, 43, 45, 46, 47, 111–29 Conservative government 133 Conservative party 116–17 general election, 2005 151 New Deal 117 New Labour 116–18, 154 Social Exclusion Unit 9 Treasury 119–21 ‘golden rule’ 21 welfare reforms 115 ultimatum game 71 uncertainty 12, 28, 100 Unk 49, 167 US 39, 41, 43, 45, 70 Upton 94 Van Oorschott 49, 167 Veghte 55, 79 Vickerstaff 164 voluntary work 95 Wainwright 27 Walker 71, 138 Wallace 158 Wallis 141

217

Index Wanless report 122–3 Weber 60, 67, 68, 80 Weill 49 welfare state reforms 14, 55–8, 111–15 market-centred 25, 47–8 pressures on 14–6 welfare values 119 Westminster model 114

218

Williams 17, 97, 131, 149, 180 Wilson 73 World Bank 25 xenophobia 49 Yeandle 180 Zinn 12

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