The Financial Crisis as Game Changer for the UK Welfare State

Abstract

This chapter analyses the UK coalition government’s two over-arching social policy strategies: deep spending cuts and organisational restructuring. It argues that these represent a new and distinctive ideologically-driven way forward for the UK. The Conservatives in coalition government have been remarkably successful in persuading the public that increases in government spending caused a crisis in public finances that preceded the financial crisis. By a strategy of what Pierson (Dismantling the welfare state? Reagan, Thatcher, and the politics of retrenchment. Cambridge University Press, 1994) has termed ‘blame avoidance’ for welfare state cutbacks, it has been to be able to push through its austerity agenda. In this vision pressures on the welfare state are to be contained through a shift of responsibility in many areas away from government to a web of semi-independent private providers, citizens or the community. Market principles will permeate social welfare to a greater extent. It is argued in this chapter that the coalition government’s cut-backs and restructuring go beyond piecemeal responses to deficit reduction and amount to a coherent programme that is part of a larger strategy to set the UK political economy on an entirely new path. Its approach contributes to the Conservatives’ long-term ideological goal to shrink the state, free up the market and set the UK political economy on a trajectory of permanently lower spending, lower debt and market-led growth. In contending that the financial crisis and austerity have been ‘game-changers’ as far as social policy is concerned, this chapter discusses the following policy fields: labour market, pensions, health, long-term adult social care, family and children, and housing.