The social investment welfare state: the missing theme in British social policy debates

Colin Crouch
Colin Crouch

by Colin Crouch, University of Warwick

It is curious how little traction the idea of the social investment welfare state (SIWS) has had in British social policy discussion. The basic idea behind SIWS is that some forms of public social spending contribute positively to creating an innovative economy. Spending on education, skills and active labour market policy are the most obvious elements, but spending on high-quality childcare is also part of the concept. This is partly for its contribution to early-years education but also for making life reasonable for the two-parent-earner family that increasingly characterizes the most productive economies. Of course, elements of this enter British discussions, especially education, but it comes in piecemeal, whereas it gains most strength

from being conceived as an overall concept. It then plays an important role in contesting the dominant view that welfare state spending is the equivalent of putting money in a hole in the ground or, worse, giving it to some Lithuanians to do so.

Despite the possibilities of the concept and despite the size and importance of the British social policy community, one finds very few of its members prominent in what remains a continental European idea. Is that perhaps the reason, the creeping Europhobia that affects most British policy debate? Although the main collected volume on SIWS was published by Policy Press (Morel, N., Palier, B. and Palme, J. (eds) Towards a Social Investment Welfare State (Bristol: Policy Press, 2012)), only one of its 14 chapters has British authors, and they are, significantly, Patrick Diamond and Roger Liddle, Europe experts rather than specialists in social policy. The Journal of Social Policy has published several articles related to SIWS, but very rarely do they concern the UK.

SIWS certainly has its flaws. Original versions of it were nested in the Third Way idea that ‘new’ social risks had replaced the ‘old’ ones that had been the hallmark of industrial society, such as unemployment, sickness and poverty in old age. These had required the passive policies of a ‘compensatory’ welfare state, ran the argument, while for the more educated populations of post-industrial society, risks were rather opportunities; opportunities that men and in particular women could embrace, provided an ‘investment-oriented’ welfare state could equip them to do so. These arguments seemed to justify a shift between the two forms of spending, so that SIWS would not require net increases in social budgets. In that form the idea was very important to New Labour and in Germany to the Neue Mitte.

But the old risks did not go away; they are back with a vengeance. It was probably also always wrong to regard the  ‘old’ welfare state as merely compensatory; certainly in Beveridge’s vision getting rid of the evils of insecurity would mean an end to ‘waste’, a very social investment idea. Meanwhile, facilitating expenditure tends to help middle-income groups the most – especially when active labour market policy for unemployed people is being increasingly redeveloped as workfare. The age of innocence of SIWS has passed. More recent contributions to it, such as the Morel/ Palier/Palme collection, Anton Hemerijck’s book (Changing Welfare States, Oxford: Oxford University Press, 2012), and that edited by Frank Vandenbroucke and Bea Cantillon (Reconciling Work and Poverty Reduction, Oxford: Oxford University Press, 2014) show that much has been learned. These authors are refashioning policy as a response to both the enduring risks and emerging opportunities of working lives. This loses the Third Way vision of a transfer of spending and shows the need for high social budgets, not as a sign of stress, but of part of the apparatus of maintaining an advanced society and economy.

The concern of British social policy specialists with poverty ensures that they, unlike the country’s policymakers and some writers on new social risks, never turn their backs on the poor. But by being preoccupied with social problems they have unwittingly conspired at a neoliberal redefinition of the welfare state as something residual, solely for society’s casualties. The debate over how to develop the next stage of SIWS as a part of both citizenship and building for the future lifts us out of that trap. It is time to join it.

Colin Crouch is an emeritus professor of the University of Warwick. His latest book, Governing Social Risks in Post-Crisis Europe, has just been published by Edward Elgar.

If you enjoyed this blog entry, you may be interested in a similar article: Making the Case for the Welfare State by Peter Taylor-Gooby

4 thoughts on “The social investment welfare state: the missing theme in British social policy debates

  1. Luke Price March 12, 2015 / 4:14 pm

    We published a report dealing with this very issue late last year (see here for more information:, and would wholly agree that we need more than piecemeal attempts to embed the logic of social investment into the social security system.

    In the above paper – for which a companion piece is soon to be published in the upcoming Social Policy Association’s In Defence of Welfare II collection – we argue that there is a need to re-capture some of the original principles of Beveridge’s welfare state. Linked to this is the idea that social security is not a ‘bill to be cut’, but rather an investment to be made in the strengths and capabilities of individuals, communities and the whole of society.

    We frame this through an early action lens: thinking about how we can act earlier and prevent problems such as avoidable poor health or unemployment from ever arising in the first place. It’s not just hollow rhetoric, however, and we set out a range of practical suggestion as to how this could be achieved. These are underpinned by a set of key principles (many of which would probably cause little disagreement), and several changes to public spending rules to enable a shift towards a more preventative, social investment-focussed social security system.

    I won’t go into any more detail here, but if anyone’s interested please do take a look at the paper and feel free to get in touch to discuss any of it.

    • policypressblog March 13, 2015 / 11:40 am

      Thank you!!!

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