Don’t wish Beveridge a happy birthday
On the 70th anniversary of the publication of the Beveridge Report, it’s time radicals addressed the devastating social costs of welfarism.
On 2 December 1942, the UK government published the Report of the Inter-Departmental Committee on Social Insurance and Allied Services, usually referred to as the Beveridge Report after its chair, the social reformer (and eugenicist) William Beveridge. The report is commonly regarded as a watershed in the development of the welfare state in Britain, a sign that we were becoming a more civilised and humane society. But the seventieth anniversary of the report on Saturday will no doubt prompt much handwringing about the system that the report helped to create.
The Beveridge report identified five ‘giant evils’ in society: squalor, ignorance, want, idleness and disease. Its conclusion was that in order to tackle these evils, we had to set up a system of compulsory social insurance to ensure that everyone had a subsistence level of income to rely on when they were unable to support themselves, whether as a result of unemployment, old age, disability or the death of the family ‘breadwinner’. The report’s conclusions were broadly backed by a White Paper in 1944.
The fact that the report’s recommendations were largely implemented by a Labour government, elected after the Second World War ended in 1945, has led to the creation of a myth that these were somehow ‘radical’ or ‘socialist’ policies. In fact, the general assumption that the state had to step in to reorganise and manage large swathes of society had been broadly accepted both before and particularly during the war. Compulsory national insurance had been introduced in a limited way in 1911 and state pensions had been enacted, for the very few people who lived past the age of 70, in 1908. The first call for a national health service came from the distinctly un-radical think tank, Political and Economic Planning, in 1937 – a call which was backed by the British Medical Association a year later.
Beveridge built on these developments, but what his report gave rise to was not the welfare state as we know it today. Rather, Beveridge recommended the expansion of the compulsory insurance scheme that forced workers and employers to set aside contributions in advance to offset the inevitable periods when they would be unemployed and to save for some kind of income in old age. Thus, this was not largess handed down by the goodwill of the state, but rather benefits accrued thanks to the contributions made in the good times when work was available.
There was, however, still a system of poor relief – National Assistance – to act as a safety net if these benefits ran out or for those who were not part of the scheme. But these benefits were means-tested, much to the irritation of those who had to have their resources and household income pored over. Even the entitlements accrued under the system of social insurance were far from generous, strictly designed to meet the subsistence needs of those who claimed them and no more.
These changes were not a case of the working classes beating the bosses into submission, but rather represented a recognition among society’s rulers that a bare standard of existence had to be maintained in order to run factories, to keep a reserve of labour available during recessions and to fight wars. The mish-mash of private assurance via friendly societies and charitable provision was simply too inefficient and narrowly applicable to sustain a modern society. Social welfare, education, healthcare and the wider economy had to be organised by the state because private provision had proved itself lacking and incapable. In this light, modern-day notions of saving ‘Our NHS’ look laughable – it was never ours in the first place.
Moreover, although revolutionary notions among the working classes had been put down with the smashing of the General Strike in 1926, it was clear to the ruling elite that there was always the potential for social unrest unless the worst symptoms of market failure were attended to. This new system of minimal ‘cradle to grave’ support was designed to ameliorate the worst aspects of capitalism as a way of pre-empting any wider social and political challenge.
Beveridge also built his belief in social insurance on another idea: that it was the function of the state to ensure full employment. Beveridge was inspired by the establishment’s new ideologue-in-chief, John Maynard Keynes; ideas about planning and state management of the economy started to become all the rage. The welfare bill would never become too large, Beveridge assumed, because the government would never let unemployment get out of hand. Individuals suffering temporary unemployment would be covered by their insurance contributions. In any event, it was widely assumed that people would, by and large, be too proud and independent to abuse the system and would choose work over welfare.
Yet as the decades passed, the welfare state expanded. The notion of a connection between national-insurance contributions and entitlements has pretty much disappeared. Now there is an amorphous sense of entitlement to welfare, regardless of one’s contributions. The state has positively encouraged this sentiment even as politicians have attacked ‘scroungers’ rhetorically.
For example, incapacity benefit has been expanded, so that millions of people who could work but are not currently employed are effectively told not to bother looking for jobs. This suited politicians when it became abundantly clear that full employment was gone, never to return. Taking those who might struggle to find work off the dole figures, and putting them on benefits that are not reliant upon them looking for work, might seem like a humane or generous thing to do. But in truth, the incapacity system effectively disabled them, by officially branding them ‘incapable’ – a label which many of these people have now internalised.
Welfare has expanded from a short-term fix when people can’t earn money or can’t afford healthcare into something that touches upon everyone’s lives, all of the time. Hence the howls of protest when the chancellor of the exchequer George Osborne announced in 2010 that families with a higher-rate taxpayer would lose child-benefit payments. Even well-off people now assume that they should receive routine support from the state.
In turn, the state has taken to poking its nose into every aspect of our lives. Incapable of macromanaging the economy, the authorities instead seek to micromanage our lives from ‘cradle to grave’. (In fact, from womb to grave would be more accurate, given the endless regulation of pregnant women.) Today’s announcement of a minimum price per unit of alcohol is just the latest way in which an increasingly therapeutic, welfarist-minded government is interfering in how we live our lives.
In turn, the belief that the state will provide for us has undermined the sense of needing to be independent and the importance of making a contribution. The court action brought by unemployed geology graduate Cait Reilly against the government for forcing her to undertake work at Poundland in exchange for her welfare benefits is a case in point. The scheme that she was on may have been useless at helping her to find a decent job, but to declare that being forced to work in exchange for benefits was a denial of her human rights was an absurd expression of a pervasive sense of entitlement.
Far from being radical, such demands are thoroughly conservative. You are not exactly going to overthrow the state if you are dependent upon it. While there may be much bitching from politicians past and present about the cost of welfarism, this relationship of dependence between the populace and the state is the big overarching idea by which the political class justifies itself today: ‘We will look after you’, is their message, their means of gaining political and public legitimacy.
Sadly, much of the debate about Beveridge in the next few days will be reduced to fretting about the financial cost of the welfare state today or the impact of government cuts to benefits. While the financial cost of social security is substantial, and could no doubt be reduced, it is the political, social and personal cost of welfarism that we should really be worried about.