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The development of post-industrial economy after the 1970s apparently dealt a serious blow to the foundations of post-1945 welfare states. In particular, the case of Britain, which underwent a comprehensive neo-liberal restructuring after 1979, is instructive here, for it presents an empirical model of transitions from state-based to mixed welfare provision model. The purpose of this essay is to highlight the nature of respective changes in welfare politics, as well as to present a historically specific narrative of the causes of post-WWII welfare state dismantlement.

Historical context of post-1979 British welfare state transformation. The rise of Thatcherism was conditioned primarily by growing needs for an all-out transformation of Britain’s productive system. Whereas the post-WWII welfare state was constructed in the 1940s to 1950s, when British capital still had access to the privileged markets of its colonies, the 1970s situation was characterized by growing lag in competitiveness between British and Continental European industries, and the impact of rapid inflation generated by the 1973 oil shocks meant that a previous model of welfare state became increasingly unsustainable (Gamble). This enabled Thatcher’s government to carry out a long-lasting rebalancing of state functions, which constituted a major break with Attlee-era social democracy, the ideological premises whereof had until then been largely unquestioned.

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In the 1990s to 2000s, despite the partial discrediting of Thatcherite political principles among the general public, the successive British governments, both of Conservative and Labour political affiliation, continued promoting a financial services-based model of economic growth inherited from Thatcher’s times. As this economic framework entailed the dismantlement of any remnants of protectionist guarantees for the workforce and increased labour market flexibility, the welfare models tended to be underpinned by the emphasis on greater private sector involvement. The privatization of welfare went hand in hand with an overall decline in directly provided public services. This process manifested itself both in public-private partnership and contractual models promoted under the New Labour governments (Faucher-King and Le Gales 41). This individual-based approach toward welfare provision policies was paradoxically combined with growing bureaucratic regulations, this time aimed at welfare recipients. This New Labour contractualism was invariably bound with encouraging consumer-oriented public services and unit autonomy, while the level of bureaucratic control over these seemingly autonomous structures, in fact, increased (Faucher-King and Le Gales 44).

Similarly, the “Big Society” narrative of Cameron government, while being framed in distinctively communitarian terms, has been an integral extension of Thatcher-era welfare state reforms. As noted by Kisby, the Conservative-Liberal coalition welfare model rests on final devolution of the state’s functions in providing public services to either local communities or, more often, to the ‘third-sector’ voluntary organizations, which would take on the character of charity providers (486-488). This philanthropy-based, private sector-oriented welfare system would stand in sharp contrast with the classical social democratic idea of centralized ‘provider state’, thus being a part and parcel of post-1979 efforts at dismantling the latter.

Reasoning behind the Welfare State negation. The decline in public welfare provision was coupled with the growth in private and third-sector options, brought about by the specific conditions of the 1980s to 2000s economic growth models. The situation of neoliberal globalization led to partial reversal of social democracy-achieved political consensus with respect to equalitarian distribution of social product. The decline of traditional class identities and of class-based politics in general likewise proved decisive in limiting the welfare state expansion or reversing the latter; in particular, in Anglo-Saxon countries, class identity of the blue-collar working class and the role of its traditional defensive organisations, the trade unions, were greatly diminished with the rise of de-industrialisation trends (Korpi and Palme).

On the other hand, the employers were no longer interested in the maintenance of previous steady employment models, as their retention would undermine their profitability. With the further growth in acuteness of international competition, Britain had to rely on increasingly mobile financial capital that required the lifting of welfare provision costs, exemplified by tax cuts and similar financial incentives. Therefore, the state limited its own capacities to directly fund welfare expenses, having to partially pass this burden to third-sector and other voluntary structures.

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The post-1979 mixed welfare system: core model. The substantive changes in welfare provision system that were instituted both by the Thatcherites and New Labour may be put down to the notion of contractualism. While the post-1945 welfare consensus was that every citizen in need would be entitled to the receipt of adequate and equal level of public welfare services, the post-1979 welfare state became more individually-oriented, with welfare recipients re-envisaged as the consumers that were characterized by specific options of choice for which the respective fees for service should be charged (Finn 101-117). Such approach is evident both in unemployment policies, with increased emphasis on the unemployed entering into specific agreements with the respective agencies in order to secure the receipt of their benefits. Following in the footsteps of the 1986 Jobseekers’ Allowance, the successive post-1979 governments made significant inroads in reversing the previous unemployment reduction policies aimed at securing full employment regardless of its economic efficiency (Baldock, Manning and Vickerstaff 169). The unemployed have now been construed as the party contracting with the employment agency, taking on certain obligations in return for specified material benefits. This stood in sharp contrast with orthodox notions of full employment as a social good in itself, marking further economizing of this sphere.

Similarly, the post-1979 welfare and public services provision rested on the fundamental assumption of beneficence of private and third sector involvement in the field, which was rhetorically contrasted with the ‘dead hand of the state’ and lauded as the new breakthrough (Alcock and Scott). Starting from the 1992 Private Finance Initiative, the neo-liberal governments of both Conservative and Labour parties sought to increase private sector’s involvement with public services provision via encouraging their entering into contractual relations with respective public agencies. According to the estimates, by December 2004, total value of such contracts amounted to 3.4 percent of GNI, or %u20A443billion (Baldock, Manning and Vickerstaff 298). This figure in itself may be taken as the evidence toward growing influence of private organizations in traditionally ‘public’ sectors. The privately funded projects in public services mainly focus on health care provision facilities, with hospital buildings being their landmark feature.

Finally, the post-1979 welfare state transformations have frequently centred on the notion of devolution, i.e. reduction in powers of central departments over the exercise of respective welfare policies at local and regional levels. Whereas previously the ministries enjoyed a command of on-the-ground policy implementation, the 1990s and 2000s reforms focused on providing local agencies and, ultimately, communities with the tools for independent conduct of respective policies. The case of the NHS system is indicative here, as the primary care trusts (the PCTs), rather than Department of Health, were put into control over the NHS resource allocation as of the late 2000s (Baldock, Manning and Vickerstaff 436). The other welfare and welfare-connected sectors are generally touched by the similar devolving trends.

Thus, the basics of the post-1979 welfare provision model are fundamentally different from the classical social democratic notion of centralized welfare state. This paradigmatic shift helped bring about the integral restructuring of the British state in general, giving rise to a post-modern neo-liberal order.

Functional dimensions of mixed welfare system. While taking the aforementioned into consideration, it is necessary to dwell on specific applications of welfare provision policies in the post-1979 Britain. Given their systemic character, such sectors as health care, unemployment benefits provision, and public housing were selected as the cases to be considered.

With respect to health care, a combination of privatization and devolution trends may be observed. The NHS has undergone significant changes since Thatcher’s times, with the New Labour era proving instrumental in its comprehensive revamping. The introduction of the choice-based system of health care provision, overhauling the previous regulatory framework and diminishing the authority of medical doctors, fully conformed to the consumer-oriented philosophy of welfare. At the same time, this development led to concerns about risks to quality and standards of medical profession that the consumer-oriented decision-making necessarily entailed (Baldock, Manning and Vickerstaff 436). While the NHS privatization remains a focus for fierce opposition on the part of both Labour loyalists and significant layers of its rank-and-file users, the public-private partnership has been implemented in this field as well. The aforementioned PFI and public-private incentives have greatly increased in importance within the NHS system, as the New Labour and Coalition governments continued to cut direct health care funding, with almost %u20A41 billion cut from the NHS services between 2009 and 2011 (White 140). The constant cuts and re-imagining of the NHS, with greater emphasis on bottom-up structures, proved to be the most significant element of this institution’s transformation in the 2000s.

The unemployment welfare provision reform was by far the most controversial of Thatcher’s era undertakings, and the reforms that followed were hardly better received by the general public. The New Labour emphasis on ‘welfare to work’ approach that was designed to compel the long-term unemployed to more actively seek job opportunities was focused on such groups as women and youth, with the assumption that welfare should be predicated on personal effort, rather than on a fully guaranteed provision (Baldock, Manning and Vickerstaff 170). Following the preoccupation with economic efficiency, the government spokespersons referred to the ‘active’ welfare policies, which would motivate the unemployed to seek their future jobs, rather than wait for the government to provide them. Such approach is completely consistent with the basic neo-liberal discourse.

The housing provision reform carried out by Thatcher government famously focused on privatization option for the tenants receiving long-term council housing at their disposal. Coupled with the growing housing rents after 1980, this trend led to the significant increase in housing costs for the tenants, as the rent gap between council and owner-occupied/privately rented housing almost closed (Baldock, Manning and Vickerstaff 519). Both Conservative and New Labour governments have kept to this course of policy since then, apparently with a view to discouraging the excessive demand for public housing on behalf of the socially disadvantaged population.

Conclusion. The devolution and market-based model of welfare regime transformation was instituted in Britain after 1979, in order to shift the burden of welfare provision from the state to non-state actors, as well as to boost the economic efficiency and private initiative believed to be stifled by the costs of welfare for the British economy’s competitiveness. Apparently, this policy led to mixed results. In particular, the impact of welfare reforms on such fields as unemployment benefits and public housing provision would seem to be rather negative.

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