The History of the Welfare State

In 1942 William Beveridge published his report on Social Insurance and Allied Services. The report instantly became a best seller of all time. The report was based on eliminating poverty and it has subsequently come to be considered as the blueprint of the welfare state. The Beveridge Report was identified as the core of wartime social transformation. It became very significant at a time when unemployment was at an ultimate high, the report “was seen by many people the light at the end of the tunnel of war, and as a promise of “social justice” for the post war world”. (Gladstone, 1999. p39) Beveridge was asked to write a detailed report on how to improve the existing national schemes of social insurance and allied services. The report was built on defeating “Want”. But Want was only one of the five giants on the road to reconstruction. The others were Disease, Ignorance, Squalor and Idleness. His recommendations of the system on social insurance were to rectify the poor conditions of post-war Britain and it was an attack solely upon Want which would remove poverty. This essay will look at what are the main features of The Beveridge Report and why they were significant. It will also examine whether the report realistically attempted to tackle all the so-called “five giants” which is mentioned in the report.

The main feature of the report was based on a scheme of social insurance- “that is, a system of insurance in which risks are pooled within the community, so that individuals are able to pay flat-rate contributions sand receive flat-rate benefits regardless of the extent to which they are liable to be in need of those benefits”. (Hill, 1990, p28) The plan for social security was to eradicate “want” but in order for this to be achieved there must be co-operation between the state and the individual. Bevereidge said that the state should offer security for service and contribution; by this the state should consider the need for a national minimum, which should provide individuals with the minimum for himself and his family to live on. However, he stated that this minimum should be given as of right and not means tested, so that individuals can build upon it freely. (Timmins, 2001, p23) Taking social insurance as the base of the report, Beveridge boldly made three assumptions which were to make it work; a universal scheme of family allowances, a comprehensive national health service, which was financed by taxation and the maintenance of employment. The first two assumptions were part of the insurance scheme of social security, and was the most expensive prerequisites. The third assumption worked two ways; it maximized the number of contributors and minimized the number of people claiming benefits.

Beveridge’s main investigation into social security was to reform all social services and provide a minimum of subsistence and care for the whole population. He believed that to eradicate poverty a reform of national insurance was vital and this can be achieved by provision of benefits and services. His proposal for social insurance and minimum subsistence was supplemented by private and voluntary means. (Thane, 1996, p232) The universal scheme was split into six groups and it was designed to cover people in actual or potential need. He defined these groups as: employees, self-employed, housewife’s, those below and above working age, the sick and disable and others of working age fit to work. (Lowe, 2005, p141) Housewives were particularly a difficult group to cover, and this will be discussed further later. The people who fall into these groups should receive the following benefits: unemployment and sickness benefits, disability benefit which also covered injuries at work, maternity grants and widow benefits, funeral benefits, family allowances and retirement pensions. However, even though this system of social insurance (which was later changed to national insurance) was there to provide subsistence-levels of adequate benefits, Beveridge knew there might be other circumstances where it would not be enough, and he therefore recommended another system of social assistance.(which was also later changed to national assistance) This scheme would work through means test to provide for people whose needs were not met by national insurance. People who qualify for national assistance, for example are disabled people, deserted or separated wives and men who refused to take on work when it is offered to them. The need for assistance could arise for reasons of sickness which meant they were not able to work and get into the labour market. This could be because a person has abnormal needs of diet or care.

Along with Beveridge’s proposal for national insurance and national assistance, he also proposed family allowances. This proposal came from a post-war issue of child poverty and low wages being paid to people who have large families. He said that family allowances were an essential part of an adequate social security system. The idea of family allowances had already been proposed by other economists such as Keynes. Beveridge insisted on family allowances to be non-contributory and financed through general taxation, for it would be too much for people who have large families and low wages to make contributions. This would cause a great burden on employment. He proposed that 8s should be paid to every dependent child except the first. However, the government was reluctant to pay 8s because it exceeded the limit given by the Treasury, so in 1945 the Family Allowances was introduced at a rate of 5s.

Beveridge’s second major assumption was comprehensive health and rehabilitation service which was to cure disease and help workers get back to work when they are sick, and make them available for work when it is offered. This would also prevent the reasons for unemployment and poverty. This service is to be available for all members of the community and free at the point of consumption. This service was not based on national insurance contributions but funded by taxation. There had already been deliberation before the Beveridge Report was published on making a comprehensive, free medical service, but the Beveridge Report got the government engaged into this more and in 1946 the National Health Service (NHS) was introduced. Before the NHS was introduced, medical services in Britain were not fulfilling the needs of people and the service was very poor. One of Beveridge’s five giants was Disease and the road to reconstruction was to tackle this post-war crisis, and by making the proposal of introducing the NHS which is free for everyone was an attempt to tackle Disease.

His third assumption was maintenance of full employment. Beveridge said that unemployment is a crucial problem which needs to be solved and without change, social improvement was impossible. (Thane, 1996, p239) In his Report he defined the need to avoid mass unemployment by keeping the rate of unemployment at an average of no more than 8 and a half per cent. However, by the end of the Second World War and the mid 1970’s the unemployment rate was accomplished and what in fact happened was that the unemployment rate fell below 8 and a half per cent that Beveridge had suggested. (Hill, 1990, p30) In the report he based his assumption that full time employment will be achieved, which in theory would tackle idleness.

As mentioned before the report on Social Insurance and Allied Services was particularly aimed at proposing a set of recommendations for setting up a system of social insurance, which will be mainly an attack on the giant Want. However, the other giants were also briefly mentioned in the report, but not to a great extent. After World War Two people had no houses to come back to, and the education system was failing terribly, there was an increase in poverty, unemployment and no adequate health care was available. To fight the five giants he gave a vital kick to start the programmes that he thought could give freedom not only from want, but the others too. The report in practice does not mention education to a great deal or detail apart from his trumpet call for the attack on Ignorance. Nor does he talk about Squalor in detail, which involves providing houses. This is due to the fact that Beveridge struggled over how to handle rents within the social security. (Timmins, 2001, p24) He proposed a comprehensive national health service which was to tackle Disease, but that is debatable as a free medical care would not only prevent disease but it would reduce poverty which will attack Want, so this linked into his main idea of his report. However, the creation of the NHS would cause problems on economic grounds as it was very expensive to run a free medical service at the point of use. Beveridge’s attack on Idleness was to provide high levels of full time employment. This attack on the five giants is linked with Want, as not having a job creates poverty, which then means people have to depend upon benefits, and to make the social security system work there needs to be more people in employment and less people claiming benefits. This is why Beveridge described the course of arguing a full employment was a prerequisite of an adequate system of social security. (Brown, 1995, p84) Looking at the five giants that Beveridge said must be attacked in order to change post-war Britain; he did not mention the other five giants in too much detail as he did with defeating Want. He therefore did not realistically attempt to tackle all the five giants, and let’s be honest even Beveridge could not stretch his terms of reference that far. It was hard enough trying to implement his main proposals of social insurance, so if he aimed his report on defeating all the giants then nothing probably would have come of it and it would not have been as successful as it was.

We have established that the main features of the Beveridge Report which are a set of recommendations for the setting up of a system of social insurance. The crucial elements of Beveridge’s proposals were that everyone was included; they were covered “from the cradle to grave” and benefits would be at a level which enabled a family to live without recourse to other means. The six fundamental principles of the report were: flat rate of subsistence benefits; flat rate of contribution; unification of administrative responsibility; adequacy of benefit; comprehensive; and classification. Based on them, and the proposal of national assistance which operated through means test, the aim the report was to eliminate Want under any circumstances. The Beveridge Report was a successful seller and the main features of the report became significant, as it gave hope to the people of Britain who were suffering from poverty and unemployment at extreme highs. Beveridge’s proposal of national insurance and national assistance, was adopted almost at its entirety. In 1945 Family Allowance Act was legislated, subsequently in 1946 the National Insurance Act was introduced, shortly following the National Assistant Act in 1948. These legislations were significant in what Beveridge had recommended as the main features of his report. He understood that if his recommendations had been enacted then Britain would have an ideal social security system which will provide adequate relief to the people in need and improve unemployment. However, there are many criticisms of The Beveridge Report and why many of his proposals were later abandoned and changed from what he initially proposed.

One of the problems of Beveridge’s proposals was with women, in particularly married women. Beveridge recommended that all married women should be eligible for a wide range of benefits “by the virtue of their husbands’ contributions”. (Lowe, 2005, p141) Most married women were not in paid work at that time, but women who worked could opt to pay lower contributions and in return they will qualify for the full range of benefits, though below the standard rate. The feminists were his major critics, as Beveridge’s explicit assumption of married women should enter into partnership with their husband and remain economically dependent upon them goes against what the feminists stand for. It also does not fit the present day situation, in which nearly half of all married women are in paid work. (Hill, 1990, p33) However, the main underprivileged groups are the non-working single women and even after efforts being made to meet their needs, nothing came of it. He also did not find a satisfactory solution for separated, divorced and widowed women within an insurance scheme. Women were generally not equally represented or rewarded in the labour market and they did not choose to not participate, but they were excluded from any competition with men. So when Beveridge recommended a “housewives charter” which would allow provide grants upon marriage, free domestic help when ill and a separation allowance, it gave hope to the women. However, this was overlooked by critics, as his proposal was dismissed by the government and became a weakness of his Report. This flaw in the implementation of the report has questioned Beveridge’s aim to change social provision for housewives as it regarded women as dependants of their husbands and not treated equally to men.

Beveridge’s proposals were very significant in what he had promised would happen if they were implemented by the government, which is relieving poverty. But there were many compromises which had to be made in order to adopt his proposals. Many of Beveridge’s proposals had been rejected by the Treasury on the grounds that it was excessively expensive; this was a flaw both politically and in practical terms. Due to this there was a very lengthy perusal for his recommendations. Beveridge was not liked by Churchhill very much as he also believed that Beveridges recommendations was far too expensive; it would create doubtful prospects for the post-war economy and form hopes for the people of the country which the post-war government could not satisfy. (Thane, 1996, p235) His susten lacked sufficient resourses to respond to inflation or changes in social need or social demand. (Lowe, 2005, p135) Even though the report gained popularity, it also received widespread criticisms like the pension rates are too low and stronger fear that the government will ignore the report. (Thane 1996, p235)Beveridge’s proposal that retirement pension should gradually be phased in over a period of 20 years was not implemented. This was because it would make arrangements for people who had not contributed to the retirement scheme previously to qualify for very much more quickly than that.

Benefits were generally at lower levels than Beveridge suggested. This can be seen with the family allowances, which he said should start at 8s but the government changed it to 5s. Another weakness of his report which critics argue contradicts his main proposals is the principle of universalism and adequacy. If Beveridge’s main objective was to eliminate Want then why were those in need not targeted for relief? The universalism scheme essentially means that vast contributions will be collected from and benefits will be distributed to those who do not need help from the state. This would then fail effectively to help those who are genuinely in need because benefits will be too widely distributed. The principle of adequacy and universalism was to eliminate means test and not rely on national assistance benefits, but quite the opposite occurred and it was then inevitable that the cost-conscious government would reject the principle of adequacy. Many of Beveridge’s proposals were contradicted when they were implemented, and it destroyed the logic of the report. As did the agreement the government came to when they said that “the rate of benefit should only be one which provided a reasonable insurance against want”. (Lowe, 2005, p144) This automatically meant that insurance contributions was no longer a guarantee that people will be freed from poverty and that would have to result in applying for means-tested national assistance. Rather than diminishing the use of national assistance as predicted by the report, it became increasingly significant.

Beveridge’s proposals became significant, as the main acts of social insurance were accepted by the government, although after some alteration, they were legislated and brcame the foundation of his report. However, a report which was said to be a blueprint of post-war reform was far from revolutionary or logical. Even though some of his proposals were enacted, they were changed vastly from what Beveridge had proposed to begin with. All this did not come without recourse to other measures, which was seeking national assistance. This subsidiary benefit was supposed to wither away, but in fact the number of claimants increased. Furthermore, many of his proposals were abandoned and did not make Along with the fact that it was impractical, the high cost of social insurance emphasises the failure of Beveridge’s principle of the unification of administrative responsibility. Beveridge hoped that through the establishment of one responsible ministry, which were the Ministry of Social Security, both government and claimants would become the beneficiaries of a greater “co-ordination, simplicity and economy”, (Lowe, 2005, p141) but this was far from the case as they did not achieve this and Want was relieved by a wide range of means-tested benefits which were administered by other local governments and the NHS. (Lowe, 2005, p159) Several proposals which Beveridge made were either changed when they were implemented or they were completely abandoned. The reason for this was mainly because as mentioned previously, they were illogical, impractical and very expensive. And his proposals were contradicted when people had to rely on means-tested benefits, which was what he was against and wanted to change.

In conclusion,