Beveridge Basics: has New Labour missed the key point?

By Peter Thomson

The best thing about the ‘Nye Bevan is the one wot done it‘ piece the other day was that it made me revisit the original 1942 Beveridge Report and review what the fundamental function of the Welfare System is and that is to act as a backstop, not as a nanny. That is the starting premise of the multiple bills which came from the 1944 White Paper, based on Beveridge’s 1942 Report.

The 1944 Education Act’s core aim was to increase the literacy and numeracy of the population and ensure all young people left school numerate and literate. It was not to create an educational nirvana where everyone had a degree, but to build a system where everyone had an opportunity to improve themselves. That opportunity died as the Further Education and Technical Colleges turned themselves into ‘Universities’ and in turn reduced in the availability of courses and apprenticeships that the belated U-turn by Labour has done little to change. SME’s are loath to take on apprentices because of the paperwork and the cost of the pseudo-conformance inspections carried out routinely by folk with no working knowledge of the sector or of the actual compliance regulations they seek to check and are, to many potential apprentices, self defeating in helping them gain the opportunity to learn skills and find work.

The 1942 Beveridge Report, the 1944 White Paper and the original Welfare Bills all saw a benefit system as one which, in the words of the former:

“… was to support the worker and his family. Benefits were to be set at a level that enabled a man, his wife and child to survive.”

Beveridge also states in his report that:

“It is felt that this point cannot be over emphasised; any social security plans for the future must, if they are to succeed at all, be based on a state of society in which there is possibility of work for all, and at an adequate wage.”

Now the politicians must decide what is meant by ‘survival’ and an adequate wage but there is another point to consider, again according to the Beveridge Report:

“The danger of providing benefits which are both adequate in amount and indefinite in duration, is that men as creatures who adapt themselves to circumstances, may settle down to them.”

So, to afford the Welfare State – as outlined by Beveridge and put in place by Government after 1944 – the balance had to be sought between ‘survival’ and ‘employment’, with an emphasis on employment – something the current minimum wage and tax regime fails to achieve.

Beveridge clearly supported FDR’s idea of Government investment in positive job creation schemes as a way of encouraging full employment:

“The place for direct expenditure and organisation by the State is in maintaining the employment of labour and other productive resources of the country…not in patching an incomplete scheme of insurance.”

So, it can be argued that it is right and proper for Government to fund such schemes as the London Olympics as it creates positive lasting resources that benefit the people, the businesses that create wealth and the infrastructure and it is more cost effective and beneficial than paying out benefits.

Then we turn to New Labour’s record of where and how it spent the surplus and large tax revenue it inherited on taking power in 1997 and the ultimate result of Brown’s Chancellorship in the period thereafter. Where has Government spent taxpayers’ money to reduce unemployment and create infrastructure to the benefit of all?

Building Hospitals through PFI, you might argue, is one example with merit. I would disagree, as the system of commissioning hospitals by PFI is six times more expensive than traditional means of public funding and has created many hospital buildings that are unfit for purpose or of poor construction, designed merely to remain intact for the duration of the PFI contract and so hardly a ‘productive resource’.

The same goes for PFI-built schools – at least one Local Authority in Scotland (West Lothian) has already found it cheaper and more effective to buy back their schools’ PFI contract into Local Authority control and North Lanarkshire Health Authority are asking for Scottish Government support to buy out their PFI contracts so they can free up money for frontline services rather than close hospitals and services to control their out-of-control budgets.

So, what we have seen instead is a Labour Government propping up banks that their greed for Company Tax income allowed to run wild in the first place; propping up madcap, expansionist, oil for glory wars which have brought little or no benefit to the UK economy (as rebuilding Iraq was divided up amongst Bush’s pals); buying kit for the armed forces that was not and remains unfit for service; jobs for the boys and girls in unaccountable quangos which have few productive benefits for society; and feathering their own nests at the expense of the public purse. Hardly what Beveridge or Atlee or Bevan would think of as a Labour social program of benefit to all. As Beveridge wrote:

“The place for direct expenditure and organisation by the State is in maintaining the employment of labour and other productive resources of the country…”

Many will find Beveridge’s words quaint or of another time and so consider them not applicable to modern times, but that is just intellectual laziness. Beveridge was born in Victorian times and lived through the First World War and its aftermath of sickness and poverty as well as the mass unemployment of the early ’30s. He had long been involved in creating a fairer society for all, from Lloyd George’s 1911 National Insurance bill onwards. The 1944 White Paper was the result of forty years of Beveridge’s direct and active involvement in creating a fairer Britain.

The Labour Party could do well to consider a little humility and reconsider and act on the fundamental social truths of Beveridge’s 1942 Report, all of which are still cogent today:

“Unemployment, both through increasing expenditure on benefit and through reducing the income to bear those costs, is the worst form of waste.”

There, I suggest, is an idea whose time has once again come round.