Welfare state in the United Kingdom

History

In 1984 historian Derek Fraser told the British story in a nutshell. The welfare state, he said:

germinated in the social thought of late Victorian liberalism, reached its infancy in the collectivism of the pre-and post-Great War statism, matured in the universalism of the 1940s and flowered in full bloom in the consensus and affluence of the 1950s and 1960s. By the 1970s it was in decline, like the faded rose of autumn. Both UK and US governments are pursuing in the 1980s monetarist policies inimical to welfare.

The welfare state in the modern sense was anticipated by the Royal Commission into the Operation of the Poor Laws 1832 which found that the old poor law (a part of the English Poor laws) was subject to widespread abuse and promoted squalor, idleness and criminality in its recipients, compared to those who received private charity. Accordingly, the qualifications for receiving aid were tightened up, forcing many recipients to either turn to private charity or accept employment.

Opinions began to be changed late in the century by reports drawn up by men such as Seebohm Rowntree and Charles Booth into the levels of poverty in Britain. These reports indicated that in the massive industrial cities, between one-quarter and one-third of the population were living below the poverty line.

Liberal reforms

The Liberal Party launched the welfare state in Britain with a series of major Liberal welfare reforms in 1906-1914. The reforms were greatly extended over the next forty years.

The minimum wage was introduced in Great Britain in 1909 for certain low-wage industries and expanded to numerous industries, including farm labour, by 1920. However, by the 1920s, a new perspective was offered by reformers to emphasize the usefulness of family allowance targeted at low-income families was the alternative to relieving poverty without distorting the labour market. The trade unions and the Labour Party adopted this view. In 1945, family allowances were introduced; minimum wages faded from view.

The experience of almost total state control during the Second World War had encouraged the belief that the state might be able to solve problems in wide areas of national life.

The Liberal government of 1906–1914 implemented welfare policies concerning three main groups in society: the old, the young and working people.

Beveridge Report and Labour

The aftermath of the First World War boosted demands for social reform, and led to a permanent increase in the role of the state in British society. The end of the war also brought a slump, particularly in northern industrial towns, that deepened into the Great Depression by the 1930s.

During the war, the government became much more involved in people's lives via governmental organisation of the rationing of foodstuffs, clothing and fuel and extra milk and meals being given to expectant mothers and children. The wartime coalition government also committed itself to full employment through Keynesian policies, free universal secondary education, and the introduction of family allowances. Many people welcomed this government intervention and wanted it to go further.

The Beveridge Report of 1942, (which identified five "Giant Evils" in society: squalor, ignorance, want, idleness and disease) essentially recommended a national, compulsory, flat rate insurance scheme which would combine health care, unemployment and retirement benefits. Beveridge himself was careful to emphasize that unemployment benefits should be held to a subsistence level, and after six months would be conditional on work or training, so as not to encourage abuse of the system. That was however predicated on the concept of the "maintenance of employment" which meant ‘it should be possible to make unemployment of any individual for more than 26 weeks continuously a rare thing in normal times’ and recognised that the imposition of a training condition would be impractical if the unemployed were numbered by the million. After its victory in the 1945 general election, the Labour Party pledged to eradicate the Giant Evils, and undertook policy measures to provide for the people of the United Kingdom "from the cradle to the grave."

Included among the laws passed were the National Assistance Act 1948, National Insurance Act 1946, and National Insurance (Industrial Injuries) Act 1946.

Impact

This policy resulted in increased expenditure and a widening of what was considered to be the state's responsibility. In addition to the central services of education, health, unemployment and sickness allowances, the welfare state also included the idea of increasing redistributive taxation, increasing regulation of industry, food, and housing (better safety regulations, weights and measures controls, etc.)

The foundation of the National Health Service (NHS) did not involve building new hospitals but nationalisation of existing municipal provision and charitable foundations. The aim was not to substantially increase provision but to standardise care across the country; indeed Beveridge believed that the overall cost of medical care would decrease, as people became healthier and so needed less treatment.

However, instead of falling, the cost of the NHS has risen by 4% annually on average due to an ageing population, leading to a reduction in provision. Charges for dentures, and spectacles were introduced in 1951 by the Labour government that had founded the NHS three years earlier and prescription charges by the Conservative Government in 1952. In 1988, free eye tests for all were stopped, although they are now free for the over-60s.

Policies differ in different countries of the United Kingdom, but the provision of a welfare state is still a basic principle of government policy in the United Kingdom today. The principle of health care "free at the point of use" became a central idea of the welfare state, which later Conservative governments, although critical of some aspects of the Welfare State, did not reverse.

Expenditure

In the financial year 2014/15, state pensions were overwhelmingly the largest governmental welfare expense, costing £86.5 billion, followed by housing benefit, which accounted for over £20 billion. Expenditure in 2015–16 on benefits included £2.3 billion paid to unemployed people and £27.1 billion to people on low incomes, and £27.6 billion for personal tax credits.

Criticisms

Critics of the welfare state claim that, in addition to the vast expense, by relieving citizens of personal responsibility for their own welfare the government has inadvertently promoted irresponsible and immature attitudes, with the result that squalor, ignorance, and idleness are common. In 1980, T. E. Utley, wrote that the welfare state was "an arrangement under which we all largely cease to be responsible for our own behaviour and in return become responsible for everyone else's. The temptations which this way of doing things offers to synthetic anger, fraudulent penitence, all other forms of hypocrisy and the sheer evasion of duty are infinitely too strong for fallen man".

In the early 21st century, the Government of David Cameron has argued for a reduction of welfare spending in the United Kingdom as part of their programme of austerity. Government ministers have argued that a growing culture of welfare dependency is perpetuating welfare spending, and claim that a cultural change is required to reduce the welfare bill. Public opinion in the UK appears to support a reduction in welfare spending, however commentators have suggested that negative public perceptions are founded on exaggerated assumptions about the proportion of spending on unemployment benefit and the level of benefit fraud.

Figures from the Department for Work and Pensions show that benefit fraud is thought to have cost taxpayers £1.2 billion during 2012-13, up 9 per cent on the year before. This is lower than the £1.5bn of benefit underpayment due to error.

There are also widespread complaints from church groups and others that the UK welfare state does insufficient work to prevent hunger.

Benefit rates as a percentage of industrial earnings

Note on source, as quoted in the text: "based on statistics of weekly earnings, Employment and Productivity Gazette."

Changes in National Assistance/Supplementary Benefit

Notes

(a) As quoted in the text: "the scale is calculated using the average discretionary addition (adjusted to spread winter fuel costs throughout the year) for retirement pensioners. It does not include any allowance for rent. The price index used for the single pensioner is that in the Employment and Productivity Gazette."

(b) As quoted in the text: "it is assumed that the children are aged four, six, and eleven."

Increases in National Insurance benefits

Notes

(a) As quoted by text: "Based on average earnings for adult male manual workers in manufacturing, allowing for income tax and national insurance contributions.

(b) As quoted by text: "Calculated on the special price index for single pensioner households published by the Employment and Productivity Gazette adjusted for housing expenditure using the housing component of the retail price index. Since a disproportionate number of pensioners have controlled tenancies, this may overstate the increase in prices."

(c) This column is deflated by use of the Retail Price Index

Social security benefits as a percentage of average earnings

a,b Man plus dependent wife.

c Man plus dependent wife on his insurance.

d Married couple.

e For one child.

Changes in real terms in social security benefits

Notes

(a) Refers to married couple.

(b) Refers to man plus dependent wife.

(c) Refers to man plus wife on his insurance. After 1971 refers to recipients under 80 years old.

(d) Includes family allowance and tax allowance combined for second child up to 1977, when these were unified into the child benefit.

Percentage change in social security benefits, prices and earnings

(a) Single person.

(b) Single pensioner under age 80.

(c) General index of retail prices.

(d) Average gross weekly earnings of full-time adult male manual workers. For November 1978, October 1977 to October 1978 increase used.

Unemployment and sickness benefits as a percentage of income

(a) After allowing for income tax and national insurance contributions.

(b) Average earnings of adult male manual workers.

(c) Earnings Related Supplement calculated using average earnings in October of the relevant tax year.

The real value of social security benefits, 1948–75 (£s, 1981 prices)

Unemployment benefit

July 1948: 19.64

April 1961: 26.88

September 1971: 34.96

November 1975: 36.47

Retirement pension

July 1948: 19.64

April 1961: 26.88

September 1971: 34.96

November 1975: 42.96

Supplementary benefit

July 1948: 17.93

April 1961: 25.31

September 1971: 33.39

November 1975: 35.10

Child support: one child

July 1948: 4.87

April 1961: 4.36

September 1971: 4.27

November 1975: 3.67

Child support: three children

July 1948: 17.60

April 1961: 16.62

September 1971: 15.36

November 1975: 13.81