Welfare state in the United Kingdom


The welfare state of the United Kingdom began to evolve in the 1900s and early 1910s, and comprises expenditures by the government of the United Kingdom intended to improve health, education, employment and social security. The British system has been classified as a liberal welfare state system.

History

In 1984 historian Derek Fraser told the British story in a nutshell. The welfare state, he said:
The welfare state in the modern sense was anticipated by the Royal Commission into the Operation of the Poor Laws 1832 which found that the old poor law was subject to widespread abuse and promoted squalor, idleness and criminality in its recipients, compared to those who received private charity. Accordingly, the qualifications for receiving aid were tightened up, forcing many recipients to either turn to private charity or accept employment.
Opinions began to be changed late in the century by reports drawn up by men such as Seebohm Rowntree and Charles Booth into the levels of poverty in Britain. These reports indicated that in the massive industrial cities, between one-quarter and one-third of the population were living below the poverty line.

Liberal reforms

The Liberal Party launched the welfare state in Britain with a series of major Liberal welfare reforms in 1906–1914. The reforms were greatly extended over the next forty years.
The minimum wage was introduced in Great Britain in 1909 for certain low-wage industries and expanded to numerous industries, including farm labour, by 1920. However, by the 1920s, a new perspective was offered by reformers to emphasise the usefulness of family allowance targeted at low-income families was the alternative to relieving poverty without distorting the labour market. The trade unions and the Labour Party adopted this view. In 1945, family allowances were introduced; minimum wages faded from view.
The experience of almost total state control during the Second World War had encouraged the belief that the state might be able to solve problems in wide areas of national life.
The Liberal government of 1906–1914 implemented welfare policies concerning three main groups in society: the old, the young and working people.
YoungOldWorking

  • In 1906 local authorities were allowed to provide free school meals.
  • The Children and Young Persons Act 1908 introduced a set of regulations that became known as the Children's Charter. This imposed severe punishments for neglecting or treating children cruelly. It was made illegal to sell cigarettes to children or send them out begging. Separate juvenile courts were set up, which sent children convicted of a crime to borstals, instead of prison.
  • In 1908 pensions were introduced for the over 70s.
  • In 1909 Labour Exchanges were set up to help unemployed people find work.
  • The National Insurance Act 1911 was passed, ensuring free medical treatment, and sick pay of 10 shillings a week for 26 weeks. An estimated 13 million workers came to be compulsorily covered under this scheme.

    • Beveridge Report and Labour

    The aftermath 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 end of the war also brought a slump, particularly in northern industrial towns, that deepened into the Great Depression by the 1930s.
    During the war, the government became much more involved in people's lives via governmental organisation of the rationing of foodstuffs, clothing and fuel and extra milk and meals being given to expectant mothers and children. The wartime coalition, and the introduction of family allowances. Many people welcomed this government intervention and wanted it to go further.
    The Beveridge Report of 1942, essentially recommended a national, compulsory, flat rate insurance scheme which would combine health care, unemployment and retirement benefits. Beveridge himself was careful to emphasise that unemployment benefits should be held to a subsistence level, and after six months would be conditional on work or training, so as not to encourage abuse of the system. That was however predicated on the concept of the "maintenance of employment" which meant ‘it should be possible to make unemployment of any individual for more than 26 weeks continuously a rare thing in normal times’ and recognised that the imposition of a training condition would be impractical if the unemployed were numbered by the million. After its victory in the 1945 general election, the Labour Party pledged to eradicate the Giant Evils, and undertook policy measures to provide for the people of the United Kingdom "from the cradle to the grave."
    Included among the laws passed were the National Assistance Act 1948, National Insurance Act 1946, and National Insurance Act 1946.

    Impact

    This policy resulted in increased expenditure and a widening of what was considered to be the state's responsibility. In addition to the central services of education, health, unemployment and sickness allowances, the welfare state also included the idea of increasing redistributive taxation, increasing regulation of industry, food, and housing
    The foundation of the National Health Service did not involve building new hospitals, but nationalisation of existing municipal provision and charitable foundations. The aim was not to substantially increase provision but to standardise care across the country; indeed William Beveridge believed that the overall cost of medical care would decrease, as people became healthier and so needed less treatment.
    However, instead of falling, the cost of the NHS has risen by 4% annually on average due to an ageing population, leading to a reduction in provision. Charges for dentures, and spectacles were introduced in 1951 by the same Labour government that had founded the NHS three years earlier, and prescription charges by the successive Conservative Government were introduced in 1952. In 1988, free eye tests for all were abolished, although they are now free for the over-60s.
    Policies differ in different regions of the United Kingdom, but the provision of a welfare state is still a basic principle of government policy in the United Kingdom today. The principle of health care "free at the point of use" became a central idea of the welfare state, which later Conservative governments, although critical of some aspects of the welfare state, did not reverse.
    Welfare spending on poor people dropped by 25% during the decade of austerity, cuts to benefits that disabled people receive were significant, Personal Independence Payments and Employment and Support Allowance have both dropped by 10%. Over half of families living below the breadline have at least one relative with a disability. Cuts include, tax credits, universal credit, child benefit, disability benefits, ESA and incapacity benefit and housing benefit. Frank Field said, "A £37bn attack has been mounted on the living standards of many of our fellow citizens to such an extent that possibly millions struggle to keep on top of their rent, pay the bills and buy adequate food. Likewise, an unknown number are unable to clothe their children properly before sending them to school where all too many of these children not only rely on free school dinners as a cornerstone of their diet, but on breakfast and supper clubs as well."

    Expenditure

    In the financial year 2014/15, state pensions were overwhelmingly the largest governmental welfare expense, costing £86,500,000,000 followed by housing benefit, which accounted for over £20,000,000,000 Expenditure in 2015–16 on benefits included: £2,300,000,000 paid to unemployed people and £27,100,000,000 to people on low incomes, and £27,600,000,000 for personal tax credits.
    BenefitExpenditure
    State pension86.5
    Tax credits 29.7
    Housing Benefit23.5
    Disability Living Allowance15.4
    Incapacity benefits14.1
    Child benefit11.6
    Pension Credit6.6
    Attendance Allowance5.4
    Jobseeker's allowance3.1
    Income Support2.6
    Maternity and paternity pay2.4
    Carer's allowance2.3
    Winter fuel payments2.1
    War pensions0.8
    Universal credit0.1
    Other5.9
    TOTALpounds 213.9

    Criticisms

    Conservative thinkers have debated the structural incompatibility between the liberal principles and welfare state’s principles. Certain sectors of society have argued that the welfare state creates a disincentive for working and investment. Also suggesting that the welfare state at times does not eliminate the causes of individual contingencies and needs. Economically, the net losers of the welfare state are often more against its values and role within society.
    Sometimes women who have nothing and cannot feed themselves or their children are forced into prostitution. Delays in benefit payments when claimants have no money to buy food or to pay rent can force claimants to crime or prostitution, Emma Mullins said, "We had just been made homeless and we had nothing, no food, nothing. I still feel angry when I think about it now that I had to degrade myself – but it was either that or see my children starve. I would do it again if I had to, but I hope I’m never in that situation again."
    In 2010, the Conservative-Lib Dem coalition government led by David Cameron argued for a reduction of welfare spending in the United Kingdom as part of their programme of austerity. Government ministers have argued that a growing culture of welfare dependency is perpetuating welfare spending, and claim that a cultural change is required to reduce the welfare bill. Public opinion in the UK appears to support a reduction in welfare spending, however commentators have suggested that negative public perceptions are founded on exaggerated assumptions about the proportion of spending on unemployment benefit and the level of benefit fraud.
    Figures from the Department for Work and Pensions show that benefit fraud is thought to have cost taxpayers £1.2 billion during 2012–13, up 9% on the year before. This is lower than the £1.5 billion of benefit underpayment due to error.
    In some cases, relatives who bring up a child when the parents cannot bring up the child face sanctions and financial penalties, they can be left poor and homeless. There are also widespread complaints from church groups and others that the UK welfare state does insufficient work to prevent poverty, deprivation even hunger.
    Support for raising taxes to finance more provision on health, education and social benefits is the highest it has been since 2002, NatCen Social Research maintains. Two-thirds of Labour supporters favour tax rises and 53% of Conservatives also favour that.
    In 2018 the House of Commons library estimated that by 2021, £37bn less would be spent on working-age social security than in 2010, despite rising prices and rising cost of living. Cuts to disability benefits, Personal Independence Payments and employment and support allowance are noteworthy, they will have fallen by 10%, since 2010. Over half of families with income below the breadline include at least one person with a disability. There are also cuts to tax credits Universal Credit child benefit disability benefits ESA and incapacity benefit and housing benefit. Alison Garnham of the Child Poverty Action Group said, "Cuts and freezes have taken family budgets to the bone as costs rise and there is more pain to come as the two-child limit for tax credits and universal credit, the bedroom tax, the benefit cap and the rollout of universal credit push families deeper into poverty."
    In 2019 Social security payments are the lowest they have been since the welfare state was started, millions are excluded from mainstream society and food bank use has increased. The Institute for Public Policy Research found £73 per week, now amounts to 12.5% of median earnings. When unemployment benefit was introduced in 1948 it amounted 20%. Due to this millions of people are, "excluded from mainstream society, with the basic goods and amenities needed to survive let alone thrive increasingly out of their grip". A senior government adviser stated that economic insecurity was now, "the new normal." The IPPR urges all parties to add an emergency £8.4bn into the welfare system, which has become harder than previous systems because debt deductions are made from payments, there is increasing underpayment and strict sanctions are applied. One in three universal credit claimants are working. Clare McNeil of the IPPR said, "Social security should offer a safety net, not a tightrope over poverty. It is remarkable that in postwar Britain the support for those living in poverty was closer to average earnings than it is today. This is the very simple fact that lies behind the record levels of personal debt, rising use of food banks and increasing destitution that we see in the UK."

    Historical statistics on welfare trends

    Benefit rates as a percentage of industrial earnings

    Year Single pensionSupplementary Benefit for single personFamily Allowance for four children
    1948 18.917.510.9
    1961 19.117.89.3
    1962 18.417.18.9
    1963 20.819.58.6
    1964 19.218.18.0
    1964 18.717.67.7
    1965 21.220.17.4
    1965 20.419.47.1
    1966 19.818.86.9
    1966 19.720.06.9
    1967 19.419.76.8
    1967 21.020.17.7
    1968 20.219.311.9
    1968 19.619.812.6
    1969 18.819.312.1
    1969 20.019.211.7
    1970 19.018.311.3
    1970 17.618.310.2
    1971 17.318.010.0

    Note on source, as quoted in the text: "based on statistics of weekly earnings, Employment and Productivity Gazette."

    Changes in National Assistance/Supplementary Benefit

    Date of changeReal value single pensionerReal value married man with three children Real take home pay for average worker
    May 1963100100100
    March 1965111112106
    November 1966117110106
    October 1967122115108
    November 1969122115110

    ; Notes
    Date of increaseReal take home pay for average worker Real value of single pension Real value of unemployment benefit
    March/May 1963100100100
    January/March 1965106111110
    October 1967108114113
    November 1969110114116

    ; Notes:
    YearUnemployment, sickness, and retirement benefits Retirement pension National assistance/supplementary benefit Adult male manual workers Adult male administrative, technical, and clerical employees
    1963100100100100100
    1969148149150154148

    Supplementary benefits rates as a proportion of income

    Date of introductionSingleMarried couple
    197314.010.3
    197423.819.8
    1975 25.020.4
    1975 25.721.4
    197623.620.3
    197723.420.4
    197828.023.5

    Households dependent on Supplementary Benefit

    Changes in real terms in social security benefits

    YearSupplementary benefits Sickness/unemployment benefit Retirement pensions Family allowance/child benefit
    196414617614985
    196516619916885
    196616519916882
    196717331817380
    196817331817377
    196917232917272
    197017332917269
    197117835417780
    197218735618375
    197318634219168
    197419134521678
    197518732721569
    197618932321972
    197719032622169
    197818932122882
    1979190308232102

    ; Notes:
    DateUnemployment and sickness benefit Retirement pension Prices Average earnings
    July 197417.029.013.512.9
    April 197514.016.017.717.4
    November 197513.314.711.710.7
    November 197616.215.015.012.8
    November 197714.014.413.09.6
    November 19787.111.48.114.6
    Total increase October 1973 – 1978114.3151.6109.6107.9

    Unemployment benefit
    July 1948: 19.64
    April 1961: 26.88
    September 1971: 34.96
    November 1975: 36.47
    Retirement pension
    July 1948: 19.64
    April 1961: 26.88
    September 1971: 34.96
    November 1975: 42.96
    Supplementary benefit
    July 1948: 17.93
    April 1961: 25.31
    September 1971: 33.39
    November 1975: 35.10
    Child support: one child
    July 1948: 4.87
    April 1961: 4.36
    September 1971: 4.27
    November 1975: 3.67
    Child support: three children
    July 1948: 17.60
    April 1961: 16.62
    September 1971: 15.36
    November 1975: 13.81