The Political Economy of Regulating for Welfare: Regulation Preventing Loss of Access to Basic Services in the UK, Sweden, the EU, and Israel

• Author: Hanan Haber
• DOI: 10.1177/0002716220954399
• Published date: 01 September 2020
• Date: 01 September 2020

954399ANN
THE ANNALS OF THE AMERICAN ACADEMYPolitical Economy of Regulating for Welfare
research-article2020
What does the state do to prevent consumers from los-
ing access to basic services in the market due to finan-
cial hardship, and under what conditions will this
occur? Bringing together the literature on regulatory
governance and the welfare state, this article compares
regulatory regimes that prevent loss of access to ser-
vices in the UK, Sweden, and Israel in housing credit,
electricity, and water, as well as to the electricity and
housing credit sectors in the EU, from the early 1990s
The Political to the 2010s. The article finds that regulation to address
this issue was introduced in all but the Swedish cases.
Economy of This highlights the significance of the welfare state
context in addressing these issues through regulation,
as more residual welfare regimes are associated with
Regulating for more social protection through regulation.
Welfare:
Keywords: regulation; welfare; housing; electricity;
water; utilities; social policy
Regulation
Preventing Loss What does the state do when consumers
cannot or do not pay their bills? How are
of Access to people protected from losing access to crucial
services, such as electricity, water, or mort-
Basic Services gaged housing, once they face debt and arrears?
These questions have far-reaching social, politi-
in the UK,
cal, and economic impacts, as could be seen,
for example, in the 2008 global financial and
Sweden, the housing crisis, or following the economic hard-
ship resulting from the COVID-19 health cri-
EU, and Israel sis. They also pose a theoretical challenge to the
literature on the modern capitalist state: the
literature on social protection and on regulation
of economic reform has generally overlooked
these questions or offered an expectation of lit-
tle or no policy to address such issues.
By
Hanan Haber is a lecturer in public management (regula-
HANAN HABER
tion) at King’s Business School, King’s College London, and
a research associate at the Centre for Analysis of Risk and
Regulation (CARR) at the London School of Economics.
NOTE: The author would like to acknowledge the support
of the British Academy for this research, as part of a British
Academy postdoctoral fellowship, pf170149.
Correspondence: Hanan.haber@kcl.ac.uk
DOI: 10.1177/0002716220954399
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ANNALS, AAPSS, 691, September 2020

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POLITICAL ECONOmy Of REgULATINg fOR WELfARE
51
Scholarship on regulation has described a shift from state involvement in the
economy through state ownership to regulation of liberalized markets, occurring
in Europe and elsewhere since the late 1970s. This has been dubbed the transi-
tion from the positive state to the regulatory state (majone 1997, 2011). In this
view, the regulation of markets is aimed at enhancing economic efficiency, while
questions of social protection and distribution, previously addressed politically or
administratively under a state ownership regime, are now framed out of the
design of regulation and regulatory agencies. This view suggests a normative, as
well as an empirical, expectation for regulation to focus on addressing market
failures, not economic hardship.
A similar expectation for little regulation addressing these types of issues arises
from the literature on the welfare state. While regulation has always been part of
social protection (e.g., through the regulation of the labor market), it has not been
as central as social spending and insurance in the study of the varieties of welfare
capitalism and the discussion of welfare state retrenchment and austerity (Esping-
Andersen 1990; for an overview see Arts and gelissen 2002; Danforth 2014;
Pierson 1994; Jensen, Wenzelburger, and Zohlnhöfer 2019; Pierson 2001). When
regulation is discussed in the context of social provision, it usually focuses on regu-
lating the provision of public and privatized social services, such as education or
health, rather than on the social aspect of market services, such as utilities.
What is lacking from these common understandings of the role and limits of
regulation is the study of the social aspects of regulating market services. This
goes beyond the welfare state’s focus on decommodification in the labor market,
toward at least partial decommodification of access to services or goods in mar-
kets. It also goes beyond the well-established role of regulation in consumer
protection, toward protection of those who cannot afford to be consumers. This
is regulation not of market failure, but of a failure in the ability to participate in
markets.
The study of regulatory welfare has increased in recent years, including the
study of such areas as electricity, water, housing credit, rail, pension fees, public
procurement, and immigration. Research has detailed the manner in which regu-
lation is being used for social purposes in economic sectors (Haber 2011, 2015,
2018; Leisering and mabbett 2011; mabbett 2013; Levi-faur 2014; Pflieger
2014; Benish, Haber, and Eliahou 2016; Haber, Kosti, and Levi-faur 2018;
Eckert 2017; Hartlapp 2020; Trein 2020). However, we still require a compre-
hensive view on how regulatory regimes in different countries and sectors
address these issues, as well as the drivers of these types of policies.
To address the question of how such regimes of regulating-for-welfare (Haber
2011) develop, this article compares the regulatory regimes for social protection
in the electricity sector and in housing credit in the UK, Israel, and Sweden from
the 1990s to the 2010s, with additional comparisons made to the residential water
sector in these countries, and to the electricity sector and housing credit at the
European Union (EU) level. The article argues that existing institutions and
policy context are driving (or inhibiting) the development of regulatory welfare
policies. The development of regulatory welfare was an addition to existing social
and economic settings, and specifically to existing policies and institutions of the

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THE ANNALS Of THE AmERICAN ACADEmy
welfare state. The development of regulatory welfare is thus dependent on, but
also contributes to, how citizens are already protected from social risks.
The research design is a compound, comparative medium-N design (Levi-
faur 2006), allowing for comparisons across several different dimensions of
interest: across the same sector in different countries, between different sectors
in the same country, and across different sectors in different countries.
The case choice represents an effort to maximize relevant dimensions of both
similarity and difference of both regulatory and social policy. In the case of elec-
tricity, reform occurred in the mid 1990s, including the liberalization of the sec-
tor, the creation of independent regulatory agencies, and efforts toward
marketization of national providers. In the housing credit sector, the similarities
lie in high rates of homeownership and a prominent role for the state in encour-
aging private homeownership as the dominant form of tenure. At the same time,
the cases represent different models of welfare states, from a Social Democratic
model (Sweden), to a Liberal model (UK), to a hybrid model (Israel), to no wel-
fare state (EU). This can also be seen as a distinction between an institutionalized
model of the welfare state, as in Sweden, to a more residual model, as in the UK
and Israel.1
The findings show that the most consistent variation between the cases is at
the country, rather than the sector, level. Regulatory welfare, or regulation and
other types of policy addressing service termination, developed in Israel, the UK,
and the EU, but not in Sweden. This finding supports the claim that national-
level context matters for the development of regulatory welfare, as more residual
welfare regimes are associated with more social protection through regulation.
The findings do not seem to offer similar support for alternative explanations,
such as a left-right partisan divide, social need and focusing events, interest
groups, or the power of ideas.
Explanatory framework
This article asks how consumers are protected from losing access to basic services
such as electricity, water, and repossession of mortgaged housing due to eco-
nomic hardship, debt, and arrears across different national contexts.
However, the literature and practice of creating regulatory regimes as part of
the “rise of the regulatory state” do not support an expectation for a regulatory
response to social hardship. This is because of the focus of regulatory agencies on
the correction of market failures, and on structuring these regimes and the regu-
latory agencies that oversee them as autonomous from political actors and pres-
sures (majone 1994, 1997, 2011).
In such regulatory regimes, we expect little scope for addressing social issues.
Indeed, we might even expect regulation to formally bar social considerations
from setting tariffs or providing services, as was the case, for example, when the
electricity sector in Israel was initially reformed (Haber 2011). At the same time,
the formal independence of regulators means that even if political pressure to

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POLITICAL ECONOmy Of REgULATINg fOR WELfARE
53
address social needs might develop, there would again be little recourse for
addressing these issues within these regulated sectors, as regulators were...