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Last Updated: Tuesday, 26 July 2005, 21:12 GMT 22:12 UK
Britain's long road to the welfare state
By Steve Schifferes
BBC News economics reporter

Slum street, 1930s
Huge slum tracts in the big cities testified to the social divide

The British welfare state that emerged in 1945 was the product of a century of struggle over how to tackle poverty - but its origins go much deeper.

Poverty was tackled by the Elizabethan poor law, which regulated vagrancy and obliged parishes to help the poor.

The rise of industrial Britain made the problem of the poor more difficult.

There was a growing social divide in the cities between rich and poor, as numerous social investigators discovered.

Meanwhile, skilled workers were creating organisations such as trade unions to lift themselves out of poverty - but their growing militancy worried the middle classes.

Liberal reforms

Transport Strike demonstration, 1912
Trade union militancy worried political leaders - and fuelled reform

By the early 1900s all political parties had concluded that the state would have to play a bigger role in providing welfare for the poor.

The social reforms were, in part, designed to win the loyalty of the British working classes in the same way that Germany had introduced social reforms in the l880s to cement loyalty to the new regime.

Radical Liberals, led by David Lloyd George, took the first steps towards Britain's first welfare state after their huge electoral victory in 1906.

Among the key measures introduced were old age pensions, a system of health insurance, and labour exchanges to help tackle unemployment.

However, the Edwardian welfare state was incomplete.

It was limited to the working class, its funding basis was insecure, and little progress was made in tackling poverty among people of working age.

War and Depression

The cauldron of the First World War boosted demands for social reform and led to a permanent increase in the role of the state in British society.

The Jarrow march for jobs
Before the war unemployment was seen as the key to poverty

Workers in munitions factories forced the government to introduce rent control in 1915 after a series of rent strikes, and in 1918 Lloyd George - now Coalition Prime Minister - pledged to provide "homes built for heroes" for returning war veterans.

Two million council homes were eventually built.

The end of the war also brought a slump, particularly in northern industrial towns, that deepened into the Great Depression by the l930s.

By the time Britain entered the Second World War, the pressures for social reform were mounting.

"The idea that the Beveridge welfare state was built on a post-war consensus is a myth
Howard Glennister, Professor of Social Policy, LSE

And the shared sacrifice during the war enhanced the belief that "never again" should Britain fight for an unequal and unfair society.

The war also led to equality of sacrifice, with widespread rationing reducing the consumption of the rich but actually raising food consumption of the poor.

Many key social institutions, such as hospitals, were also nationalised for the duration of the war.

'Moral fibre'

Early in the war, the coalition government began planning for post-war reconstruction. They entrusted the task to another Liberal social reformer, William Beveridge, an Oxford don.

William Beveridge, architect of the welfare state
Beveridge's report on social insurance galvanized opinion

By December 1942 he had effectively hijacked the process by publishing his own comprehensive programme of social reform "from the cradle to the grave" - the Beveridge Report on Social Insurance and Allied Services - despite the government's misgivings.

His report called for a universal flat rate benefit, payable to all, on the basis of fixed national insurance contributions. It was to cover old age, unemployment, and sickness.

"Beveridge had combined his long-standing commitment to contributory insurance - to build moral fibre and to prevent a new means test - with a new commitment to the state providing a national minimum," wrote Jose Harris, his biographer.

Beveridge wanted to tackle what he called the "five giants" - want, disease, squalor, ignorance, and idleness - through a universal welfare state which would provide a comprehensive health service, vastly expanded public housing, free and universal secondary education, and full employment, as well as benefits for the poor and family allowances.

Full employment - and the relative prosperity that went with it - was the key to Beveridge's plan.

Opposition

His vision was enormously popular with the public, and still forms the blueprint for the UK's welfare state.

But, as Howard Glennister, Professor of Social Policy at the London School of Economics, points out "the idea that it was built on a post-war consensus is a myth".

First babies born on NHS, July 1948
The NHS embodied the principle of universal free access for all

The Conservatives had opposed it, as had doctors who initially refused to join the NHS.

Meanwhile, the Treasury thought it was far too expensive.

The new Labour government, which took power in 1945, was keen to implement the Beveridge report in full as soon as possible.

But, in the severe conditions of post-war Britain, it did not have the money to pay an adequate level of flat rate benefits that would keep people out of poverty - particularly when their housing costs were taken into account.

So from early on, the residual poor law - now known as National Assistance - played a bigger role in alleviating poverty than Beveridge had planned.

And the idea of basing entitlement on contributions through national insurance - designed to give people ownership of their benefits and avoid stigma of a hand-out - meant that many people, especially women, were excluded from the system.

Family allowances were also never implemented in the generous way Beveridge had proposed. They re-emerged later - first as child benefit then as child tax credits.

Investment in health, education, and housing soon proved inadequate to meet the accumulated social needs.

When the UK welfare state was created in the l940s, it was the model admired around the world.

But in the last 50 years it has become the poor relation among European welfare states as continental economies spurted ahead of Britain.




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