THE STATE AND SOCIAL SERVICES IN BRITAIN, FRANCE AND GERMANY SINCE THE 1980s: Reform and growth in a period of welfare state crisis

The idea that the welfare state has grown to limits is popular¹ and there seems to be a broad consensus that economic and political problems require a limitation if not retreat of the welfare state.² Moreover, many recent studies have focused on welfare state retrenchment and decline. Pierson (1996) even proposed a new research paradigm for the ‘new politics of the welfare state’. But is this image really true for the whole area of social policies? It seems to fit with some ‘mature’ social security systems, but there is less evidence on historically ‘weaker’ areas like family policy and social services. Indeed, within the general discourse of welfare state crisis there is at the same time growing concern about under-investment in education, the family and social services. Esping-Andersen and others (2002) argue in favour of a social investment strategy in order to overcome major structural problems of the welfare state. Their idea is not a retreat of the state, but a ‘new welfare state’ in which social investment becomes predominant. In this strategy social services may play a strong role.

Yet in social services the state was never as strong as in other welfare areas. Social services have always been characterized by limited state intervention and by welfare pluralism. Historically, the family, the churches and the local communities held key positions in social services into which the state did not strongly intervene. The only exception seems to be Scandinavia where services were developed much earlier than in other countries (Anttonen and Sipilä 1996). Yet even here the local communities and not the central state were the key actors. Today social service systems are squeezed between rising demands on the one hand and declining capacities on the other. Population ageing and family instability are pushing demands. At the same time the family and religious organizations are losing service providing capacities due to growing female labour force participation and secularization (Bäcker et al.1995). In addition, the welfare state and the local communities are in huge financial and political difficulties.

There is no easy way out of this general dilemma (Munday 1989). One line of argument postulates a retreat of the welfare state from social service systems in order to solve their structural problems. The state may shift ‘back’ responsibility towards the family, voluntary associations and the market (privatization). Moreover, regulatory powers may be transferred from national to local government (decentralization) (see Pinch 1997). In addition, the rising new middle classes demand more flexible and diversified services for which welfare state institutions do not seem to be well prepared. Hence, new middle-class-based, voluntary initiatives are spreading into various social domains including the personal services. In this scenario of a new ‘welfare pluralism’ (Evers and Olk 1996; Bode 2004) the position of the state is further declining.

The opposite view envisages a stronger role of the state in social service systems as the main route for solving their structural problems. In this view the new welfare pluralism is basically unable to replace the ‘old’ actors in decline. The welfare state is needed more than before for guaranteeing access to and institutional stability of social services, for example through granting social entitlements, standardization of benefits and stable financing, i.e., the classical instruments of the modern welfare state. The state is needed in particular to institutionalize the growing complexity of systems and support the family, religious organizations and local communities in their role as service providers.

The recent literature on welfare state reform has increasingly argued that the role of the state has not become weaker in general (for a good summary see Wendt et al. 2007; for a historical perspective on the changing role of the state see Baldwin 2005). Also results of recent comparative research show a varying picture across countries and policy fields (see for example the studies conducted at the Centre for Social Policy at the University of Bremen in the field of ‘Transformations of the State’). My argument goes a bit further and stresses a slightly different point: the recent reforms in social services have not been driven by the more or less successful logic of retrenchment but by the ‘classical’ logic of welfare state expansion which is still going on.

The interesting question is how different social service systems have reacted to this dilemma. Has there been a general trend or have different systems followed different paths of development? Has the role of the state declined or been expanded and how can differences between countries be explained?

The welfare state is defined here by two core elements: social rights and institutionalized welfare provision (Girvetz 1968; Kaufmann 2001). Only the latter aspect is studied here empirically. Institutionalized welfare provision comprises extension (size) of services, delivery structures, financing and regulation (control). If the assumption of a retreat of the state holds true, one should be able to observe this in several dimensions: a shrinking size of the service system, a less institutionalized provision, a decreasing share of public delivery, a limited public financing and a relaxation of regulations.

The paper studies these developments on the basis of quantitative key indicators. The development of the size of service systems is studied by growth and coverage rates. Growth rates show changes in absolute numbers of services, coverage rates show supply in relation to the relevant populations at risk. If both indicators tend to decline, services would have been ‘privatized’ mainly towards the family.

A tendency towards less institutionalized forms of service provision is indicated by a relative growth of ambulatory services compared to institutions. A declining proportion of public services would indicate that the state is partly being replaced by other providers operating in market-like arrangements (see for example Adams 1996); this dimension can be called ‘market privatization’.

The third dimension is state regulation and public financing. Has the welfare state really relaxed interference into service systems? This dimension concerns social entitlements, delivery standards and financing. If we find a limitation of state activities in these respects this would indicate deregulation of social service systems.

In comparative welfare state research social services are an underdeveloped area. This is due to a lack of comparative data and to the institutional complexities of social services. Therefore, a comparative analysis over time has mainly to rely on national data. Since this implies huge problems of comparability, such a study should be limited to few cases. I have selected here two service areas (children and the elderly) and three countries (Britain,³ France and Germany) for which good national studies and data are available.⁴

Britain, France and Germany are chosen for comparison because the overall size of their social service systems do not vary too much in the European context. Scandinavia (very high level) and Southern Europe (very low) are excluded because of their ‘extreme’ positions in the European spectrum. The social service systems of the three selected countries vary institutionally, in particular with respect to the (historical) role of the state. This is an excellent condition for studying institutional path dependency in the role of the state. If this is found to be decreasing in the three different systems, the general argument would be strongly supported.

The main historical differences between the three countries can be summarized by referring to Jens Alber's macro-sociological framework for the analysis of social services (Alber 1995). If one adds the role of the family one can distinguish between three dimensions of variation: the relationships between the centre and local communities, between public and private actors (the state and the churches) and between the family and the state (Bahle 2005).

The UK was historically characterized by a separation of central and local government (dualism) and a strong divide between public and private spheres, also with respect to the relation between the state and the family. The social services were based on local public and on private provisions (see also Baldock 2003). France was characterized by a strong central state, a deep conflict between state and church and a strong family institution. The social services were comparatively highly centralized, but based on a mixed public and private provision (Martin et al.1998). Germany was characterized by decentralization and ‘subsidiarity’ concerning the relations between the state and the churches and between the state and the family. The social services were highly decentralized and dominated by church-related welfare organizations (Evers and Sachße 2003). The family had an important position, but was less actively supported than in France.

These historical-institutional differences may lead to different adaptation strategies. The British system can be regarded as most ‘open’ for fundamental reforms. First, because of the strong legislative powers of central government vis-à-vis local communities and secondly because of the strong position of local communities in service provision. It is therefore precisely the strong role of the state and the powerful position of local communities that have enabled the most far-reaching market-oriented reforms in social service systems. By contrast, in Germany such reforms are much more difficult, because the federal system limits the legislative powers of the central state and the strong position of the non-profit welfare associations in service delivery is a strong barrier against any market-oriented reform. The French system is located in between: the role of the state has only been strong in some areas, whereas others have remained the domain of non-profit associations; the local communities have held a relatively weak position.

We may thus expect the greatest policy shift in Britain and the smallest one in Germany, with France being in between. But in which direction have these changes gone? Here, the concept of path dependency offers less obvious arguments. On the one hand we may expect that systems with a strong historical role of the state may be forced the most to cut it down in the process of reform. Yet if the role of the state is going to be expanded everywhere such systems may have a comparative advantage. Vice versa, systems with a weak historical position of the state may have an advantage if the general tendency is towards a withdrawal of the state from the social services.

Synopsis 1 shows the main institutional characteristics of the social service system for the elderly at two time periods: the early 1980s and after 2000, after major reforms were implemented.

Social service systems for the elderly have changed profoundly since the 1980s (see for example Ceccaldi 1993; Evandrou and Falkingham 1998; Martin 2003; Evers and Sachße 2003). At the beginning of the period under study, the English and Welsh system was characterized by a duality of services. The local communities played a key role in service provision, but long-term care services were mainly organized and financed by the NHS. Large parts of residential accommodation were financed by National Insurance. The major reform was the Community Care Act in 1990 aiming at changing the system in three respects: services should be integrated and coordinated by local communities; local authorities are required to shift provision to the private sector; the mix between institutions and ambulatory services should be shifted towards the latter. Thus, functional integration, local coordination, a mixed economy of welfare and de-institutionalization of services were the major aims of the reform that has indeed changed the system. At the same time the system is more strongly controlled by central government, in particular with respect to budget and quality control. Thus, service provision was ‘market privatized’, but not financing, coordination and control.

The French system was characterized by institutional fragmentation. National government and the départements were responsible for residential accommodation and care, health insurance and voluntary associations for ambulatory care, and local communities and pension insurance for home help services. In all services mixed financing prevailed. The laws of decentralization, starting in 1983, transferred the competencies for social services to the départements. But health and pension insurance continue to play a role as well as associations. The role of the départements was undoubtedly strengthened by the reforms, but after a decade of standstill, central government stepped in again. Public financing was extended in particular in 2002 through the new personal care allowance APA (allocation personnalisé d'autonomie). Over the 20 and more years under study here, the system was first decentralized after 1983, but since the end of the 1990s re-centralized in order to overcome developmental problems.

The German system was deeply fragmented and decentralized. Ambulatory care was financed by health insurance and provided by voluntary associations. Accommodation and long-term care were part of the residential sector under the responsibility of the states and local communities. Local social welfare (Sozialhilfe) stepped in for persons with low income. The major institutional change was the Long-term Care Insurance introduced in 1994 by which residential and ambulatory care services were integrated by federal law. Accommodation, however, remained in the hands of the states and local communities. The law was a clear step towards centralization and standardization in financing and service provision. It was one of the major aims of the law to remove the burden of financing from local government. Thus, the local communities have no strong role within the new system. With respect to privatization, the law opened the door for commercial care providers to enter the market. Provider structures have changed indeed, as more for-profit providers entered the field, but financing has remained almost completely public.

Overall, the reforms in our three countries did not lead to a stronger decentralization or privatization of social services, although elements of local coordination and market competition were introduced. Yet at the same time centralized control and public financing were strengthened.

Table 1 shows coverage rates of services for the elderly in our three countries since 1980. The figures are not strictly comparable, but show a clear tendency: overall, service provision for the elderly has kept pace with the rise of the elderly population. In the UK, coverage rates of residential institutions increased significantly, but home help services declined. This is due to the fact that home help provision in the UK was exceptionally high at the beginning of the period and is still high by international standards. For France, data show a growth in ambulatory services, at least until the 1990s, whereas coverage rates of residential institutions stagnated. This is mainly explained by the high level of residential services at the beginning of the period. Furthermore, it shows the structural problems of long-term care in France that remained unresolved over the past two decades. In Germany, the development was similar to France. Coverage rates of residential services did not increase significantly, but there was a shift from residential accommodation to caring homes and homes providing both accommodation and care. By contrast, the historical lack of ambulatory services that characterized the ‘old’ German system was filled.

Overall, since the 1980s the three countries were able to fill their ‘old’ service gaps by extending coverage significantly. Moreover, coverage rates kept pace with demographic change. In fact, service levels were lowered only in one area with relative high coverage at the beginning of the period: home help in Britain. But the figures also show that some structural problems remain unresolved, in particular long-term care in France for which the period since the 1980s was one of lost opportunities (Martin 2003).

Coverage rates underestimate real service growth, because they are calculated with reference to the elderly population which has increased since the 1980s. In absolute numbers service growth is even more impressive. In Britain, the number of places in residential homes increased strongly and in France there was a spectacular growth in ambulatory services. In Germany places in caring homes grew since the 1980s, even before long-term care insurance was introduced in 1994.

Table 2 shows the public share of services.

Germany has always had the lowest share of public services. Here, voluntary welfare organizations have provided the vast majority of places. After 1980 the public share in residential and caring institutions has further declined. But the strongest decline in the public share took place in the UK. In 1980 about two-thirds of places in institutions were provided by public authorities, until 2000 this proportion went down to about 10 per cent. Also in home help the decline in the public share was significant. In 1990 home help was practically a monopoly in the hands of local communities, but until 2000 the share has fallen to less than one-half. Here the impact of the 1990 reform was strong, whereas in the case of residential institutions the public share had already fallen before, in the 1980s. The reason was the strong growth in private homes in this period. Also in France, the share of public provision fell over the 20-year period, but still the French system is characterized by a strong public pillar, in particular in residential institutions.

Public provision is in fact the only indicator where one can really see a retreat of the welfare state. But this has to be interpreted carefully. Still, private service providers are almost completely financed from public funds or are working on behalf of public authorities. This is the case, for example, in the British home help services. Here, local authorities are contracting out public services to private providers, but services are determined and financed by the public purse. There is no direct relationship between private service providers and clients; services are mediated through public assessment, care management, financing and control. Therefore, this is a system of ‘quasi markets’ rather than a real market between providers and customers. Also in the German case, the vast majority of service provision in long-term care is financed and regulated by public agencies, in this case the care insurance funds. Although clients are free to choose among registered service providers, benefits and costs are standardized by federal law and implemented by social insurance bodies. Thus, there was not really a shift towards privatization and the market. The state has only withdrawn from direct service provision, but has strengthened its role in financing, standardization and control.

Childcare services developed differently than services for the elderly, but one can see similar tendencies with respect to the role of the state (see Synopsis 2).

In England and Wales and in France the system is divided between education and social care. In both countries, preschools and in particular public preschools have played an increasingly important role. In England and Wales this is further emphasized by the relatively early beginning of compulsory school at age 5 and the fact that today almost all children aged 4 and 3 attend nursery classes on a part-time basis. In France, the écoles maternelles have a long tradition and provide places for almost all 3–5-year-old children during the whole day. For younger age groups a variety of social care institutions provide services. Among them the crèches and the registered childminders are the most important. In Germany, childcare services are regulated by the federal law on child and youth welfare (Kinder- und Jugendhilfegesetz). In this sense, there is a unitary system in Germany, but one that is at the same time highly decentralized, because states and local communities are responsible for financing and provision. In some states, the Kindergärten for children aged 3–5 are formally part of the education system, but in practice preschool education is not strongly developed. Kindergartens are seen as socializing institutions, although since PISA their educational function has attracted more attention. The decentralized German system is further complicated by the fact that the majority of places are provided by voluntary welfare organizations, whereas in England and Wales and in France the preschool sector is clearly dominated by public institutions.

The most important institutional changes that took place since the 1980s were the part-time preschool education programme for children aged 3 and 4 launched by the New Labour government in the UK in 1998 and the guarantee of a kindergarten place for children aged 3–5 in Germany implemented in 1999. These two reforms spurred the development of childcare services significantly (see Table 3).

Coverage rates went up strongly in general, but with some variations between countries. In England and Wales there was a strong increase in institutional provision. Coverage rates for day nurseries went up from 1.7 per cent of children aged 0–4 in 1980 to 9.4 in 2000. For services provided in less institutionalized settings (like play-groups and childminders; in Table 3 subsumed under family day care) coverage rates increased less. The reverse development took place in France. Here coverage rates for services provided by crèches familiales and registered childminders (subsumed under family day care) grew from about 5 per cent to more than 20 per cent of the age group. These developments show a convergence in service patterns: in both countries growth was particularly strong in fields which had a low level of provision at the beginning of the period.

In the case of preschools the extension of services is even more striking. France has a long tradition of preschools and already by 1980 coverage for children aged 4 and 5 was universal and for children aged 3 almost so. Even about one-third of children aged 2 attended a preschool. There was not much room for further growth, but universal coverage was reached for 3-year-old children by 1990. In the British case, the opening of preschools for younger children was more recent, but coverage grew fast. By 2000 almost all 4-year-old children attended a part-time education programme and already about 90 per cent of 3-year-old children as well. In Germany there is still a big gap in coverage rates between children aged 0–2 and 3–5. Coverage rates for Kindergarten children (age 3–5) rose from about 80 per cent in the old states in 1980 to 90 per cent in united Germany in 2000. In many states there is now practically universal coverage. On the other hand, coverage rates for Kinderkrippen (children aged 0–2) are still low by international standards, although there was a strong increase since 1980.

Since the systems differ in institutional terms and the age groups served by particular institutions do not coincide, it is difficult to calculate comparable coverage rates. Thereby one has to take into account that in England and Wales compulsory school starts at age 5, in France and Germany at 6. Moreover, many children may attend more than one institution. Therefore, simply adding the number of places offered gives too positive a picture. But from an institutional perspective, and this is relevant here, this somewhat ‘artificial’ figure tells us something about the ‘theoretical’ extension of the childcare system.

The total coverage ratio for each country (the last row under each country in Table 3) is calculated by adding all places in all institutions and dividing them by the population aged 0–4 in England and Wales and 0–5 in France and Germany. Over the past two decades, total coverage rates in all three countries went up significantly, in particular in England and Wales. Also in France which started at a much higher level, there was still a significant increase. The ‘latecomer’ Britain did catch up fast and by 2000 even surpassed Germany. Yet the British figures should be read with caution. First, as already mentioned, most places are part-time. Therefore, many children may attend more than one institution resulting in a huge problem of double-counting. In France and Germany this is less problematic, because institutions for age groups 0–2 and 3–5 are separated from each other and more places are available for the whole day.

Also in absolute terms, growth in service provision since 1980 is impressive. In 2000 in England and Wales there were more than 5 times as many day nursery places than in 1980. Also in France, the absolute number of places grew by a factor of approximately 2. Only in Germany the absolute number of places did not increase, in fact there was a decline after reunification in 1990. The mix between institutions and childcare provided in family-like settings has also changed. In England and Wales, institutions have grown faster than family day care provisions, in France vice versa; thereby the two countries have converged. In Germany, there is no public programme for family-like childcare.

With respect to public provision there was more continuity in childcare than in services for the elderly (see Table 4).

In France, there was practically no change in institutional childcare settings. The vast majority of preschools and about two-thirds of day nurseries are provided by public authorities. Family day care is almost exclusively provided by private childminders, but publicly organized small crèches familiales hold a notable share of 8 per cent of such places in 2000, although the proportion went down from 17 per cent in 1990.

In Germany the share of publicly organized places differs between Kinderkrippen and Kindergärten. The majority of places in Krippen has always been provided by the public sector, basically the local communities. Only recently, the voluntary welfare organizations entered into this field; historically, they have been very reluctant with regard to services for very young children. In particular the two biggest welfare organizations, the Catholic Caritas and the Protestant Diakonie, were against early childcare services, because they thought that young children should stay with their mothers. Also the recent rise in voluntary provision is mainly due to local initiatives outside the confessional organizations. By contrast, the Kindergärten were the historical domain of the confessional organizations. In Germany (West) before unification, most kindergarten places were only part-time and had the major purpose of socialization. This was closely in line with the ideas of the churches. The two confessional welfare organizations together provided more than two-thirds of kindergarten places in 1980, less than 30 per cent were public. This constellation changed with reunification, because in the former GDR almost all service provision was public. Therefore, around 1990 the public share of kindergarten places was the highest ever; since then it has slightly decreased.

In England and Wales the share of public childcare institutions declined dramatically, from 56 per cent of places in 1980 to 6 per cent in 2000. Only in this case can one really speak of a private market, since these private institutions also are not directly subsidized by the state. By contrast, in Germany and France, childcare services provided by voluntary organizations are mainly financed by public funds. In fact, the English and Welsh system now is one that is dominated by private, in most cases commercial, institutions. Yet the one sector of childcare that has developed most dynamically in Britain is preschools. And these are in their vast majority public institutions. Therefore, also in this case one can say that the role of the state in childcare has become stronger than before.

The article has shown that the welfare state continues to expand in social service systems, foremost with respect to regulation and financing. Quantitative indicators of service provision such as growth and coverage rates also show a clear trend of expansion. In fact, there is not a single strong piece of evidence for ‘privatisation towards the family’ (because coverage rates are growing), ‘de-institutionalization’ (because service mixes are becoming more closely integrated) or ‘de-regulation’ (because the state is establishing stronger regulations). The only indicator that supports the view of welfare state retreat is direct public service provision. Yet even in this respect, the French and German figures show continuity rather than fundamental change. Only the British system has clearly moved towards ‘market privatization’ in service delivery. But one may ask what this shift really means. In long-term care, for example, the British system is still mainly financed by local authorities and private providers are usually working under local tutelage. And in the British childcare system there has always been a large private pillar, because public facilities were historically limited to disadvantaged groups. Really new, however, is the extension of publicly funded and guaranteed part-time education, hence an extension of the welfare state.

Social services have grown in an era of welfare state crisis. Moreover, the role of the state has been strengthened during a period when privatization and decentralization were themes of the day. The basic logic of institutional reforms was also similar. The old service systems had been ‘locked in’ by institutional deficits and powerful vested interests, both hindering their change and growth. In all three countries studied here, central government tried to remove these institutional barriers and break up the power positions of established interests by new instruments of financing, delivery and coordination. Thereby in each country the service systems departed from their historical paths of institutional development. New innovative elements were introduced by which the role of the state was generally enhanced.

In England and Wales the local social service workers who had controlled the old system lost power. In France power was shifted from the fragmented and politically uncontrolled bureaucracy to the elected bodies of the départements. In Germany the cartel of welfare organizations was broken up by a standardized social insurance opening up the market for commercial providers. The reforms also strengthened the coordination centres everywhere. In England and Wales those are the local authorities (as managers, not providers of services), in France the départements and in Germany social insurance. Thus, in all countries the reforms were similar in principle, but at the same time reflected their different historical institutional forms.

What are the consequences of these developments for the architecture of the welfare state? Is the old ‘industrial’ welfare state dominated by class politics and labour market interests really in decline (Alber 2005)? Do we see the advent of a new ‘post-industrial’ welfare state in which gender, life course, age groups and cultural cleavages are more important?

The answer to this question is of course speculative. There are in my view two broad interpretations. The first is that of a profound transformation of the welfare state. The ‘new’ social problems are indeed not directly related to economic issues, but to demography, family structures and changing cultural norms. Social services are an answer to ‘new’ kinds of social demands and problems (OECD 1999). Moreover, services have expanded, although there are no strong economic pressure groups supporting them in politics. Neither families nor the dependent elderly are highly organized and able to put pressure on politicians. Yet childcare and elderly care have become issues in the electoral process, because older people and families represent significant population groups among the electorate. In addition, on the supply side the self-interests of state bureaucracies and providers have pushed for an extension of services. The interplay between electoral politics and public bureaucracies may have pushed towards an extension of services, although there are no powerful economic interest groups behind them (for Germany see Schölkopf 1999).

The alternative interpretation by contrast assumes continuity in welfare state development. In a historical perspective one can see a ‘service lag’ in the development of the modern welfare state that had lasted for about 100 years. If it is true that any welfare institution that has become a core issue needs a strong foundation in the economy, then the key to explain the recent extension of social services is a profound change in the constellation of economic problems and interests. In the ‘old’ historical constellation, social services remained outside core social politics, because they had only been loosely related to economic interests. This was the reason for their rudimentary development. Yet the fundamental social and economic changes in the movement towards a service-based economy has transformed this ‘old’ constellation. Thereby social services have come closer to economic interests and labour market issues and hence have moved into the core structures of the welfare state – and this has been a precondition for their recent rise.

The key issues in this argument are, not surprisingly, female employment and new jobs. In both childcare and long-term care there is a huge potential for jobs, certainly a strong argument in a situation characterized by sticky mass unemployment. Moreover, in the field of childcare the idea of a new ‘activating’ social policy for parents is also prominent. In this context, childcare is not primarily seen as a service for children, but one for parents who want to combine family and work. These policies are strongly supported by employers who aim to keep their qualified female staff. Family policy is also closely linked to the issue of human capital formation in society and thus the ‘social investment strategy’.

The second interpretation is perfectly in line with classical assumptions on the modern welfare state. In my opinion the belated rise of social services has indeed followed the historical path of welfare state development, but with a long time lag. Therefore, the rise of social services does not indicate a new welfare state, but completes its classical economy-related form. For whatever reasons we may need a ‘new welfare state’ (Esping-Andersen et al. 2002), the social services have grown in the context of the ‘old’ one.

I would like to thank Jens Alber and the Wissenschaftszentrum Berlin für Sozialforschung (WZB) for the opportunity to work on this paper during my stay there. Also I should like to thank the anonymous referees for their comments.

Dr Thomas Bahle is Sociologist and Lecturer at the University of Mannheim. His main interests are in comparative welfare state research, the family and historical sociology. He has ‘published on family policy and recently completed a postdoctoral thesis on the changing role of the state in social service systems.