This article argues for the centrality of the concept of social identi
ty in contemporary analyses of social policy. It attempts to transcend
arguments for or against postmodernism and argues that debates about
'identity and difference', when combined with an analysis of social re
lations, need not undermine a focus on structural inequalities and sho
uld be at the heart of theoretical considerations in social policy. It
suggests that the concept of social identity is still poorly understo
od in recent debates and goes on to outline a provisional theory which
distinguishes between ontological and categorical identity. Such a di
scussion, it is argued, may help suggest ways in which the role of soc
ial policy in the process of identity formation may be better understo
od.