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Public and Private Welfare Activity in the United Kingdom, 1979 to 1999
Rachel Smithies
March 2005
Paper No' CASE 093:
Full Paper (pdf)

JEL Classification: H50; H53; L33

Tags: welfare; social spending; privatisation; contracting-out; public provision; private provision

This paper analyses the shifting balance between public sector and private sector welfare provision in the United Kingdom over the past two decades. Five sectors – education, health, personal social services, housing, and income maintenance and social security – are examined over three time points, 1979/80, 1995/96, and 1999/2000. Burchardt’s (1997) typology is used to classify welfare activities according to who funds them, who provides them, and who decides on the provider and/or amount of service. It is found that shifts in the composition of welfare activity have been relatively small and gradual: around half of all welfare activity, dropping from 52 percent to 49 percent, is entirely public; around a quarter, rising from 24 percent to 29 percent, is entirely private; and the remainder involves a mixture of both sectors. Within the latter group, there was a notable increase over time in the contracting-out of public services, which rose from 6 percent to 10 percent of all welfare activity.