The Welfare State

The official start of what’s now known as “the welfare state” started in 1945, but as a bit of background, I’m going to go about 40 years further back than that.

At the 1906 General election, the Liberal party were suffering a bit of a split. This was the first case of there being modern liberalism and classic liberalism.  The Liberal leader, Henry Cambell-Bannerman, was a firm believer in free-trade, but also, apparently believed in improving social conditions. So after wining the general election, they slowly moved away from their strictly free-market capitalist stances, But not by much. This wasn’t a sudden case of them caring about the working class. They were desperately trying to stop the rising popularity of Keir Hardie and the labour movement at the time.

Keir Hardie being a strong supporter of policies like free education, maintenance for the aged poor (pension) and child maintenance payments. In the very early 1900s, these were rare things to believe in. But they were gaining traction, so Henry got into gear.

Over their years in government, they gave local authorities permission to offer free school meals, (though most didn’t cos it wasn’t compulsory and cost too much) they introduced the pension (to people over 70 on an income of 21 to 31 quid a year) The problem was, most people couldn’t prove their age and even if they did get it, they were still living below the poverty line. Also, Many people were dead before they reached the age of 70. So while it was a nice offer, it didn’t live up to the claims.

They gave slightly more powers for trade unions which allowed a minimum wage to be legally enforceable, but only in very limited industries and again, didn’t guarantee a good standard of life. They also introduced the National Insurance Act in 1911 in coalition with Labour, which made health insurance compulsory  for workers earning less than 160 quid a year. Similar to what the US are idolising as Obamacare, just now.

These welfare policies did continue getting better, slowly but surely over the course of a couple of decades. Their subsidies went up a bit, they maybe got a bit more money in their pension, maybe the pension age went down a wee bit and they got improved labour exchanges. But there was still a very, very long way to go.

Due to wartime austerity in Britain, a more community spirit was kindled. Food was rationed, so people were taking, purely the food they required. During bombing campaigns, neighbours checked on each other to make sure they didn’t need anything. Sharing became very popular. Then with evacuations of kids from poor families to more middle/upper class families in the countryside, the extent of the disparity between haves and have nots became clear. Add on to that the fact the government was more involved in the lives of ordinary people. Giving free vaccinations against diphtheria and strongly focused on temporary housing for people suffering damage from bombing raids. There came a true hunger for true community.

In 1942 the Beveridge Report was published. It was chaired by William Beveridge, The Liberal Party economist. In this, he identified 5 “Giant Evils” in society. These were squalor, ignorance, want, idleness and disease. It then proposed reform to the current welfare system in place.

In 1945, with Germany defeated and concentration put onto Japan, Churchill planned for the wartime coalition government to continue. Labour were not happy with that plan and argued against it. They won that argument and Churchill called an election.

This was an interesting election because no matter who won, there were going to be welfare reforms. And pretty big ones. All 3 main political parties wanted healthcare to be more inclusive, both conservatives and Labour talked about it being universal. Liberals didn’t mention universality. They all planned more security for the poor, to a certain degree. The differences were to what extent was this reform going to be offered.

The conservative party *did* want universal healthcare. In principle, at least. Whether they’d actually have went for the same as what the NHS currently is is a different story. They kept support for social housing, but were pretty obvious that this was purely temporary. Universal pensions at 20 shillings for single people and 35 for couples. An offer of contributory sickness benefit, but if you hadn’t contributed and/or didn’t work – nothing. The conservative party also had plans to only keep industries publicly owned for a limited amount of time. They had advanced plans to sell off everything that was publicly owned.

Similar thing with the liberals. In fact, the liberals didn’t even mention universal healthcare. They simply stated that they’d improve health services and allow patients to choose their GP. Beyond that not a huge amount different from the conservatives. They’re just slightly more willing to have the railways nationalised. That was pretty much the only difference.

Labour, though… They went all in. Fully universal, inclusive healthcare. Free secondary education, inclusive social security plans, including disability benefits, unemployment benefits, pensions and mass nationalisation of fuel and power industries, of inland transport, iron and steel, of the banks. To fully appreciate the extent that labour battered into this, I’d like to quote a paragraph from their 1945 manifesto:

“They say, “Full employment. Yes! If we can get it without interfering too much with private industry.” We say, “Full employment in any case, and if we need to keep 8 firm public hand on industry in order to get jobs for all, very well. No more dole queues, in order to let the Czars of Big Business remain kings in their own castles. The price of so-called ‘economic freedom’ for the few is too high if it is bought at the cost of idleness and misery for millions.”

It’s hard to argue against that. Especially in a time of the community spirit they had at that point. People cared about each other. They genuinely wanted to help. For the first time, the rich and the poor really saw the difference in how they were living. They’d been basically segregated before this. This was a truly revolutionary time.

So as you can probably guess, Labour won the 1945 general election. And as shocking as this may be, they actually followed through with their manifesto promises.

In 1945, they passed the Family Allowances act – providing 5 shillings a week for each school-aged child, other than the eldest. In 1946, they passed the national Insurance act. unemployed workers given 26 shillings a week or 42 for married men. Pensions were provided, help to fund funerals was also provided. The only issue with this act is it didn’t provide the same for people who were yet to contribute to the fund. But this was temporary, this was fixed a bit later on. I don’t think it’s unreasonable to not be perfect the first time around. They done a lot.

In the same year, the Industrial Injuries act was passed, giving financial relief to workers injured at work. The only issue with this, is it gave businesses the freedom to refuse payments to workers injured at their place of work The government was picking up the tab for businesses not paying for their workers. And to be honest, it’s still the same today.
Also in 1946, they introduced the New Towns Act. Creating new towns to reduce overcrowding. It didn’t work tremendously well to begin with, but it was a building block for future things.
In 1948 the National Assistance Act was passed. This removed the poor law in the UK and provided assistance to those who had not paid national insurance contributions, including some pensioners who weren’t receiving the pension. And finally, also in 1948, the NHS was born. Like anything as big as this, they run into some problems. Because of how badly health had been dealt with in the past, the first 5 years were extremely expensive. They had a backlog of ill people getting things sorted they couldn’t afford to fix the year before. The NHS initially had free dental treatment and glasses, but had to go back on that because the NHS cost them more than they had assumed. But again, after dealing with health so badly for so long, that’s to be slightly expected that there’d be issues.

So that’s the welfare state now in existence. Over the course of the next 50 years, there were fixes in price, in how systems were run. There was also some dismantling of some welfare systems thanks to Tory governments. So there was a mixture of both good improvements dismantling. But in general, welfare has become more inclusive over the years, at least up until the latest Tory government.

In 1998, under New Labour, for the first time, a universal minimum wage was put into place. For decades there had been wage controls in certain sectors and sort of enforced by trade unions. But there had never been a blanket, for-all minimum wage ever put into law. This of course was opposed by the Tories, so when they ever talk about the living wage, you can tell them to get to…

And now we’re at the present day. healthcare is still free at the point of use, but, no longer free prescriptions outside of Scotland. And more privatisation happening every day, with even a few right wing politicians openly stating their support for an insurance-based system like the US. Basically, they want to regress to 1906, while doubting labour policies for taking us back to the 70s. Unemployment benefits still exist with sanction quotas, disabled people on deaths door aren’t quite disabled enough in 2017 until they’re dead. Men and women, each year, appear to be losing a few years of their pension payments, but for the most part, the safety net still exists, so that leaves the question… Where are we going next?

Now, it’s easy to assume that with the Tories in charge, we’re going to end up back at the beginning. And that’s a fair assumption to make. Every time there’s a Tory government in charge, benefits lower, poverty goes up. But these are spikes. On the grand scheme of things, I do believe we are very slowly moving in the right direction.

In my view, the next logical step in welfare is UBI. UBI stands for Universal basic Income. It’s a system in which unemployment benefits no longer exist, working tax credits don’t exist, disability benefits don’t exist, but every citizen is given an amount of money per week, fortnight, month whatever to live on. And hopefully it’s actually enough to live on, that’s one of the biggest fears of this sytem. Nonsense amount of money that isn’t enough for anyone. But I’ll try to be positive here.

The universal income is extremely expensive. I won’t lie, it’ll cost about 314bn a year. Which, including pensions is about 100bn more than welfare currently costs. But there’s more to this than money and I, maybe naively, believe politicians of the future will be smart enough to see that.

From the few trials of Basic Income in Canada and Finland, there’s been a good amount of information found out. Stress is drastically reduced. The amount of money stress costs the nhs is huge. Stress contributes to obesity, to depression and anxiety disorders, to diabetes and there was even a study linking it to Alzheimer’s. So there’s a huge saving in the NHS budget. Which is currently at over 145bn.

Because people aren’t forced to work for minimum wage to feed their kids, people have the ability to get a proper education. They can afford to take time off work, get a degree of some sort and improve their lives drastically. More access to education is sometimes considered to devalue the idea of being educated. This is nonsense, an educated population can provide more services and make life easier for each other.

And linked to the last point, people won’t be forced to take the first job that offers them shitty wages. They can afford to say “no, I refuse to work for that amount of money. If you want a service, pay for that service fairly”. With a higher paid population, you have a higher tax revenue. And with a more educated population, you have more highly skilled labour, which is paid even more.

So while UBI is significantly more expensive, just the 3 things I just went through, I think can help pay for UBI with no added cost. And if there is more of a cost? You’re getting a happier, healthier population, I think that’s worth the loss of money.

And it wouldn’t hurt to get the due taxes from companies like Google and Amazon, either.

Craig Duncan

This article holds the views of the author and not neccessarily the views of Solidarity as a party
Posted in Articles.

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