From services to cash to services: Back to the future or evolution?

Much of today’s debate in social protection revolves around a renewed emphasis on social services for disadvantaged groups, including case management, psychosocial support, employment services, child care, disability services, and community-based interventions. Certain observers perceive this development as a reversion to foundational concepts, while others regard it as a concerning departure from the established evidence supporting cash transfers. In reality, the shift reflects not a reversal but an evolution, one that raises important questions about effectiveness, efficiency, and equity in the design of mature social protection systems.

This debate looks different across regions and stages of development. In Central and Eastern Europe and parts of the Western Balkans, most countries have already established broad-based cash transfer and social insurance systems that are institutionally well-developed and designed to provide coverage against core income-related risks over the life cycle, even if their performance varies in terms of adequacy, coverage, and responsiveness. In these contexts, the binding constraints increasingly include the service side, alongside remaining gaps on the cash side. Population aging, rising long-term care needs, higher prevalence of disability and chronic conditions, and the erosion of family-based care arrangements are placing growing pressure on social services that were designed for a different service-risk profile, one focused on acute and temporary needs rather than sustained care, complex case management, and long-duration support. The central question is how, in settings where income support systems are institutionally established, to integrate them with effective services in fiscally and administratively sustainable ways.

It is worth recalling that early social protection systems were often heavily oriented toward services and in-kind support, with cash playing a more limited, discretionary, or supplementary role, rather than cash transfers being the dominant instrument from the outset. Early welfare states and poor-relief systems relied heavily on institutional care, in-kind assistance, and social work. These approaches were often paternalistic, discretionary, and tightly targeted. While services mattered, especially for children, people with disabilities, those unable to work, and the absence of reliable income support sharply limited their effectiveness. Poverty, after all, is fundamentally about a lack of resources, even if those resource gaps frequently reflect deeper structural, institutional, and power-related drivers.

The late twentieth century marked a decisive shift, as cash became central to social protection policy. From social pensions and unemployment insurance to conditional and unconditional cash transfers, income support emerged as the backbone of modern social protection systems. This shift was driven by three insights. First, cash respects household agency, since people generally know their needs better than governments do. Second, cash is administratively simpler and often cheaper to deliver than fragmented in-kind programs. Third, a growing body of rigorous evidence showed that cash transfers improve consumption, food security, schooling, and health outcomes without generating the disincentive effects that were once feared.

Yet, over time, cash’s limitations became clearer. Cash transfers can stabilize consumption but may not address structural constraints such as lack of child care and jobs, health barriers, social exclusion, or discrimination. Nor can cash easily substitute for services characterized by strong public-good features or in low supply, including education quality, disability support, or mental health care. Recognition of these limits gave rise to the cash-plus agenda, which combines income support with complementary services, information, or facilitation, not as a corrective to the failure of cash, but as a meeting point between increasingly capable cash systems and evolving service needs.

Cash-plus approaches aimed to preserve the strengths of cash while deepening their effectiveness through closer alignment with services. Pairing transfers with early childhood services improved developmental outcomes; linking cash recipients to employment services improved employment stability and productive engagement; and integrating psychosocial support helped address barriers faced by highly vulnerable populations. At the same time, adding services increased program complexity, costs, and implementation risk, and evidence became more mixed. A systematic review comparing cash-plus programs to cash alone finds that some combinations deliver added benefits, while others do not, depending critically on service quality and context.

More recently, attention has shifted toward using cash to enable access to social services rather than bundling services directly into social protection programs. Instead of governments determining which services beneficiaries receive, households are given purchasing power, through vouchers, top-ups, or differentiated transfers, to access services of their choosing. In specific contexts where service markets exist, are regulated, and face capacity constraints, this approach is increasingly seen as a pragmatic way to reconcile household agency with service provision while adapting to fiscal and demographic pressures.

The merits of this approach are clear. Demand-side financing can reduce paternalism, encourage competition among providers, and accommodate heterogeneous needs. It may also strengthen service systems by channeling predictable funding to providers. The risks, however, are equally clear. Markets for social services are often thin, uneven, or absent; information asymmetries are severe, and quality is difficult to observe. Without regulation and sustained public investment, cash-for-services approaches can entrench inequality rather than reduce it.

This evolution from services to cash, to cash plus, and now toward cash for services does not reflect a pendulum swing. Rather, it represents a progressive refinement of objectives as social protection systems respond to changing risks over the life cycle and across stages of development. Cash remains foundational, and services remain indispensable. The frontier question, particularly in parts of Europe and Central Asia, where income support systems are institutionally established, and service-related risks are intensifying, is how to combine them in ways that respect agency, ensure quality, and remain fiscally and administratively sustainable.