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Financing Welfare Welfare provision in the UK comes from three sectors, the state, private and voluntary sectors. This is known as "the mixed economy of welfare." Welfare must be paid for, and Glennerster (1997 & 2003) has described 3 main sources of funding: taxation, fees or charges and gifts or charity. While the funding sources broadly reflect the mixed economy of welfare, Alcock (2003) points out that their use is much more complex than a simple three-way division. For example, state services may receive funding from charity and from charges, a well known example being the prescription charge; while taxation may be used to support private and voluntary sector services, such as through government grants. In the UK, state funding through taxation is the preeminent source of money for welfare. There are two major types of taxation, direct and indirect taxation. Direct taxation includes income tax and National Insurance contributions. These are...

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