Social investment that almost happened

Social investment emerged as a response to the new economic and social changes in the late 1990s (Hemerijck et al., Reference Hemerijck, Burgoon, Di Pietro and Vydra2016, p. 7). Scholars proposed a transformation of the welfare state, emphasizing a shift in social expenditure from mere compensating passive measures to a more balanced allocation between compensating and capacitating active policies that prioritize active measures towards children, families, education, and labour markets (Esping-Andersen et al., Reference Esping-Andersen, Gallie, Hemerijck and Myles2002, pp. 17–18; Vandenbroucke et al., Reference Vandenbroucke, Hemerijck and Palier2011, p. 21). Capacitating policies are designed to strengthen individuals’ abilities to participate fully in society and the economy by investing in their skills, health, and opportunities. The key shift lies in moving from a repair-oriented approach to one that prioritizes preparation by placing a greater emphasis on risk prevention and the improvement of people’s capabilities (Vandenbroucke et al., Reference Vandenbroucke, Hemerijck and Palier2011, p. 5; Hemerijck et al., Reference Hemerijck, Burgoon, Di Pietro and Vydra2016; Hemerijck, Reference Hemerijck2018). Social investment has been central to debates about the future direction of European welfare states and their ability to sustain both economic competitiveness and social cohesion.

The United Kingdom under the Labour governments (1997–2010) can be used as a prominent example of social investment-oriented reform within a traditionally liberal welfare state. The Labour governments emphasized support for families, reduction of child poverty, improvement of work-life reconciliation, and expansion of early childhood education and care (Labour Party, 1997). Welfare spending was reframed as an investment in future human capital, leading to increased funding for children and families. Key policy goals included improving mothers’ labour market participation, increasing parental leave, lifting households with children out of poverty, and enabling all children to reach their full potential (Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019).

Between 1997 and 2010, the Labour governments implemented a series of reforms aimed at expanding and improving ECEC (Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019). At the same time, quality standards were strengthened through workforce qualification requirements, regulated staff-child ratios, and the implementation of a national early years curriculum (Lewis and West, Reference Lewis and West2017). Taken together, these reforms reflect a broader expansionary phase in UK family policy that emphasized capacitation and work-family reconciliation. Furthermore, the Labour government launched Sure Start in 1999, initially targeting vulnerable families with children under four, providing integrated services including childcare, health, and parenting support (Glass, Reference Glass1999; Eisenstadt, Reference Eisenstadt2011; Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019). In 2004, Sure Start was extended to all families with young children, marking a shift towards more universal provision. By 2009, the number of Sure Start Children’s Centres had grown far beyond initial projections (Cattan et al., Reference Cattan, Conti, Farquharson and Ginja2019). These developments were complemented by other family programmes such as Every Child Matters and Troubled Families (Eisenstadt and Oppenheim, Reference Eisenstadt and Oppenheim2019).

By 2009, the Labour government had increased annual investment in children by 1 per cent of GDP compared to when it came to power. Between 1999 and 2010, spending on state benefits rose by 61 per cent, and spending on early years education increased by 58 per cent per pupil (Kelly et al., Reference Kelly, Lee, Sibieta and Waters2018; Cattan et al., Reference Cattan, Conti, Farquharson and Ginja2019). The 2008 Great Recession marked a turning point in UK family policy. The economic shock undermined the Labour government’s social investment approach and paved the way for a shift in policy direction under the Conservative-led coalition (2010–2016) (Hemerijck and Ronchi, Reference Hemerijck, Ronchi, Ferlie and Ongaro2020).

The Conservative-led coalition government came to power in 2010, committed to a policy agenda that combined social justice rhetoric with austerity measures in response to the Great Recession (McEnhill and Taylor-Gooby, Reference McEnhill and Taylor-Gooby2018). Central to this approach was an emphasis on individual responsibility and fiscal restraint (McEnhill and Taylor-Gooby, Reference McEnhill and Taylor-Gooby2018). Many of the universal and capacitating policies introduced by the Labour governments were dismantled, and financial support for families was significantly reduced. These reductions were driven both by austerity-related spending cutbacks and broader ideological shifts in family policy. A total of £11 billion was cut from welfare benefits, disproportionately affecting families.

The restructuring of government departments, such as renaming the Department for Children, Schools and Families back to the Department for Education, signalled a narrower focus on education and a retreat from integrated family services (Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019). After 2010, childcare participation in the United Kingdom declined significantly, largely due to cuts in subsidies for childcare costs (Hemerijck and Plavgo, Reference Hemerijck, Plavgo, Hemerijck and Matsaganis2022a, Reference Hemerijck, Plavgo, Hemerijck and Matsaganis2022b). While the Conservative-led coalition government (2010–2015) maintained an interest in early intervention, its approach differed markedly from that of the Labour governments. The coalition established the Early Intervention Foundation, which aimed to support child development up to age 19 years and effectively replaced the broader Sure Start programme (Bradshaw et al., Reference Bradshaw, Glendinning, Maynard and Bennett2015; Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019).

In 2012, the coalition introduced a new parenting programme (Eisenstadt and Oppenheim, Reference Eisenstadt and Oppenheim2019). Although some parenting support initiatives from the Labour era were retained, their scope was narrowed to focus exclusively on vulnerable groups. This shift from universal to targeted provision was accompanied by significant reductions in funding: between 2009/10 and 2012/13, real spending per child on early education, childcare, and family services fell by 25 per cent, and spending on family services dropped by 32 per cent (Abbott et al., Reference Abbott, D’Ambruoso and Paxton2019).

According to Abbott et al. (Reference Abbott, D’Ambruoso and Paxton2019), Labour governments combined capacitating and compensating policy levers, aiming to improve families’ capabilities and incomes and provide universal support for families. In contrast, the Conservative-led coalition focused on reforming the tax and benefits system, promoting targeted support and social mobility. This shift meant a move away from universal provision towards more selective and means-tested interventions. Between 1997 and 2010, family policy measures expanded significantly, but from 2010 forward, they contracted sharply. The United Kingdom stands out in the magnitude and direction of these cuts, particularly in family benefits and eligibility criteria (Hemerijck and Plavgo, Reference Hemerijck, Plavgo, Hemerijck and Matsaganis2022a).

In comparative perspective, the UK case illustrates how a liberal welfare state temporarily adopted elements of social investment before shifting back towards fiscal consolidation. This alternation between expansionary and retrenchment-orientated phases provides an opportunity to examine whether broader policy environments correspond with changes in parental well-being. Rather than attributing effects to specific programmes, the empirical analysis investigates whether shifts in overall family policy orientation coincide with changes in parents’ agency, resilience, and sense of purpose.

Family policy and well-being

Changes in the family policy environment may be associated with changes in parental well-being. According to the Stress Process Model, parenthood increases adults’ exposure to a variety of stressors related to work, economic insecurity, cultural expectations, and everyday responsibilities (Nomaguchi and Milkie, Reference Nomaguchi and Milkie2020). These stressors have been linked to elevated levels of depression, distress, and anxiety, which can diminish the emotional rewards of parenthood and contribute to lower levels of well-being (Glass et al., Reference Glass, Simon and Andersson2016). However, family policies may alleviate some of this stress (McLanahan and Adams, Reference McLanahan and Adams1987; Nomaguchi and Milkie, Reference Nomaguchi and Milkie2020). For instance, parents report higher life satisfaction in countries that offer generous financial support, extensive childcare provision, and flexible working arrangements (Pollmann-Schult, Reference Pollmann-Schult2018). Glass et al. (Reference Glass, Simon and Andersson2016) found that paid leave and childcare subsidies were associated with smaller happiness gaps between parents and non-parents, and in some cases, parents were even happier than non-parents when family policy packages were robust. The positive effects of family policy are understood to stem from their ability to reduce time-related, economic, and psychological pressures (Nomaguchi and Milkie, Reference Nomaguchi and Milkie2020).

Building on this theoretical foundation, the following section explores how Labour’s social investment policy environment may relate to parental well-being and the parenthood paradox. This study uses eudaimonic well-being measures. Eudaimonic well-being refers to functioning effectively and to fulfilling one’s values, aspirations, potential, and purpose (Huta and Waterman, Reference Huta and Waterman2014). Thus, eudaimonic well-being allows exploration beyond traditional subjective hedonic well-being measures, such as happiness or satisfaction, which are often momentary and past-oriented. Instead, eudaimonic well-being measures in this study investigate agency, resilience, and sense of purpose that signify capacity rather than just emotions. The distinction between hedonic and eudaimonic well-being does not imply that family policy should necessarily affect them in opposite directions. Rather, they capture different consequences of the policy environment. Happiness and life satisfaction indicate how positively individuals feel about or evaluate their lives, whereas agency and resilience indicate whether they perceive themselves as having the capacity to act and cope with difficulties. Sense of purpose further captures whether individuals experience their lives and roles as meaningful. This distinction is particularly important for social investment because capacitating policies are intended to strengthen individuals’ capacity to manage life-course risks, rather than simply improve how they feel. Therefore, even where hedonic and eudaimonic well-being might move in the same direction, changes in agency, resilience, and purpose provide distinct evidence about whether the family policy environment corresponds with the capacities that social investment is intended to support. Therefore, these dimensions provide insight into how parents perceive their capacity to function effectively and lead lives they consider fulfilling and worthwhile.

Unlike prior studies that focus on economic outcomes, this analysis uses a longitudinal approach but applies it to well-being, examining whether possible changes in agency, resilience, and sense of purpose align with broader shifts in family policy orientation. While economic effects often appear quickly, well-being effects may follow a different trajectory, emerging more gradually and reflecting psychosocial mechanisms rather than immediate financial relief. Associations between policy environments and well-being are unlikely to operate uniformly: gender, for example, shapes how parents experience policy support (Nomaguchi and Milkie, Reference Nomaguchi and Milkie2020; Lehmus-Sun, Reference Lehmus-Sun2023). Mothers often face greater caregiving demands and time constraints, making them more sensitive to policies that improve work-family reconciliation, while fathers may benefit differently through enhanced flexibility and role validation.

Family policies grounded in the social investment approach are theorized to strengthen individual agency by providing concrete resources and meaningful choices. When parents feel they can combine caregiving and employment at more ease, their sense of control over life and ability to shape their future is strengthened (Lehmus-Sun, Reference Lehmus-Sun2025). At the same time, these policies foster resilience by offering structural support and flexibility that help families cope with everyday challenges and crises without major deterioration in their social or economic status (Lehmus-Sun, Reference Lehmus-Sun2023).

By emphasizing robust and inclusive family policies, the social investment welfare state also creates a broader social safety net. This safety net provides security in the face of uncertainty and changing life circumstances, allowing individuals to be freer from constant insecurity and to live with less fear of social or economic disruption (Wolff and de-Shalit, Reference Wolff and de-Shalit2007). Freedom from stress and insecurity should support and increase parents’ capacity to act independently, make their own free choices (agency) and easily recover from difficulties in life (resilience). This allows them to feel the emotional rewards of parenthood and to feel meaning, and direction in life (purpose).

Accordingly, social investment-orientated policy environments may be associated with parental well-being both directly and indirectly. Direct effects stem from services that reduce the actual time and economic constraints of parenthood such as affordable childcare, flexible work arrangements, and paid parental leave. Indirectly, these policies can alleviate stress and worry by providing a sense of security: simply knowing that support is available if needed may improve well-being (Radcliff, Reference Radcliff2001; Pacek and Radcliff, Reference Pacek and Radcliff2008). This psychological reassurance can be particularly important for parents navigating demanding life stages. Supporting this, Glass et al. (Reference Glass, Simon and Andersson2016) found that generous family policy provision was associated with higher happiness among both mothers and non-mothers, suggesting that the availability of services, not just their use, can positively affect well-being.

Traditional welfare states typically address homogeneous biographical risks, but social investment welfare state policies are designed to tackle heterogeneous vulnerabilities related to labour market and family life-course transitions (Hemerijck and Huguenot-Noël, Reference Hemerijck and Huguenot-Noël2022). These transitions are particularly significant for gender, as family formation tends to impose greater demands on women than on men (Nomaguchi and Milkie, Reference Nomaguchi and Milkie2020). Scholars argue that while traditional welfare states often overlook gender, social investment policies emphasize it (Hemerijck and Huguenot-Noël, Reference Hemerijck and Huguenot-Noël2022). Childcare services and adequate parental leave that promote gender equality are intended to encourage mothers, in particular, to participate in the labour market (Bouget et al., Reference Bouget, Frazer, Marlier, Sabato and Vanhercke2015).

This study expects that the parenthood gap in eudaimonic well-being differs across expansionary and retrenchment-orientated family policy phases. Specifically, it examines whether the transition from an expansionary to a retrenchment-orientated family policy environment was associated with a widening of the parenthood gap in agency, resilience, and sense of purpose (H1). Given that parents with young children face particularly intensive caregiving demands, shifts in the gap may be more pronounced among those with young children in the household (H2). Furthermore, considering the gendered distribution of caregiving responsibilities, mothers may experience stronger declines in agency, resilience, and sense of purpose during the retrenchment period than fathers (H3).

Methodology