This article is concerned with recent developments in welfare states. After a decade of stagnation, crisis and defensive strategies a period of fundamental change of welfare states appears to have begun. Change however is a difficult phenomenon to grasp and to explain. If one wants to grasp change, one first has to define a starting point, the status quo on a certain time. Secondly, one has to define a dimension of change: what are the crucial variables that indicate fundamental change? We are interested, thirdly, in fundamental changes because everyday policy change has to be distinguished from more fundamental changes that can reveal the direction in which modern welfare states are developing in reaction to growing fiscal austerity and changing social and economic circumstances. In this article we will discuss these three issues in relation to the existing theories in welfare state change and with the Dutch case as an example of welfare state change.