FABIAN POLICY REPORT

BEVERIDGE AT 70

The future of welfare 70 years on from the Beveridge Report, with Liam Byrne, Jose Harris, Liz Kendall, Estelle Morris, Nick Pearce, Nicholas Timmins, Steve Webb and many others Contents EDITORIAL 2 The next welfare settlement The Beveridge report was published at the high-watermark of British soli- Andrew Harrop darity. In December 1942, its bold social principles – of universal coverage, 4 Who was William Beveridge? full employment, family allowances, benefits in return for contributions, Jose Harris a national health service, and the right to citizen welfare – were readily accepted by the public and politicians of all parties as the way to ‘win the 5 From welfare state to welfare society peace’ and remake British society following the ravages of war. Barry Knight Over time the solidarity that underpinned the post-war settlement has 6 The spirit of give and take been eroded; and the conditions of society which informed Beveridge’s Nick Pearce conclusions have fundamentally altered. Public support for our welfare state is often now witheringly low, and its politics poisonous. As Kate Bell 8 The five giants and Declan Gaffney write on page 12, “…people have come increasingly  Want – Kate Green to believe that social security is going to the ‘wrong’ people – extraordinar- Disease – Liz Kendall ily, the public believes one in four claimants are committing fraud – and Ignorance – Estelle Morris data from the British Social Attitudes Survey suggests that claimants are Squalor – Vidhya Alakeson now seen as significantly more ‘undeserving’ than they were 20 years ago.” Idleness – Steve Webb We often feel close to returning to distinguishing between the concepts 11 Peverse incentives of the ‘deserving’ and ‘undeserving’ poor – whereby destitution was an Anne Begg individual ‘failing of citizen character’ – which early Fabians effectively banished whilst inventing modern social policy. 12 Social security for everyone Beatrice Webb’s 1909 Minority Report to the Royal Commission Kate Bell and Declan Gaffney on the Poor Law was the first appearance of many of the Beveridge 14 A prize worth fighting for principles, as well as some of the specific recommendations. Beveridge Liam Byrne himself worked as a researcher for Webb and later wrote that his own report “stemmed from what all of us had imbibed from the Webbs”. 15 Something for something Beveridge was responding to the testing times he had lived through, Nicholas Timmins just as the Webbs’ sought to address the grinding poverty the poor law 17 Winning on welfare manifestly failed to address. Following the financial meltdown of 2008, Nick Pecorelli Britain today now faces its own crisis – very different to previous ages’, but no less real. There is now broad agreement that the left needs a new welfare contract based on solidarity, contribution and earned entitlement as part of broader notion of equal citizenship. But what is the institutional and policy design that can make this work, with an aging population and huge fiscal challenges? And how can it be done with public support? The Beveridge report is an obvious place to start looking for answers. Whilst times have changed, his recommendations speak across the decades in several ways. This report investigates what elements of the Beveridge report endure and what lessons can be learnt for the future of welfare. For the next 5 years the Trust has To find out how the Webb committed the vast majority of its Memorial Trust aims to tackle funding resources to a structured poverty and inequality in the programme that will be focused on UK, and to learn more about the [email protected] This report is published in www.fabians.org.uk association with Webb Memorial the issues of poverty and inequality in achievements of Beatrice Webb the UK. During this time the Trust is Trust and the legacy that the Trust General Secretary, aiming to answer three questions: Andrew Harrop Like all publications of the Fabian intends to leave, visit Deputy General Secretary, Society, this report represents not 1. What does a good society without www.webbmemorialtrust.org.uk Marcus Roberts the collective views of the Society, poverty look like? but only the views of the individual Report Editors, Sofie Jenkinson, writers. The responsibility of the 2. What are the factors that produce a Ed Wallis fabian society Society is limited to approving Printed by DG3, London E14 9TE good society without poverty? 11 Dartmouth Street its publications as worthy of Designed by Soapbox, 3. Who does what to implement a good London SW1H 9BN consideration within the labour www.soapbox.co.uk society without poverty? 020 7227 4900 (main) movement. Cover photo: © AP/Press “Beveridge on Beveridge: recent speeches of Sir 020 7976 7153 (fax) Association Images William Beveridge”, published by the Social Security League, [1944]. Library of the London School of Economics & Political Science

1 / Beveridge at 70 expanding the boundaries of the welfare to top-up low earnings. To avoid poverty and required to accept a job, training or state, in order to show that the costs will be low-earning families typically need both community work. borne by the beneficiaries. This pragmatic top-ups from government and two work- Robust conditions matter because they version of ‘soft’ hypothecation was impor- ing parents. So the state needs to do more help people meet their own long-term The next welfare settlement tant for Beveridge’s new social insurance to help second earners stay in work, by aspirations and also because they shrink The left is correct to celebrate how much of Beveridge’s legacy lives scheme; but it is just as relevant today when improving the incentives in tax credits and the pool of people who relying on state thinking about how to win support and offering free or subsidised childcare. At the support, thereby opening the way to on, but should also feel inspired to seek out comprehensive solutions raise money for expanded provision in areas moment the coalition is going the other way giving those remaining more help in the to the giants we face today, writes Andrew Harrop such as social care. in the way it is designing universal credit future. Better popular understanding of Secondly, while most welfare provision is and cutting to Sure Start. the welfare system’s robust requirements earned and paid for through the taxes we could also be the route to changing the all pay, there are some entitlements where terms of the public debate. For example, receipt only seems justified when preceded To restore faith, growing media reports of the tough polic- by a sustained and earmarked contribution. politicians must change ing of ESA and personal independence In the mid-2000s the Turner commission payment (PIP) may challenge the unpleas- Andrew Harrop is general secretary concluded this was still the case with re- tack and explain that it ant tabloid narrative of scroungers and of the Fabian Society spect to pensions, and recommended that shirkers ‘on the sick’. And a job guarantee only people who had spent decades in the is because the rules are for young people, and perhaps in time UK earning or caring should expect a pen- lone parents with older children, could istening to most commentary about adults below pension age declined in value all backgrounds and sustain public con- sion by right. now robust, that people help give legitimacy to those who remain Lthe British welfare state might leave you by around a quarter, relative to average sent for redistributive spending. Lastly The same argument could be made by can have confidence in on benefits, for what in future might be a depressed, fearing that the legacy of Sir Wil- earnings. universal entitlements smooth risks and advocates of more generous, contribution- time-limited period. liam Beveridge’s 1942 report is all but dead. So while many people believe the cost costs across our lifetimes, which in many based unemployment and sickness protec- the genuine need of those A change in language and attitudes will But in spite of legitimate and troubling con- of welfare is out of control, over the next instances is a good in itself, regardless of tion. Today people who become unemployed not happen on its own however, or even cerns, ‘follow the money ’ and you’ll see the 20 years spending on working-age social whether we are at risk of poverty. Together but have savings or a working partner are within the system just as a result of shifting policy. After all, in spirit of Beveridge is alive and well: for the security is actually set to halve as a share these arguments make a compelling case limited to £1,900 of state support, which office Labour tightened the rules on welfare two largest areas of public spending are free of national income, due to the falling value for universalism in areas such as the state does not go far for most families. Restoring It will only be possible to end in-work but also ratcheted up the language, so peo- healthcare (‘provided for all citizens by a of entitlements. As a consequence, just as pension and the NHS. a more generous insurance system would poverty, by taking firm action on pay, ple thought there was more of a problem national health service’) and state pensions, in the pre-Beveridge era, ‘benefits amount But the benefits of universalism will not be expensive, so could only be a long-term conditions and job security for low paid not less. To restore faith, politicians must earned by national insurance contributions. to less than subsistence’ (unless you are a always outweigh the high costs. Decisions project for after austerity. But if the British workers. Increasing pay, whether through change tack and explain that it is because Both were recommendations of December pensioner or have children) and the system about the scope and targeting of govern- people are prepared to move to a flat-rate binding sector-wide bargaining or a na- the rules are now robust, that people can 1942, with origins lying in the ideas of early fails to eradicate ‘want’. ment provision should be based on chang- pension of £140 per week, for those who tional living wage, would mean that more have confidence in the genuine need of Fabians like Beatrice Webb. Beveridge’s plan was famously rooted not ing social conditions rather than ‘founda- have contributed long enough, why not of low-earners’ incomes would come from those within the system. Indeed, for all the short-term pressures in means-tested assistance for the poor, but tion myths’, notwithstanding the legacy unemployment or sickness insurance paid their employers rather than tax credits; and A final salutary thought. Beveridge of austerity, the NHS and the state pension in the principles of universalism and contri- of figures like Beveridge and the Webbs. on the same basis? better protection and training in the work- dodged one issue that still bedevils welfare system are not just alive but thriving: in bution. The two terms should not be con- For example, when Beveridge proposed Beveridge understood that his proposals place would lead to fewer people cycling today, what he termed ‘the problem of rent’. 1960 the UK spent around six per cent of fused. Beveridge backed contribution-based children’s allowances, few children lived would only be affordable with a healthy between benefits and fragile employment. The cost of housing benefit today is vast and economic output on health and pensions social insurance but also recommended in rich households and national computer labour market: the maintenance of employ- Such a transformation could free up the growing, but this is down to our failure to combined; today it is 14 per cent and on non-contributory children’s allowances databases were science fiction. Today, with ment was one of the ‘necessary conditions money needed to pay for the children’s reform the housing market, not the fault of current projections it will be 17 per cent and the small matter of a national health modern technology and soaring inequality, of success in social insurance’. Today return- services and in-work credits needed to its recipients. For all the harshness of the in 2060, assuming no change in policies. service. Today, while both universalism and it makes sense to prioritise the ‘progressive ing to full employment is an essential pre- drive down poverty, make work pay and coalition’s cuts, the costs will keep mounting What’s more the British public strongly the contributory principle are thriving else- universalism’ of child tax credits over child condition for a successful welfare system as equalise children’s life chances. while rents keep on climbing. The solution supports spending on both pensions and where, they seem to be on their knees when benefit. well as a priority for many other reasons, We should not forget, however, that of the post-war Labour government was of health. Both are on a far firmer footing it comes to working-age social security. But the traffic is not all one way. Bev- including the nation’s tax revenues, public Labour’s record on employment was posi- course a vast programme of housebuilding today than in 1997, following Labour’s Child benefit and disability living allowance eridge’s proposals were grounded in the health and demographic sustainability. A tive before the crisis. Alongside tax credits in the social and private sectors. Today we record investment in the health service (DLA) are being restricted in different ways assumption that unpaid care was the role future government must ensure that jobs and the minimum wage, Labour’s welfare to probably need the same to reduce the costs and major pension reforms since the 2005 as part of the cuts, while the coalition’s deci- of married women: in the 21st century that and earnings growth are priorities for regu- work programmes were an unsung success of housing benefit. Turner report. sion to time-limit contributory employment thought is a historic relic and there is a com- latory, fiscal and monetary policy. Public story and even after the recession there are We should greet Beveridge at 70 as The reason for commentators’ melan- and support allowance (ESA) is just the pelling case for a universal support towards spending allocations will also need to be half a million fewer lone parents and disa- optimists. The Beveridge report is, after all, choly is the state of working-age welfare, latest blow to contributory benefits, which the costs of social care and childcare. more growth-orientated, so investment- bled people on benefits than a decade ago. a reminder that it is possible to imagine which is both a policy disaster area and have been on the wane for decades. When Beveridge wrote about ‘contribu- style spending on infrastructure, science Setting conditions for receipt of benefit was and realise visionary yet practical reforms, the subject of deep public hostility. To take The arguments in favour of universalism tion’ he had a ‘funded’ insurance scheme and education must not be crowded out by always part of Beveridge’s thinking, whose even in times of crisis and severe financial one example of hardening attitudes, the are more or less the same as in Beveridge’s in mind, but even in his report hypotheca- pensions and healthcare. origins trace back to the mutual insurance constraint. The left should rightly celebrate British Attitudes Survey reports the number day. Universal entitlements reduce stigma, tion was a chimera and tax revenues were But achieving high employment alone is fund as much as the poor law. In its dying how much of Beveridge’s legacy lives on, believing that ‘unemployment benefits are administrative cost, and disincentives to required alongside national insurance. But not enough. In stark contrast to Beveridge’s days the last Labour administration went especially in pensions and health. But we too low and cause hardship’ fell from 55 per work or save. Counter-intuitively they even if the ‘national insurance fund’ has al- time, today more than half of the people in one step further and created a ‘young should also feel inspired by Beveridge’s ex- cent in 1993 to 19 per cent in 2011. In reality, are also better at reducing poverty and ways been a myth the contributory principle poverty under pension age live in a working person’s guarantee’ where anyone out of ample to seek out comprehensive solutions over the same period, the main benefits for inequality since they bind-in people of still matters. Firstly, it is important when household, even though we have tax credits work aged under 25 was both guaranteed to the giants we face today. F

2 / Fabian Policy Report 3 / Beveridge at 70 Published in November 1942, over nonetheless, severely damaged his career prosperity. However, whilst not wanting to 500,000 copies of the report were sold by his outspoken championship of native detract from these achievements, we have within three days, and Beveridge rapidly Indian causes. The elder Beveridge had a tendency to look back on the high points became a household name – not just in also been an ardent disciple of the French of the welfare state uncritically, seeing only Britain but in the USA, the British em- positivist philosopher, Auguste Comte, the great social advances, while forgetting pire, and many parts of occupied Europe. and of his teachings on ‘altruism’, the an equally important narrative. Despite its widespread public acclaim, subordination of private interests to the The roots of this narrative lie in what Who was William however, the report provoked much common good, the basic unity of natural From welfare state Hilary Rose has called the myth of ‘the behind-the-scenes consternation among and social science, and a strongly ethical affluent society’ in which both the Labour Beveridge? civil servants, entrepreneurs, orthodox ‘religion of humanity’. to welfare society party and the Conservative party sought economists and coalition ministers of all Unlike his father, William Beveridge to gain all possible credit for setting up the Jose Harris explores parties. Some believed its proposals were himself was never a member of the Beveridge was furious his proposals welfare state. This myth obscured the fact Beveridge’s underlying ideas grossly premature in a war for national organised positivist movement, but pow- were implemented through state that the system failed to eradicate poverty, and asks if there are any lessons survival; others that it would arouse erful traces of this ‘positivist’ inheritance rather than voluntary agencies. as Abel Smith and Townsend so graphi- for policymakers today expectations of post-war prosperity that could nevertheless be detected at many A new system to eradicate poverty cally demonstrated in their 1965 study The would prove impossible to satisfy; whilst points in his mental outlook and public Poor and the Poorest. Reviewing the social a third group objected on more philo- career. It could be seen, for example, must be owned by the people service system in 1972 book ‘Poverty and sophical grounds that (even if affordable) in his belief that ‘society’ and social argues Barry Knight Taxation’, Jim Kincaid noted that it “does 0 years ago, at one of the darkest mo- such policies would be the kiss of death institutions could be studied by methods nothing effective to iron out inequality, and 7ments of the second world war, an ob- to any hope of return to a competitive borrowed from the natural sciences. that the services are far less egalitarian and scure inter-departmental report on Social market economy. And it could be seen also in Beveridge’s more punitive than is generally supposed.”. Insurance and Allied Services, composed In the event, public support for lifelong view – by no means shared by all ention the name ‘Beveridge’ and Things could have been so much better by a temporary wartime civil servant, Wil- the Beveridge plan proved so strong English progressive liberals – that ‘good Mchances are that your mind will had Beveridge’s advice been heeded. He liam Beveridge, suddenly shot to fame as that ministers and Whitehall depart- government’ and forward planning spring to his 1942 report: the blueprint for foresaw that cold bureaucracies would what was at the time the best-selling ‘blue ments started preparing for post-war could override the damaging side-effects the post-war welfare state. It set out how dominate the system. This led to the for- book’ in British history. reconstruction almost as soon as the of market forces. It also helps to explain the state should take responsibility for the mation of ‘claimants unions’ in the 1960s,

The ‘Beveridge plan’, as it was instant- report was published. But Beveridge Beveridge’s surprising admiration for welfare of citizens by providing free health which saw the Department of Health and © Library of the London School Economics & Political Science ly called, set out a comprehensive agenda himself was expressly excluded from this the teachings of John Ruskin (not for care and secondary and comprehensive so- Social Security as an agent of social control, for the abolition of poverty in Britain, not process, and even from making contact Ruskin’s philosophical High Toryism, cial security based on a compulsory system operating with its own internal culture and intervention to help the poor is falling as a mirage of utopia, but as what its au- with officials who were charged with but for his practical involvement in ap- of national insurance. rules largely outside parliamentary ac- rapidly, which could eventually bring an thor claimed was “a practicable post-war implementing his own social-security prentice schemes, working-class higher However, what is less commonly countability. The Claimants Union Federa- end to all that Beveridge achieved. So, as aim”. Underpinning the plan’s proposals proposals. That exclusion may seem, education, housing programmes, and known is that the 1942 report was the first tion demanded a four-point plan: we commemorate the 70-year anniversary were four main strategies that signalled in retrospect, to have been a strange emphasis on the ‘dignity’ of public in a trilogy. Subsequent volumes were ‘Full of Beveridge, we should perhaps look to a major development from previous over-reaction to what (beneath its purple works). Employment in a Free Society’ (1944) and 1. The right to adequate income without Beveridge’s dream of a welfare society national policies: the extension of exist- passages) was basically a rather dry and These ideas lay behind Beveridge’s ‘Voluntary Action’ (1948). means test for all people. rather than a welfare state. It is vital that ing, limited social-insurance schemes technical document. A document which role as a pioneer of labour exchanges The later reports are important because 2. A free welfare state for all with services we involve the public in this devising a new to provide coverage for all citizens; a built on policies that had been progres- and statutory social insurance during Beveridge saw himself as laying the controlled by people who use it. system that builds on the groundswell of comprehensive, free national health sively evolving in British society over the the ‘new liberal’ phase of British social groundwork of a ‘welfare society’, not a 3. No secrets and the right to full informa- community activism, which is finding ex- service; tax-financed family-allowances previous half-century, and that was ac- policy from 1908-14. And they help also ‘welfare state’. Social advance depended tion. pression in new people-based movements for all second and further children; and knowledged even by its critics to be well- to explain his lifelong association with on everyone, with business and civil so- 4. No distinction between the deserving such as Transition Towns, London Citizens, more tentative (and ultimately more costed and economical. But it expressed a and admiration for Sidney and Beatrice ciety playing their part. Indeed, Beveridge and undeserving poor. 38 Degrees, and UK Uncut, which signify a controversial) policies to maintain ‘high feeling (even among some of Beveridge’s Webb (even in periods when he deeply was furious that the Labour government new desire to step forward to help to build and stable employment’, as both a good admirers) that the razzmatazz generated disagreed with them over major issues of implemented his proposals through state The lack of public ownership of the wel- a better society. We should be going back in itself and to avoid bankrupting the by the report had gone beyond what was political theory and high politics). agencies rather than friendly societies. In fare system meant that when the right came to the tradition set out in E. P. Thompson’s national insurance fund. constitutionally proper; while to others Such influences suggest that, although his 1948 report, he complained about the to attack it, they were in a stronger position Making of the English Working Class. As As under previous schemes, benefits it seemed that there was no stopping- Beveridge always identified himself as ‘damage’ that the welfare state was doing than they otherwise might have been. Fol- the recent Fabian pamphlet Letting Go were to be jointly financed by three-way place between Beveridge’s well-meaning an ‘advanced liberal’, his policies cannot to what people do for themselves. He sug- lowing changes to social attitudes in the puts it, it is important to see that: “The state contributions from workers, employers social reformism and inexorable descent be squeezed into any single party ideol- gested that the government should “en- 1970s, when people increasingly became can’t deliver. People do.” and the exchequer; but benefit-levels were into an authoritarian state. All of this ogy or tradition. In all these respects, it courage voluntary action of all kinds” and unwilling to pay to support the welfare The Webb Memorial Trust has embarked to be ‘scientifically’ related to subsistence raises the question of who exactly was is perhaps not hard to imagine that Bev- “remove difficulties in the way of friendly of others, the 1979 Conservative govern- on an ambitious programme to develop a needs, defined by what was adequate the William Beveridge who caused this eridge might have found much common societies and other forms of mutuality”. ment developed an ‘enterprise culture’ that model of what a good society without pov- for ‘basic healthy living’. Benefits were furore? What were his underlying social, ground with the Blue Labour and Red The system, he felt, should be owned by involved tax cuts, privatisation of govern- erty would look like. The work will move not, however, to be so generous as to dis- economic and political ideas? And why Tory movements of the present day. F the people and not the state. ment services, deregulation, and public outside the rarefied world of the policy elite courage additional voluntary insurance were they seen in certain quarters as so Beveridge’s pleas were ignored. Despite expenditure cuts. This led to the erosion of to find out what people would be prepared through friendly-societies, trade union dangerously controversial? Jose Harris is Emeritus Professor of Modern this, the decades after the second world the principles behind the welfare state. to do to deliver it. F benefit schemes, and other forms of mu- Beveridge had been born in India in History at St Catherine’s College, University war saw significant improvements in This decline appears set to continue. tual aid (which Beveridge saw as essential 1879, the son of a judge and apparent of Oxford and is author of William education, health, life expectancy, social According to the latest British Social At- Barry Knight is principal adviser to the features of a flourishing civic culture). pillar of British imperial rule, who had, Beveridge: A Biography mobility, employment opportunities, and titudes survey public support for state Webb Memorial Trust

4 / Fabian Policy Report 5 / Beveridge at 70 However, employment rates for certain towards instability, the ‘automatic stabilis- needs not met through work have combined groups – particularly young people, mothers ers’ could be strengthened, such that an to reduce the role of the contributory prin- and older men – remain low by international employer national insurance contribution ciple to a residual one in the British welfare standards. This increases the scale of need cut kicks in whenever unemployment tops state (outside of the basic state pension). The spirit of give and take with which the welfare system has to deal a certain level. Meanwhile, tax-funded universal services, Rehabilitating the welfare state must rest on the pursuit and reduces the resources on which it can most notably the NHS, have proved more draw, through national insurance contribu- politically durable than universal benefits. of full employment, the creation of universal care services and tions and tax. It is hard to have a generous, A contemporary Nonetheless, consideration should the ideal of reciprocity, writes Nick Pearce protective social security system when well rethinking of Beveridge be given to new ways of animating the over four million people were reliant on it instincts of the contributory principle in the to replace an earned income even after 15 must take as its starting current welfare system, reflecting the major years of uninterrupted growth and strong shifts in the worlds of work and family life employment performance. Conversely, the point the twin goals of since Lloyd-George and Beveridge. There fact that we lack a generous, protective are perhaps three possible areas to explore. welfare system, which reaches across low restoring full employment The first would be to provide greater Nick Pearce is director of the and middle income households, undercuts and completing the protection to people who have contributed Institute for Public Policy Research its majoritarian foundations. The contrast into the system, most closely reflecting the with the NHS – well funded and wildly feminist revolution in traditional model of social insurance. This popular – is stark. could take the form of a higher rate of job or a technical report of a government Benefits would be paid at a flat-rate as a countries, social democratic governments Any project for rehabilitating a strategic welfare services seekers allowance (JSA)/employment sup- Fcommittee, the popularity and influence right of citizenship, on the basis of contribu- proved more pervious to the demands of role for the welfare state in a centre-left port allowance (ESA) (or universal credit, in of the Beveridge Report has probably never tion from all. This universality of social citi- nascent feminist movements in the 1960s governing project must rest on the pursuit Advancing high quality, affordable child- time) for those who have recently worked. been exceeded in British history. It sold zenship was the common basis of post-war and 1970s, creating high quality, universal of full employment. In the first instance, this care is also vital for repairing the consent Given the cost implications of such a move, 100,000 copies within weeks of publication, welfare states built throughout Europe, de- childcare services and expanding care of is about running a fiscal policy with the goal and affordability of the welfare state. There an alternative would be to offer significantly and racked up over 600,000 sales in total, an spite the different institutional and practical the elderly to enable women to participate of higher and stable rates of employment. is strong and consistent evidence that the greater financial support on a short-term astonishing number by any stretch of the forms they took. Universality was perfectly fully in the labour market and reconcile This imperative must be balanced against cost and availability of childcare is a major basis for people who have paid in, but with imagination. Beveridge took to the airwaves compatible, in Beveridge’s view, with a con- the demands of work and family life. High the considerable pressures on the public barrier to higher levels of female employ- the money recouped once they are back in to promote its arguments and a summary tinued role for friendly societies and trade standard pre-school education also under- finances, which are only set to intensify. We ment. An extra million women in work – an work (such as IPPR’s proposal for national version was distributed to the troops. By unions in the administration and provision pinned a new wave of social mobility in have been deficit spending – sensibly – for increase that would bring the UK up to the salary insurance). early 1943, almost everybody had heard of insurance benefits, and a “vital place for these countries, while aggressive retraining a number of years, but this can’t continue best performers in Europe – would help to The second direction would be to expect about it. local authorities”, as the report put it. Only for workers displaced by industrial restruc- indefinitely. The priority, therefore, should secure the financing of the welfare state greater contributions from people in receipt It was this runaway success that has with hindsight would its critics attack the turing ensured that intergenerational disad- be to shift public expenditure towards areas (not to mention public services). Perhaps of support. There have been a number of endowed the report with the status of a post-Beveridge settlement for bureaucratic vantage did not become deeply entrenched. that are most pro-jobs. This would certainly even more importantly, an offer of better, extensions of such ‘conditionality’ over founding document for the post-war Brit- centralisation and, although the core role of Two significant political achievements include higher capital spending, for instance cheaper childcare, which is open to all the last 15 years, but entrenching a job ish welfare state, but in reality it rested on the contributory principle would wane, the flowed from these reforms. First, the middle by switching money overtime from housing parents – free for some, very affordable for guarantee in the welfare system to be both earlier achievements, notably those of the majoritarian nature of social security would classes remained firmly committed to the benefit in to house building. Re-profiling others – would go some way to broadening more protective and more demanding. For Edwardian Liberal administrations. Indeed, not be dismantled – at least until now. welfare state, as they benefited directly from of this kind – towards employment rich support for welfare. If this were embodied those who are not ready for paid work yet, it was for Churchill at the Board of Trade The report was replete with gendered as- high quality services for their families; and expenditure – should be a key test for the in community institutions – like nurseries, benefit conditionality could focus on ways that Beveridge first cut his teeth as a public sumptions, however. Beveridge’s archetypal second, the employment rate of women next spending review. schools and children’s centres – they would to counter the isolation and loneliness of administrator, directing the national system household has a male full-time worker, with reached consistently high levels, underpin- The Bank of England could take em- also play a role in helping families of dif- unemployment. of labour exchanges while helping shape a wife and children at home. Women mostly ning the tax base upon which the fiscal ployment into account in decisions about ferent backgrounds to overcome isolation The third area for developing the notion the landmark 1911 National Insurance Act. appear as dependants or widows, not work- sustainability of Scandinavian welfare states monetary policy (as the Federal Reserve and build a common life together. Making of contribution would be in the relation- These Edwardian reforms – the creation of ers. Consequently, post-war economic and still rests. does in the US), aligned to a pro-jobs fis- progress in this area will not be cheap how- ships and acts of reciprocity among those a state pension and an embryonic national social developments cut away the ground A contemporary rethinking of Beveridge cal policy. It might also think about ways ever, requiring resources to be found from involved in delivering or experiencing the insurance system – were the direct ante- from the report’s foundations. The rise of must therefore take as its starting point the to use the tax system to tilt the balance of elsewhere, such as holding down future welfare system. For example, thinking cedents of the plan upon which the Attlee female employment, the breakdown of twin goals of restoring full employment and employer’s hiring decisions in favour of increases in cash benefits for children. about the social connections of unemployed government built the new welfare state. nuclear families and the growth of older completing the feminist revolution in wel- those who face disadvantages in the labour And what of Beveridge’s contributory people, not just their CV, is vital given how Beveridge himself described his report as people’s care needs, all drew women into fare services. The affordability and consent market (such as the long-term unemployed principle? Popular attachment to the idea many job opportunities never get registered a particularly “British revolution” that was the worlds of work and care without provid- of the post-war welfare system rested on and disabled people). This would comple- of putting in what you take out is still with Jobcentre Plus. a “natural development from the past.” In- ing the requisite public services and social consistently low levels of (male) unemploy- ment on-going measures that expect those very strong (indeed there is good evidence Options such as these suggest it may be deed, he went further: it gave expression, he insurance reforms for either. At the same ment. This generated the revenue to finance in receipt of benefits to take active steps from the social sciences that co-operative possible to re-graft the spirit of give and take believed, to the deep instincts and popular time, the rise of mass unemployment and social security and minimised people’s towards employment. In this vein, society reciprocity is a recurrent feature of all stable – on which Beveridge’s enduring legacy was sentiments of the British people. structural labour market change in the 1980s dependency on it, while keeping the con- could decide to put a limit on the length of human societies). Conversely, public hostil- founded – in ways that are consistent with Beveridge was a liberal but his genius pulled the golden thread of work out of the temporary disease of widespread fears of time we were prepared to allow someone to ity to ‘unearned’ welfare is high and rising. the major economic and social shifts since was social democratic. He universalised social fabric on which Beveridge rested. ‘free-riding’ in check. The UK labour market be unemployed, at which point they would This makes restoring the contributory basis the 1940s, as part of a strategy of turning social security, taking the pre-war patch- Other northern European welfare states has proved remarkably resilient despite the be guaranteed a paid job but required to of social security entitlements an attractive the welfare state into a strategic political work of entitlements and creating a na- responded to these social changes more economic convulsions of the last few years, take it up. Finally, to shield workers from the one for political strategists. But the rise in asset, not something to be merely defended tional system for the population as a whole. rapidly than in the UK. In the Nordic at least in terms of headline numbers. impact of capitalism’s inherent tendency means-testing and the growth of social against financial and popular attacks.F

6 / Fabian Policy Report 7 / Beveridge at 70 diabetes, heart disease and obesity, which The failure to grasp the nettle of despite the autonomous nature of these are strongly influenced by people’s own reforming social care is hurting us all. As institutions. health behaviour, and life expectancy for councils face increasing demand with ever The state must be a continuing force disabled people has increased. tighter budgets, fewer people are getting in the nation’s education system but we The five giants Some health conditions that are now their care for free, quality is suffering, and should regret the declining influence of common amongst very old people, like care charges are soaring, affecting those those other social institutions that were For Beveridge, the 1942 report was not just about dementia, were virtually unknown in the on low and middle incomes alike. great educators at the time of Beveridge organisation of insurance but about social progress. immediate post-war period. Mental health Beveridge believed genuine social – trade unions, guilds, the co-operative Beveridge famously identified “five giant evils”: want, problems are also more prevalent and security could only be achieved through society, faith groups and organisations like widely acknowledged. co-operation between individuals and the the Workers’ Education Society. At their disease, ignorance, squalor and idleness. Here, Kate Green, Social attitudes have changed too. Peo- state. This partnership must now be at the height these were powerful engines of Liz Kendall, Estelle Morris, Vidhya Alakeson and Steve Webb ple are far less deferential, it can no longer heart of a new settlement for funding so- aspiration and social mobility and we need assess how far we have travelled in defeating them and automatically be assumed that women will cial care, so people can effectively plan for their like again. stay at home to look after their families, their future and be confident of security in The vision and ambition of Beveridge challenges they still pose for policymakers today and disabled people have more rights. their old age. can still motivate the Labour party but Despite the many reforms and real it is a different time and the party needs improvements in the NHS over the last Liz Kendall is MP for Leicester West and different levers of reform. 70 years, our health and care system still shadow minister for care and older people First, we should resist the political inequality, framing it around the Bev- hasn’t kept pace with the scale and nature headline grabbing initiatives. Politicians eridge principle of full employment. Ed of demographic and social change. But it always turn to large scale structural reform Balls’s proposals to tax bankers’ bonuses must if it is to retain support in future. – as we can see with Michael Gove – but and use windfall profits from the sale of There are four key challenges ahead. academies, free schools or any one of the 4G are focused on driving the economic First, health and care services must ad- dozens of school structures we’ve seen in recovery and, crucially, creating jobs. dress people’s physical, mental and social the last 70 years cannot deliver by them- Want Liam Byrne’s interest in a reformed so- Disease care needs together, rather than treating selves. They are easy politics but they are cial security system recognises the need them in separate silos as is still too often not the answer. Ed Miliband’s ‘one nation’ must be to move beyond a de minimis safety net, We must, as Beveridge did, inspire the case. Delivering ‘whole person’ care is Our vastly increased knowledge of acknowledging the need to recognise vital to improving health, helping people Ignorance teaching and learning is the large scale one that is free of poverty writes contribution as a prerequisite for more a revolution in health and social work, and reducing waste and inefficiency. change that could make a difference and Kate Green generous benefit levels when people fall care, says Liz Kendall Second, the focus of care and support Easy politics is not the answer in Labour needs to build a raft of policies to out of employment. must shift out of hospitals, into the com- education policy. Labour must make sure that all schools embody this The Labour governments between munity and more towards prevention. best practice. champion the potential of every Ending poverty should be seen as an 1997 and 2010 made tremendous progress In his 1942 report William Beveridge said: Beveridge himself talked about the impor- Second, if Labour believes that educa- integral part of economic policy, not the in reducing poverty. Pensioner poverty “A revolutionary moment in the world’s tance of domiciliary care and rehabilitation citizen, says Estelle Morris tion is key to its political ambition, the enemy of or disconnected from it. halved, and more than a million children history is a time for revolutions, not services, but these have historically been teaching profession must have greater The coalition’s policies are set to were taken out of poverty. Yet, despite patching”. The challenges presented by neglected compared to institutional or status and more training than is currently cause terrible hardship. Already, there’s this achievement, the present govern- our ageing population require as great a hospital based care. Tackling this issue is The terminology is different but 70 years the case. Past Labour governments made a a shameful rise in the number of people ment accuses Labour of having failed revolution in our health and care system crucial to reducing health inequalities and after the Beveridge report, ‘ignorance’ is good start but there is still some way to go. having to access food banks, and cuts to on poverty, at the same time as its own today as Beveridge called for 70 years ago. ensuring the extra years of life people live still a giant to be slain. In the decades since These policies may not make easy po- benefits, including housing benefit and austerity measures undo all the good that The NHS remains one of our best loved are spent in good health. the report the lives of hundreds of thou- litical slogans but they are what will make benefits for children, will put families was done. That it’s been possible simul- institutions, an organisation that binds Third, the contributory principle that sands of people have been transformed the difference and Labour must give them under tremendous pressure. A combina- taneously to trash Labour’s record, put us together, whatever our background, was so central Beveridge’s original report by the opportunities that came from the political leadership. tion of massive job losses in the public progress into reverse, and question the income or needs; the embodiment of ‘one needs to evolve beyond people’s financial post-war education and welfare reforms. Underpinning these education sector and a lack of business confidence, very concept of poverty, as Iain Duncan nation’ Britain. However, the health and contribution alone. An effective 21st Despite this, we have never broken the initiatives must be a very clear political which is deterring investment in our Smith and his cronies repeatedly do, is care challenges we now face are very dif- century care system would see individuals link between poverty and educational un- message. Some believe that we’ve reached economy, mean that many struggle to get testament to perhaps Labour’s greatest ferent from those in Beveridge’s day. and their families as genuine partners, derachievement and in a knowledge-rich the limit of the number of young people a job, or when they do, find themselves mistake – we didn’t do enough to cement When the NHS was created, average giving them more say, greater control and society the consequences of low education who could benefit from higher education in stop-go, poorly paid employment. Yet and trumpet our own achievements. life expectancy was 66 years for men and greater responsibility for their health and standards are even greater. or that standards can only improve if ex- the narrative is all of ‘benefits scroung- The policy solutions lie not just with 71 for women. It is now over 78 years care, and better support to look after their Over those years of reform, the state ams are made easier. Labour’s passionate ers’ and ‘welfare dependency’; there is social security, but also in our industrial for men and 82 for women. The period elderly or disabled loved ones. has been a major force in education. For belief in the potential of every citizen, no little recognition of the structural drivers policy, education and skills, and infra- between cradle and grave will continue to Fourth, achieving security in the ageing half a century, following the Beveridge matter what their background, is core to of poverty and inequality. structure investment. Ed Miliband’s ‘one expand in future, with one in four babies society means finally tackling the crisis report, it provided school-level education the party’s values – and it needs to renew To be sure, there is much to be done nation’ must be one that is free of pov- born this year set to live to 100 years old. in social care. Social care was excluded for more than nine out of 10 children. this message and inspire the nation that it to flesh out a policy programme that erty. Full employment is fundamental to 70 years ago, the main causes of death from the initial creation of the NHS. Yet Now, its role as a provider is curtailed is a cause for which it is worth working – invests in the drivers of prosperity and achieving that. and illness were infectious diseases and three quarters of us will now need some but it retains a key role on funding, cur- and voting. growth, and creates an equal and lasting accidents and many disabled children form of social care when we get older and riculum, assessment and strategic direc- recovery. Labour has already begun Kate Green is MP for Stretford and Urmston died at a very young age. Now, the major one in 10 of us will face care costs of over tion. In further and higher education the Estelle Morris is a Labour peer and former to redirect the debate on poverty and and shadow equalities minister diseases are long-term conditions like £100,000. state still exercises considerable influence education secretary

8 / Fabian Policy Report 9 / Beveridge at 70 sociations have already attracted billions where there is someone in work than in bond finance into the development of there are in unwaged households. affordable homes. Local authorities such Since Beveridge, the response to this as Manchester city council and Barking problem has been a progressive expansion and Dagenham are increasing the supply of wage top-up schemes, from family of market rent and affordable rent homes income supplement in the 1970s through Squalor through intuitional investment. Other to the coalition’s new universal credit – the government entities need to follow suit most comprehensive response yet to the Perverse incentives There are no quick fixes and make this a priority. scourge of in-work poverty. The government’s welfare when it comes to housing but Third, there is a strong case for govern- As well as providing a single integrated ment investment to stimulate the growth system of support – combining benefits reforms are in danger of creating the government can do more of part-ownership. Shared equity and currently paid by the Department for Work another forgotten generation, to support those in need of shared ownership products offer people and Pensions, local authorities and HMRC writes Anne Begg affordable accommodation, the chance to build assets and have a – the universal credit makes work pay and says Vidhya Alakeson stable home, whether or not they even- makes working more pay more. People get

tually become fuller owners. In many to keep more of what they earn when they © Sarah Faulkner cases there would be no long-term cost first take a job and then, as they increase to government because the initial invest- their hours, their universal credit is with- t is very easy to say that everyone those who were interested in getting back ESA is stopped after a year for those who 70 years on from Beveridge, housing ment would be recouped through growth drawn more slowly. Iwho can work should work. It is also to work a helping hand through a vari- have been placed in the work-related activ- is once again in crisis. We are just not in capital values. The universal credit tries to bring something that most people would agree ety of incentives and employment support ity group (WRAG) of ESA. These are peo- building enough homes of any kind. Inad- There is no quick fix for housing. benefit recipients into the mainstream. with, including those who are out of work. schemes, the most successful of which was ple who are not deemed so ill or disabled equate supply is keeping prices high even The scale of supply we need cannot be It is based around the model of a wage However, finding and keeping a job is not pathways to work. This provided support to never to be expected to work again, but are during the recent downturn, creating a delivered in a couple of years and the where payments are made monthly, direct always easy, especially for those who have help people with disabilities to overcome not well enough to be expected to find a generational divide between older house- wider economic impacts of a dramatic to the claimant, and where claiming is a chronic illness or disability. the barriers they faced in re-entering the job in the short-term, and who live in a holds who own their homes outright and fall in house prices would be severe. But ‘digital by default’. Whilst not everyone It is not so easy to find employers will- work place. As a result until the economic household whose income is above income younger households whose only option is addressing today’s housing crisis on these finds it easy to budget and not everyone ing to take on someone with a history of downturn in 2008 the numbers on IB were support levels. Contributory ESA can be relatively insecure accommodation in the three fronts would pay dividends over the is able to claim online, the system is built mental illness, someone who has a poor slowly beginning to come down for the stopped even if a personal adviser doesn’t private rented sector. next 70 years. on the idea that moving from benefit to health record, or someone who has just first time. think you are well enough to be referred to For the very poorest, the situation is work should be as painless as possible. If received a diagnosis saying they have can- Based on what has been happening over one of the work programme providers to one of overcrowding, temporary accom- Vidhya Alakeson is deputy chief executive of people in work mostly get paid monthly cer or a degenerative disease. Yet many of the past year, as those on IB are moved to undertake work related activity. modation and rising homelessness. All of the Resolution Foundation and have to budget, then as many people the people who are ‘failing’ the discredited the new employment support allowance With the loss of benefit, there is no this comes at a high price to government, on benefit as possible should get used to work capability assessment (WCA) and (ESA), figures are likely to show that the incentive for the individual to engage which spent £24.4bn in 2011–12 to subsi- this experience so that taking a job is less are being found fully fit for work still have numbers on an out of work disability ben- with Jobcentre Plus, especially if they feel dise unaffordable rents through housing of an alien experience. The system will significant health problems. efit are coming down more rapidly than they are unlikely to get a job. As they are benefit. have provision for those who can’t man- Much of the coalition government’s ever before. This is because around a third receiving no benefits, there are no sanc- The challenge of addressing the hous- age budgeting or online application, but rhetoric suggests there are the people who of those presently on IB are being found fit tions the jobcentre can impose and there is ing crisis is perhaps greater than the one the old divisions between the experiences work and the people who don’t work. How- for work when they go through their WCA no incentive for the government to spend Britain faced 70 years ago. Then, a major of those on benefit and those in work are ever, the reality is that most people who are and so are being placed on job seekers al- money on trying to get them into work. programme of council house building being broken down. out of work at any one time have been in lowance (JSA) instead of ESA. It is sad to think that the people in this created a new supply of affordable homes. Under universal credit, simply being in work for a large part of their working life. I am fairly sure the coalition government group are those who, until their ill health Today, with the public sector deficit con- Idleness work is only a start. Where people are only For some, it may have been the revolving will hail this drop as a huge success, prov- or disability made it difficult for them tinuing to grow, it is not a simple matter in part-time work or are in unremunera- door of short-term low paid work, followed ing that people who were perfectly able to to find work, worked all their lives, paid of launching a major government building The old divisions between the tive self-employment, there is a growing by periods out of work. If such a person work were languishing on benefits. This is their national insurance contributions and programme. More creative solutions are experiences of those on benefit and conditionality, which prompts people develops a problem with their health and the group who have come in for so much either have some savings or a partner who needed in three areas. to do all that they can to become self- those in work are being broken is unable to take on the low paid, physical criticism in the tabloid press, being called is still in work. They have done everything First, we need to change the incentives sustaining – to earn enough to support work available then it becomes very hard ‘scroungers’, ‘work-shy’ or ‘on the fiddle’. the government has said is the right thing for the house building industry to make it down, says Steve Webb themselves and their family. for them to find anything else. However, just because people have been to do, but at the point when they expect the more profitable to build houses at scale, Whilst Beveridge envisaged that social The main criticism of incapacity benefit moved on to JSA doesn’t mean they have state to step in to help, that help runs out rather than to constrain supply and hold insurance was the best response to income (IB), and invalidity benefit before it, was found work. Nor does it mean that people after either six months (if they are on con- onto land that could be developed so that The Beveridge model of social insurance poverty, the coalition is using income- that many of the people who were long- who have come off benefit completely tributory JSA) or a year. It is little wonder its value rises. It is unacceptable that the against loss of earnings worked well related in-work support as a modern term unemployed with a health problem have gone into work either. Some will have many think the incentives in our welfare UK’s large house builders are posting when poverty was synonymous with lack response to the same problem. F were merely shifted on to IB and then for- found work, but by no means all and it will system are perverse and seem to punish huge profits at a time when the country of earnings and not having a job was the gotten. Unemployment was kept artificially be some time before we have any figures to those who did work and did save – not has a serious housing shortage. main reason for working age poverty. Steve Webb is minister of state for pensions low, while claimants got their money every know how many. what Beveridge envisaged at all. F Second, national and local governments Today, having a job is no longer enough and Lib Dem MP for Thornbury and Yate week and weren’t expected to do anything The coalition government is in danger of need to work closely with institutional to ensure that a family is lifted out of pov- in return. No signing on, no obligations creating yet another forgotten generation. Dame Anne Begg is MP for Aberdeen South investors to get private capital flowing erty. Perhaps surprisingly, there are more to prepare or look for work. Labour did This is because, due to the Welfare Reform and chair of the work and pensions select into the rented sector. Large housing as- children living in poverty in households try to engage with people on IB, to give Act, which passed last year, contributory committee

10 / Fabian Policy Report 11 / Beveridge at 70 suggested, by the likes of Graeme Cooke benefit claims among working claimants as system that enables women to take time out for IPPR,3 that a return to Beveridge’s the recession has kicked in, for example). of, and crucially return to, the labour market Social security for everyone key argument that “benefits in return for Labour’s recent interest in a rights-based is critical to address this. At present, the UK contributions rather than free allowances approach to disability suggests the sort of system offers over-rigid choices between Kate Bell and Declan Gaffney look at how the contributory from the state” might be one way to reverse counterpart that a more contributory ap- work and caring. Enabling people to use the principle can help us build a stigma-free welfare state equipped the decline in the number of benefit claim- proach would require. contributory system to build up entitlement ants who are seen as ‘undeserving’. In our But there’s another good reason why we to take time off work (in much the same way for an ageing population report on benefit stigma we argue that should look to the contributory principle in as the Belgian ‘time credit’ system operates) claimants are seen as deserving of support assessing the health of the Beveridge system might be one way to address this. As a step either when they are seen as in need due today. The major challenge that the social towards this parents’ current entitlement to to no fault of their own, or when they are security system will face in the medium-term a period of unpaid parental leave could be seen as having an entitlement to a benefit. is an ageing population. At present, there are supported through a contributions-related Contributions provide one form of securing 1.4 working people to every one child or payment – enabling parents to actually use this entitlement, and international evidence pensioner that needs looking after. Based on what remains only a right in principle for 4 Kate Bell is London campaign co-ordinator suggests that countries with more contribu- current patterns of employment, that will fall many low paid workers. at Child Poverty Action Group. tory systems are less likely to see high levels to 1.1 working people by 2031, and by 2051 There is therefore a strong policy ration- Declan Gaffney is an independent of benefits stigma. there will only be one worker to each one ale for looking at how contributory benefits policy consultant However, drawing a border between person who needs our support, leaving the could address contemporary issues which ‘contributors’ and others could simply welfare state with a crisis of affordability. The were far from Beveridge’s mind when he ithin the myriad of reflections on the the elderly in retirement. There is less en- parents and people with disabilities. However reinforce public suspicion in exactly the clearest way to address this is by an increase wrote his revolutionary report. If this helps WBeveridge report published this an- thusiasm about public spending on all types a generally better functioning labour market same way as previous efforts. What risks in employment rates, and promotion of rebuild public support through the sense niversary year, there have been two recur- of benefits, and an increasing belief that the may paradoxically have contributed to nega- getting lost in the debate on contribution employment should be a major test of any that social security is for everyone, that ring themes. Firstly, what has happened to welfare system encourages dependence.”1 tive public views. From 1995 to the onset of is the other dimension of ‘deservingness’: proposals for social security reform. Max- would be a good thing. But that is more likely support for the welfare state? And secondly, Researchers found, for example, that the recession, the risk of unemployment for need. Continuing strong public support imising employment is not the same aim to happen if policy is based on employment could a return to the principles which he set proportion of those agreeing that ‘If benefits employed workers was at the lowest level on for disability and carers’ benefits indicates as reducing benefit caseloads: much of the objectives rather than symbolism. F out in that report, in particular the ‘contribu- were less generous, people would stand on record (starting from 1975) – about 2 per cent that this criterion remains important, potential for growth is among people who tory principle’, provide the basis for a revival their own two feet’ had risen from 26 per over the course of a year. Aware that their but support is vulnerable to exaggerated are not receiving out of work benefits. We 1. Clery, E ‘Are tough times affecting attitudes to of welfare state popularity? cent in 1991 to 54 per cent in 2011. own risks were low, employed workers may beliefs that people are playing the system. believe that there are ways that the contribu- welfare’ in Park, A., Clery, E., Curtice, J., Phillips, A more successful approach might be one tory principle could help achieve this aim, M. and Utting, D. (eds). (2012), British Social At- Beveridge aimed to build a maximally in- In recent research on stigma, for the have been more likely to query the legitimacy titudes: the 29th Report, London: NatCen Social 2 clusive system with broad popular support, charity Elizabeth Finn Care, we sought of claims by others. that reminds people of the reasons why because well-designed contributory benefits Research. which would be free of the stigma associ- to examine these beliefs further and their A major factor, we argue, is that public Beveridge suggested the establishment of a can help maintain labour market attachment 2. Baumberg B, Bell, K and Gaffney D (2012) Benefits ated with earlier forms of social assistance. links to attitudes towards claimants. What views on the benefit system are strongly welfare state in the first place: the risks of and raise the value of employment while Stigma in Britain, Elizabeth Finn Care. It is hard to argue that these ambitions we found (in focus groups and secondary influenced by information from the media, unemployment, ill health or disability that facilitating temporary labour market exit. 3. For example, in Cooke, G (2011) National Salary are met by the system as it stands. Many analysis) was not hostility to the idea of a which in turn tends to reflect political many of us are still likely to face, and the As the Resolution Foundation and others Insurance: Reforming the welfare state to provide fact that these remain the primary drivers of have highlighted, the major employment gap real protection IPPR. do not see social security as offering them social security system per se. Most people discourse. Debate about social security has 4. We discuss this further in Bell K and Gaffney D anything; public support is, in many ways, don’t believe that claiming benefit should become trapped in a vicious circle. Politicians changes in the amount of people who claim in Britain is amongst women, and particularly (2012) Making a contribution: social security for fragile; and in an irony that would surely be stigmatised (68–72 per cent disagree) believe that attitudes towards claimants are benefits (witness the increase in housing among women with children. Designing a the future TUC. have horrified Beveridge, stigma remains a – although more believe that claiming is hardening, and respond with ‘tough’ lan- potent force in public perceptions, political stigmatised by the public at large (51–54 per guage and policies. These serve to endorse debate and media coverage. cent disagree). Rather, people have come rather than allay existing suspicions. Perhaps Figure 1 Figure 2 Nonetheless reports of the death of social increasingly to believe that social security is the strongest evidence for this circular process Benefit claimants are seen as significantly more ‘undeserving’ Negative vocabulary in newspaper articles on security have been exaggerated. And while going to the ‘wrong’ people – extraordinarily, lies in newspaper coverage of benefit fraud. than 20 years ago working age benefits a more contributory welfare system might the public believes one in four claimants Some 30 per cent of all stories on working 45% 700 help to increase popular legitimacy for social are committing fraud – and data from the age benefits between 1995–2011 referred to 40% security, its real potential is to address the British Social Attitudes Survey suggests that fraud, an extraordinary figure given the scale 600 35% less talked about ‘crisis’ of welfare: that posed claimants are now seen as significantly more of the problem, and most of these stories 500 by an ageing population. Regardless of their ‘undeserving’ than they were 20 years ago. originated from the Westminster policy 30% potential impact on public opinion, proposals Why has this shift taken place? We can process rather than the magistrates’ courts. It 25% 400 for a more contributory approach need to be be fairly confident that it doesn’t reflect real- is hard to see this disproportionate coverage 20% firmly grounded in employment objectives. world developments in terms of the number as unrelated to the public’s overestimation 300 So, what has happened to support for so- of people claiming benefits, or the number of of fraud. As the BSA research suggests “this 15% 200 cial security and why has it declined? British those managing to ‘play the system’. Fraud shift of opinion was nurtured by a tougher 10% Social Attitudes (BSA) research published stands at 2 per cent of all benefit claims, a his- stance towards welfare under the previous 5% 100 earlier this year suggested a pretty gloomy torically low level. The out-of-work caseload Labour government.” It’s all too obvious 0% prognosis for our patient, concluding that was some 1.6m lower in 2008 than in 1995, that this ‘tough’ stance is one that is being 0 1985 1990 1995 2000 2005 2010 “the public is becoming less supportive of and remained more than a million lower in continued under the coalition. 1995 1997 1999 2001 2003 2005 2007 2009 2011 the government taking a lead role in provid- 2011, reflecting not just lower unemployment, How does this all relate to debate about In need as lazy Don’t deserve help All articles Negative vocabulary ing welfare to the unemployed, and even to but major increases in employment for lone the contributory principle? It has been Source: British Social Attitudes Source: Elizabeth Finn Care

12 / Fabian Policy Report 13 / Beveridge at 70 millions of families universal credit will make for ordinary families are being squeezed – in Our task in the year ahead is to show how things worse; a couple with kids working full just the last four years, low to middle incomes playing by the rules, working, caring and time could lose £1,200 a year. have fallen by 7 per cent. saving becomes the key to unlock the new The result is stark. Today British workers These changes mean that working things Britain’s workers need, such as earned A prize worth fighting for are producing more and earning less. For people need new things to help them get entitlements like tax credits, childcare, re- The lesson of history is clear: even in the toughest times the first time we are set to become a country on in life. They pay in, but feel they get little wards for savings and a bigger pensions pot. where social mobility goes into reverse. out. People feel short-changed. They want a We will never forget our history. We can our country can afford to put ambition into action. Under this government the contribu- better deal. only put ambition into action if we put So let’s build a country that works harder, earns more tory benefits attacked by Macmillan and Once upon a time, social security was all people into jobs. That’s why we believe and is more equal, says Liam Byrne Thatcher are set to become nothing more about ‘minimising disruption to earnings’. one nation social security is built on full than a rounding error. Excluding pensions Now it must be about something more: employment. This is a goal that demands they will total just 4 per cent by 2016-17. It is maximising potential of earnings. government take responsibility for creat- now five minutes to midnight for Beveridge. So our job is to turn ‘short-changed’ Brit- ing opportunities and individuals have a Our job in the Labour party is to turn this ain back into a ‘something for something’ responsibility to take them. tide. But let’s be honest, the politics of this Britain. Where people see, once more, that That’s why we must insist on a simple are tough. Support for the welfare state isn’t the way to get ahead in life is to earn it. starting point: a tax on bankers’ bonuses rising, it’s falling. Where we restore the rewards for work and, to create a fund for 100,000 jobs for young I think there is a simple explanation. crucially, we help people with the things people: on the proviso that young people Liam Byrne is MP for Birmingham Hodge Hill Britain has changed since Beveridge. Think they need to get ahead in life. have to take those jobs. and shadow work and pensions secretary about the world of work today. People who have paid in and worked I believe we can win on social security. If Work has changed fundamentally. The hard for decades rightly wonder why they we get this right, the prize is great. We get a idea of having a job for life is a distant don’t get more support to retrain. Those country that works harder, earns more and xactly 70 years ago, William Beveridge So Labour’s 1945 manifesto declared a We believed then what we believe today, memory and more than 40 per cent of people who have saved for the future need to know is more equal. It’s a prize well worth fighting E published the white paper that would policy of ‘jobs for all’ and ‘social insurance that the bedrock of social security is full now work part-time, in temporary jobs, or that their pension won’t be eaten away by for. It’s a prize of which Bevin and Beveridge revolutionise Britain. The story of the report against the rainy day’. “There is no good employment. We believe that an equal so- are self-employed. There are more women in hidden costs and charges. And parents who would be very proud. F is one of high principles. Principles that are reason why Britain should not afford such ciety demands an equal measure of dignity work now than ever before and our society is want the freedom to work need a childcare simple and strong remain to this day. Princi- programmes but she will need full employ- for all. And we believe that responsibility is ageing. Prices are rising and living standards system that is fit for the 21st century. 1. Labour Party, Let Us Face the Future, 1945 ples inspired by old British values like ambi- ment and the highest possible industrial expected and should have its reward. tion and compassion, dignity and duty. And efficiency in order to do so.”1 Full employment, universalism, and crucially for us in the Labour movement, the contribution. For us these words are not a pride and the possibilities of work. slogan. They’re an expression of decency. Legend has it that the great man did not Once upon a time, social The Tories have never believed, or fought get off to an auspicious start. Desperate to security was all about for the idea of full employment. They basi- organise manpower on the home front, it cally believe that you’re on your own. They Something for something is said that Beveridge burst into tears when ‘minimising disruption can’t even be bothered to make their work Beveridge would be dismayed by the state of told he was instead to lead an inquiry into programme work, and it shows. The latest the small matter of social insurance. to earnings’. Now it must figures reveal monthly referrals to the flag- national insurance. Could the principle be revitalised to pay It didn’t take Beveridge long to rebound. ship welfare-to-work scheme has halved at for health and social care, asks Nicholas Timmins? In the first nine months of 1942, he took evi- be about something more: a time when long-term unemployment is dence from 127 individuals, pressure-groups maximising potential still rising. Their cuts to councils are deepest and lobbyists. In July, he unveiled his five where jobs are fewest. Their plan to cut too giants. By summer, he had struck a ‘deal’ with of earnings far and too fast has throttled the recovery. Keynes on the money. Finally as the winter The result is unemployment that is drew in on 1 December 1942, the BBC began Finally on the afternoon of 6 February higher than in May 2010, with long-term broadcasting from dawn, details of the plan 1946, the minister of national insurance, Jim unemployment and long-term youth un- Nicholas Timmins is author of The Five Giants: A Biography of the in 22 different languages. The report leapt Griffiths got to his feet to move the national employment still rising. All of this means Welfare State, Senior Fellow at the Institute for Government and at The off the shelves: it became the most popular insurance bill be read a second time. After that the welfare bill is rising through the King’s Fund, and former Public Policy Editor of the Financial Times government white paper until the Profumo years of preparation, a nation battered by roof: £24bn higher than forecast. We were scandal. Sex and spying versus social security war passed the Beveridge report into law. promised a revolution but the work pro- was never going to be a fair contest. The lesson of history is clear: even in the gramme doesn’t work and universal credit o much has changed since 1942 – the The one thing that can be said with some Beveridge did recognise that some residual By the end of 1944, a white paper and toughest times our country can afford to put is becoming universal chaos. Srole of women, the nature of families certainty, however, is that he would not level of means-tested benefits was inevitable. then a bill and then a Ministry of National ambition into action when we act to put This unchecked and uncontrolled cost of and longevity, to name but a few – that it is recognise, and would be dismayed by, the Britons, he declared, did not want a Insurance were produced and crucially people into jobs. failure now drives the Tories to short-change impossible to know what Beveridge would state of national insurance. After all, it was “Santa Claus state” that provided “free Ernie Bevin, Herbert Morrison and Clem- The challenge now for Labour is not to Britain’s strivers. Rewards for work are being have made of the welfare state today. It is national insurance that underpinned his allowances”. Rather they wanted a “some- ent Attlee had perfected the alchemy that abandon the principles of Beveridge and decimated. Tax credits are being cut so hard also impossible to know because Beveridge report. It was “first and foremost, a plan of thing for something” approach. would turn theory into reality: marrying Bevin; it is to renew them for new times, that thousands would actually be £728 better was far from entirely consistent in his views. insurance”. Benefits would be paid in return 70 years on, national insurance is social security with the new goal of full against a Tory party that has learned noth- off on benefits than in a job. Cuts to childcare So you’d have to ask: to which period of for contributions. They should be given “as now virtually unrecognisable from either employment that would pay for it. ing from their history. are forcing women out of work. And for Beveridge does the question apply? of right and without means test,”, although Beveridge’s conception or the scheme that

14 / Fabian Policy Report 15 / Beveridge at 70 Labour implemented in 1948. It is not just direct link between what people actually bases, time periods and bases of charge, the moral fibre and that idleness is the product So how can Labour win the welfare that national insurance benefits were set too pay in and what they get out has become two taxes combined mean that on much of of parents who no longer teach right from debate? Quite simply it should focus on low in 1948 to avoid an appreciable level of weaker and weaker to the point where it is taxable income the real rates of tax are 32, wrong, as they used to in the days when the war not the skirmishes, and to do this it means-testing. It is also that national insur- vanishingly small. 42 and 52 per cent once employee national we all knew our neighbours and worked must return to first principles and find the ance has a history of losing battles. As John As John Hills noted, there have been two insurance is added to the the income tax together in the same factories. They place common ground between responsibility Hills of the LSE pointed out in his masterly main drivers behind this. Governments of bands of 20, 40 and 50 per cent. While that less stress on their own endeavour and and justice seekers. review of national insurance in 2003, na- the left tended to favour ‘inclusion’ – credit- might be the reality, it would, however, be a more on the rules and social mores that Two principles underpinning Bever- tional insurance as envisaged by Beveridge ing more people in to national insurance brave politician who exposed it by combin- Winning on welfare anchor us all. idge’s case have been lost in the mists of has lost repeated battles since 1948. benefits to ensure that those who play ing the two. The recession, burgeoning national time. The first is the contributory principle. To name just a few, it has moved from important roles in society such as bring- Nonetheless, polling tends to support Like so much in politics, welfare is a debt, and a prolonged squeeze on living If someone contributes more they should being flat-rate contributions for flat-rate ing up children or caring for people with Beveridge’s firm assumption that, when gut issue argues Nick Pecorelli standards, have hardened beliefs among get more out in times of need than those benefits to earnings-related contributions for disabilities do not lose pension as a result. asked, people still support the ‘something both main groups, and swelled the ranks who have not. flat-rate benefits. There is no longer an upper Governments of the right tended to focus for something’ for principle. Perhaps unsur- of the responsibility seekers. Our collective A second Beveridge principle is the earnings limit for employer contributions. limited resources on means-tested benefits prisingly, that has seen calls from politicians financial melancholy has led each camp subsistence principle. Beveridge was very Unemployment benefit – now job seeker’s al- for the poor. And New Labour from 2001 chiefly, although not entirely, from the left f all the elements of Beveridge’s to return to its citadel and pull up the clear that unemployment benefit should be lowance (JSA) – has been cut from 12 months did some of both – increasing crediting in for national insurance and the contributory Ooriginal settlement, welfare for people drawbridge. set at a subsistence level. To pay more is not to six and has had its value cut so that it is but also focussing means-tested benefits on system to be somehow rebuilt. Given the of working age poses Labour’s greatest only unaffordable in the current climate, paid at the same rate as means-tested JSA, the working poor through tax credits, the scale of the erosion, it is hard to see how challenge. Electorally Labour often strug- but it prevents governments’ shaping a but without the ‘passported’ benefits, such as laudable aim being to support people in low that can be done in the benefit system. gles to espouse a vision and set of coherent Labour should be bold welfare system that makes work pay. free prescriptions. The value of the old inva- paid work rather than pay them benefit for There might, however, be another area to welfare policies that command widespread and seek to engage the To these principles Labour should add lidity benefit was cut, and incapacity benefit being out of it. which it could be applied. The Dilnot report support. And governments of all persua- the moral equivalence principle. Tax eva- is now partially means-tested. Contributory The result has been a fairly remorseless on long-term funding for social care sug- sions get ground down by the intricacies whole country in debate sion may involve far greater sums than employment and support allowance is now rise in means-tested benefits of one sort gested that at least part of the extra cost of and intractableness of our welfare system. cheating the benefit system but that does paid only for a year, when the predecessor or another, in work as well as out of work, his proposals should be met by those who Like so much in politics, welfare is a gut not make it more abhorrent. Labour too benefit was paid indefinitely. at the expense of contributory benefits for stand to benefit the most – namely those issue: the moral or ethical beliefs under- The 2012 British Values Survey by Cul- often vocalises the case against the former, Up to 1980, pensions rose in line with which individuals have actually paid in cash. past state retirement age. One obvious way pinning an argument are more powerful tural Dynamics shows how visceral views whilst meekly stating the case against whichever was higher, earnings or prices. There is still a difference between na- to do that would be to apply an element of than the sums that appear to make it stack can be. 42.8 per cent of the population the latter. By simply stating these three But the earnings link was then removed, tional insurance benefits and means-tested national insurance to either or both of the up. On welfare the fundamental fault line agree to various degrees with statement ‘I principles Labour can begin to re-engage leading to the value of the basic state pen- ones. Non-means tested JSA is still paid earnings and savings of this group. is between those who emphasise justice believe that people can be divided into two responsibility seekers in a debate about the sion withering away against average living as of right on an individual’s contribution All of which prompts one other thought: and those who emphasise responsibility. classes – the weak and the strong. I think future of welfare. standards. Now the earnings link has been record, regardless of a partner’s income. if the huge spending squeeze that is on its Justice seekers embrace an all- that issues of societal disadvantage are More fundamentally, the failure of restored with the coalition government de- National insurance still entitles people to way leads to a poorer performance from encompassing notion of fairness. They are spurious.’ And 30 per cent agree to vari- welfare is based on a failure to deliver livering rises in line with the better of prices, contributory based employment and sup- the NHS and thus to the usual debate, universalists, who care about the rights of ous degrees with the statement ‘I feel that outcomes, particularly on housing and em- earnings or 2.5 per cent. But contribution port allowance (where the same applies), every time that happens, about whether the all and are more likely to see the world as people who meet with misfortune have ployment. The arguments about how the conditions have changed – whereas women to maternity allowance and bereavement funding system should be changed, then borderless. They have a forgiving view of brought it on themselves. I see no reason world has changed since Beveridge’s day used to need 39 years of contributions and benefits (though the value of these has one way to do it might be to use national human nature and tend to believe that the why rich people should feel obliged to help are well-rehearsed but what is only now men 44 years, you now only need 30 years’ been cut over the years) and of course to insurance to pay for the whole of health fate of an individual is determined not by poor people.’ These responses to values- beginning to be discussed is the over-cen- contributions to receive a basic state pension. the state pension. But these feel like the last and social care. In effect, national insurance their actions alone, but by those of society based statements suggest that that the ir- tralisation of welfare in Britain. By pursuing This change was aimed at ensuring it was remnants of a fast disappearing system. would be turned into a sort of hypothecated as a whole. reducible core of the responsibility seekers, a welfare devolution revolution Labour near impossible for any resident of the UK In reality, there is no real ‘national tax for both parts of the care system. Responsibility seekers hold a tougher who will support almost any benefit cut, is can simultaneously avoid the skirmishes, not to get the basic state pension. Meaning insurance fund’. And while a small part The ‘something for something’ approach view of human nature. They emphasise that around one third of the population. reshape the welfare debate, and answer the that, particularly if the coalition goes ahead of national insurance does go towards the would then apply to the services of the our fate is in our own hands, and that, if Given this evidence base, what is the Tory charges of profligacy. with its plans for a ‘single’ state pension of NHS, the proportion of NHS spending met NHS and to state support in the social care we are able-bodied, whatever our circum- Tory welfare strategy? Having initially Finally, the biggest lesson of all from £140 a week, the basic state pension will by national insurance has varied widely, system, rather than to benefits. stances we can and must better ourselves. made the case for bold reform (e.g uni- the Beveridge report is that the best way have returned to something that Beveridge and more or less randomly, over the years Hypothecated taxes have many prob- For responsibility seekers, society is an versal credit), they are now engaged in a to build support for reform is to appoint would recognise: a guaranteed platform on – making up as little as 9 per cent of NHS lems, not least that the income from them intangible notion but government welfare is piecemeal approach to cuts, picking off someone who is above the fray to look which to build private saving for old age. expenditure to over 21 per cent. It currently tends to decline in periods of recession likely to be taken advantage of by ‘shirkers.’ targets one-by-one. On each occasion their anew at the whole system, without re- It means, nonetheless, that people pay it accounts for about 17 per cent of NHS when demand is likely to rise. Some sort of Within this group there are nuanced message – prefaced by the need for deficit straint. This approach has been used many in for 30 years to qualify and then pay in expenditure. buffer fund would be needed. And difficult but important differences. There are those reduction – is targeted at responsibility times since Beveridge, but typically tacti- for many more years up to a (rising) state The erosion of the contributory principle decisions would need to be made over the who are more individualistic and focus on seekers. If they pick their targets carefully cally rather than genuinely. Labour should retirement age, for no extra benefit. has been such that it has led not just politi- role that national insurance does still play in endeavour and the responsibility of others they can win each skirmish (a recent You- be bold and seek to engage the whole This change is an extension of another cians or political thinktanks, but genuinely the benefit system. to them as a taxpayer. They work hard and Gov poll found 72 per cent support the country in debate. Only by building bridges trend, which has seen far more people ‘cred- independent bodies like the Institute for While such a change would require a lot pay their taxes, why should others be able withdrawal of child benefit for those earn- between responsibility seekers and justice ited in’ to national insurance benefits with- Fiscal Studies, to argue that national insur- of thought and analysis, it might be worth to get away with idleness? The Tories are ing over £50,000). seekers can Labour hope to be successful, out actually contributing, which includes ance has effectively become just another tax exploring a different way to restore the con- targeting this group assiduously. They call This strategy is not without risk. It may in opposition, and in government too. F those caring for a child or a disabled person, on income and that it should be combined tributory principle to one part of the welfare them the ‘strivers.’ bolster Tory support among strivers but it for example, or for some low earners for with income tax. Although national insur- state, even if it would play a very different A second cluster of responsibility is also contributing to the re-toxification of Nick Pecorelli is Associate Director of The maternity allowance. In other words, the ance and income tax operate on different role to the one that Beveridge envisaged. F seekers emphasise that Britain has lost its the Tory brand. Campaign Company

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