Contrary to all expectations Labour achieved a huge majority in the 1945 General Election under Clem Attlee and was committed to creating a fairer and more equal society. The Welfare State, as we know it today, came into full effect in 1948 with the foundation of the NHS -”the jewel in the crown” backed up with public housing and social services.
Although a universal and free health service was set up in 1948, a range of social security benefits was soon rolled out shortly after the election of the Labour government. In 1945 the Family Allowances Act was passed bringing in a universal family allowance payable on the birth of the second child. Extra cash was paid for subsequent children up to the age of 15.
National Insurance Act
In 1946 Labour passed the National Insurance Act which provided a universal system of NI which covered virtually everyone in Britain. The Act extended NI to cover unemployment benefit, retirement pensions, windows’ benefits and death grants. Those of working age were compulsorily insured. Flat rate contributions (the stamp) were paid by the employee, the employer and the state. People could claim benefits when in need. The measures were built heavily on previous legislation, firmly establishing the ‘contributory principle’. For the historian Morgan : ”the Act was a measure which provided a comprehensive universal basis for insurance provision that had hitherto been unknown”.
National Assistance Act
Two years later in 1948 Labour passed the National Assistance Act which provided a ‘safety net’ for those not covered by NI such as lone parents and the long-term unemployed. The Act finally repealed the hated 1834 Poor Law with cash help now provided by the National Assistance Board.
Yet means-testing determined need and the principle of ‘less eligibility’ remained in the social security system. Cash benefits were well below that of paid work. Unlike NI there was no automatic right to cash assistance, so aspects of the stigma linked to the Poor Law remained in the new system.
Beveridge’s plans were mostly implemented by Attlee’s Labour government. Yet contrary to Beveridge, Labour introduced pensions immediately. This meant that the NI scheme didn’t have time to mature as a true insurance scheme. Contributions went directly to retirees which meant that the value of the state pensions was low.
Entitlement to unemployment benefit was restricted to one year on the grounds of cost. Arguably most of the government’s social security legislation was built on previous Acts with the exception of family allowances.
Evolutionary or revolutionary?
Most historians believe that the social reforms of 1944-1949 were evolutionary rather than revolutionary. Post-war legislation in council housing, social services and social security was built on reforms of the pre-war period. For Derek Fraser: ”the British Welfare State was not born – it had evolved.”
Yet post-war social welfare legislation became more comprehensive in scope, better funded and more rational. Pre-war services were patchy and poorly coordinated. And much health care had to be paid for.
The historian Arthur Marwick argues that Labour was responsible for creating the Welfare State. However, the social policy writer, Kathleen Jones points out that all political parties were united in their aims to bring about a more ”secure and equal society”. Although the Labour government implemented ‘radical ‘ reforms, they weren’t exclusively socialist. As Jones notes:
”The 1940s were a period of great social idealism and this was not confined to any one political party.”