The Affluent Society : poverty rediscovered?

Post-war Britain is characterised by Butskellism, a hybrid word formed from part of the names of the Conservative (Butler) and Labour (Gaitskell) Chancellors of the Exchequer.

This socio-economic policy was a compromise between private and public responsibility for the individual and was seen to describe a consensus between right and left which was to last until 1975 (for the Conservatives) and 1979 (for the Labour Party).

The 50s and 60s were years of the acceptance by both sides in British politics of a Welfare State, which looked after the individual “from the cradle to the grave”.

Economic and social changes

Received wisdom indicates an increase in the standard of living for the majority of British people. The average male weekly wage for men in 1952 was £8 14s, the equivalent of £36 in 1976 when the same average weekly wage had reached £65.

This represented an increase in real terms of 80% in 24 years. Or there again, considering the percentage of homes owned by their residents, the figure in the same period jumped from 29% to 54%, an increase of 86%.

For the first time in their lives, many working-class and lower middle-class people benefited considerably from the “affluent society”. They could borrow money at low rates of interest and buy new consumer goods and services. In 1951 there were 48 cars and 103 telephones for 1,000 people. In 1976, the figures were 103 and 392 respectively.

However, it must be remembered that economic growth was slower in Britain than in most other capitalist countries. This is often referred to as “relative” economic decline.

The most important caveat concerning the interpretation of Britain’s decline in growth is, however, a different one. League tables of economic performance are all very well, but what matters for people is their own condition of life…

There is no other period in history, which has seen such an enormous improvement. Indeed, this is not a story of decline; it is one of remarkable advance. However objectionable the statement may be too many, with its connotations of Harold Macmillan’s Bedford speech of 1957, it is a matter of sober truth that most people in Britain have never had it so good. What is often called the decline of Britain is therefore economic and relative.

Economic decline need not mean social or political decline; though the three are obviously related in some ways. Relative decline, in a sense, need not mean decline at all. It simply means that others have done better than Britain, though Britain, too, has done well.

What is more, Britain was the first country to do well, so that in a sense the people of Britain have reaped the benefits of industrialisation for longer, if not to a greater extent, than others.

Yet this is obviously not the whole story. Relative decline means, after all, that British industry lost its dynamics at a time during which others found it perfectly possible to move ahead…

At the same time as Britain’s economy grew (slowly) during the post-war period, so public spending as a percentage of GNP (Gross National Product) rose, to reach approximately half in the I 970s, and within public spending, the amount spent on social welfare (including housing) also rose, to reach approximately a quarter (of this half) in the 1970s.

The economic situation was difficult before the 1964 General Election so the incoming Labour Government inherited a number of problems notably a rising balance of payments deficit.

After 13 years in opposition Labour also wanted to introduce costly social measures, re-nationalise steel (also costly) and expand the economy. The underlying idea was that it was possible to improve economic performance and boost growth, over a period of years, by the national coordination of resources and investment. If Wilson and his Government in the 1960s were for something distinctive, it was for this.

The period 1964-1970 was characterised by a number of economic crises. Britain’s share of world trade fell from 13.9% to 10.8% during this time. Taxation increased from 32% of GDP to 43% of GDP.

Economic planning had failed and this failure precluded major social planning despite the fact that some social reforms were carried through (the launch of comprehensive education, reorganisation of public transport, development in health and local government).

Under the Conservative Governments (1951-1964) Rent and Housing Acts had gone some way towards freeing up rent controls, essentially leading to increasing rents. For Labour, private rents had to be controlled and more council houses had to be built.

The 1965 Rent Act introduced the concept of the fair rent. The Labour Housing Minister Crossman tried to create a parity between the public and the private sectors, with the aim of building altogether 500,000 new homes a year.

This objective was knocked off course by the economic crisis leading to Government spending cuts, rising interest rates and the introduction of SET (Selective Employment Tax) which hit labour-intensive industries like building. In the best year (1968) 426,000 homes were built.

Social mobility: rigidity still prevailed

So the picture painted of the post-war period (1945-1979) is that of a complex situation: an ever-increasing improvement in living conditions for the majority, an apparent reduction in inequality and a gradual increase in spending on the Welfare State, yet, at the same time, fundamental economic problems from the end of the 1950s and persistent social difficulties in certain groups, which became noticeable in the 1960s.

We have therefore to look more closely at the post-war period to see in what way life for certain categories of people was evolving in order to see how the situation affected those in, or on the brink of poverty.

The first post-war survey on social mobility was carried out by David Glass and his group of researchers from LSE. They took a random sample of 10,000 adults in 1949 and asked basic biographical questions.

They then produced an intergenerational mobility table which showed, according to them, that Britain was characterised by a barrier between manual and non-manual workers, by a lot of short-range mobility, and finally by much rigidity and “self-recruitment”, especially at the upper levels of society, where sons would follow in their fathers’ footsteps.

It is not surprising in the early years of the Welfare State that little had seemed to have changed in Britain since the inter-war years, only a few years before. Indeed, Glass’s picture is of British society just as the Welfare State is being introduced.

Westergaardand Resler, writing nearly 30 years later, come to different conclusions from Glass’s data: for them, it would be wrong, especially in a capitalist society, to assume that inequality is fixed from birth.

There is a certain amount of “fluidity’ but this is not incompatible with great inequalities of opportunity. Children from privileged homes still had a better off-chance of getting into high-flying jobs than did the children from underprivileged homes.

Michael Young and Peter Willmott set out in the early 1950s to examine the effects the family unit of the movement of working-class people from the city (Bethnal Green in London) to the housing estate on the outskirts of the city (Greenleigh).

Traditional wisdom stated that the wider family of the past had shrunk since the Industrial Revolution “to a smaller body”. Young and Willmott found however that the wider family was still there in a kinship network.

To return to the theme of the Welfare State, Saville, writing in 1957, considers it as a part-way house on the road to socialism. It owes its setting up to the working-class struggle, the requirements of industrial capitalism for a more efficient environment in which to operate and recognition by the employers that it is the price to pay for political security.

The measures implemented in the 1945-1951 Labour Governments were, therefore, the result of a historical process, beginning in the second half of the 19th century.

Since the inception of the Welfare State, it has become common to talk of the improvement in the share of the national income accruing to the working-class. Saville reminds us that part of this additional share has been taken away in higher indirect taxes to pay for the increased Social Services.

Also, he claims that the major trend towards redistribution occurred during the War, not after it. According to him, since the War, there has been a move to greater inequality, typical of capitalism.

Poverty rediscovered

It was Abel-Smith and Townsend who are credited with the “rediscovery of poverty” in the 1960’s: these and other social scientists noticed that certain categories – notably families with children on low incomes and retired couples – often lived in difficult circumstances.

Titmuss points out that welfare “services” have been provided in the post-war period to counterbalance “disservices” from which many poor and underprivileged people suffer. These “disservices” have been as a result of the way society has evolved over the last century and especially since the War.

He argues for the maintaining of a “universalist” approach with selective positive discrimination in certain key areas to palliate the needs of particular groups. Among the “universalist” measures, he mentions acts in the field of the NHS, education, national insurance and family allowances.

One aim for introducing such laws was to remove the social stigma among claimants. Another was the development of the notion of “social rights”, which developed at the end of the 19th century.

Yet another was the idea of “prevention” rather than “cure”: preventing as many people as possible from falling into the traps laid out by the Five Giants. However, universalism is more complex than first appears: a number of difficult questions have to be answered, concerning the nature of the entitlement, the conditions and rules of entitlement, the methods of payment, the nature of the service or benefit and the extent to which the benefit compensates a “disservice” caused directly by society (like unemployment) or indirectly (like pollution) or inevitable (like language classes for immigrants), or as part of a deliberate social policy (like integration).

Titmuss goes on to point out that as well as”universalist” benefits, the 1960s are still characterised by a large number of means-tested benefits. He mentions a figure of between 1,500 and 3,000 of such means tests, administered by local authorities, in the field of education, child care, health, housing and welfare. “It follows that in these fields alone there exist some 1,500 different definitions of poverty or financial hardship, ability to pay and rules for charges, which affect the individual and the family”.

Titmuss wonders how potential claimants know how to fill out their forms. He considers it would be interesting (but virtually impossible) to try and discover (and if necessary punish !) those responsible for the “disservices” suffered by so many.

“Universalist” benefits should be maintained, they are in part “the consequence of unidentifiable causality”. But a more serious question concerns benefits which may be provided for claimants who are themselves “at fault”. Should everyone be able to claim benefits, either universal or means-tested, without regard to their own responsibility?

Universalism is not, by itself, enough. Since the War, the Welfare State has been unable to eliminate poverty, great differentials in income and different educational opportunities.

The only way forward is thus positive, selective discrimination in income maintenance, education, housing, medical care and mental health, child welfare, integration of immigrants …

T. F. Marshall (“The Role of the Social Services” in Political Quarterly, vol. 40, N°1, Jan-March 1969) posits that the introduction of the Welfare State led to a certain euphoria about the end of poverty which events since the War have shown to be premature.

He refers to the notion of “diswelfare”: instead by merely redistributing money, from the rich to the poor, services and the environment have to be improved to benefits all.

In any discussion of social welfare, it is necessary to come back to the fundamental question of what do we mean by need.

On one level, we can all recognise the need to survive physically, to have enough to eat and drink, without running the risk of falling ill and dying.

On another level, need is about adequate housing (what do we mean by “adequate” ?), income, education, health so as to reach the normal minimum level. This second level shows need to be both social (i.e. it is concerned with standards in communal life) and relative (in that varies from time to time and place to place).

There are different ways in which need is defined and accepted :

  • Normative Need – fixed by experts, to define the minimal level. An example is the Housing Act (1957) which proposed a formula to work out if people were living in overcrowded conditions.
  • Felt Need – what people say they want when asked
  • Expressed Need – when a felt need is translated into a demand, often through a pressure group.
  • Comparative Need – when certain groups, in certain areas, are perceived as falling behind others, by comparison.

Such categorisation enables Governments and Local Authorities to work out which are those most in need within society. Identifying what is therefore meant by “poor” is a way of showing people where the line is (and in a sense warning them not to cross it, if at all possible, because, in so doing, they would be changing category and so changing status in society).

Pointing out who exactly is in need also implicitly shows who is not, and so defines those in society who are deemed comfortable and self-reliant. Those who are identified as being “needy” are thus marked out and set apart. Yet this is the only way social policy can be directed. State aid is not unlimited. Everybody cannot be given unlimited amounts of money, help or time…

The term “needy”, or “those in need” is often perceived as being derogatory in that it implies that only these people are to be studied, apart from the rest of society.

The term “socially deprived” is seen as being more inclusive since those so deprived are deprived by other members of society who themselves may be able to do something about the situation or who may require the Government to act on their behalf.  The socially-deprived are thus seen as victims of society.

The period 1964-1970 saw a number of changes implemented in the field of social welfare. It was apparent that despite the improvements in living standards brought about for many by the Welfare State and by greater economic prosperity, there were still many who lived in need.

The Milner Holland Report (1965) looked into housing conditions in Greater London. This Report was to have a great impact on the debate about overcrowding and homelessness, not to mention the race issue.

Enoch Powell (a Conservative Minister who was expelled from the Party for his outspoken views on immigration in the late 1960s) began a campaign in the late 1960s to show that the country was gravely threatened by the influx of “coloured” immigrants.

He claimed the Report supported his view that “coloured” people were taking over white streets. In fact, the Report pointed out that bad behaviour was not a racial matter, it was a matter that affected all races.

In 1967, there was the Plowden Report, entitled Children and their Primary Schools, under the chairwomanship of Lady Plowden. The Report made a stand against rote learning in schools. It gave a place to parents, denounced corporal punishment and favoured systematic nursery education. There should be an effort in favour of schools in socially deprived areas, with extra staff and funds.

In this, the Report was influenced by recent models imported from the United States. As Lady Plowden said in 1972: “Much of the misunderstanding and violence in society … comes from a deep feeling of isolation and injustice ingrained in our city failures and within our education system”.

The Report also suggested the designation of “educational priority areas” where social and educational conditions were worst, a kind of positive discrimination, through the setting up of “community schools”, “a school open beyond ordinary school hours for the use of children, their parents and, exceptionally, for other members of the community”.

The Report correlated certain social symptoms with certain geographical areas. It listed zones where there were high clusters of deprivation, especially inner cities… In the Report, there was a study of the social studies available to primary school children in the Midlands.

Not unsurprisingly, in the “inner ring area” a much higher percentage of children had to be visited at home by the Social Services when the children’s “health, social adjustment or educational performance appeared to be suffering because of adverse home or other social factors”.

In small towns and rural areas studied, the figures were significantly lower. In the “outer ring”, composed of council estates and re-housed families, children showed fewer problems than in the “inner ring”, so showing the benefits of council housing and re-housing.

According to Holman, following on from Plowden, “there appears a strong case for saying that socially deprived families are frequently found in confined geographical areas identifiable by certain physical and social characteristics”.

He mentions examples of these characteristics: geographical location, “twilight zones” near a city’s business area; areas populated by immigrants; overcrowded and poor amenities, Victorian housing stock; areas with a high percentage of unskilled and semi-skilled workers; higher than average proportions of families on State supplements; higher than normal percentage of large families; a large number of fatherless families; areas with little play space and recreational facilities; areas with poorer health; a high percentage of child deprivation and delinquency, accompanied, according to Plowden, by high rates of truancy. Often these confined geographical areas have worse Social Services than the more attractive areas.

In 1965, the government set up the committee of Local Authority and Allied Personal Social Services, under Sir Frederick Seebohm, to “review the organisation and responsibilities of the local authority personal Social Services in England and Wales, and to consider what changes are desirable to secure an effective family service”. Its remit was therefore large.

Before 1968, personal Social Services were organised within the Local Authorities in separate Children’s, Welfare and Mental health departments. Other departments, such as health, housing and Education were sometimes involved with questions to do with social welfare.

The committee reported three years later and 1970 saw the passing of the Local Authority Social Service Act which implemented parts of the Report (incorporation of the Children’s, Mental Welfare and Welfare Departments, with certain functions of the health and Education Departments, into one Social Services Department.

In 1972 the Government introduced a White Paper entitled National Health Service Reorganisation, England: what was wanted was a service which ensured that the people’s “needs for health and Social Services are not divided into separate compartments”.

Before Seebohm, social workers had developed specialist skills in certain areas. After reorganisation, although social workers could work with one family without having to keep changing department, the skills required were more varied.

During the 1960s, it became obvious that a number of factors were causing problems in the field of social welfare: concentrations of social deprivation in definable geographical areas (following on from Plowden), the realisation that Local Authorities with their separate departments were unable to cope with the rising tide of problems and finally, the knowledge that in the USA, an agency had been set up to wage war on poverty. It became apparent also that in the 1960s many black immigrants to Britain were settling in “inner ring” zones.

In 1968, the Labour Government announced the creation of a programme which would direct resources to those areas of greatest need. The programme was in two parts: the first, called the Urban Programme (UP) or sometimes Urban Aid (UA), gave extra cash for the neediest areas; the second instituted the Community Development Project (CDP), allowing the setting up of teams of workers in selected Local Authorities.

Among the achievements of the UP/UA was the setting up of new services for children and the winning of the interest of voluntary organisations, who could apply for extra cash from the Local Authorities. It can be said that it constituted a new means of allocating resources and of stimulating activity within deprived areas.

Among the criticisms of the programme can be mentioned the fact that the Home Office asked the Local Authorities to make bids before deciding how to spend its money.

Some councils did not make bids or else they did not work them out properly, due to their lack of specialist knowledge of such matters or because they did not want to be stigmatised with the label “deprived area”. Allocations did not always flow to the really deprived areas.

There are different interpretations of the UP and its function. For the Home Office, its purpose is to “strengthen existing service: as a supplement and not an alternative to what Local Authorities may be expected to do”.

Another problem is the lack of resources for the UP. The CDP was also financed from the same source but it was otherwise distinct. It consisted of 12 deprived areas where the Home Office and Local Authorities set up small teams of workers and researchers.

It was based on the assumption that residents in deprived areas possessed untapped capacities which could be used to free them from the dependency on Social Services.

Criticisms of the CDP centred on firstly, the fact that only cooperative Local Authorities were included in the project; secondly, the fact that the projects were run through the Local Authorities excluded deprived residents from having any real control over the initiatives. Thirdly, small projects were rarely followed through to become large-scale projects, capable of helping the many.

Frank Field, the then Director of the Child Poverty Action Group (CPAG) challenged the CDP’s assumptions by arguing that poverty was not contained within small geographical areas and by claiming that the level of welfare benefits was so inadequate that a mere improvement in the communication between social agencies and those in need would not abolish deprivation. Others agreed that deprivation was not confined to geographical areas but was inherent in the social structure of society.

The Family Income Supplement (FIS) was instituted by the Conservative Government to direct money to those in direst need. A problem with Supplementary Benefit had been its inability to reach the working poor.

The Family Incomes Supplement Act (1970) created a source of benefit for families with a full-time worker. FIS set out certain minimum financial levels related to family size, allowing families to receive half the difference between their income and the prescribed level.

The Government claimed it was better to introduce this scheme rather than to increase Family Allowances since the latter would not have helped one-child families. The new benefit helped those on low wages.

Claimants had not to have made a minimum number of contributions. One-parent families were included. Its receipt opened up the right to other benefits (free school meals, free NHS prescriptions …).

Critics claim it subsidised employers who paid low wages. Workers who obtained wage increases did not benefit in cash terms (since they lost a proportionate amount of benefit). Also, the amounts paid in FIS did not take claimants out of poverty. Some pointed out that employment entails expenditure.

Therefore some people would be better off not working and continuing to draw Supplementary Benefit. Also, the take-up rate was only 52% of those who qualified. People did not appreciate the means-tested aspect of this benefit.

Eventually, even the Government felt that FIS had produced perverse effects and it became obvious its days were numbered.

A number of social workers became involved with the issue of “welfare rights”, the entitlement of low-income people to statutory financial or material provisions. ‘Those in need should take up their due. Social workers should make sure that all the needy should be informed of their rights.

Critics pointed out that too much preoccupation with “welfare rights” meant less time dealing with casebook work. Another development in the late1960’s and early 1970s was the growth of community action: this involved local groups organised in definable geographical areas or according to functional interests, interested in social problems often presented in political terms.

Tenants associations, claimants unions, local organisations protesting about planning decisions, housing action groups, neighbourhood associations all proliferated as Social Services were unable to eliminate poverty.

The poor felt less and less represented by the traditional political parties. Turnout in deprived wards reached record low levels. But has community action led to a lowering of confidence in the official channels? Its local anchorage can scarcely lead to national action.

We have seen that in the 1960’s the problem of poverty in certain areas, especially the inner cities came to the fore. The undoubted benefits of the Welfare State were obviously not reaching everyone in British society.

The Reports mentioned in the previous chapter brought to the attention of the authorities the inter-linked nature of urban poverty.

As a result of these Reports, Governments introduced such programmes as Urban Aid and Community Development Projects. These were targeted responses to perceived localised need. Inner cities contained some of the following problems :

  • Factors associated with people : poverty and income support dependency, unemployment, chronic unemployment, the unskilled and under-skilled, one-parent families, large families, the elderly, single elderly people, the sick, the chronic sick, families in need of Social Services
  • Environmental factors : poor physical environment and physical dilapidation, environmental pollution, crime and fear of crime, social tension
  • Educational factors : physically run-down schools, poor teaching, low levels of educational attainment
  • Service Provision : poor or inadequate health services, poor environmental services, poor financial services (loans …)
  • Economic factors : decayed economic infrastructure, poor and inadequate tax base, a high dependency ratio.

Policy strategy therefore had to take into account the full range of problems in trying to solve the problem of the inner cities. At the end of the 1960s and during the 1970s “inner-city policy… was based on an assumption that urban deprivation represented small residual pockets of poverty and dependency on which the otherwise successful Beveridgean Welfare State … had failed to impact” (Edwards J.)

Having said that it would be wrong to jump to the conclusion that everyone in the inner cities was deprived. Neither would it have been true to claim that poverty was only to be found in the inner cities.

‘Areas of special social need’ means local areas where living conditions are particularly poor… and pressure on Social Services is severe. Evidence of social need may take many forms – poverty ; high levels of unemployment, delinquency, mental disorder or children in care ; overcrowding, old and dilapidated housing ; inadequate community services ; a poor quality of environment. Many areas have large concentrations of Commonwealth immigrants.

Home Office Report, 1974

As we have seen, the Urban Programme (UP), which finally disappeared in 1993, focused aid on the inner city. However, it could not be seen as giving preferential treatment too overtly to immigrants to the detriment of the other members of British society, bearing in mind the racial tensions whipped up by Enoch Powell and others. This was a difficult balance to achieve.

The Government put in quite small sums of money, augmented by Local Authorities’ contributions, in the field of pre-school education, language training for those who did not have English as a first language, housing and health centres… It was a question of extra resources for special targeted needs.

In addition, those running the Community Development Projects (CDP) gradually came to the conclusion in the 1970s that the problems in their areas would only be solved by job creation and an improvement in the local economy. Finally, the Education Priority Areas (EPA), created as a result of the Plowden Report, were looked at by Halsey in 1972: each area looked at was different from the next.

Turnover in teachers in the EPA remained high; blanket salary increases for all teachers had not brought about significant results; many of Halsey’s remarks went back to the Plowden Report. Too little nursery schooling was provided.

By the early 70’s it had been realised that poverty was not confined to some particular geographical zones which could be improved by targeting resources. Despite (or because of, according to some) the Welfare State, poverty remained a persistent problem. It became apparent that poverty was linked with persistent economic and social inequality in British society. In 1975 there was published the first of a series of Reports on Distribution of Income and Wealth.

In 1938-1939 the top 10% of income-earners received 40.5% of pre-tax earnings; in 1972-1973, this percentage had fallen to 26.9%. After tax, the same top 10% in 1938-1939 received 34.6% of total incomes; in 1972-1973, the figure was 23.6%.

Therefore, one could say that since 1938, the top 10% have had their share of total earnings gradually reduced and that the figure after tax has also declined though less significantly. Concerning wealth, in 1972-1973, the top 10% owned 72% of the personal wealth in the country.

Tax rates in the early 70s have also to be considered in this context: the top rate of tax on earned income was 83% and the top rate on investment income was 98%. High tax rates were seen as a means of redistributing wealth to a certain extent and reducing inequality.

Halsey refers to changes which took place in the 20th century in the class structure of Britain and inequality: at the beginning of the 20th century, 3/4of the employed and self-employed were engaged in manual labour; by 1971, the occupational structure was more differentiated and more balanced, with manual workers only representing about a third.

From 1918 to the 1970s, there was a gradual movement towards a more equal distribution of personal income. Halsey goes on to say that these equalising tendencies stopped in the mid-1970s when a movement towards greater inequality re-emerged. Halsey goes on to point out that the top one-fifth of households increased their share of total incomes from 44% to 47% between 1976 and 1982.

Titmuss suggests that the impact of taxes and transfers operates through three loosely related systems of state intervention: fiscal policy, the Social Services and occupational welfare.

According to Halsey, “these political interventions can only be understood as collective action to chase the unacceptable outcome of market exchanges: and that means the outcome of class”.

The division of labour is increasingly complex. And the fiscal system is not just one of progressive taxation. It aims to reduce the amount of money the richest members of society keep and increase the amount of money those at the bottom of the scale receive.

It is therefore slightly redistributive but the rates applied do not fundamentally change the fact that the rich remain rich and the poor remain poor. The Social Services were not set up to reduce significantly social divisions but to open up (in the field of education for example) greater opportunities (“the meritocratic society”) and to alleviate the worst forms of suffering from the Five Giants.

Indeed, it could be said that the Welfare State in fact has helped the middle-class as much if not more than the working-class. To take the case of education, the increased investment in further / higher education has in fact helped the middle-class far more than the working-class. And also, the middle-class is usually better informed of its rights than the working-class.

This is also the danger of “universal” services which go to all irrespective of need. It could be argued that the way to help the working-class would be to target it and create more selective Social Services (make the middle-class pay for example for going to university ?).

What has happened since the 1960s is that the Government has tried to “claw back” in higher taxation from the middle-class what it has given them in “undeserved” Social Services.

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