The Five Giants [New Edition]: A Biography of the Welfare State

At the beginning of June 1941 someone else got the job Beveridge wanted: Godfrey Ince, who went on to become the department’s permanent secretary, was made Director General of Manpower. Beveridge was taken off administrative work and put in charge of a study on the way skilled manpower was being deployed into the forces. Four months before, however, in February, the Trades Union Congress had been to government to lobby about the hopelessly untidy mess of sickness and disability schemes by which workers were then covered. An inter-departmental committee was proposed to Cabinet in April. Bevin, having initially opposed the idea, suddenly saw it as a way of getting rid of someone whom he had clearly come to see as a pain in the neck.17 It was Greenwood who formally made the job offer, but Beveridge recorded twenty years later that it was Bevin who ‘pushed me as chairman of the Social Insurance Committee by way of parting with me … my removal from the Ministry of Labour … was “a kicking upstairs’”18 away from the work he believed he was cut out to do. Hence the tears that started to his eyes.

Indeed, so disillusioned was Beveridge that he appears for some months to have done little or nothing about his new task. His appointment, announced on 10 June 1941, attracted much parliamentary and press comment. But Beveridge spent the next months touring military bases and finishing his study on how the army was wasting skilled engineers. His reaction is perhaps understandable. The terms of reference – ‘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’ – scarcely sounded like the dawn of a revolution or the making of a place in history.

While Home Office and Ministry of Health officials had higher hopes, the Treasury saw the committee merely as ‘a tidying up operation’, one of its senior officials declaring that the terms of reference had been made ‘as harmless as they can be made’.19 Bevin’s parting shot, according to Beveridge, was that the inquiry ‘should essentially be official in character, dealing with administrative issues rather than with issues of policy’.20 Arthur Greenwood, however, saw it as something a lot bigger and in an early example of spin-doctoring gave briefings to that effect, inspiring Fleet Street so to write it up.21 The day after the committee was formally announced several newspapers reported in remarkably similar terms that it would be ‘the widest and most comprehensive investigation into social conditions … with the object of establishing economic and social security for every one on an equitable basis’.22

Certainly something, if only at a tidying-up level, needed to be done. If, forty years on in 1984, Norman Fowler concurred in his civil servants’ judgement that the social security ship needed to be hauled in ‘to have the barnacles scraped off it’,23 in 1941 the social security system – if it could even be called that – was a vessel full of holes and rotten planks through which it was only too easy to fall. It was showing all the strains and anomalies that piecemeal growth of voluntary and state provision over the previous forty-five years had produced since the Workmen’s Compensation Act of 1897.

Seven different government departments were directly or indirectly involved in providing cash benefits of one kind or another. To modern eyes, some of these seem mighty strange: Customs and Excise, for example, administered ‘the Lord George’, the first state pension. But by 1941 there were three different types of pension, and three different types of unemployment benefit, all operating under different rules. War victims and their dependants were helped by the Ministry of Pensions, but the civilian disabled, widows and orphans were the responsibility of the Ministry of Health. The Home Office had its finger in the pie through running workmen’s compensation in some industries. For many, however, cover for industrial injuries was provided by for-profit insurers who scandalously tried to buy off claimants with inadequate lump sums when disaster struck. ‘Indoor servants’ in private houses were excluded from the state unemployment insurance scheme; those in ‘establishments and institutions’ were included. Health insurance now provided panel doctors for those in work who earned less than £420 a year, but that still covered less than half the population. Wives and children remained excluded. Sickness benefit was provided through non-profit-making ‘approved societies’ whose benefits varied as widely as their performance. A good one might provide a nursing home, dental treatment and spectacles, a poor one only the minimum sickness benefit guaranteed by the state. And beneath and alongside all this, local authority committees, the inheritors of the Elizabethan Poor Law, paid means-tested benefits to those in need.

The result was ‘different rates of benefit involving different contribution conditions and with meaningless distinctions between persons of different ages’ as Beveridge was to say in his report.24 There he picked out just one example of the many he said could be found. A married man with two children, he recorded, received 38s. od. (£1.90) a week if unemployed. If he then became sick and unavailable for work, his benefit more than halved to 18s. od. An unemployed youth of seventeen, by contrast, received 9s. od.; but 12s. od. if he was sick. It was this considerable mess that Beveridge was set to sort out. He did so in the grandest of styles, and on a scale that no one who appointed him could possibly have envisaged.

The first hint of what he was planning, and that he had no intention of just tidying a few things up, came in July when he produced a paper for the committee headed ‘Social Insurance – General Considerations’. ‘The time has now come,’ he declared, ‘to consider social insurance as a whole, as a contribution to a better new world after the war. How would one plan social insurance now if one had a clear field … without being hampered by vested interests of any kind? The first step is to outline the ideal scheme, the next step is to consider the practical possibilities of realising the ideal, and then the changes of existing machinery that would be required.’

Beveridge aside, the committee was staffed entirely by officials. There was a civil servant apiece from each of the seven departments involved in social insurance. In addition, there was the inevitable official from the Treasury, one from the Ministry of Reconstruction, the Government Actuary, and a representative each from the Assistance Board and the Friendly Societies. They spent the summer drawing up background papers and inviting evidence, while Beveridge’s attention was elsewhere.

In all, 127 pieces of written evidence were to be received, and more than 50 private evidence sessions held with witnesses. But only one piece of written evidence had arrived by December 1941 when Beveridge circulated a paper entitled ‘Heads of a Scheme’ which contained the essence of the final report a year later. The paper proposed unifying the existing schemes, paying flat rate benefits at a rate high enough to provide ‘subsistence’ – that is, sufficient to live on, free of poverty – while the whole should be financed by contributions divided between the insured, employers and the state. As Point One, the paper opened with the key statement which was to stretch his terms of reference up to and beyond their limit and which was to underpin the whole report.

1 No satisfactory scheme for social security can be devised [without the] following assumptions.

A A national health service for prevention and comprehensive treatment available to all members of the community.

B Universal children’s allowances for all children up to 14 or if in full-time education up to 16.

C Full use of powers of the state to maintain employment and to reduce unemployment to seasonal, cyclical and interval unemployment, that is to say to unemployment suitable for treatment by cash allowances.25

So there it was. The nation needed a national health service; tax-funded allowances for children; and full employment to make social security work.

The reliance on insurance – though insurance backed by the state, so-called ‘social’, as opposed to private, insurance – reflected what already existed even if less than half the population was covered in 1941. It also reflected what Beveridge had helped design for the unemployed in the years after 1908 and his own long-held beliefs. In 1924 he had written a tract for the Liberals advocating ‘insurance for all and for everything’. Always opposed to means-tests, he had like many of his compatriots become affronted by both their enormous expansion and the harshness of the particular tests used during the Great Depression of the 1930s. He wanted to see benefits paid as of right. One consequence of the insurance principle, the paper states, is that ‘no means test of any kind can be applied to the benefits of the Scheme’.

But while Beveridge believed that everything that could be insured for should be, he had also come to see that benefits for children could not be run that way. To combat poverty and at the same time provide work incentives, it was essential that children’s benefits be paid at the same rate whether the parent was in or out of work. For if only means-tested help was given for children, then the low-paid with large families would be better off out of work than working – unless benefit rates were to be set dangerously low. Equally, family allowances would also help to prevent poverty among the low-paid. Rowntree’s work had shown that low wages in large families were the primary cause of poverty in 1899 and even his 1936 study showed they still played a significant role. Thus, Beveridge concluded, children’s allowances had to be tax funded, not insurance based. He had additional motives for backing family allowances. The war had seen the cancellation of the 1941 census, and on the information available Beveridge believed erroneously that the birth-rate was still declining, as it had been in the 1930s. It was a trend he believed required to be reversed in the national interest.

‘Once this memorandum had been circulated,’ Beveridge declared blithely in his autobiography, ‘the committee had their objectives settled for them and discussion was reduced to consideration of the means of attaining that objective.’26

They had indeed, and there was to be no little annoyance among the committee members at Beveridge’s general unwillingness thereafter to listen to their views, other than on technical matters. But point one of the memo had another instant effect: it alerted the government to the scale of what he had in mind. Alarm bells started to ring. Beveridge was asked to withdraw his three assumptions, and refused. On 17 January 1942, Greenwood wrote to him after talking to the Chancellor, Sir Kingsley Wood, declaring that ‘in view of the issues of high policy which will arise’ the departmental representatives should in future be regarded merely as ‘advisers and assessors’. The report would be signed by Beveridge alone and ‘be your own report’. The civil servants ‘will not be associated in any way with the views and recommendations on questions of policy which it contains’.27 In other words, the government was damned if it was going to let itself be committed.

Work on the committee speeded up through 1942 as witnesses were called and evidence taken. But the credit (or reproach: some see the report and its aftermath as a key cause of Britain’s post-war decline) for the report’s popular impact may need to go as much to Janet Mair as to Beveridge himself.

Jessy, as Janet Mair was known, was the wife of David Mair, a somewhat austere mathematician and civil servant who was Beveridge’s cousin. She and Sir William had become close before the First World War, Mrs Mair sharing, in Jose Harris’s words, Beveridge’s ‘dreams and ambitions’. A powerful personality in her own right, she and Beveridge were to marry a fortnight after the report was published. They had, however, already scandalised the ‘lady censors of the University world’ when Mrs Mair moved into the Master’s lodgings at University College at the outbreak of war.28 Jessy also had, in Peter Baldwin’s words, ‘a knack of putting in the baldest terms the ideas that lay more implicitly in her husband’s writings’.29

During the crucial stages of the report’s compilation in the spring and summer of 1942, Jessy was staying with relatives in Scotland. But it was she, according to Jose Harris, who ‘greatly encouraged’ Beveridge not just to rationalise the existing insurance system but to lay down long-term goals in many areas of social policy.

There is no evidence to suggest that Mrs Mair was responsible for any of Beveridge’s substantive proposals. But much of his report was drafted after weekends with her in Edinburgh, and it was she who urged him to imbue his proposals with a ‘Cromwellian spirit’ and messianic tone. ‘How I hope you are going to be able to preach against all gangsters,’ she wrote, ‘who for their mutual gain support one another in upholding all the rest. For that is really what is happening in England … the whole object of their spider web of interlocked big banks and big businessmen [is] a frantic effort to maintain their own caste’. And she urged Beveridge to concentrate on three main policy objectives – ‘prevention rather than cure’, ‘education of those not yet accustomed to clean careful ways of life’, and ‘plotting the future as a gradual millennium taking step after step, but not flinching on ultimate goals.’30

Beveridge of course had a track record as journalist and broadcaster, not just as an academic and administrator, and could express ideas clearly. He was fond of lists: ‘ten lions on the path’, ‘six principles’, ‘three assumptions’, as well as his ‘five giants’. But nothing else he wrote – certainly not his Full Employment in a Free Society whose preparation two years later was to worry both Churchill and his Chancellor – has the same rich blend of Cromwellian and Bunyanesque prose to be found in the drably titled Social Insurance and Allied Services.

When the report was published on 1 December 1942 its reception was ecstatic. On the night before there were queues to buy it outside HMSO’s London headquarters in Kingsway. The first 60,000 copies of the full report at 2S. od. (lop) a time were rapidly sold out. Sales topped 100,000 within a month and more than 200,000 by the end of 1944.31 It is hard to believe that most of those who bought it made it through to the end. Much of this 200,000-word excursion through technical exposition and complex appendices is heavy going. Even Beveridge’s own section is hard work, and the report may well rank alongside Stephen Hawking’s A Brief History of Time as one of the most bought but least read books ever published in Britain. What made its reputation and provided its impact was the twenty-page introduction and the concluding twenty-page summary, separately published in a cut-down version at 3d. Combined with the full report this took sales above 600,000:32 in HMSO folklore, nothing is said to have outsold it until the Denning report on the Profumo scandal twenty years later.

And that introduction and summary were couched in terms unlike those of any government report before or since. Beveridge declared that he had used three guiding principles. First that ‘a revolutionary moment in the world’s history is a time for revolutions, not patching’. When the war was ‘abolishing landmarks of every kind’, he declared, now was the time to use ‘experience in a clear field’.33 Second, his plan for security of income – social security – was principally an attack upon Want. ‘But,’ he went on, hammering the point home with mighty capital letters, ‘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.’ Third, he stressed that social security must be achieved by co-operation between the state and the individual. ‘The State should offer security for service and contribution. The State in organising security 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 the minimum for himself and his family.’ But that minimum should be given ‘as of right and without means test, so that individuals may build freely upon it’.

Taking social insurance as the base, he wrote in boldly the three assumptions needed to make it work: family allowances, a national health service, and ‘maintenance of employment’. In the conclusion of the main report, he expanded the themes in Bunyanesque terms. The plan, he said, ‘is not one for giving to everybody something for nothing and without trouble’. It involved ‘contributions in return for benefits’. War offered the chance of real change, for ‘the purpose of victory is to live in a better world than the old world’. And, most importantly, he stated that in itself social security was ‘a wholly inadequate aim’; it could only be part of a general programme.

It is one part only of an attack upon five giant evils: upon the physical Want with which it is directly concerned, upon Disease which often causes that Want and brings many other troubles in its train, upon Ignorance which no democracy can afford among its citizens, upon Squalor … and upon the Idleness which destroys wealth and corrupts men.34

In that one ringing paragraph Beveridge encapsulated much of post-war aspiration. By seeking not only freedom from want, but a national health service, improved education, full employment and an attack upon Squalor (which Beveridge saw as being as much about town and industrial planning as about housing), he gave the vital kick to the five giant programmes that formed the core of the post-war welfare state: social security, health, education, housing, and a policy of full employment, the giants constructed to combat Beveridge’s five giant evils.

The report in practice does not mention education apart from its trumpet call for the attack on Ignorance. Nor does it deal in any detail with housing save for his struggle over how to handle rents within social security. Even a Beveridge could not stretch his terms of reference that far. The sections on how the health service would work are undisguisedly tentative. Beveridge himself stressed the need for further study. But the necessity of comprehensive health care ‘without a charge on treatment at any point’35 is repeatedly driven home – not just to prevent poverty, but on economic grounds, to help keep people working, and quite simply on moral ones: ‘restoration of a sick person to health,’ he states, ‘is a duty of the State and the sick person, prior to any other consideration’.

If the report’s impact at home was spectacular, it was also pushed heavily overseas by an initially enthusiastic Ministry of Information. Details of ‘The Beveridge Plan’ were broadcast by the BBC from dawn on 1 December in twenty-two languages. Copies were circulated to the troops, and sent to the United States where the Treasury made a $5000 profit on sales.36 More copies were dropped into France and other parts of Nazi-occupied Europe where they caused concern at the highest level. After the war, two papers marked ‘secret’ and providing detailed commentary on Beveridge’s plan were found in Hitler’s bunker. One ordered that publicity should be avoided, but if mentioned the report should be used as ‘obvious proof that our enemies are taking over national-socialistic ideas’. The other provided an official assessment of the plans as ‘no “botch-up” … a consistent system … of remarkable simplicity … superior to the current German social insurance in almost all points’.37

Overnight Beveridge became a national hero – in Paul Addison’s phrase, ‘The People’s William’.38 It was ‘like riding an elephant through a cheering mob’, Beveridge said.39 Halls were packed to hear him expound his proposals in the rather prissy Edwardian tones that marked his speech. He broadcast and wrote about it endlessly, batting down critics who said his proposals would lead to feather-bedding and moral ruin. When an American declared that if Beveridge had had his way in the days of Good Queen Bess there would have been no Drake, Hawkins or Raleigh, he replied with a touch of the wit that his critics would deny him: ‘Adventure came not from the half starved, but from those who were well fed enough to feel ambition.’40

A little seventeenth-century evangelical language, however, in a boringly titled and dense government document, even when propounded by a well-known Oxford don, is not enough to explain the report’s impact. To understand that we must go back, through the influence of the Second World War, to the Great Depression of the 1930s, the outcome of the Great War, and even beyond.

The Boer War (1899–1902) had provided one part of the stimulus for the great reforming programme of the Liberal Government of 1906 when it was discovered that almost half those volunteering to fight in South Africa were medically unfit. The First World War exposed the same problems even more brutally and on a much larger scale. One survey showed that one conscript in three was not fit enough to join the forces.41 Only a third were judged Grade One. By the time of the Second World War, seven out of ten were put in the top grade.42

The mud and carnage of Flanders and the Somme, the days of ‘lions led by donkeys’, also changed British society for good. The Victorian era and the gilded summers of its Edwardian afterglow, in which hideous poverty had come to exist alongside abundant wealth, were to be swept away for ever. Lloyd George, in language Beveridge would have recognised, declared in 1917:

The present war … presents an opportunity for reconstruction of industrial and economic conditions of this country such as has never been presented in the life of, probably, the world. The whole state of society is more or less molten and you can stamp upon that molten mass almost anything so long as you do it with firmness and determination … the country will be prepared for bigger things immediately after the war … and unless the opportunity is seized immediately after the war I believe it will pass away.43

The Welsh wizard found poverty abhorrent and the agenda from which he was working bore striking similarities to Beveridge’s almost thirty years later: unemployment insurance, health, housing and education, and a desire to end the 1834 Poor Law which had established the workhouses and the principle of ‘less eligibility’. In order to provide a vigorous incentive for self-help, the 1834 Act required that Poor Relief be set at a standard below the earnings that an industrious labourer ‘of the lowest class’ could achieve, regardless of the impact that policy had. The view then was strong, and its echoes can still be heard today, that poverty was the fault of the individual and should be punished. As the Royal Commission whose report produced the Act put it: ‘Every penny bestowed, that tends to render the condition of the pauper more eligible than that of the independent labourer, is a bounty on indolence and vice … nothing is necessary to arrest the progress of pauperism, except that all who receive relief from the parish should work for the parish exclusively, as hard and for less wages than independent labourers work for individual employers.’44 Individuals would thus be forced, as far as possible, to stand on their own two feet. There was no intent here to prevent poverty, only to avert starvation.

Despite Lloyd George’s words, in 1917 too little was done too late. But before the grand vision collapsed, there was a brief illusion that all was well. The rapid removal of wartime controls brought a short but spectacular boom, producing the certain assumption, in the phrase of the day, that it was ‘business as usual’. Significant strides were made in education and the expansion of council housing. Unemployment insurance, limited to a few high-risk industries in 1911, was further extended in 1920 to cover around twelve million workers, roughly three-quarters of the workforce.

But Britain’s share of world trade proved to have contracted sharply during the war. The economy swung rapidly into recession. In 1922 the ‘Geddes axe’, named after Sir Eric Geddes who chaired the economic committee, introduced swingeing public spending cuts. These curtailed plans for educational expansion and left Lloyd George’s euphoric promise of ‘Homes Fit for Heroes’ with a desperately hollow ring. As the new unemployment insurance came in, the total number of unemployed increased in the summer of 1920 to more than a million. Between then and the summer of 1940 it never fell below that mark and at times rose above three million.45 The new experience of mass unemployment dominated social policy for the next twenty years, for it rapidly destroyed the insurance basis of the 1911 and 1920 Acts. Large numbers either exhausted their right to benefit, or were thrown out of work without having earned it in the first place. Fearing large-scale unrest and the Bolshevism which had just produced the Russian revolution, the government responded with a series of ad hoc measures starting in 1919 with Christopher Addison’s ‘out-of-work-donation’ for the unemployed: the words ‘the dole’ entered the vocabulary. The payment was not means-tested, and semi-inadvertently it established the principle that the state had a commitment to maintain all the unemployed, not just those whose insurance payments were up to date. But at the same time it undermined the insurance principle.