Lloyd George’s Pensions Act and How the Treasury Tries to Make Welfare Take-Up Difficult

One of the things I’ve noticed is that as soon as a government roll out some new form of welfare benefit, there’s almost always an attempt immediately either to block it, or to make sure that spending on it is kept as low as possible, and that as few people as possible take it up. In the case of the Tories, this is part of the whole point of these reforms: they’re too make sure as few people qualify for the benefit as possible, but make it appear as though they’re still somehow giving help to the poor. Hence increased benefit cuts, disguised with verbiage about how benefits are being raised in real terms, or else they’re reforming the system so that its geared towards those who really need it. Or some other such nonsense.

In the case of the Labour party, opposition to increased welfare spending seems almost always to come from the Treasury, which immediately makes a statement about the need to preserve spending limits, and recommends amendments to make sure that expenditure is lower than that actually desired by those who formulated the reform. This has been going on for a very long time, almost as long as welfare benefits were introduced. Lloyd George’s pension reforms of 1908 were similarly criticised and modified by the Treasury.

Asquith, Lloyd-George’s predecessor at the Treasury under Campbell-Bannerman, had promised to introduce non-contributory state pensions in 1906. This was to be 5s a week for people over 70. Married couples would only receive 7s 6d. In 1908 Lloyd George gave into pressure from the backbenches, and removed the discrimination against married couples. However, the Treasury had also succeeded in limiting the take-up of the new benefit, was putting a limit of £7 million on the amount that could be spent on it and moving the age when it could be paid from 65 to 70. (See G.C. Peden, British Economic and Social Policy: Lloyd George to Margaret Thatcher, pp. 20-1). And the Tories have done exactly the same today. A few years ago they raised the retirement age to 70 for men, on the grounds that more of us are living and remaining active to that age. They may well be right, but I doubt that’s the only reason they raised it. It seems to me to be something they’ve wanted to do for over a century, ever since Asquith and Lloyd George brought it in. There are certain things in Tories that really don’t change. Unfortunately.

G.M. Trevelyan and the Promotion of Victorian ‘Workhouse’ Values in the 20th Century

I’ve put up a few pieces in the past few days tracing Thatcher’s ‘Victorian values’ and the modern Tories’ emphasis on conditionality in welfare support – or what’s left of it – to the doctrine of less eligibility that insisted that welfare relief should be made as hard and uncomfortable as possible in order to dissuade the able-bodied poor from going on it. The recommendation of the Tory think-tank, Reform, that the disabled should be paid the same amount of relief as those without disabilities very strongly echoes the classic statement of the principles of ‘less eligibility’ as articulated by a Victorian Poor Law Commissioner.

G.C. Peden in his book, British Economic and Social Policy: Lloyd George to Margaret Thatcher (Deddington: Philip Allan Publishers Ltd 1985) describes how laissez-faire individualism was central to Victorian economic attitudes. He notes that it became a philosophy that permeated politics and social studies, and discusses the rise of the doctrine of ‘less eligibility’ and the 1834 Poor Law establishing the workhouses. He also mentions the work of the historian, G.M. Trevelyan, in continuing to promote the workhouse and the ideology behind it into the Twentieth century, writing

One man acting as a bridge between the centuries was G.M. Trevelyan, who was born in 1876 and who was Regius Professor of Modern History at Cambridge from 1927 to 1940. His British History in the Nineteenth Century and After first appeared in 1922 and was still being printed as a paperback in the 1960s. In it, Trevelyan gave a classic defence of the Poor Law Amendment Act of 1834. Before that date magistrates in England and Wales had had the power to supplement inadequate wages out of local rates – a form of relief which Trevelyan describes as destructive of self-respect and self-help, virtues which could be restored to what he called the ‘cringing poor’ only by the ‘intellectually honest’ if ‘harsh’ reform of 1834. (Trevelyan 1965, pp. 248-9). (p. 4). (My emphasis).

Trevelyan was one of the leading historians of that period, and my guess is that many schoolchildren and students studying history in the early and middle twentieth century were brought up on at least some of his works. My mother, for example, has a copy of one of them, though she certainly doesn’t share his attitudes. My guess is that Trevelyan’s works form the intellectual background to Thatcher’s ‘Victorian values’ and their re-emergence in the Tory party. Of course, she was greatly taken with von Hayek, slapping to down in front of her cabinet colleagues to say ‘This is what we all believe now’, but I think Trevelyan’s influence was already strong, at least in preparing the intellectual ground for von Hayek, Friedman and the like. And it’s disgusting that what should have gone the way of the 19th century is still blighting life in the early 21st.

The Foundation of the NHS: The Conservatives’ Reaction to the Beveridge Report

As I mentioned in my last post, I’ve been discussing the origins of the NHS with a presumably Tory critic, who took issue with my statement that Nye Bevan is the NHS’ founder. Among his other points, he argues that Winston Churchill was in favour of it, and the NHS would have happened regardless of who was in government at the time.

I have argued that Churchill was in fact highly ambivalent about it. Sometimes he was for it, at other times against. G.C. Peden, in his British Economic and Social Policy: Lloyd George to Margaret Thatcher (Oxford: Philip Allan Publishers Limited 1985) has this to say about the public and the government’s response to the report.

The focus for discussion of postwar social planning was the Beveridge Report on Social Insurance and Allied Services (Cmd. 6404). The Report appeared in December 1942, at a time when ultimate victory could be foreseen and when new incentives had to be found to maintain the war effort. Despite this, the Government was cautious, if not openly hostile, to Beveridge’s proposals for universal social insurance, without means test, against interruption of earning due to unemployment, ill health or old age. It was true that the Anglo-American peace aims in the ‘Atlantic Charter’ of 1941 had included a reference to ‘social security’ but Churchill thought that such plans should be substantially left until after the War. As Harris (1977) has shown, the Beveridge Report had been very much Sir William Beveridge’s own handiwork. His committee had been expected to deal with technical questions related to workmen’s compensation for industrial disease or injury, and with anomalies in social insurance, such as the well-known one whereby a man whose earning were interrupted because of unemployment received a higher rate of benefit than if he were sick. Beveridge, however, had gone beyond his terms of reference and had called for an attack on Disease, Ignorance, Squalor and Idleness as well as Want – the five giants on the road of reconstruction, as he called them in Bunyanesque language. In particular, he stated that no satisfactory scheme of social security could be devised unless there were family allowances, comprehensive health and rehabilitation services, and avoidance of mass unemployment. Indeed, the actuarial soundness of Beveridge’s plan depended upon the average rate of unemployment being no higher than the lowest level in the 1930s; that is 10 per cent of interwar insured labour force or 8.5 per cent of the wider body of insured employees in the new scheme (Cmd 6404, pp. 120, 154-65, 185-6). Uncertainty whether unemployment could be controlled, and memories of the political consequences of an actuarially unsound unemployment insurance fund in 1931, no doubt contributed to the Treasury’s critical reception of the Report.

Nevertheless there can be little doubt that the Report was extremely popular with the general public and, following a backbench revolt in parliament, the Government felt compelled to commit itself to Beveridge’s plan, at least in principle. Widespread support for universal social insurance without means test may have been the result of what Titmuss called a ‘war-warmed impulse of people for a more generous society’. On the other hand, the fact that so many people in the armed forces and munitions industries could not but be uncertain about their own post-war employment, in the light of post-1918 experience, must have been a factor. In the interwar years the unemployed had always been a minority of the electorate; in the war those who felt threatened by unemployment may well have been a majority. Moreover, the associated prospect of universal health insurance may well have been attractive to people had been finding the cost of private health insurance a burden.

Key interest groups were also generally in favour of Beveridge’s ideas. The evidence presented to Beveridge’s committee showed that hardly any trade unions opposed extensions of national insurance and even business witnesses generally favoured more intervention by the state in matters relating to national efficiency. The one business group clearly adversely affected by Beveridge’s proposals were the industrial insurance companies which had helped to administer national health insurance since 1912. Beveridge not only recommended their exclusion from this, but he also proposed that national insurance should cover workmen’s compensation and funeral grants, thus taking away business from the companies. These seem, however, no longer to have had the influence they had had in Lloyd George’s time, and the state no longer needed their administrative expertise. Wartime experience had created new attitudes about what the state could achieve. All this does not mean, however, that there was necessarily a consensus in favour of a ‘welfare state’ except in the most general terms. Looking at Beveridge’s five giants in turn, one finds that sometimes proposals were agreed for differing motives, or on an inadequate basis, and that sometimes there were serious disagreements between Conservative and Labour members of the Coalition government.…

For all its reservations on Beveridge’s main proposals, the Government did agree in principle with his assumption that there should be a comprehensive health service available to all, without any conditions of insurance contributions. The trouble was that it proved to be impossible during the war for the details of such a service to be agreed, either between political parties or with the interest groups involved. Certainly war had increased the state’s role. Greatly exaggerated prewar estimates of numbers of casualties in air raids had led to the provision of 80,000 Emergency Hospital Service beds, compared with 78,000 beds in voluntary hospitals and 320,000 in local authority hospitals. Moreover, the Emergency Hospital Service gradually extended its operations from war casualties to treatment of sick people transferred from inner city hospitals and then to other evacuees. In discussions in 1943-45 on a future national health service, however, both Conservative ministers and the British Medical Association showed themselves to be determined to safeguard private practice and the independence of the voluntary hospitals. In particular, there were deep differences between successive Conservative ministers of health, Ernest Brown and Henry Willink, who were responsible for health services in England and Wales, and the Labour Secretary of State for Scotland, Tom Johnson, who was responsible for health services north of the border. For example, Johnson successfully opposed the idea of maintenance charges for patients in hospital. The 1944 White Paper on A National Health Service (Cmd 6502), which was signed by Willink and Johnston, left much undecided and was avowedly only a consultative document. …
(pp 139-40).

The National Health Service Act of 1946, and its implementation on the Appointed Day in 1948, was a considerable achievement of Aneurin Bevan, the Minister of Health. Bevan’s original nation health proposals differed from those of Willink, his Conservative predecessor, chiefly in respect of the degree of the Ministry’s control over hospitals and doctors, and in the emphasis given to group partnerships of doctors in local health centres. Whereas Willink had wished to preserve the independence of voluntary hospitals, Bevan took over all local authority and voluntary hospitals, except those not necessary for the National Health Service (NHS). Bevan’s biggest problem was with the British Medical Association which, as late as February 1948, organised a poll of its members which resulted in a vote of 8:1 against the Act. Bevan was aware of the need to meet the medical profession on some points. In particular, he was willing to allow private beds in NHS hospitals so as to attract the best specialists into the service. He met the general practitioners’ fears for their independence by promising that there would be no wholetime salaried medical service. In the end the doctors and consultants were given a larger place in the administration of the NHS than Willink had envisaged.

(pp. 155-5). Thus, while the Tories did have a role in the creation of the NHS, the government as a whole only reluctantly accepted its necessity after it won a general acceptance amongst the electorate and parliament. Yes, Willink did play his part, but the ultimate creation of the NHS was under Nye Bevan.

There is much, much more I could write on this, but at the moment this ends the discussion.