The Welfare State: an end to poverty and inequality ?

According to Beveridge, two points of view are presented concerning the introduction of the Welfare State. The established view is that it was introduced in a climate of consensus: wartime hardships, the Evacuation, national solidarity and the acceptance of an increased role for the State in central planning led to a bipartisan approach to the need for durable change in social and health policies in Britain, as in other Western countries.

More recently, it has been pointed out that the War did not eliminate social differences or resentment, Evacuation did not lead to an ending of social prejudice, and the Conservatives and Labour Party did not agree on the way forward.

Nevertheless, Beveridge concludes that the War “was a major watershed in the history of school medical provision… It undoubtedly led to a determination to do something about the burden of poverty and ill health which had been revealed.

The Butler Education Act (1944)

Even before the Labour victory of 1945, Conservative Minister R. A. Butler introduced the 1944 English Education Act: since education had, like social security and health care, developed haphazardly, it was felt the situation before 1944 was complex, wasteful of ability and inequitable.

The 1944 Act laid the responsibility for education in England on the State and LEAs (Local Education Authorities), a national system, where locally administered Education became a free and universal social service. A Minister of Education was created.

Public education was to be organised in 3 stages: primary, secondary and further. In every area of the country schools should be sufficient in number, character and equipment “to afford all pupils opportunities for education offering such variety of instruction and training as may be desirable given their different ages, abilities and aptitudes”.

The private fee-paying sector was left intact. Education for all became compulsory from 5 to 15. Every parent had to ensure his child received a “suitable education” and every LEA had to make suitable provisions for this.

At age 11, children would take a test in English, Arithmetic and General Knowledge (11 plus): in the function of the results obtained at this examination, children would be sent either to Grammar School (for those with the highest marks) or Secondary Modern/Technical School for the rest.

This was known as the tripartite system but in reality, it was bipartite since very few LEAs set up Secondary Technical Schools. Comprehensive Schools were not proscribed, nor were they encouraged.

At age 16, the “brighter” pupils would take GCE O-Levels (General Certificate of Education Ordinary-Level) in several subjects, the others CSE examinations (Certificate of Secondary Education), introduced in 1963. At age 18, the “brightest” pupils would take GCE A-Levels (Advanced), which enabled pupils to apply for university.

The Labour victory of 1945 was followed by a heavy legislative programme. There were bills concerning Coal Nationalisation, Industrial Injuries, National Insurance, New Towns, Housing, Trade Union Law, the National Health Service… Much of the social planning for this legislation had been carried out during the war.

A common name for this battery of legislation concerning public health, social security, pensions and children’s allowances, better educational opportunities, and even a greater role for the State in the economy of the country (through nationalisations) is the Welfare State.

According to Marwick :

A ‘welfare state’ is one which accepts a responsibility to ensure the social well-being of all its citizen : the commanding heights, so to speak, of social well-being are income security (which ideally, as well as insurance or assistance to cover interruptions of earnings, includes an economic policy directed towards the maintenance of a high level of employment), health, housing and environment, and education. Beyond the commanding heights a sophisticated Welfare State may try to extend its domain to the romantic mist-capped peaks of culture, entertainment, morals and the manifold lesser problems of social relations and social welfare. The phrase was first coined to point a punning contrast to Germany’s ‘warfare state’.

Apart from the influence of Beveridge, which has already been pointed out, it is important to mention here that of John Maynard Keynes, who believed in an increased role for the State in managing the economy.

The National Health Service (NHS)

Before 1939, hospitals were organised piecemeal. In 1938 there were 1334 voluntary hospitals and 1771 municipal hospitals.

During the period of Victorian philanthropy and the consequent growth of hospitals, most of the income of voluntary hospitals came from donations and investments.

In 1891 this amounted to 88%. However, with the increase in medical knowledge and treatment, and greater access to the public, this percentage declined to only 33% in 1938. Manifestly, voluntary hospitals were in a serious predicament and thus they pleaded with the Government for state grants.

As far as doctors were concerned, family doctors (GPs: General Practitioners) were still being paid on the principles of the 1911 scheme, called “Ninepence for Fourpence”: this was the first state-supported health scheme and concerned all male workers earning less than £160 per annum.

The worker had to pay 4d (4 pence); the employer 3d; the state 2d. The scheme was administered by “approved societies” and workers could call on the services of a “panel” doctor.

Yet they had no right to hospital care or medicine. 43% of the population was covered by a “panel” doctor but working-class wives, children and the self-employed were not covered. Spectacles (glasses) could be bought at Woolworths for 6d. Children and the poor could get free treatment only under the means test.

The actual NHS was the first health system in any Western country to offer entirely free medical to the entire population.

It was not based on the insurance principle, with entitlements based on contributions, but on universal services, financed out of general taxation, able to organise preventive medicine, research and paramedical aid on a national basis.

If people choose not to consult a GP under the NHS, they can still consult one as a private patient. It was introduced by Aneurin Bevan, the controversial Labour left-winger.

Bevan believed the war had provided the instruments and the mood to bring about sweeping social change and a decisive shift in economic power, but only through solidarity, through the purposeful use of centralised power.

The NHS bore his personal stamp. Labour’s plans for education and social insurance were already outlined in Butler and Beveridge, so in health, there was room for someone like Bevan to leave their mark.

What was proposed went far beyond anything so far suggested. If there had been a consensus that some kind of NHS was necessary, there was still great suspicion from middle-class doctors. Bevan used great diplomacy to disarm his critics. He drew up proposals in 1946 which were to form the NHS Bill.

New group partnerships and health centres were encouraged in “under-doctored areas”. GPs were to have a salaried amount within their income. The sale of medical practices was abolished and hospitals were nationalised. The launch of the NHS led to a 2-year battle with the BMA.

The doctors, especially those who were rather elderly, well-off and from the South-East were trying to protect their interests. In the end, the impasse was broken, there was no whole-time salaried service and so the vast majority of doctors joined the NHS.

The NHS was officially launched in July 1948: it received a lot of support in the country. Nevertheless, the Conservatives voted against the Bill on Second and Third Readings: they claimed to want an NHS too but were against Labour’s proposals. They felt the Bill would destroy the ownership of hospitals. This gave them the reputation of having been hostile to its introduction.

The private practice remained, and so did pay beds in hospitals. There were no limits to specialists’ fees. Doctors were compensated for losing the right to sell their practices. Medical treatment was linked to needs and not means.

The Act stated that the Government wanted to ensure that in the future every man, woman, and child could rely on getting all the advice and care they might need, irrespective of their ability to pay.

Regional inequalities were supposed to disappear. The organisational structure was based on regional boards and executive councils, which were heavy and bureaucratic, with little popular participation. They replaced the old voluntary or local authorities. Critics have said this made the new boards less accountable.

Nevertheless, the keywords were nationalisation and regionalisation. Yet, Local Health Authorities were responsible for providing maternity and child welfare services, home nursing and home helps vaccination and immunisation provision with medical practitioners, and ambulance services.

Hospitals and specialist facilities for the physically disabled were also free. Training and work placement for the handicapped was covered by the Disabled Persons (Employment) Act of 1944.

The cost had been seriously underestimated. Already in 1949, Bevan had to concede that the estimated costs were inadequate. A further £53m had to be found. There were at this time already threats to introduce prescription charges and charges on false teeth and spectacles.

If there had not been a £3.5 billion loan from the USA, the Government would have had great difficulty in continuing to finance the NHS: in the first year, 187m prescriptions were issued, 8.5m dental patients treated, and 5.25m pairs of spectacles prescribed. Churchill suggested Bevan should be one of the first to seek (free) psychiatric advice.

Criticisms of the NHS come from different directions: according to David Stark-Murray of the Socialist Medical Association, Bevan – given the atmosphere and general feeling in 1946 – should have broken with the past: his reform was rather conservative and did not go far enough.

According to Whitney, a Conservative Minister of Health in the Thatcher Government, the creation of the NHS was part of a myth that before it, there was chaos and despair and that July 5th 1948 was a magical date thanks to Aneurin Bevan, the road to a new Jerusalem.

Whitney stresses the long road to the NHS, that began with Lloyd George’s 1911 Act. Whitney claims that the NHS, like Beveridge and Butler, were Conservative ideas introduced by Labour.

According to Timmins, the Bevan Act had the effect of divorcing GPs from the hospitals they had worked with. They became supplicants to the salaried specialists for their patients’ hospital treatment. As a result, their status declined within the NHS.

Social Security

As we have seen, Rowntree suggested that there were 2 main causes of poverty: large families and interruptions in earning power. The National Insurance Act (1946) and the National Insurance (Industrial Injuries) Act (1946) aimed to guard against as many interruptions to earning power as possible.

Previously, social insurance had been limited in its scope; also, it had not protected the individuals covered by it against several possible interruptions to normal work and pay; finally, benefit rates were too low. Both Acts managed to solve the first 2 problems by including all workers and all situations. This was one of the main characteristics of the Welfare State: universality.

The National Insurance Act (1946) provided for social insurance payments, except those relating to industrial injuries. It was the beginning of the establishment of a national minimum standard.

The Act aimed to attack the “want”, identified by Beveridge in his Report, which could arise when people temporarily lose their earning power, through illness, unemployment, retirement…

Benefits were provided from a fund built on the insurance principle, with contributions from all insured people, from employers and the Government (i.e. from general taxation also). Flat-rate benefits in exchange for flat-rate contributions.

Everyone above school-leaving age (15 in 1947), rich or poor, had to contribute to the National Insurance Fund. The only exceptions were those on very low incomes or married women who could choose to enter the scheme or to stay outside. If they chose the latter, then they could benefit from their husbands’ insurance rights. If not, they could benefit from the full range of benefits in their own right. There were varied contributory rates for different categories, with different entitlements.

Unemployment benefits were only payable to employed contributors, and sickness benefits and maternity allowances to employed or self-employed contributors. To qualify for benefits, a minimum number of contributions was necessary. Since unemployment in the post-war decade was less than the 3% expected, unemployment benefits cost less than expected too. Claimants had to make themselves “available for work”.

Sickness benefit was paid in respect of any day in an incapacity for work. It was up to the claimant to prove incapacity, normally done by sending a doctor’s certificate to the local office of the Ministry of National Insurance (later referred to as the Ministry of Pensions and National Insurance).

Widows’ benefits were complicated and had strings attached. Retirement pensions (for women over 60 and men over 65) were paid upon the claimant stopping work. Pensions were paid in full immediately, at the rate of 26 shillings for single people and 42 shillings for married couples, without a minimum amount of years in contributions.

This was contrary to what Beveridge had proposed. If people continued to work beyond that age (65-70 for men and 60-65 for women), the pension would not normally be paid. Most workers did not stay on in work after the retirement age.

Women who were insured in their own right could receive a maternity grant, a weekly allowance for at least 13 weeks. For mothers not insured in their own right, a small lump sum was available.

The National Insurance (Industrial Injuries) Act (1946) was administered by the same ministry as the previous act, both were financed from an insurance fund, with the same contributors.

As industrial injuries were rather rare, for relatively small contributions, relatively high benefits could be offered. There was no provision for the self-employed or for those who were not unemployed. All employed people, including working married women, had to contribute.

The benefit was provided chiefly for “personal injury by accident arising out of and in the course of employment”, usually from the time of entering to the time of leaving employers’ premises. The Act took compensation out of the hands of employers and tribunals and gave workers clearly defined universal rights.

The National Assistance Act (1948), which legally abolished the Poor Law, took the payment of relief away from the local authorities (PACs or Public Assistance Committees), whose duties had been to maintain certain institutions (for the elderly, the infirm, orphans..) and to provide for those in need, based on the means test.

The 1948 Act was a way of standardising the same system throughout the country. Also, potential recipients would not have to go and ask for the benefit. Instead, it became a right, after a short interview with an official of the newly-founded NAB (National Assistance Board). Local authorities however retained responsibility for residential accommodation for the elderly, and orphans.

The NAB, not part of a ministry but rather a semi-autonomous public body, had a duty to “assist persons in Great Britain who are without resources to meet their requirements, or whose resources… must be supplemented to meet their requirements”. Anyone over 16 could apply. Anyone in full-time work was excluded but claimants fit for work had to register for work to receive payment.

The amount which the claimant might receive was assessed according to his resources and the shortfall between his resources and his needs. The total amount must not exceed the amount he would earn if in full-time employment.

The NAB was also responsible for distributing non-contributory old-age pensions (based on the Old Age Pensions Act of 1936), based on a means test, paid to those who did not qualify for a pension based on the 1946 National Insurance Act. Many of those entitled to such pensions also qualified for an assistance grant.

Family Allowance Act (1945)

Family allowances, as suggested by Beveridge, were financed out of general taxation. They were therefore seen as a way everyone could help a particular category of the population in the redistribution of income.

The allowance was not paid for the first child but for every subsequent one, the original amount being 5 shillings a week. There was no means test. Children had only to be below school-leaving age (15) and to be maintained by the claimant (the mother). The allowances were of great benefit to large families on relatively low incomes.

By 1948, 3m families received them.

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