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In June 1941 Arthur Greenwood, the Cabinet Minister responsible for post war reconstruction, asked William Beveridge to chair a new committee. It would be called the Inter-departmental Committee on Social Insurance and Allied Services.
Their task was ‘to undertake, with special reference to the inter-relation of the schemes, a survey of the existing national schemes of social insurance and allied services, including workmen’s compensation, and to make recommendations’.
At this time there was no co-ordinated, comprehensive social security system.
Instead, there was a confusing patchwork of private and state administered social insurance schemes. With the exception of the Poor Law, these had arisen over the previous forty five years beginning with the 1897 Workmen’s Compensation Act.
Various pieces of legislation concerning health, disability, pensions and unemployment had been brought in. However each issue was dealt with in isolation.
As a consequence state benefits were managed by several different government departments. Each had their own rules governing eligibility and payments. There were many anomalies.
Although the income needs of the unemployed and those unable to work due to illness were more or less the same, they received different rates of benefit.
Not all of the population were covered.
The state provided cover for injured workers in a limited number of industries. The rest had to fight for compensation from private insurance companies. The wives and children of workers were still not covered for medical treatment under National Insurance.
It was these inconsistencies which, in February 1941, had led the TUC to lobby the Government for a review of social insurance.
The Committee was made up of civil servants. Over one hundred individuals and organisations, including insurance companies, charities and trade unions submitted evidence to the Committee.
By the end of 1941 Beveridge was imposing his own views on the Committee’s work, directing them towards a set of objectives which already included his three assumptions (a national health service, children’s allowances and full employment).
This alarmed the Government who were unwilling to commit to such proposals. Arthur Greenwood informed Beveridge in January 1942 that the Committee members would now only ‘be regarded as your advisors’.
Beveridge was to take full responsibility for the contents of the report and its policy recommendations. ‘…the Report, when made, will be your own report; it will be signed by you alone’.
On 1 December 1942 Social Insurance and Allied Services was published. It soon became known as the Beveridge Report.
Beveridge laid down three guiding principles which would underpin his recommendations.
‘Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field. A revolutionary moment in the world’s history is a time for revolutions, not for patching’.
‘Social insurance…is an attack upon Want. But Want is only one of five giants on the road of reconstruction and in some ways the easiest to attack. The others are Disease, Ignorance, Squalor and Idleness’.
However the State ‘should not stifle incentive, opportunity, responsibility; in establishing a national minimum it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family’.
‘…the aim of the Plan for Social Security is to make want under any circumstances unnecessary’. William Beveridge, Beveridge Report, 1942
Beveridge recognised that one of the principal reasons for poverty was loss of earnings. This could be due to unemployment, sickness, accident or retirement.
Beveridge also thought that provision should be made for ‘exceptional expenditures’ associated with birth, marriage or death.
He believed that everyone should be guaranteed a minimum level of income that was sufficient to live on. Beveridge called this minimum the ‘subsistence level’.
He thought the best way to achieve this was with a universal system of social insurance, financed by contributions. This was a method people were already used to.
The contributions would go into a single Social Insurance Fund, administered by the Government. Benefits would be paid from this fund and not out of general taxation.
‘…benefit in return for contributions, rather than free allowances from the State, is what the people of Britain desire. This desire is shown both by the established popularity of compulsory insurance, and by the phenomenal growth of voluntary insurance … It is shown in another way by the strength of popular objection to any kind of means test’.
Each insured person would have access to all benefits based on a single weekly insurance contribution. The contribution would be compulsory and paid at a flat rate. There was to be no means test and the benefits would be paid ‘so long as the need continues’.
‘All insured persons, rich or poor, will pay the same contributions for the same security’.
Beveridge wanted the scheme to be comprehensive and cover most of the population. Employees and their employers, the self-employed and the State would all contribute to the Social Insurance Fund. Working married women could choose whether to pay contributions.
A Ministry of Social Security would be set up to administer the scheme.
Beveridge thought his Plan should be implemented as soon as possible. ‘If a plan for freedom from want, so far as social security can give it, is to be ready when the war ends, it must be prepared during the war’.
Beveridge wanted social insurance to be as comprehensive as possible, and paid at a level that was high enough to cover the majority of people and their ‘normal’ needs. However there had to be a safety net.
For those who had not paid enough contributions and so were not covered by social insurance, or who had abnormal needs, there was National Assistance.
Beveridge thought this ‘must be felt to be something less desirable than insurance benefit; otherwise the insured persons get nothing for their contributions’.
To that end, National Assistance was to be subject to a means test. It would be financed by the Exchequer.
Beveridge intended National Assistance to be required in only a small minority of exceptional cases.
People who fell into this group included the very low paid. Those with an income of less than £75 a year were exempt from making contributions. It would also include those who had difficulty entering the labour market, such as single parents or those who had never worked due to disability.
Underlying Beveridge’s Plan for Social Security were three assumptions.
This was to be paid for out of general taxation. All families would receive an allowance for their second and subsequent children.
This would ideally provide ‘full preventative and curative treatment of every kind to every citizen without exceptions…and without an economic barrier at any point’.
The Government had to manage the economy to prevent mass unemployment.
The Report became a best seller. Over 100,000 copies were sold in the first month. It received wide public support.
Beveridge was setting out a plan for social security which would cover everyone from the cradle to the grave and abolish want. This appealed to the millions of people who had endured the economic hardships of the inter-war years.
The Times newspaper called it ‘a momentous document which should and must exercise a profound and immediate influence on the direction of social change in Britain’.
Many felt the war was an opportunity to create a fairer post-war society. The British public and Beveridge himself saw the Plan as part of this wider vision of post-war reconstruction.
Beveridge wrote in the Report, ‘the purpose of victory is to live in a better world than the old world’.
