"The Development of Policy on Family Allowances and National Insurance in the United Kingdom 1942-1946" by Richard Paul Chapman Thesis for the degree of Doctor of Philosophy at the London School of Economics UMI Number: U048581 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U048581 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 T/-hE’S /-S F 6>Sl ( * 2.\ 2 ABSTRACT A variety of factors contributed to the creation of the Beveridge Report, which, despite covert Treasury attempts to muzzle it, was published in November 1942. Beveridge exploited the terms of reference he had been given to the full and made wide-ranging recommendations for a comprehensive reform of British social security. When the Report was published it received widespread popular support. Following an initial examination by an interdepartmental committee of civil servants, the war Cabinet of the Coalition Government delegated the task of a preliminary response to the Beveridge Report to a Ministerial Committee comprising equal numbers of Conservative and Labour Ministers. Over six meetings between 22 January and 10 February 1943, this Committee successfully hammered out decisions on Beveridge's proposals which would attract the support of the major political parties. However, poor presentation and a Treasury inspired lack of commitment to implementation nearly provoked a major crisis during a 3 day debate in the House of Commons in February 1943. The enormous popularity of Beveridge's proposals ensured that, in the consensus ideology of the time, many of them would be implemented. Legislation for Family Allowances was introduced in the dying months of the Coalition Government and enacted by the Caretaker Government that followed in June 1945. The National Insurance proposals were enacted by the Labour Government in 1946. Structural weaknesses in Beveridge's scheme coupled with a lack of commitment to transfer all the resources necessary to fully implement it have led to its failure to achieve many of its original objectives. The various factors which contributed to the Report's genesis and implementation are analysed. The thesis concludes that there is little evidence of a consensus in ministerial circles in favour of reform of social security during war-time, and that popular support for egalitarian measures played a crucial part in their enactment. 3 CONTENTS Introduction 4 Background 7 The Treasury versus Beveridge 35 The Phillips Committee 64 The Reconstruction Priorities Committee 113 The War Cabinet Decides 148 The Great Debate 159 The New Consensus 177 Implementation of National Insurance 189 The Impact of National Insurance and Family Allowances 209 Conclusions and Discussion 222 Bibliography 239 4 INTRODUCTION By the end of the 1930s a generation of leaders of the Labour movement had emerged, such as Ernest Bevin, Walter Citrine, Herbert Morrison and Clement Attlee, who did not want to overthrow capitalism. They had witnessed the noble but vague aspirations of previous leaderships crumble into the defeats not only of the General Strike of 1926 but of 1924 and 1929-31 as well.'*' They were not interested in distant utopias but in achieving some tangible improvements in working class life within the capitalist system. This meant jobs, and a decent minimum standard of living. The former involved the pursuit of full employment policies; the latter, the creation of a national minimum income, improved standards 2 of housing and access to adequate health and educational services. The social, economic and political changes created in the fires of the Second World War led, in Titmuss' phrase, to "the war warmed impulse of people for a more generous society", and gave the Labour leaders their chance. The result was the creation of what came to be called "the Welfare State". The centrepiece of the Welfare State was the income maintenance legislation of 1945-48, including National and Industrial Injury Insurance, Family Allowances and the abolition of the Poor Law. The aim behind the legis­ lation was to put an end to poverty among those who for whatever reason could not, or were not expected to, participate successfully in the wage market, and to do it in such a way that some dignity was restored to the poor and therefore to the non-poor. The humiliation of the means test was to cease. The failure of the legislation to achieve many of 1. The years in which the first two Labour Governments were in power. 2. For example, the "four essentials" which the Labour Party wished to see provided after the Second World War were as follows: "We have to provide full employment, we have to rebuild Britain to standards worthy of the men and women who have preserved it; we have to organise social services at a level which secures adequate health, nutrition, and care in old age, for all citizens; and we have to provide educational opportunities for all which ensure that our cultural heritage is denied to none." Labour Party, The Old World and the New Society (London 1942), p 11, quoted in A Marwick, The Labour Party and the Welfare State in Britain, 1900-1948. 5 Beveridge's objectives has been well described elsewhere. What is perhaps less well known is the decision-making process surrounding the implementation of the income maintenance aspects of his report. Indeed it may be thought that these proposals were non-controversial unlike, for example, Bevan's Health Service plans which aroused the spleen of the doctors.4 This is quite untrue. The Beveridge Report, while massively popular in the Country, aroused considerable opposition from within the civil service and the war-time coalition government. It created the biggest crisis of the coalition following a revolt of backbench MPs. When eventually the Labour Government of 1945-50 enacted the proposals in an atmosphere of calm, this was only because the controversial aspects had been dealt with during the war, largely in secret. For a substantial period in the middle of the war, Beveridge's proposals for reform were a major source of conflict both within the civil service and between Ministers. Most of the arguing was done behind closed doors at innumerable committee meetings. Occasionally, a whiff of it spilled out and was reported in the press or in Parliament. This is the story of this process as it affects the family allowance and national insurance aspects of the Beveridge Report. It concentrates on discussion of the major structural features of the national insurance proposals - their universality, the rate and duration of the leading rates of benefit for unemployment, sickness and retirement, contributions and the overall financial aspects. As a consequence, several other important areas of policy debate have had to be omitted. Chapter 1 deals with the background to the formation of the Beveridge Committee in 1941. Chapter 2 with the influence of the civil service, both permanent and temporary, on the work of Beveridge and his Committee until the publication of the Report in November 1942. Chapter 3 des­ cribes the thinking and attitudes of the Philips Committee - the committee of officials set up to report to Ministers on Beveridge's proposals. 3 of, for example, B Abel-Smith, The Reform of Social Security, Fabian 1954; J Walley, Social Security - Another British Failure?, Knight 1974; and J C Kincaid, Poverty and Equality in Britain, Pelican 1973. 4 Cf Harry Eckstein, The English Health Service: its origins, structure and achievements, Cambridge Massachusetts 1958. 6 The first few meetings of the Cabinet Reconstruction Priorities Committee, during which the preliminary key decisions about the Report were taken by Ministers, is covered by chapter 4. Chapter 5 deals with the decisions of the War Cabinet on the Report, while their subsequent reception by an agitated House of Commons in February 1943 is tackled in chapter 6. Chapter 7 covers the period from the Commons debate in February 1943 until the enactment of the family allowance legislation in July 1945. The work of the Reconstruction Priorities Committee (retitled the Recon­ struction Committee, by Churchill in November 1943) from March 1943 to the fall of the war-time coalition government early in 1945 is given only cursory attention because most of its work was concerned either with settling details of policy which were decided in outline prior to the debate in the House of Commons in February 1943, or in covering new ground not germane to the basic structure of the insurance proposals or this thesis. The implementation of the national insurance legislation by the Labour Government is dealt with in chapter 8. Chapter 9 discusses the impact of the national insurance and family allowance schemes. Finally, there is a concluding chapter which attempts to draw together some of the threads which run through the preceding chapters, and dis­ cusses the influence of the War on the policy-making process. ? CHAPTER 1 BACKGROUND It was Frank Wolstencroft, Chairman of the TUC's Social Insurance Committee, whose initiative set in hand a train of events which led to the social security legislation of 1945-48. Representations from individual trade unions and resolutions passed at the Annual Congress at Southport in 1940 convinced the Committee of the need for action over National Health Insurance.