Welfare State


I – Définitions

L’Etat Providence (Welfare State) désigne les différentes fonctions de l’Etat liées à la protection sociale (chômeurs, vieillesse…) et l’action de l’Etat en faveur de la justice sociale et de l’obtention du plein emploi (intervention sociale de l’Etat).

La protection sociale consiste à protéger les individus contre certains risques (chômage, maladie, vieillesse, pauvreté).

Les prestations sociales sont les différents versements effectués par les organismes de la Sécurité Sociale (assurance maladie, retraites, allocations familiales, indemnités chômage, assurance invalidité, accidents du travail, maternité…).

La Sécurité Sociale fut créée par la loi de mai 1946, c’est une institution indépendante de l’Etat. Elle a un budget spécifique avec des recettes propres (cotisations sociales) et des dépenses spécifiques.

Le système de sécurité sociale est inspiré du rapport Beveridge. Le fondateur de la sécurité sociale en France est Pierre Laroque.

Les cotisations sociales sont les prélèvements obligatoires effectués sur les salaires. Elles proviennent de 2 sources :

  • du salarié lui-même
  • de son employeur

La C. S. G. est la Contribution Sociale Généralisée introduite en 1990 par Michel Rocart afin de mieux équilibrer le financement de la protection sociale.

Les revenus de transfert sont les revenus alloués par les pouvoirs publics au titre de la solidarité nationale. Ce sont les prestations familiales, les allocation chômage, les pensions retraite, le RMI.

La redistribution est le mécanisme qui consiste à prélever des impôts et des cotisations sociales sur les revenus primaires et d’en redistribuer une partie sous forme de revenus de transfert. C’est prendre d’une poche pour mettre dans une autre.

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, the 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, 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 in view of 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 "suitable education" and every LEA had to make suitable provision for this. At age 11, children would take a test in English, Arithmetic and General Knowledge (11 plus) : in 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, neither were they encouraged. At age 16, the "brighter" pupils would take GCE O-Levels (General Certificate of Education Ordinary-Level) in a number of 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 the 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 on 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 Woolworth’s for 6d. Children and the poor could get free treatment only under 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. Private practice remained, 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 unsure 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. The replaced the old voluntary or local authorities. Critics have said this made the new boards less accountable. Nevertheless, the key word 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.

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, 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 a number of 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 aim of the Act was to attack the "want", identified by Beveridge in his Report, which could arise when people temporary lose their earning power, through illness, unemployment, retirement… Benefits were provided for 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, sickness benefits and maternity allowance 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 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. 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, 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 in order 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 in order 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 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 were in receipt of them.

William Beveridge

William Beveridge was born in 1879 and he became a social worker in the East End of London in 1903. Later, he visited Germany to see for himself the system of social insurance introduced by Bismarck. Beveridge became a journalist, writing mainly on social policy. He was noticed by Churchill (still a Liberal at that time) and in 1908, Beveridge became a civil servant at the Board of Trade. Over the next three years, he worked on a national system of labour exchanges, which were introduced by the Liberal Government of Lloyd George. This measure only covered 2.75m men , one in six of the workforce. Beveridge remained a civil servant for the duration of World War I and after the war, he became the Director of the London School of Economics (LSE). He continued academic work at the Universities of London and Oxford. In June 1941, he was asked to chair an interdepartmental committee on reconstruction problems and on the coordination of existing schemes of social insurance. At this time, the social security "system" was in a confused state : 7 Governments departments were involved in providing various cash benefits to some people. The terms of reference were:

To undertake, with special reference to the inter-relation of the schemes, a survey of the existing national schemes of social insurance and allied services, including workmen’s compensation, and to make recommendations. (Beveridge, Beveridge Report : Social Insurance and Allied Services, 1942)

The Beveridge Report

It had been thought Beveridge would just tidy up the existing schemes but in fact, he came up with a brand-new scheme. In December 1941, he produced a preliminary paper entitled Heads of a Scheme, setting out ideas and assumptions, which were repeated in a slightly amended form in the Report itself:

Three Assumptions : no satisfactory scheme of social security can be devised except on the following assumptions :

  1. Children’s allowances for children up to the age of 15 or if in the full-time education up to the age of 16;
  2. Comprehensive health and re-habilitation services for prevention and cure of disease and restoration of capacity for work, available to all members of the community;
  3. Maintenance of employment, that is to say avoidance of mass unemployment (Beveridge, ibid.)

These words take us a long way from the Means Test of the 1930’s and from private insurance. In Beveridge’s view, benefits should become rights. What was revolutionary was not that the system was based on "insurance", backed by the state, but that it would be universal, signifying and end to all means tests.

However, if insurance was to provide the basis for benefits, then children’s allowances would be paid whether the parents were in work or not. If children’s allowances were means tested, then the low-paid with large families would be better off out of work than working unless benefits were very low. This is the problem of the so-called "wage benefit overlap". It is interesting here to go back to Rowntree’s investigations in 1899 to see how families with many children were often penalised if the wages coming in were relatively low. Since Beveridge and others believed the birth rate was falling and thus the country would, in the long term, suffer from this decline, his ideas were also coloured by a desire to encourage women to have children and not to penalise them for so doing.

Beveridge was not the first to raise the questions of children’s allowances : Rowntree himself and others had advocated their introduction before the War and even in the period 1940-1941, an inter-Party group was formed to accelerate their introduction.

When the Report was published on December 1st 1942, it received massive approval. On the night before publication there was even queues outside HMSO (His Majesty’s Stationery Office) branches to buy it. Sales reached 6 figures before the end of the year. The Home Intelligence Unit of the Ministry of Information said the Report was welcomed with almost universal approval as the first real attempt to put into practice talk about the "new post-war world".

Beveridge wages War in his Report on five giants : Disease, Ignorance, Squalor, Idleness and Want i.e. poor health, poor education, poor living conditions, unemployment and poverty. At the beginning, Beveridge briefly explains the reasons why he had come to the conclusions he presents in his Report. He points out that the various schemes in existence have grown piecemeal over the years. Each problem had been dealt with separately : "the first task of the Committee has been to attempt for the first time a comprehensive survey of the whole field of social insurance and allied services, to show just what provision is now made and how it is made for many different forms of need".

Beveridge does not begin with an open criticism of the status quo. The situation in Britain, he says, is "hardly rivaled in other country of the world". However Britain does fall short in the field of medical services "both in the range of treatment which is provided as of right and in respect of the classes of persons for whom it is provided" and in the field of cash benefits "for maternity and funerals and through the defects of its system for workmen’s compensation". Beveridge adds that the "limitation of compulsory insurance to persons under contract of service and below a certain remuneration if engaged on non-manual work is a serious gap". He advocates therefore a closer coordination which would help beneficiaries and indeed cost less in administrative costs.

He then goes on the point out three guiding principles of recommendations, and signals the way to freedom from want. Later, he indicates what he means by the notion of "social insurance" which underpins the Report : "it implies both that it is compulsory and that men stand together with their fellows. The term implies a pooling of risks…". The concept behind it is innovative : universality and national solidarity – instead of each person, each category of worker having a separate system or even no system of cover, all workers are treated in the same way, in exchange for their contributions. The Report then goes into great detail about the proposed level of contributions and is rather technical. The conclusion to the Report, presented immediately before a large section of appendices, is entitled "planning for peace in war". Beveridge points out the likely arguments supporters or detractors, on one side or another, of his Report will make. He answers them by situating the Report in its historical (and historic) context and as a fine war aim to set out, through courage and faith, in a spirit of national unity, as a victory for justice.

The impact of the Beveridge Report

Many people misunderstood the Beveridge Report, thinking it proposed free welfare benefits, when it fact it promised insurance benefits, based on insurance contributions and children’s allowances based on taxation since plainly "you don’t get something for nothing". An illusion was created that in some way, this was going to be a generous gift from the state to all individuals. This misunderstanding was in part cultivated by Beveridge himself. Yet if one looks closely at the text, he refers to providing people with a "subsistence level", with the onus on them to work to improve their lot.

To understand the impact of the Beveridge Report, one must look back to the inter-war years. Then, the question of the myth of national solidarity during the hard months marked by the threat of invasion and the Blitz needs to be considered. Divisions in the country may have forgotten at a time of national crisis, but the basic problems still existed : injustice, inequality, indifference were still prevalent, especially in many industrial cities of the North, Glasgow, South Wales and the East End of London. And even in the superficially ore affluent rural areas, agricultural workers were hardly well-off.

Beveridge’s ideas were in tune with current thinking and that’s the reason for its success. Many thought the Report was going to lead to radical "utopian" social change. Those witnesses called by the Committee also broadly supported radical change. Also, the need to modernise, coordinate, ration and centralise during the War sapped traditional ideas of individuality and a small role for the State. Beveridge had leaked much of what was in the Report, so there was a great expectation. Sometimes his leaks were unfortunate : "[the report] would take the country half-way to Moscow". This guaranteed him and his Report a cool reception from the Government. Nevertheless, Montgomery’s success at the battle of El Alamein had just taken place and this victory, for the first time, over the so-called "invincible Germans", caused church bells to ring out on November 15th 1942, just before the publication of the Report, so it could be said to have arrived at a propitious moment for the country.

Public reaction was enthusiastic but other reactions were mixed. There were some who did not believe in all this talk of a "new Jerusalem", such as Sir John Forbes Watson, Director of the Confederation of British Employers (CBE) and J. S. Boyd, Vice-President of the Shipbuilders Employers’ Federation, who thought the measures could not be afforded. Churchill’s position was perhaps surprising : he was against the Report, preoccupied as he was with winning the War, and thus with foreign policy before home policy. Churchill had defined the terms for the Coalition in the following terms : "everything for the war, whether controversial or not, and nothing controversial that is not bona fide needed for the war". Also, Churchill wondered, with others, if it could be afforded. In his opinion, it was impossible, financially speaking, immediately. Conservatives were unsuccessful at by-elections, as they gave the impression they were against it. He was obliged eventually to make a speech in 1943 modulating his position and claiming the credit for inaugurating a reflection on the question of National Insurance.

A Whitehall Committee was set up to look into the implementation of the Report. Then, White Papers were produced on the subject of a National Health Service, Employment policy and Education, the latter leading to the 1944 Education Act. Therefore, even though it was the Labour Government of 1945 which introduced the Welfare State, preparatory work had been done by Churchill’s Coalition Government, which of course included many Conservatives.