Chris Renwick


The Origins of the Welfare State


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Penguin Random House UK

First published 2017

Copyright © Chris Renwick, 2017

The moral right of the author has been asserted

Front cover photograph: the Unionist Party candidate, Captain Browne, addressing a crowd of supporters during the Whitechapel by-election, London, 24 April 1913 © Topical Press Agency/Getty

Cover design: Antonio Colaço

ISBN: 978-0-241-18669-5

For Ivy


‘A Very British Revolution’

On the afternoon of Tuesday, 16 February 1943, William Beveridge – a slightly built 64-year-old economist with a distinctive head of white hair parted on the left – was sat in the gallery at Westminster listening to MPs, who were meeting in the House of Lords after Luftwaffe bombs had destroyed the Commons’ chamber nearly two years earlier. Back in the summer of 1941, Beveridge had made a nuisance of himself, criticizing the government when it had been struggling to make a breakthrough in the war with Germany, calling on it to let him play a bigger role in helping turn things round. Tired of his demands, the coalition government, led by Conservative Prime Minister Winston Churchill, had looked for ways to keep him out of sight and mind. A time-consuming and deeply involved investigation into Britain’s complex state-run insurance schemes, which covered almost 15 million people against short periods of unemployment and enabled nearly 5 million more to see a doctor when they were ill, seemed as good an answer as any. Now MPs had convened at Parliament to discuss the results – a 299-page report called Social Insurance and Allied Services. While Beveridge had been compiling his report, things had changed. Lieutenant-General Montgomery had secured a major victory at El Alamein in Egypt in November 1942 and the war seemed to have turned in the Allies’ favour. But the government still wanted Beveridge to go away, along with his report.

In the report, Beveridge had outlined an ambitious and expensive system of social security, wrapped in a ‘comprehensive policy of social progress’, and told the public it was nothing less than they deserved for their wartime sacrifices. Judging by the half a million copies of the report that had been sold by the time of the parliamentary debate, the public agreed.

At around three o’clock, a few hours into the debate, Beveridge left Parliament and headed two miles north, past St James’s Park and through Soho, on his way to Manson House in Marylebone, where he was due to deliver a lecture entitled ‘Eugenic Aspects of Children’s Allowances’. Later in the twentieth century, any hint of an association with ideas of eugenics would be enough to terminate a political career. In the mid-1970s, the Conservative reformer Keith Joseph, one of Margaret Thatcher’s mentors, ran for the leadership of the Party: when he gave a speech warning that Britain would degenerate if something was not done about teenage mothers and other groups he suggested were a threat to British ‘stock’, his campaign promptly collapsed. In 1943, however, attitudes to eugenics were quite different. Beveridge, a man with deeply progressive ideas about society, was himself a fellow of the Eugenics Society and would join its consultative council after the war. But he also thought the idea of a welfare state that he had outlined in his report had eugenic implications – albeit ones quite different from those that later concerned Joseph – and believed they needed to be taken seriously by both government and society.

Beveridge was far from alone in having some kind of connection to either the Eugenics Society or the broad range of conversations on which it impinged. In the first half of the twentieth century, British people were fascinated by questions about fertility and what these questions meant for the country’s future. While the public digested scientific research that warned, plausibly (though with important caveats), that Britain’s population could dwindle to as few as 5 million within a century, social researchers inquired into people’s lives to find out why they seemed to want fewer children than their parents and grandparents. Mass-Observation, created in 1937 by the journalist Charles Madge and Tom Harrisson, an anthropologist, with help from the filmmaker Humphrey Jennings, aimed to access what Madge called the ‘collective unconscious’ by documenting the kinds of ordinary voices that went unheard in most newspapers and magazines. Initially based in London and Bolton, Mass-Observation had upwards of a hundred active volunteers around the country who responded to surveys and kept diaries about life around them, which the organization then used as the basis for reports and books. By the early 1940s, attitudes to parenthood and families was a topic that had piqued Mass-Observation’s interest. They interviewed more than a thousand men and women in London and Gloucester, Britain’s metropole and a town thought typical of life beyond it, analysed hundreds of letters sent to family planning clinics and radio shows, and carried out observational studies of ordinary households, all in an effort to understand why British people, particularly middle-class people, were having smaller families than they had in the past. According to Mass-Observation’s report, Britain and Her Birthrate (1945), the situation was indicative of a deep and decades-old malaise that had been brought into focus by the war. People lacked

faith in the future. Not a belief that things are going to be tough, and it will take a long time to get right … But a belief that nobody’s going to try and put things right and improve them, that the nation is going to muddle on through the chaoses [sic] of another 1919–39 to another world war in 1965.

These concerns seemed to prove Beveridge right. People were likely to muddle through whatever happened, but when it came to big decisions, like whether or not to have a child, their behaviour was guided, often unconsciously, by whether they thought there was a light at the end of the tunnel. The plan Beveridge had presented to the government in late 1942, more than two months before Parliament was finally allowed to debate it, was ambitious. He promised it would end poverty in Britain and allow people to live with dignity, thanks to a system that would take care of them ‘from the cradle to the grave’ – as others, including Churchill, put it – and all for a simple, flat-rate weekly payment from everyone who had a job. There were all kinds of questions about his proposals. Would there be enough jobs for everyone so they could pay the taxes that were required to make the scheme work? Would the benefits Beveridge’s system offered make some people lazy and complacent? Would there be families who expected everyone else to pick up the tab for the cost of raising their children (as the more reactionary members of the Eugenics Society argued)? But, as hundreds of thousands of copies of Social Insurance and Allied Services flew off His Majesty’s Stationery Office’s printing presses, to be seen later in the hands of people in libraries and cafés, and on trains and buses, there was a sense that Beveridge had gone a long way to showing politicians what the country wanted.

Yet for all the interest in his report, not to mention the government’s displeasure at being forced to discuss such a significant programme of reconstruction and reform when there was still a war to win, the vast majority of what Beveridge had presented his readers with was far from new. A technocrat who excelled when it came to detail and pragmatism, he had looked at a century’s worth of ideas developed by myriad politicians, social scientists, social reformers, campaigners and businessmen from across the political spectrum. Indeed, he had drawn extensively on the principles underpinning the existing social insurance legislation passed by both Conservative and Liberal governments during the previous four decades. Beveridge thought implementing his proposals would mean immediate and significant improvements in people’s lives. He also described them, however, as the capstone of a ‘British revolution’: a process that had evolved over the previous 150 years, whose strands he was helping to tie up.

Few of the MPs who debated Beveridge’s report in 1943 wanted to argue with his headline-grabbing promise to end poverty, which had captured the imaginations of those who had joined the armed forces and kept the country going through aerial bombing, evacuation and shortages of everything from food to clothes to fuel. Many of them were uneasy, however, with the breadth and depth of his vision, which implied even greater change. Beveridge had told people that it was time to slay ‘five giants’: want, disease, ignorance, squalor and idleness. He argued that, to achieve this, Britain needed to do much more than make incremental improvements to its existing system of benefits and contributions, as the government had imagined Beveridge would suggest when it sent him away in June 1941. He told Parliament and the public that tinkering would achieve little on its own. The country had to commit to the creation of new and costly institutions, including a National Health Service, not to mention markedly different economic policies to the ones that had been commonplace before the war. Beveridge had described what he thought the British people not only wanted but truly deserved: a society where there were cash benefits for anyone who required them, but in which few people actually needed to ask for them in the first place. All that was required was the political will to make it happen.

When it comes to the history of the British welfare state, there are good and obvious reasons for starting in early 1943, with William Beveridge. Social Insurance and Allied Services, usually known simply as the Beveridge Report, made him synonymous with the welfare state in popular and political culture and a central figure in the story of the general election of 1945, when the British people said thank you but goodbye to Winston Churchill and voted Clement Attlee’s Labour Party into power by a landslide. Thanks to this handover, there is a tendency in popular culture to see the welfare state as Labour’s achievement – a socialist triumph, built out of the wreckage of the Second World War. Labour were certainly key actors in that moment, creating something the Tories were unlikely to have assembled in precisely the same way or using exactly the same parts had they been in government. But institutions as huge as the welfare state are seldom constructed in one moment or by one person. Indeed, while Beveridge had made his name in politics more than forty years earlier when Churchill, then a member of a Liberal government, had invited him to help establish state-backed unemployment insurance for specific groups of workers, he was not a socialist either. Although he refused to declare his political allegiance for most of his career, Beveridge was a Liberal MP by the closing stages of the war, albeit one who lost his seat in the electorate’s unforgiving judgement of July 1945.

The story of the British welfare state’s origins is clearly longer and more complicated than a focus on the 1940s and the Second World War allows us to see. Charting that history and, in the process, pulling apart the strands that Beveridge helped weave together are this book’s central aims. Doing so will see us encounter some of the most eminent names in modern British political history, from Tories like Neville Chamberlain, to Liberals including David Lloyd George, and socialists such as Sidney and Beatrice Webb, members of the Fabian Society who helped found the modern Labour Party. It also features social scientists and investigators, from nineteenth-century theorists such as Jeremy Bentham, the founder of utilitarianism, and John Stuart Mill, his most distinguished intellectual successor, through to their twentieth-century heirs, such as Seebohm Rowntree, the York-based confectionary manufacturer and social surveyor who made famous the idea of a ‘poverty cycle’, and John Maynard Keynes, the Cambridge don and public intellectual who pioneered the then-new field of macroeconomics during the 1920s and 1930s. It will also involve politicians, commentators and campaigners with eyes on an assortment of different problems, from public health to women’s rights to child poverty, not to mention the different and constantly evolving structures of government, from high political debate in the Houses of Parliament to the frequently more mundane but no less important world of local government.

This book has its centre of gravity in the ideas about the welfare of the British public and the thinkers, politicians, campaigners and social investigators who produced, argued about and legislated for them during the century and a half leading up to 1945. As we will see, these ideas were constantly in motion; products of particular times and places, they inspired people to act in different ways and sometimes changed significantly once they were put into practice. Popular movements – the kind of agitation from below that some commentators believe is central to social and political change – of course played their part, not least by giving the individuals and groups I discuss leverage to put their ideas into action at key junctures. But the intellectual framing and content of ideas about the welfare of the British people often came from people with power – elites, as they are often called – whether they be in political parties, universities, business or any of the other institutions that shape society. Sometimes these reformers met with resistance, at other times they found the wider political and intellectual climate more accommodating. At each stage, however, far-reaching ideas about concepts such as human nature were embedded into both political discourse and the seemingly unremarkable administrative structures encountered in everyday life.

As we will see, the welfare state was an intergenerational project, built by a variety of different and sometimes conflicting individuals and groups, not all of whom fit neatly within the ‘progressive’ or ‘radical’ tradition or who understood themselves to be contributing to a process that would end up where it did after the Second World War. These people lived in different eras, were located on different parts of the political spectrum, had different aims and interests, and played different roles, from formulating the questions – and, indeed, causing the problems – that others would grapple with to providing the ideas and tools that would be used to answer them. The welfare state that emerged from that process – which spanned the Victorians’ efforts to align society and their new notions of progress, the early twentieth-century struggle to adjust old political ideas to new economic realities, and post-war reconstruction – was not simply a moral enterprise intended to protect the weakest members of society or reward people who had given up so much in not one but two world wars. The welfare state was certainly those things, but it was also a project that integrated different aspects of social, political and economic life with the aim of making Britain fit for the challenges of the modern world. Sentiment played its part, but so did hard-headed thinking about things like economic productivity. As Beveridge put it shortly after Social Insurance and Allied Services was published, there should be ‘bread for all … before cake for anybody’.

In the decades that followed its foundation, the welfare state’s modernizing credentials were often obscured as politicians and commentators focused their criticisms and complaints, as their predecessors had done, on quite narrow aspects of its overall job. Unemployment benefits have been a favourite target, with critics, including Keith Joseph, claiming they have a negative impact on economic growth and moral character. As we will see, though, the welfare state – understood as not simply cash benefits but, as Beveridge and his contemporaries saw it, a general approach to shaping people’s social environment – was intended to be a tool for social and economic progress. Rather than a rejection of capitalism and industrialization, the welfare state was meant to make those things work better. During the nineteenth century, Britain had gone as far as any country when it came to unleashing the forces of economic liberalism. In the process, however, people had come to realize that markets would not always right themselves or produce the kinds of social outcomes they thought desirable. Problems such as long-term unemployment and chronic ill health often looked like matters for individuals, but, as observers across the political spectrum conceded, they were capable of combining in ways that threatened the stability of the system as a whole, as anyone who had lived through the Great Depression of the 1930s could testify.

Underpinning all these developments was a relatively simple idea: that society could be shaped and controlled according to the will of those in charge. By the mid-twentieth century, politicians, bureaucrats and intellectuals believed Britain could run an economy in such a way that the number of people who were unemployed at any given point would be below a specific proportion of the available workforce. They thought they could keep overall welfare expenditure down, and economic productivity up, by spending money on things such as health services, including public health infrastructure, and schools. The results of this way of thinking were often stark: a free prescription that cured a condition someone had been suffering from for years; an end to parents deliberating over which of their children would get to see a doctor; a house with bedrooms for everyone and an indoor toilet; a pension on retirement. But there were rules, regulations and institutions too. These made the aims of welfare politics clear, though sometimes through the formal language of administrators, and made entitlements and practical achievements secure. Despite their seemingly mundane nature, however, those rules and regulations were also a significant statement on the kind of society people wanted to live in – most notably on the matter of who was included and who was excluded from the benefits and services on offer. In these respects, it is important to remember that the British welfare state was founded not as a system of handouts, as critics often claim, but as a partnership between the state, individuals and private business, each contributing to a project from which they all derived benefits. None of this was inevitable and, as experiences in other countries make clear, it could have been organized very differently. Indeed, the seeds of alternative ways of calibrating the relationship between people, the state and capitalism, such as the idea of a ‘property-owning democracy’, were sown in the midst of these developments.

One of the most important arguments I make in what follows is that, while the British welfare state has roots in different political camps, it owes most to liberalism. This debt is easily obscured by a temptation to equate liberalism with the Liberal Party, which went into near terminal decline after the 1920s, and the fact that a Labour government presided over the construction of institutions like the National Health Service after 1945. Political philosophies are not static entities, though; they change over time, are frequently renewed, and sometimes find new leases of life in different settings. Nineteenth-century liberalism played a central role in both causing and defining problems that have loomed large in debates about welfare and social policy over the past two hundred years. Conversely, however, liberal thinkers’ efforts to reform their ideas in response to their obvious failings were crucial in the development of welfare provision during the early twentieth century. This was true not only legislatively but also intellectually, with thinkers such as John Maynard Keynes, a Liberal Party supporter, working out ways to reconcile new economic realities with old ideals. In so doing, solutions such as Keynes’s may very well have been one of the major factors in the Liberal Party’s decline as an electoral force, primarily by creating the levers that other parties could pull to achieve ends that satisfied not only the Liberals’ traditional supporters but their own too. Liberalism was woven into the welfare state’s identity, something that is essential to understand if we are to appreciate what its founders hoped it would achieve.