New private sector providers in the welfare state

AuthorMartin Powell
Published date01 March 2019
Date01 March 2019
New private sector providers in the welfare state
Jonas Pieper
Palgrave Macmillan, 2018, 181 pp., £16.85 (hb), ISBN: 9783319-62562-1
In this book, Jonas Pieper asks whether welfare industries become powerful actors in welfare state politics. Focusing
on provision (rather than finance or regulation), he explores the privatization of social policy provision. He compares
welfare industries in two countries and two sectors: for-profit providers of hospital servicesand pensions in Germany
and the UK from 1990 to 2010.
After an introductory chapter, chapter two discusses theoretical expectations about the political role of welfare
industries. Chapter three provides basic information about the sectors and countries. Chapter four adapts the power
resources model to business. Chapter five examines the determinants of privatizing reforms. Chapter six moves to
case studies, and chapter seven provides a conclusion. Pieper presents a number of hypotheses (pp. 2728): H1: wel-
fare industry power will increase over time; H2: pension industries will be more powerful than hospital industries;
H3a: right-wing parties together with powerful welfare industries will foster private provision if institutional con-
straints are low; H3b: left-wing parties will foster privatization if they face problem pressure, and welfare industry
lobbying provides a window of opportunity for policy-makers to get rid of expensive social policy provision. These
hypotheses are examined mostly in the three main empirical chapters.
Chapter four develops a power resources index with four theoretical dimensions: industry characteristics; inter-
firm relations; collective action; and firmpolitics relations. Chapter five uses fuzzy-set qualitative comparative analy-
sis (fsQCA) to detect patterns of causal factors that lead to privatizing reforms. Chapter six turns to more in-depth
case studies of four reforms according to their membership scores on the QCA. Pieper concludes that welfare indus-
try power has increased over time (H1), and that pension industries score higher than hospital industries (H2). Finally,
there was more support for H3b than for H3a.
As I struggle to keep up with one sector in one country, I have great admiration for authors who explore two sec-
tors in two countries. To avoid displaying my ignorance on wider issues, I will therefore largely confine my attention
to the material on healthcare in England. This book has many positive features. Pieper skilfully weaves together a
range of theoretical arguments on the interests and power of welfare industries, and actor-based, institutional and
structural explanations. He links this with impressive empirical approaches such as QCA.
On the other hand, it is possible to point to a number of minor problems. First, the assumption behind hypothesis
H3b of a window of opportunity for policymakers to get rid of expensive social policy provisionis highly question-
able. It is difficult to see how this happens given that many critics argue that private providers are more expensive
(and/or of lower quality) than public providers (particularly if there is a deliberate effort to attract new entrants by
offering financially attractive terms, such as in the case of English Independent Sector Treatment Centres (ISTCs)).
More widely, the total government resources going to Private Finance Initiative (PFI) providers have been widely
estimated at far more than the public sector borrowing option, and some PFI companies are based in tax havens, and
so pay little UK tax.
DOI: 10.1111/padm.12581
Public Administration. 2019;97:231234. © 2019 John Wiley & Sons Ltd 231

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