"The Development of Policy on Family Allowances and National Insurance in the United Kingdom ...

245 Pages·2014·8.7 MB·English

"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
C O N T E N T S
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. A letter was written on behalf of the
Committee to the Minister of Health, asking him to bring health
insurance into line with other social security benefits. The Minister
of Health, Malcolm Macdonald, was anxious to accommodate the TUC. He
wrote back, asking for a meeting. It took place on 6 February 1941.
At the meeting Wolstencroft listed the defects of health insurance and
the associated medical services and hospital system. But health
provision could not be dealt with in isolation, the whole insurance
scheme would have to be re-cast:
"From the insured person's point of view the problem is
how to provide an income when he loses his wages and at
present that central fact is dealt with by a whole lot
of schemes purporting to deal with the same problems, but
each providing a different kind of remedy. The method of
application and administration is different in each case.
The rules to be observed are very different. The methods
of appealing against decisions have practically no
resemblance to each other. The whole thing is in fact
completely bewildering and even social insurance experts
are at a loss to understand the ramifications of the
various schemes...we therefore ask the Ministry of Health
to take the lead in an examination of the whole position
with a view to plans being produced at an early date
which would provide a properly balanced scheme for the
insured person."!
The glaring defects of health insurance should be examined now, added
Wolstencroft. But a comprehensive plan should be prepared as well, to
be implemented as soon as possible. Macdonald blandly reassured the
TUC representatives that long-term planning was going ahead already
at his Ministry. As for some short-term improvements, he would see
what he could do. There the matter was left, and might have passed
into political oblivion but for a number of peculiar circumstances.
Of these the most crucial was the fact that Britain was engaged in
1 TUC Social Insurance Advisory Committee, Minutes October 1939-
January 1947, Soc Ins Cttee 4/1, 12 February 1941.
8
the most devastating war of modern times. A few hours before the
men of the TUC's Social Insurance Committee marched up the steps
of the Ministry of Health to press their claims to Malcolm Macdonald,
several hundred men, women and children had been slaughtered in
London by Nazi bombs. The blitz had raged nightly with undiminished
ferocity for four months. Already, over 20,000 civilians had died.
Much of London was being pulverized to ashes and dust. And yet here
were Ministers, civil servants and trade union officials pursuing
their normal round of business as usual.
Yet it was not quite like that. These reasonably modest demands made
by the TUC were to bear fruit two years later when the most important
report of World War II was published. The Beveridge Report sold over
half a million copies and excited the hearts and minds of men and
women all over the world. It led directly to the establishment of
what in Britain came to be known as the "Welfare State". The image
of a nation busily preparing plans for the future with one hand while
keeping death and destruction at bay with the other is even more
impressive than that of Sir Francis Drake preparing to disperse the
Armada after a game of bowls. It certainly brought gasps of admiration
from the Americans. A US journal wrote after the publication of
Beveridge's report:
"Not the least wonder will be at the everlasting stamina of
the British people, probably the only nation in the world
which would even form such a plan while engaged in a war of
survival." 2
This is fine propaganda but far from the truth. Had not the Beveridge
Report received the support of two, perhaps three, men of whom by far
the most important was Beveridge himself, it would either never have
emerged at all or been emasculated beyond recognition. In this sense,
the Report was a freak. However, there were a number of conditions
which made the creation of the Report, or something very like it,
highly probable. One of these, the war itself, has been touched on
already. A second factor was dissatisfaction with British methods
of income maintenance.
* * * * * *
2 CAB 123/45. Memorandum submitted to the War Cabinet on
10 February 1943 by Professor A Nicol, British Embassy, Washington
DC, USA.