How do welfare states change? Institutions and their impact on the politics of welfare state reform in Western Europe

In the 1980s and 1990s West European welfare states were exposed to strong pressures to ‘renovate’, to retrench. However, the European social policy landscape today looks as varied as it did at any time during the 20th century. ‘New institutionalism’ seems particularly helpful to account for the divergent outcomes observed, and it explains the resistance of different structures to change through past commitments, the political weight of welfare constituencies and the inertia of institutional arrangements – in short, through ‘path dependency’. Welfare state institutions play a special role in framing the politics of social reform and can explain trajectories and forms of policy change. The institutional shape of the existing social policy landscape poses a significant constraint on the degree and the direction of change. This approach is applied to welfare state developments in the UK and France, comparing reforms of unemployment compensation, old-age pensions and health care. Both countries have developed welfare states, although with extremely different institutional features. Two institutional effects in particular emerge: schemes that mainly redistribute horizontally and protect the middle classes well are likely to be more resistant against cuts. Their support base is larger and more influential compared with schemes that are targeted on the poor or are so parsimonious as to be insignificant for most of the electorate. The contrast between the overall resistance of French social insurance against cuts and the withering away of its British counterpart is telling. In addition, the involvement of the social partners, and particularly of the labour movement in managing the schemes, seems to provide an obstacle for government sponsored retrenchment exercises.