The chapter analyses local welfare governance, focusing on its ambivalence from the point of view of depoliticisation/repoliticisation dynamics. The general scenario is shaped by intertwining effects of financialisation and economic crisis in Europe: growth of vulnerability, worsening of inequality and growing social fragmentation. It is within this context that local welfare systems have to cope with increasing social problems through decreasing resources and powers, due to austerity measures and the strengthening of supranational and national control. At the same time, local welfare systems are gaining importance as fields of social innovation according to the perspective that sees cities as places of change in governance relations. After debating this mix of constraints and opportunities, we refer to an empirical study on the city of Milan in order to clarify the ambiguous relationship between social innovation, politics and the political. We argue that social innovation conceived as a redefinition of governance deeply affecting relations between the state, the market and the society means not less politics but a different politics.