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How Good Was The Welfare State In Addressing Poverty Before 1979?

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Beveridge Welfare state
Credit: http://fc08.deviantart.net/fs71/f/2010/161/c/9/welfare_state_by_Satansgoalie.jpg

How successful was Beveridge's Welfare State?

In 1942, the publication of the Beveridge report titled “Social Insurance and Allied Services” was a monument in British history as it would lay the foundations to become the modern welfare state (WS). Believing that the government should be responsible for the welfare of the population, he determined that state intervention should act to eradicate the 5 giant evils of society; want, disease, ignorance, squalor and idleness. Starting with tackling the problem of “want”, Beveridge aimed to creating a comprehensive system of welfare that would offer care for all from the “cradle to the grave”.  But just how successful was the welfare state in addressing the goals of Beveridge?

Under the scheme implemented in 1948, fixed flat rate contributions would be paid by the working population into the ‘Ministry of Social Security’ to receive flat rate benefits that would be payable to anyone in need of welfare such as to widows and children, the unemployed, retired, sick or the disabled. Additionally, the benefits would be universally set at a defined poverty line thus removing the need for means testing which was previously a requisite to obtaining welfare benefits.

There were however several problems with the WS. For instance, the use of flat rate contributions would serve to undermine the goal of ensuring that everybody lived with “freedom from want” simply due to the fact that flat rate contributions are a form of regressive tax. Consequently, this would ultimately lead to the ones that require welfare the most having to contribute a larger percentage of their income. As a result, after taking into account the cost of essential commodities, the poor would have a smaller percentage of their disposable income left and would be far from having the “freedom of wants” envisioned by Beveridge. Moreover, the amount of care able to be financed from a scheme with flat rate contributions was severely limited. With the scheme aimed being cheap enough such that flat rate contributions could be afforded by the poorest of society members, there was essentially not a large amount of benefit that could be financed as the amount paid to the ministry of social security was minimal.

Additionally several problems arose due to the fact that the BR was based largely on research carried out by Joseph Rowntree in 1936, whose report was later published in 1941. Thus when the scheme was implemented in 1948, the benefits granted to those under the poverty line had already diminished due to price hikes experienced prior to 1948. Specifically, it is estimated that wages and the general price level had risen by 66% relative to the findings in 1936. This then implies that benefits financed by the already minimal flat rate contributions would prove to be insufficient aid to those trapped in poverty. As a consequence of the inadequate welfare benefits, an increasing number of people were appealing to the “National Assistance” scheme initially intended to cater for uninsurable risks such as single unemployed women who were unable to afford the flat rate contributions required to enlist in the welfare state. Requiring applicants to be means-tested for eligibility into the National Assistance scheme would serve to push the welfare state away from the system envisaged by Beveridge which included welfare for all without the need to be means-tested.

Not long after the advent of the WS was introduced, came the third report released by Rowntree in 1950 which would underline why the welfare state should address relative and not absolute poverty. As GDP per capita levels were increasing in the UK, it was found that just 3% in York in poverty, compared with the previous 13% in 1936. Consequently, majority of the benefits received went to a tiny fraction of the population. With many more now above the poverty line of nutritional adequacy, the definition of those in poverty was reimagined by Abel Smith as those having an income so low that they were unable to “participate in the life of the community’. Whereas those in poverty were previously defined as those unable to maintain physical efficiency on top of clothing and rent, it is a major flaw in Beveridge’s vision to assume that living at the most basic subsistence level would enable the population to pursue “freedom from want” given that they are unable to participate in community life.

Yet, despite the numerous flaws in the introduction of the welfare state, it would be the government (regardless of which party) that undermined the goals planned by Beveridge the most. This fact became easily apparent by the actions taken by both the Conservative and Labour parties while in power. Demonstrated by the Labour party implementing pension schemes dependant on earnings in 1957 followed by the privatization of pensions implemented by the Conservative party shortly after, it seemed as if the proposed the idea of universalism and comprehensiveness of welfare (in this case for the retired) was all but undermined. However, it can also be said that the introduction of pensions based on earnings was just the result of a flawed system based on flat rate contributions. To further deviate from the aims of Beveridge, the period of the 1960s saw ever increasing rates of means testing brought about by government policies, rising to having 45 means tests by 1970.

The final blow that would serve to cripple the welfare system would be dealt when the concept of full employment was abandoned. With both Labour and Conservative parties excluding the prospect of full employment in their manifestoes since 1997, it was evident that the welfare state envisioned by Beveridge had all but eroded. Without the high and stable rates of employment enjoyed previously in the post war years, it was unfeasible for the state to provide adequate welfare for the increasing number of unemployed who no longer were able to even afford flat rate contributions.

Therefore it can be said that the welfare state only somewhat successful in addressing problems of poverty in Britain before 1979. Possibly largely due to the fact that the system and its aims planned by Beveridge were flawed in numerous ways such as the fact that it revolved around the concept of full employment which broke down in the 1970s. Additionally, the system was planned on tackling absolute poverty instead of relative poverty and did not manage to account for GDP per capita growth. Moreover, his views on universalism of the welfare state could also be described as ambitious as the flat rate system would contrast his goals to improve welfare of the poor on top of being unable to build a fund large enough to provide adequate welfare to those who need it. However it also should be noted that the system envisioned by Beveridge was not given much chance to prove itself. Initially supposed to allow build up reserves for welfare benefits for 20 years, the system was quickly undermined by the Labour party, being deemed politically unacceptable. Paired with the increasing number of government policies that intruded on the aims of the welfare state, it can be concluded that the welfare state cannot be easily judged on how successful it was in addressing the problems of poverty given how many government policies served to undermine it. 

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