The British welfare state has Peter Taylor-Gooby, one of its pre-eminent scholars, deeply worried in the wake of the worst economic crisis since the Great Depression. In his new book The Double Crisis of the Welfare State and What We Can Do About It, Taylor-Gooby takes stock of the troubled present and uncertain future of British welfare provision across a wide array of social services, including health, pensions, education, employment and care provision. It is his contention that the austerity reforms pursued by the Coalition (Conservatives and Liberal Democrats) government led by David Cameron, premised on a radical ideology of divisive liberalism and disguised by the discourse of the ‘Big Society’, will prove adversely consequential for the atypically employed, the low-skilled, working women, single mothers. If no political countermovement is mobilised, the once highly inclusive British welfare state will be left extremely maladapted to intensifying socioeconomic restructuring, including the critical impact of the global financial crisis.

Taylor-Gooby's notion of a ‘double crisis’ relates to the immediate impact of the global financial crisis in combination with the long-run pressures of economic internationalisation, family and gender change and adverse demography on welfare state futures. A case in point of the latter is the long-run atrophy of the male-breadwinner model upon which the post-war welfare edifice was built. Costly bank bailouts and other stimulus measures required to pre-empt economic meltdown in 2008 and 2009, enacted by the last Labour government under the helm of Gordon Brown, have drained the public purse. Rising social expenditures in the face of declining revenues, next, forced the conservative–liberal coalition led by David Cameron, to make deep cuts in welfare services and social transfers to the poor, the unemployed and pensioners, in order to shore up public finance solvency. Simultaneously, the gender revolution in women's education and employment has fundamentally changed the social risk structure facing individuals and families. In the knowledge-based service economy, access to middle-class lifestyles critically depends on dual-earner families, generating additional pressures for childcare, income-support for single-earner households and policies to help reconcile work and family life.

The Double Crisis of the Welfare State and What to Do About It is a passionate book but by no means a partisan one. Under New Labour, the British welfare state has become more inclusive and unified. The expansion of in-work benefits and the increased minimum wage and income guarantees have mitigated the plight of the working poor. Multi-pillar pension schemes expanded together with public support of lower income groups with irregular employment patterns. Exemplary of New Labour's social investment turn has been the priority given to helping children out of poverty by increasing public spending on early childhood education and care, the Working Families Tax Credits for low-earning families and the increases in the length and generosity of maternity leave. On a more critical note, Taylor-Gooby finds fault in New Labour's tolerance of high levels inequality. In hindsight, the economic success of New Labour relied on an unregulated expansion of private debt, ultimately producing an unsustainable pattern of domestic demand-led growth, accompanied by rising inequalities in income and wealth, together with a tragic misallocation of talent, luring the best minds in the country to work in the City of London.

The immediate squeeze on public spending as a result of the financial crisis set the scene for a more radical conservative–liberal market-oriented welfare retrenchment agenda, which is bound to embed a permanent policy shift of rightist ideas of state inefficiency, market superiority and stigmatising the undeserving poor. At the heart of Taylor-Gooby's argument lies a trilemma, an insurmountable tension between three important preconditions for more inclusive welfare provision. The gist of the trilemma is that in contemporary Britain it is inherently difficult to attain: (1) inclusive welfare provision; (2) feasible electoral support for adequate social spending; and (3) effective social policy delivery. Future governments may attain any two of these preconditions but not all three at the same time. Generous and inclusive welfare provision is politically unpopular as British voters are more tax adverse than mainland European electorates. Over past decades, private social services, not of good quality per se, have captured the available policy space, pre-empting the room for good quality public provision. New Labour tried to address the welfare trilemma ‘by stealth’, i.e. by privileging private provision while searching for invisible ways of taxing and spending.

Is there a way out of the bleak trilemma? Peter Taylor-Gooby finds a silver lining in the ongoing convergence of social aspirations in European societies. Most citizens (especially the younger cohorts) aspire to access to training and education and to decent jobs, and to child and elder care to support working families over the life course. Taylor-Gooby suggests that the proliferation of ‘new social risks’ of skill erosion, balancing work and family life, insufficient social insurance coverage associated with augmented job insecurity and higher labour market flexibility may in effect provide a window of opportunity for new constituencies of support for inclusive provision. New social risks allow for a broad normative redefinition of benefits and services in terms of support for work and family responsibility. All over Europe real new social risk policy innovation has taken root with significant spending increases on active labor market, family and child policy. Converging family aspirations founded in decent work for everyone and ‘dual earner’ capacitating care provision in reciprocity can become the new ticket of electoral success. In more practical policy terms, according to Taylor-Gooby social investments are potentially able to address (new) social needs without making major demands on public spending. I would however argue that social investments do not come cheap. Although the social investment paradigm promises high rates of return on investment, in terms of higher employment, rising productivity and more robust families, social investments do not incur immediate budgetary savings. Implementing a successful transition to fully fledged social investment strategies, while at the same time addressing rising needs in healthcare (and pensions) will inevitably require additional resources. Moreover, the social investment strategy remains on the supply side and therefore cannot serve as a real alternative for an effective macro-economic policy. Equally important to add here is that – contra the Third Way – social investment is no substitute for social protection. Adequate minimum income protection is a critical precondition for an effective social investment strategy.

Still, structural change, associated with widening social divisions, can provide the social context for a more humane response to structural change. This surely places great demands on political leadership to build coalitions of support for inclusive welfare provision that effectively meets widely shared needs in areas of education and training, access to decent jobs and the highly gendered areas of child and elder care and family-friendly employment relations. Such provisions are both feasible and inclusive because they align with the widespread aspirations of twenty-first century work and family life.

The Double Crisis of the Welfare State and What to Do About It is about breaking or remaking the British welfare state: about moving along the ongoing trajectory of policy drift, creating ever-harsher social divisions, while entrapping the British economy in permanent stagnation, or about recreating the Anglo-Saxon welfare regime to accommodate deep social and economic change in a fashion that simultaneously supports social well-being and economic efficiency. Peter Taylor-Gooby is to be congratulated for making this political choice entirely self-evident!