Welfare Support 1918/79 - Creating a Welfare State 1918 - 1979

Pre-1918

• Poor laws - welfare aid given in form of money or necessities to those in need.
• Usually the old, the young, the sick and the poor.
• First three were seen as ‘deserving’ poor, rightly cared for by the relatives, the church, private organisations and increasingly the state.
•  Until the end of the 19^th century, healthy people of working age who fell into destitution were often seen as morally at fault  - the ‘undeserving’ poor - they were housed in workhouses, where conditions were deliberately terrible to discourage the able bodied from poverty
• The process of having to prove that you ‘deserved’ welfare was a hated, humiliating experience.

From 1908 the liberal government inaugurated a huge expansion of state-provided welfare:

• These new mechanism were open to all who qualified with no distinction between ‘deserving’ and ‘undeserving’ poor.

The 1911 National Insurance Act expanded welfare:

·      Employers, employees and the government would contribute to the insurance scheme

·      Provided benefits and healthcare through the funds generated

·      However this scheme was only available to low paid workers earning less than £160 a year, only applied to 6 industries when created, and did not insure workers families

1917 Ministry of Construction

•       After WW1 it was largely accepted that the government had a role to play in insuring individuals had basic security

•       The Liberal government promised a ‘home fit for heroes’

•       The Ministry of Reconstruction was established to build a better Britain after the wars

Interwar years

Unemployment

Unemployment was the most pressing issues for interwar governments - It was never below 1 million between the end of the 1920s and mid- 40's (around 10% of the workforce) and peaked at over 3 million in the early 1930's.

However there was continuous conflict between supporting the unemployed and balancing the books.

Problems with the National Insurance Scheme….

• The self-funding National insurance scheme implemented by the 1911 National Insurance Act was undermined by the war as many of the 3.5 million returning troops were not eligible for the benefits provided.
• This was because they had not worked in one of the specified industries or had not made sufficient contributions.
• The wartime coalition realised that a difficult solution was developing, the national insurance scheme would need to be redesigned and the unemployed couldn’t be left to rely on old Poor law.

‘Out-of-work donation’ 1918-20

·       The short term solution, to help returning troops and civilian unemployed, was to issue dole money but under the name ' the out of work donation' (1918-1920)

·       Issued to remaining troops and then civilian unemployed until they found work.

• Was paid out of taxation/ borrowin) with no link to individual contributions

·       It was meant to be temporary, it set 2 important precedents

·       The government accepted the duty to adequately support unemployed, regardless of insurance contributions.

·       It provided more money for family dependents

1920 Unemployment Insurance Act

·       Unemployed Insurance Act was developed to offer a longer-term solution and cover those not employed by the National Insurance Act

·       2/3 workers were eligible to claim insurance

·       The act was passed in the 1920's just as the effect of the post war slump were setting in.

·       Rather than creating a self-funding system, the greater number of eligible claimants quickly drained the accumulated funds.

·       By 1921 the government was forced to make 'extended' or 'uncovenanted' payments; these were meant to be paid for through worker contributions from future employment were dole payments disguised as insurance.

·       They made this law as the Poor law could not cope with the scale of the problem and ministers feared a revolution if the unemployed were not supported.

·       Government already pressured, 2.4 million workers had taken part in strikes over pay and conditions in 1919.

·       Attempts were made to limit the expense, a seeking work test was implemented March 1921

·       By March 1930, 3 million claims had been rejected because of the test.

1929 Local Government Act

·       The local government act said that county and borough council had to set up Public Assistance committees (PAC's).

·       They were central funded and replace the poor law guardians who had administered funds under the old poor law.

·       In response to the financial crisis of 1931, the PAC's were given the power to administer means test to claimants

·       Their combined household income was thoroughly investigated to judge eligibility for dole payments.

·       The means test was hated as it was seen as an invasion of privacy and unfair, as some PAC's were more stringent than others.

1934 Unemployment Act

·       The unemployment act separated the treatment of insurable from long-term employment.

·       Part 1 of the act provided 26 weeks of benefit payments to the 14.5 million workers who had paid into the scheme

·       Part 2 created a national Unemployment Assistance Board (UAB) to help those with no entitlement to insurance benefits.

·       By 1937 the UAB had assisted 1 million people on a national means-tested basis.

·       By this point the Poor Law provisions shrunk to just a few groups not covered by the UAB; these included widows who could not yet claim a pension and deserted wives.

HOWEVER….

·       The government had not been able to solve unemployment largely because the prevailing wisdom of retrenchment (spending cuts and tax rises) could not stimulate economic growth.

·       It was only when huge state spending was poured into rearmament after 1936 that persistent unemployment was finally tackled.

Pensions

1908 Pensions Act

• State pensions were introduced
• It was hugely popular with the eligible over -70's
• There were criticisms that they were means-tested and did not support the widows and children of the deceased.

1925 Widows’, Orphans' and Old Age Contributory pensions act.

• Brought in by Neville Chamberlain- minister for health
• Addressed criticisms of the 1908 Pensions Act
• Provided a pension of 10 shillings a week for those aged 65-70 and provided for widows, their children and orphans.
• It was funded by a compulsory contribution rather than taxation
• This was initially unpopular with the Labour party, they felt it unfairly penalised the poor
• Tough economic conditions and an aging population led to it general acceptance
• Self-employed workers of both sexes were allowed to join the scheme in 1937

Housing

Why was reform needed?

• Local and national governments made efforts to improve housing since the mid-Victorian era.
• Concern that slums promoted crime and disease.
• Lots of slum clearances took place before 1918
• Major improvements in urban living standards were achieved by the introduction of mains water and sewage to homes.
• As late as 1899, only a quarter of houses in Manchester had flushing toilets compare to the 98% by 1914.
• Government had promised returning troops ' a home fit for heroes'.

1919 Housing and Town Planning Act

• The 1919 Housing and Town Planning Act aimed to empower local authorities to use central government funds to meet housing needs
• It was estimated that over 600,000 houses would have to be built to meet demand
• Only 213,000 were actually constructed before the onset of the recession lead to the 'Geddes axe' (1922 Geddes axe led to cuts in spending on education, pensions, unemployment benefit housing and health from £206 million to £182 million. also prompted cuts in defence)
• As a result the housing shortage grew worse with an estimated shortfall of 822,000 houses in 1923.

• A consequence of this was young married couples living with their parents

Conservative and Labour Housing Acts 1923 and 1924, Labour Housing Act 1930

• Conservative and Labour Housing acts in 1923 and 1924 respectively sought to use subsidies to encourage the construction of private and state-owned housing.
• These and the further Labour housing act in 1930 promoted a great deal of house building between 1919 and 1940.
• Four million homes were built in total, with one million built by the public sector.
• The 1930 Act used state funds to rehouse people living in overcrowded cities; most were built in large cities.
• Between 1924 and 1939, 20 'cottage estates' were created on the outskirts of London. These were new suburbs connected the centre by rail.
• While the quality of housing was much improved some projects were not properly thought through.
• At the huge Becontree estate (25,800 houses and flats) a lack of local jobs nearly led to disaster, which was only avoided thanks to the construction of a new ford car factory nearby in 1931.
• With the new homes came not only indoor plumbing and gardens but also increased demand for domestic goods such as new furniture, which further stimulated the economy and helped raise the average standard of living

Impact of WW2

The impact of the Second World War, the Labour Gov

The impact of total war on social welfare:

·       WW2 lead to wide consensus that welfare provision needed a radical overhaul

·       A political will developed to iron out the unfairness and inconsistency of the system

·       There were several reasons for this shift in attitudes among politicians and the general public:

o   A total war, which affected all, had prompted total solutions such as universal rationing and the provision of communal bomb shelters; the success of which gave a boost to Universalist as opposed to selective solutions.

o   The sacrifices made during the war lead to the public expecting a just reward. There was several discussions of the fair shares that should continue into peacetimes.

o   The evacuation of city children to the countryside openly showed the extent of the poverty. This contributed to the acceptance of the need for change.

o   The success of a state directed war economy increased political and popular belief in the political state intervention to improve peoples' lives after the war.

o   The war forced government to borrow and spend large sums of money in pursuit of victory. Keynes’s economic views had been proved to work

o   The war forced a wartime government and led to a greater deal of co-operation over war-time policy. White papers of 1944 was the basis of the 1946 National Insurance Act, helped to promote conservative acceptance of act.

The Beveridge report (December 1942)

William Beveridge was a liberal politician with an interest in social reform. In June 1941 he was appointed to head government committee to investigate welfare provisions and recommend improvements.

Why was the report set up?

• Set up on Churchill's request
• Partly to predict future developments
• Conservatives did not want a repeat of their broken promise of a ‘home fit for heroes’ after WW1
• Clear feeling the war being fought to deliver a better world and a more systematic, inclusive welfare system was fundamental.

Aims of the Beveridge report:

• Protection for all ‘from the cradle to the grave’.
• Tackle the five giants of

-          Want (through national insurance)

-          Disease (through the NHS)

-          Ignorance (through better education)

-          Squalor (by rehousing)

-          Idleness (through the maintenance of full employment).

• Beveridge wanted the provision of the state welfare to be centralised, regulated and systematically organised.
• State welfare should be funded entirely by a compulsory single insurance payment- Beveridge did not anticipate extra government spending on welfare and under his scheme wanted to avoid any 'means-tested' assistance payments and the rise of the santa clause state (given everything for nothing) as a liberal he didn’t want the system to incentivise dependence on the state.

Although his findings were not new, his report drew together the many findings that had taken place and presented them as a coherent, consolidated programme for post-war reconstruction.

The report was extremely popular:

• 635 000 copies were sold
• Popularity also explained by timing; winning the war made these prospects seem realistic and achievable. 
• Copies were even dropped over Germany to encourage the civilian population to demand peace.

The Atlee government

The labour party won the 1945 election with the slogan ‘let’s face the future’. They promised to implement the recommendations of the Beveridge report and introduce a welfare state in Britain.

Acts of Parliament that laid the foundations for the Welfare State.

Date of Act	Name of Act	Objective
1944	The Education Act  (AKA Butler Act)	Compulsory free education. Introduced tripartite system; after selection by exam aged 11, children were sent to either a grammar, modern or technical school.
1945	Family Allowances Act	Provided weekly payments for every child after the first. Money was paid directly to the mother. By 1949 88% of those entitled to family allowance had applied for it.
1946	National Insurance Act	Created a compulsory system to help pay for pensions and benefits for the unemployed.  Payments made by the employer, employee and government. Payments would be made in times of sickness, unemployment, maternity expenses, widowhood and retirement. The ‘Family guide to National Insurance’ was a free leaflet that was sent to 14 million homes to encourage them to be insured.
1946	National Health Service Act	Brought the whole population into a scheme of free medical and hospital treatment.
1946	The Industrial Injuries Act	Provided cover for accidents that happened at work
1948	National Assistance Act	Set up boards to deal with hardship and poverty. This new board did not have a vigorous form of means-testing and so was popular.

Other changes:

HOUSING

-          700,000 homes been destroyed in the war

-          230,000 houses were built a year by 1948 (however 240,000 were needed to eliminate homelessness)

-          1945-51 1 million homes were built.

-          4 in every 5 homes were built by the state. - Policies o

-          Pre-fabricated homes were a key focus for speed - around 150,000 prefabs were built.

-          Licences to produce homes were limited in order to achieve quality.

-          1946 New Towns act created new towns, moving people out of overcrowded cities.

NATIONALISATION

-        Between 1946 and 49 – coal, civil aviation, cable, wireless, the Bank of England, road transport, electricity, gas, railways, iron and steel, were all nationalised.

EDUCATION

-        900 primary schools built (for baby boom)

-        Only 250 secondary schools

-        School leaving age raised to 15

Issues with the welfare state

·       The BMA were initially opposed to the creation of the NHS, it took Bevan persistence and ‘stuffing their mouths with gold’ to get doctors to agree to work for the NHS

·       NHS costs rose year on year instead of decreasing - 1949 The Health budget was £597 billion, or 4.1% or GDP

·       The welfare state was expensive - Labour had rejected Beveridge’s call for welfare payments to be funded solely through insurance

·       Nationalisation meant the government now had to bear the costs of failing industries

Challenges to the welfare state 1964-1979

Changes to welfare

·       1959 National Insurance Act - introduced a top up scheme based on earnings

·       1971 Family Income Support Program - provided family allowance for the first child

·       1975 Social Security Act

Rising costs of welfare

·       Cost of unemployment benefits rose from 0.6% of GDP in 1939 to 8.8% in 1980

·       Baby booms in the late 50s and 60s - 900 000 births per year - meant higher care and education costs for children

·       Increase in average life expectancy between 1940 and 1970 (from 64 to 74 for women and 59 to 69 for men) meant a larger burden on the welfare state

·       New social groups not covered by the Beveridge report emerged like low-wage earning families and single parent families

·       Higher living standards prompted demands for a higher minimum standard of life for the poor - with absolute poverty tackled, people focused on how relative poverty could be eased

·       Growing size of the welfare state (by end of 70s welfare spending equated to around 6.5% of GDP) required ever more beurocracy to make it work

Increased criticisms of welfare

·       While spending on welfare increased just as much under Conservative governments as under Labour, criticisms of the welfare state emerged from the right during the 70s

·       Margaret Thatcher was a key critic of the welfare state, she feared benefit payments created a poverty trap  and encouraged dependence on the state

·       Many also felt that the welfare-state was unsustainable with the poor state of the economy, and commitment to full employment was fuelling inflation

·       On the other hand the left were angry about the persistence of privilege in healthcare and education, attacked welfare as inadequate and thought more should be done to combat relative poverty.