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From Poor Law to Beveridge Report

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THE publication of the Beveridge Report on Social Insurance and Allied Services in December 1942 not only opened a new chapter in British social history. It was an event of some significance for all the democratic nations of the world. Two years earlier President Roosevelt had outlined the "Four Freedoms" which should inspire the common exertions of those who were opposed to Nazi and Fascist tyranny, and his inclusion among them of "freedom from want" had been underwritten by the fifth and sixth clauses of the Atlantic Charter. Now a prosaic, closely-printed official report set out a practical, workmanlike scheme for realizing in one great democracy an important part of what the President and Mr. Churchill had defined as the purpose of our joint endeavors. Deeply felt but vague aspirations were crystallized in a form which, though designed for one country, might well prove to be adaptable to the circumstances of others. Probably that is why the Report -- a "best seller" at home -- should also have aroused widespread interest and considerable enthusiasm abroad.

The Report is the result of eighteen months of intensive work by an inter-departmental committee, appointed by the minister responsible for reconstruction planning, under the vigorous and stimulating chairmanship of Sir William Beveridge. It shows with admirable clarity and directness how involuntary poverty can be abolished from British social life by a redistribution of about one-tenth of the national output of goods and services in favor of those citizens whose needs are greatest. It shows also how familiar methods and institutions can be improved and adapted in order to achieve this distribution without setting up dangerous frictions or imposing crippling burdens on any section of the community. It is a prescription for a characteristically British-style revolution, in which an attempt is made to use all that is valuable in the experience and institutions of the past as well as the creative insights of adventurous minds.

Some foreign observers who have been impressed by the boldness and imagination with which the Beveridge plan has been prepared have shown a tendency to exaggerate the extent to which it actually breaks new ground. They perhaps do not sufficiently appreciate how much it represents the culmination of a long process of development, rooted in the British social tradition, which has already given rise to a wide range of public services playing a vital part in the lives of millions of ordinary citizens.

II

The origins of the British social services have to be sought many centuries back in English and Scottish history. The highly organized public services which exist today are the contemporary expression of two traditions deep-rooted in British social life -- the tradition of social benevolence and that of mutual aid.

The limitations of voluntary social provision were first acutely felt in England in the fifteenth and sixteenth centuries. The great economic changes of that period, above all the enclosure of arable land for sheep pastures and the expansion of urban industry and commerce, set up social strains and created problems with which mediaeval institutions were incapable of dealing. Feudal society was breaking up, and the landless men who began to rove the countryside and crowd into the towns could not be provided for in their adversity by voluntary almsgiving or through the mutual assistance funds of the decaying guilds. Some statutory provision on a nation-wide basis was plainly needed and, after a period of local municipal experiment characteristic of English social history, a national system of poor relief was brought into being towards the end of the reign of Elizabeth.

The great Act which consolidated the Elizabethan Poor Law was passed in the year 1601. Since then the administrative details have been profoundly modified, but in principle the Elizabethan Act has remained the basis of the English system of providing for those who have no other means of support. It remains the duty of the local authority -- in Elizabethan times the Justice of the Peace, in our own time democratically elected local Public Assistance Committees -- to maintain the destitute according to their need, yet in such a way as to discourage a preference for relief rather than employment. The cost of relief continues to be borne by local taxpayers and, although the establishment of many new social services, notably those providing cash benefits during sickness, unemployment, widowhood and old age, has relieved the Poor Law of many of its responsibilities, the annual charge on local budgets remains considerable. Under the Beveridge plan, however, the wide extension of social insurance and the creation of a National Assistance Service will dispose of the greater part of the local burden of relieving distress. The responsibility of the local authorities will be limited to providing specialized institutions -- such as homes for children, old people, and the mentally deranged.

For over two hundred years the Poor Law was the only public social service in England and Wales.[i] It comprehended within its scope, however, many forms of social provision which, in more recent times, have been made under specialized schemes. Relief was given to the sick, the halt and the blind, and to widows and the elderly who had no family to maintain them. Orphan children and the children of the destitute were given homes and employment; and the able-bodied unemployed were either "set to work" or given relief. Standards of relief varied from county to county, but they were nowhere high. It can never have been a pleasant thing to be a pauper. Yet the fact that the Poor Law offered a last resort for citizens in adversity was probably an important factor governing the relatively peaceful evolution of the British social system.

The great reform of the Poor Law which took place in 1834 was an attempt, based on Benthamite principles, to deal radically with the administrative weaknesses and abuses revealed by the unprecedented strains set up by the Napoleonic Wars and their aftermath of poverty and unemployment. The social consequences of this reform were far-reaching. The administration of the new Poor Law was sounder and much less wasteful than the old system, but it was unnecessarily harsh and repressive in its attempt to prevent malingering and abuse. It earned the bitter hatred of the working-class population and their sympathizers, and this destroyed the possibility of its evolution into the great public social service which it might otherwise have become.

During the greater part of the nineteenth century the prevailing social philosophy was hostile to the assumption by the state of any responsibility for the personal affairs of individual citizens who had not actually fallen into destitution. It is true that, after the first Reform Act and, later, with increasing seriousness as the franchise was extended, successive Parliaments interested themselves in a wide range of social issues. The state accepted some responsibility for providing elementary education as early as 1833 and it recognized its responsibility for providing a wide range of environmental and protective services during the course of the century. Legislation was introduced to protect the interests of workers in factories, mines and workshops, and many of the grosser evils of early industrialism were gradually eliminated. Public Health Acts revolutionized urban sanitation. Scores of municipalities (reformed and invigorated by the Municipal Corporations Act of 1835) opened parks and recreation grounds and provided libraries and swimming baths. An attack was made on the problem of overcrowding and slum clearance. But many persons held less than fifty years ago that for the state to make any direct provision for the personal welfare of its less fortunate citizens, except -- in the last resort -- through the Poor Law, was to undermine the independence, self-reliance and initiative of the individual, and to impair the mainspring of economic effort in the community. In such an age of opportunity and progress, what excuse was there for anyone who was not the victim of unmistakable misfortune not to be able to stand on his own economic feet?

So long as the upswing of economic progress was uninterrupted and the apparently unlimited possibilities of emigration provided an effective safety valve for discontent, it was natural that the principles of economic liberalism should dominate the social thinking of Victorian England. Towards the end of the century, however, these principles -- never strictly observed in practice -- began to give way under the impact of new forces and new philosophies. The great industrial depressions of the eighties and nineties seriously disturbed the complacency of those who believed that the social evils of the times would disappear with the inevitable march of economic progress. The recently enfranchised working class clamored for a greater share of the attention of Parliaments now increasingly responsive to their wishes. The propaganda of the Fabians and the investigations of Charles Booth (the enlightened Conservative businessman who organized the first great survey of "London Life and Labor"), not only awakened a new social conscience, but created a new attitude towards the study of contemporary social problems. Accepted social dogmas were critically examined, and the problems of old age, unemployment, ill-health and similar questions were studied on the basis of a scientific analysis of available social data. Gradually it came to be recognized that unless the state was prepared to undertake much wider responsibilities for the personal welfare of its citizens, there was little hope of dealing with the problem of poverty and of its concurrent social evils.

The changing climate of social opinion affected both the two great political parties. Earlier in the century Benjamin Disraeli had a prophetic glimpse of the need for radical social changes which he did not forget altogether when he became Prime Minister; but in his day Conservative social reform stopped short of remedying the deficiencies in personal incomes which were due to social injustice or insecurity. Joseph Chamberlain -- "that terrible fellow" -- broke with Gladstone over Irish Home Rule, but continued as a Liberal Unionist to campaign for a vigorous policy of social reform, including contributory old age pensions. Nevertheless his actual achievements as a Minister in Conservative Governments belied his early promise as a radical leader. Assuredly the praise which rewarded his success in introducing the first modern public social service -- the workmen's compensation scheme of 1897 -- was well merited. On the other hand, his interest in old age pensions and the rest of his earlier social program did not survive his later preoccupation with imperial affairs and tariff reform. The Gladstonian Liberals were for the most part dominated by the classical principles of economic individualism and, apart from the great educational reform of 1870, they made no outstanding contribution to the development of the British social services. After their defeat over Irish Home Rule in 1885, the Liberal Party was out of office for twenty years, save for a brief interval in the nineties. During this period they began to qualify their traditional doctrine under the influence of electoral pressures and of the new social ideas which their growing radical wing absorbed with enthusiasm. It was to be expected that the Liberal Governments of the new century, responding to the insistence of a wider, better educated and more vitally interested electorate, should embark on a revolutionary enlargement of the sphere of state activity.

The Liberal Government of 1906, supported by a substantial majority in the House of Commons, and stiffened by 53 Labor members, immediately proceeded to introduce a succession of social measures which constituted a veritable "New Deal" for the British working class. This they did without waiting for the recommendations of the Royal Commission on the Poor Laws, which had been established by the outgoing Conservative Government. A break with the Poor Law was made at once. The revelations of an official Committee on Physical Deterioration, appointed after the Boer War, led to an Act which permitted local education authorities, not the Poor Law authorities, in England and Wales, to provide meals for needy school-children. In the following year the duty was imposed on all English and Welsh education authorities of arranging for the medical inspection of school-children. In 1908 a 30-year-old agitation came to an end with the provision of non-contributory old age pensions at the age of 70, subject to a mild test of personal means but free from any suggestion of Poor Law "stigma." The first British Town Planning Act was passed in 1909; and, in the following year, Winston Churchill, then President of the Board of Trade, advised by an able young civil servant, William Beveridge, set up a national system of employment exchanges to introduce some order into an unregulated labor market. The Liberal Government also extended Joseph Chamberlain's Workman's Compensation Act which had been limited in application to certain specially dangerous industries. Agriculture had been added in 1900, but the Liberal Act of 1906 extended the scheme to cover practically every case in which people (below defined income limits) stood to each other in the relation of master and servant. At the same time the payment of compensation in the case of specific industrial diseases was provided for.

By modern standards, the additional cost to the Exchequer of these new developments was extremely modest. However, the methods chosen by the Chancellor, the then "dangerously radical" Mr. Lloyd George, to deal with his budgetary problem in 1909 led to a conflict with the House of Lords and a political crisis. The Government emerged from the two General Elections which followed with a much reduced majority, but it was able to impose severe limitations on the power of the hereditary House of Lords to frustrate the wishes of the democratically elected Commons. In 1911, Lloyd George broke new ground in social policy by introducing two important contributory insurance schemes -- against ill-health and unemployment respectively. Part One of the National Insurance Act, which came into operation in July 1912, provided for the payment of sickness, disablement and maternity cash benefit and for a general practitioner service and certain other medical benefits for the insured person. The scheme was not introduced before the acquiescence of the Friendly Societies, insurance corporations and the medical profession had been secured by measures of appeasement in the course of a lively controversy. It covered practically everyone between the ages of 16 and 70 who was employed under a contract of service in manual labor (or in non-manual employment if receiving not more than £160 a year)[ii]. Part Two of the 1911 Act introduced a limited scheme of unemployment insurance for certain skilled industries in which marked fluctuations in employment were known to occur.[iii]

The Liberal Government had now laid down the foundations of a comprehensive system of social security measures, outside the Poor Law. Before the outbreak of the First World War they were able to round off their labors with the provision of grants to local authorities for preventing and treating tuberculosis, for ascertaining and caring for mental defectives, and for developing maternity and child welfare centers.

During the First World War many of the social services which had been created in the previous eight years were improved and extended. In 1916 a public service for the prevention and treatment of venereal diseases was established, and a far-reaching measure of educational reform was introduced in 1918. After the war Coalition, Conservative, Labor and "National" Governments all made their contribution to the development of the social services. Maternity and child welfare services were widely extended. The arrangements for looking after the welfare of the blind were greatly improved. In 1925, Winston Churchill, now Chancellor of the Exchequer in a Conservative Government, introduced the first national scheme of contributory pensions for widows, orphans and old people over the age of 65. This scheme was enlarged in scope by the second Labor Government in 1929, and in 1937 the "National" Government extended the privilege of voluntary insurance under the state scheme to persons with small incomes who were not covered by the compulsory arrangements. There were, however, two social problems which over-shadowed all others throughout the inter-war period -- housing and the relief of unemployment.

The rapid and uncontrolled growth of British industrial towns during the nineteenth century had left a legacy of bad housing, overcrowding and squalor upon which pre-1914 social legislation had made very little impression. This situation was aggravated owing to the suspension of house building during the First World War, and public opinion compelled every postwar government to devote some attention to it. A long series of housing Acts were passed in the interwar period and the production of cheap, well-planned houses for the workers was facilitated by public subsidies. As a result, quite remarkable progress was made. Over four and a half million new houses were built -- most of them of the type required by working-class families; and several hundred thousand slum houses were demolished. Within two decades, over one-third of the entire population of Great Britain was provided with new homes. Large-scale rehousing was the greatest achievement of British social policy between the wars.

The emergence of mass unemployment as a chronic national problem caused the gravest political anxieties during this period. Positive measures for dealing with the problem were initiated -- training schemes, industrial transference, public investment -- but the scale of these experiments was never commensurate with the unprecedented size of the problem. Steps were taken, however, to maintain the standard of life of the unemployed at a decent level without recourse to the Poor Law. In 1920 unemployment insurance was extended to cover about two-thirds of the wage-earning population; and in 1934, after a great deal of trial and error, an unemployment assistance service was set up to provide for workers who were outside the scope of unemployment insurance or who had exhausted their insurance rights. In 1936 a special unemployment insurance scheme was started for agricultural workers. Meanwhile, the Poor Law itself had been reorganized, in 1929, broadly along the lines suggested 30 years earlier by the famous Royal Commission. Generously administered in its new form by local Public Assistance Committees, it continued to play an important part as a service which could be relied upon to fill in gaps and supplement other public social services where and when the need arose.

Some idea of the remarkable expansion of the British social services which took place between the first year of the century and the eve of the Second World War can be gained from a study of the amounts distributed to beneficiaries under these schemes during this period. In 1900-1 only poor relief and workmen's compensation were available and some £4 millions were paid out. By 1914-15 non-contributory pensions, and unemployment and health insurance had been added; and the total cash benefits had increased to £25 millions. By 1921-22 the schemes had been extended in scope and the rates of benefit increased so that the money paid out had now risen to £111 millions. A start was made in 1926 in paying contributory pensions, and the cost increased rapidly. Cash benefits and assistance in 1938-9 accounted for more than £236 millions -- about nine times the 1914-15 figure and about 70 times the 1900-1 figure. It should be observed that these figures do not include the considerable sums expended on education, public health, housing and other "non-cash" social services. Britain's total social budget in 1938-9 accounted for over £500 millions -- rather more than £10 per head of population, and more than 10 percent of her national output of goods and services.

During the present world conflict the British social services have been developed in many ways to deal with the strains which total war imposes on a complex modern society. The bombing of British cities, the evacuation of school-children, the destruction of private businesses, the employment of women, and the large scale movement of labor to man the expanding war industries -- these and other wartime developments have stimulated the social welfare departments of the state (and the numerous voluntary welfare organizations which continue to play an important part in British social life) to undertake new burdens and to adventure in new fields of activity. In addition, the war years have seen one major addition to the main structure of the British system of social services. In March 1940 a measure was introduced providing contributory old-age pensions for insured women and the wives of insured men at the age of 60, and supplementary pensions for all old-age pensioners who could show their need for additional help. As a result of these changes 300,000 more women became eligible for contributory pensions, and considerably more than a million old people are now receiving augmented pensions. Another wartime development, almost certainly due to the influence of the Labor members of the present Government, has been the substitution of a "personal means test" in place of the household means test for determining the need of applicants for unemployment assistance and supplementary pensions. The reform removed a social irritant which had caused bitterness and resentment out of all proportion to its economic consequences throughout the nineteen-thirties.

III

The system of public social services built up in Britain during the last 50 years is not unimpressive. Nevertheless, it cannot be claimed that the existing arrangements are by any means satisfactory. The different services have grown up piecemeal, as political opportunities have presented themselves and without much regard either for consistency of principle or for the effect of one service on another. In the words of the Beveridge Report, they are "conducted by a complex of disconnected administrative organs, proceeding on different principles, doing invaluable service but at a cost in money and trouble and anomalous treatment of identical problems for which there is no justification." Moreover, they have left many wide gaps which, in so far as they have been filled at all, have been filled by high-cost commercial or mutual insurance, or by resort to poor relief. The exclusion from state insurance of persons working on their own account, and of non-manual workers earning more than £420 a year is a serious weakness. The rates of benefit paid in different circumstances vary meaninglessly and, in some cases, fall far short of human needs by any acceptable standard. It was to examine this situation and to make proposals for dealing with it that the Beveridge Committee on Social Insurance and Allied Services was set up in June 1941.

The Beveridge plan for the reorganization and development of the British social services is based on a diagnosis of want. Scientific surveys of social conditions in many British cities show with precision that in the years between the wars an appreciable proportion of the people in each town were living below the "poverty line." They also show that from three-quarters to five-sixths of this poverty, according to the precise standard chosen, was due to the interruption or loss of earning power. Practically the whole of the remaining one-quarter to one-sixth was due to failure to relate income during earning to the size of family. It follows from this analysis that the abolition of want requires, first, adequate provision against the interruption and loss of earning power; and, second, the adjustment of incomes, in periods of earning as well as when earning is interrupted, to family needs. Sir William Beveridge proposes, therefore, that the existing social insurance schemes should be improved in three directions: by extension of scope to cover persons now excluded, by extension of purposes to cover risks now excluded, and by raising the rates of benefit. He suggests that the adjustment of earnings to family needs should be made by means of a system of state-financed children's allowances, payable for every dependent child after the first.

The main feature of the plan is that in place of the separate schemes which exist today there should be a single "all-in" state insurance scheme, covering all risks of loss of earning power and providing for special expenditure arising at birth, marriage or death. All citizens without upper income limit should be covered, but they would be classified for treatment according to their different ways of life. The rates of benefit payable should be sufficient to reach a decent minimum standard. The insurance fund should be financed by means of compulsory weekly contributions from employees, employers and the state, or, in the case of independent persons, from themselves and the state. Administrative responsibility should be unified, needless duplication avoided, and expenses greatly reduced. If the plan is adopted substantially in the form in which it is presented in the Report, no citizen of Great Britain need have fear of poverty resulting from unemployment, sickness, accident, widowhood or retirement in old age, and the economic strains which are associated with setting up a home, childbirth and family bereavement will be eased by marriage, maternity and funeral grants. The payment of children's allowances will raise the economic status of the family, and the establishment of a National Assistance Service will insure that extra help will be available in all cases where special circumstances and exceptional needs exist. The plan assumes that the provision of medical treatment, including rehabilitation services for the injured, will be the responsibility of a National Medical Service covering the entire population.

It must not be thought that the Beveridge plan is a grandiose scheme for distributing public funds in the spirit of Santa Claus. British workers have long been in the habit of devoting a proportion of their weekly earnings to various forms of social insurance, a fact which Lloyd George recognized and took advantage of when he introduced National Health and Unemployment Insurance in 1911. Under the Beveridge plan they will continue to make this provision, though on much more advantageous terms. Considerable economies are expected to result from the unification of existing schemes and the assimilation of what are now very expensive forms of mutual and commercial insurance. Benefits under the plan will be related to contributions. They will also depend on the fulfillment of certain conditions by the beneficiaries. Above all, workers who are unemployed will be expected to keep themselves fit for employment and, after a period, to undergo courses of training. The payment of sickness benefit and of industrial pensions is to be linked with the proposed National Medical Service in restoring the sick and rehabilitating the injured. The total cost of the scheme, including children's allowances and the National Medical Service, is expected to be £697 millions in the first year of full operation (assumed to be 1945), rising over the next 20 years to £858 millions. The estimated figure for 1945 is £265 millions more than what the existing British social insurance and assistance services will, in any event, cost in that year. Of the increase, £86 millions are expected to be collected in the form of general taxation; £125 millions will be paid by insured persons in weekly contributions; and £54 millions will be obtained by an additional levy on employers.

IV

The Beveridge Report was published December 1, 1942. Less than three months later the Government announced, during the course of a three-day debate in the House of Commons, that it had accepted the greater part of the plan in principle, with the qualification that it would undertake no binding financial commitment until the estimated cost of the proposals could be examined in relation to other calls upon public funds for reconstruction purposes. Despite this important reservation, the Times was certainly justified in commenting on Sir John Anderson's announcement: "with all its limitations no speech ever delivered in the House of Commons has committed a Government to more far-reaching measures of social advance."

Three major proposals were adopted: (1) the unification and extension to all sections of the community of existing social insurance schemes, with improved rates of benefit; (2) the introduction of state-financed children's allowances (though at a lower rate than Sir William Beveridge proposed, and partly in the form of children's services rather than cash); and (3) the establishment of a National Medical Service. The payment of a state funeral grant was agreed upon; but the more tentative Beveridge recommendation for the nationalization of the whole business of industrial assurance -- now in the hands of commercial insurance companies and friendly societies -- was rejected. On the other hand, it was announced that the participation of friendly societies and branches of commercial insurance companies in the administration of National Health Insurance (a legacy of the controversies of 1911) would be discontinued. The recommendations in the Report for gradually scaling up old-age pensions over 20 years were rejected in favor of a "once and for all" improvement in the rate of pension; and something rather more generous than Sir William Beveridge's proposed treatment of widows was promised.

Widely publicized expressions of genuine disappointment that the Government has not accepted the whole Report unfortunately deflected attention from the far-reaching advances to which the Government is now morally committed. As Sir William Beveridge himself has written, the acceptance of so much within three months "represents speed of action on a Report which can have few, if any, parallels in peace." The Government has not accepted the suggestion that a Minister of Social Security should be appointed to prepare the legislation and work out the administrative arrangements which will be necessary to give effect to the new proposals at the earliest possible moment after the war. Since so many different public departments are concerned, they decided that the most satisfactory method of dealing with such matters is to make them the responsibility of a Ministerial Committee. This Committee is now at work, and the country awaits the outcome with some eagerness and not a little impatience. The Beveridge plan has so fired the imagination of the British people that they are not likely to be satisfied with a legislative program which falls far short of its recommendations. But many of them are encouraged by the Prime Minister's recent broadcast to believe that the great leader who had the courage to offer them "blood, sweat and tears" in the hour of greatest danger will seek to crown the victory by introducing an inspiring program of reconstruction true to the spirit of the adventurous social policy with which he and Sir William Beveridge were so actively associated in the years before the First World War.

[i] In Scotland, which was an independent kingdom until 1603 and a self-governing kingdom for another hundred years, the development of the Poor Law was rather different from that of the English system. The relief of the poor remained a function of the Kirk until the middle of the nineteenth century, and the collection of funds for this purpose was conducted, for the most part, on a voluntary basis until 1845.

[ii] The remuneration limit for non-manual workers was raised to £250 in 1919, and to £420 in 1942.

[iii] At the outset it covered some 2¼ million workers. In 1916 it was extended to cover some 1½ million further workpeople, and in 1920 a new Unemployment Insurance Act superseded the original scheme and extended unemployment insurance to cover 11 million workers. By 1938 over 15 million were covered.

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