1990s >> 1992 >> no-1060-december-1992

Why Beveridge Reorganized Poverty

Fifty years ago this month the Report on Social Insurance and Allied Services by Sir William Beveridge was published to widespread acclaim. Supporters of all the pro-capitalist political parties hailed the Report as the basis for a restructured and improved social provision for the working class after the war against Germany had been won. According to the veteran Communist campaigner Willie Gallagher there was no mistaking the attitude of the British population to the plan. He told the House of Commons:

    “The trade union movement wants the Beveridge Plan, the Co-operative movement wants it, the Labour Party wants it, the Communist Party wants it, and the Liberals and a section of the Tory Party want it. It is clear that the great masses of the people, as represented by these forces, want the plan.”

In retrospect it may seem ironic that those on capitalism’s extreme left-wing, as well as its more mainstream defenders, should have been so enamoured with the Beveridge Report. Their reformist enthusiasm certainly overlooked the fact that one of its express aims was to increase productivity and encourage the working class to concentrate on the war effort while holding out the vague hope of better conditions to come, echoing Lloyd George’s 1918 “land fit for heroes to live in” homily.

While the Labour and Communist Parties jostled for a reformist advantage over the Beveridge Report, the Socialist Party analyzed the purpose and nature of the Beveridge proposals in a pamphlet called Beveridge Re-Organises Poverty. This pamphlet quoted the Tory MP Quentin Hogg (now Lord Hailsham) and his advice on the necessity of social reform within capitalism—”if you do not give the people social reform, they are going to give you social revolution”—and suggested that the Beveridge recommendations were best judged in the light of the wave of working class discontent which followed the 1914-18 war, which the capitalist class and their political representatives feared might be repeated.

Poor relief

The actual content of the Report and the proposals it put forward for social reform were, as the Times put it, “moderate enough to disarm any charge of indulgence” (2 December 1942). In large part the reforms aimed at providing an efficient working framework for the replacement of the unbalanced and disparate system of poor relief previously in existence in Britain. In fact a familiar claim of Beveridge at the time was that his proposals would be cheaper to administer than the previous arrangements. As he put it in his Report: 

    “Social insurance and the allied services, as they exist today, are conducted by a complex of disconnected administrative organs, proceeding on different principles, doing invaluable service but at a cost in money and trouble and anomalous treatment of identical problems for which there is no justification.” (p. 6, emphasis added).

Many of Beveridge’s proposals were already effectively in force for a significant number of workers, but the Report recommended the introduction of a unified, comprehensive and contributory scheme to cover the loss of employment, disablement, sickness and old age. An enlargement of medical benefits and treatments was proposed, as was a plan for non-contributory allowances to be paid by the state to parents with dependent children.

This latter scheme was criticized in another Socialist Party pamphlet called Family Allowances: A Socialist Analysis, which demonstrated how Beveridge’s proposed Family Allowances would be of principle benefit to the employing class, not the wage and salary earners, allowing employers to make-across-the-board wage reductions as wages had previously had to take account of the entire cost of the maintenance and reproduction of workers and their families, even though the majority of workers at the time had no dependent children to provide for. The Family Allowances plan was a scheme based on targeting provision on those workers actually with children. Family Allowances: A Socialist Analysis explained:

    “wages must provide not only an existence for the workers himself, but also enable him to rear future generations of wage workers to take his place. It is quite logical therefore from a capitalist point of view to raise objection to a condition which in a large number of cases provides wages “adequate” to maintain children for those who in fact possess no children.”

Poor get poorer

In outlining the case for universal state benefits and health care, the Beveridge Report was undoubtedly of some benefit to sections of the working class who, for one reason or another, had found themselves outside the existing schemes of provision. But as the case of Family Allowances demonstrated some of the gains for the working class were more apparent than real.

As the Socialist Party was able to predict, the recommendations of Beveridge and, for that matter, the modifications that have been made to the various branches of the welfare state in the last 50 years, have not succeeded in solving the poverty problem. Particularly since the end of the post-war boom in Britain in the late 1960s, the problems of poverty and income inequality have accelerated. To confound the prediction of some supporters of capitalism (and some so-called Marxists too) that the tendency of state-assisted capitalist development is to make the rich relatively poorer and the poor progressively richer, the numbers of those in relative and absolute poverty have increased in Britain, America and a number of other leading industrialized countries. Moreover, this phenomenon currently shows no sign of being reversed, despite the attentions of the reformers.

Part of the explanation for this lies in the way in which state benefits have periodically failed to keep pace with rises in the general price level, and the systematic way in which entitlements like unemployment benefit and income support have been allowed to fall as a proportion of the average wage. In 1979 a married claimant in Britain qualified for 35 percent of average earnings, but by 1990 this was down to 27 percent. In the same period of time the number of unemployed men means-tested rose from just under half to three-quarters. The break between pensions and earnings meant that a single pensioner received only £46.90 a week instead of £58.65 and a married couple £75.10 instead of £94.05. Meanwhile in the US, an unemployed New York woman with two children receives one third less in real terms than in 1972 (Sunday Times, 6 September).

In the year 1990-1 the government spent £77 billion on health and social security, 42 percent of general government expenditure. For the current financial year 1992-3 the total is likely to be about £100 billion, necessitating the present large increases in the government’s Public Sector Borrowing Requirement. With the increasing demands placed on the health service and the additional burdens placed on social security expenditure during the slump, pressure to cut back in government spending is intensifying.

Sticking plaster

As the 1942 proposals of Beveridge indicated, and experience has subsequently proved, expenditure on the welfare state can never really serve as anything more than a sticking plaster on capitalism’s poverty problems. The capitalist system leaves little room for sentiment and its driving concerns of profitability and capital accumulation impinge on the effectiveness of the welfare state, as they impinge on everything else. The health services and social security have to be paid for ultimately out of the profits of the capitalist class, generally via taxation (the burden of which in the last analysis falls on the bosses) or borrowing.

The need to keep health and social security expenditure in check does not therefore come about because of the blind malice or hatred of politicians but because of the need to keep the amount of profit taken off the capitalists as low as possible. The spectre of a declining rate of profit after tax—restricting future investment in the profit-making sectors of the economy—is not something the capitalist class are simply going to sit back and accept. This was demonstrated by the rise of so-called “Thatcherism” in Britain and other industrialized countries in the 1980s. whose overt mission (not altogether successfully carried out) was to reduce borrowing and the proportion of the capitalists’ accumulated wealth taken through tax. This, indeed, was the same mission undertaken by the last Labour government after its initial attempts to expand the economy through Keynesian economic policies ended in chaos.

Today, with the world in the midst of another economic crisis, and with future attacks on the welfare state developed since Beveridge, we can confidently re-assert our initial analysis of 50 years ago, to the effect that Beveridge represented not the “new world of hope” set out by the reformers, but a “re-distribution of misery”. That misery remains and will do so as long as capitalism and its insane priorities continue to carry all before it.

Dave Perrin

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