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

Mass Observation, the pioneering opinion poll organisation, found in December 1941 that one person in six said the war had changed their political views. ‘Eight months later, in August 1942 [four months before the Beveridge report], the proportion was one in three,’ Angus Calder records. ‘At this time it was also found that only one-third of the voters expected any of the existing parties to get things done as they personally wanted them after the war. This minority was mostly Labour or Communist.’79 The old Conservative front was collapsing. What might be dubbed the new progressive centre of Tory politics which was to receive Labour’s inheritance in 1951 was yet to have its day.

The sense that something more than victory over Nazi Germany had to be planned was also present in government itself, even if the terms were not yet very clearly defined. Churchill had, after all, appointed Arthur Greenwood Minister for Reconstruction – the same Greenwood who as Labour deputy leader, standing in for an ill Attlee in the Commons debate on the eve of war, had been urged by Leo Amery from the government benches to ‘Speak for England, Arthur.’

Churchill, back on the Conservative benches, had his days as a Liberal social reformer the better part of thirty years behind him, but he still retained Liberal or even Whiggish sentiments. His interest in home affairs had dissipated in the 1930s in the face of his concern for Empire and the threat of Fascism. But addressing the boys of his old school, Harrow, in 1940, he said: ‘When this war is won, as it surely will be, it must be one of our aims to establish a state of society where the advantages and privileges which have hitherto been enjoyed only by the few shall be far more widely shared by the many, and by the youth of the nation as a whole.’80 He had sent R. A. (‘Rab’) Butler to the Board of Education and appointed him chairman of a new Conservative Post-War Problems Committee. In August 1941 he met Roosevelt for the first time off Newfoundland where they agreed on the Atlantic Charter – a joint statement of war aims, even though the United States was not yet formally in the war. The pair called on all nations to collaborate ‘with the object of securing for all improved labour standards, economic advancement, and social security’. Peace should bring ‘freedom from fear and want’.81 Beveridge was to exploit that statement in his report, citing it as backing for his plan.

And against this background, as Sir William prepared his report, the war raged outside Britain itself. On 22 June 1941, less than a fortnight after Beveridge’s appointment, Hitler had attacked the Soviet Union. Britain at last was not alone. For those with an abiding loathing of Communism, and who had seen the perfidious Nazi-Soviet pact of August 1939 allow the Soviet Union to swallow Finland and the German tanks to roll into Poland barely a week later, this was as hard a moment as any in the war. Not least for Churchill. In a broadcast that showed both courage and statesmanship, he declared that Nazism was indistinguishable from the worst features of Communism. ‘No-one has been a more consistent opponent of Communism than I have been for the last 25 years. I will unsay no word that I have spoken about it.’ But he went on to declare that with the tanks rolling, ‘the [Soviet] past with its crimes, its follies and its tragedies flashes away … I see the ten thousand villages of Russia … where maidens laugh and children play …’ and ‘… the cause of any Russian fighting for his hearth and home is the cause of free men and free peoples in every quarter of the globe.’82 Most people believed initially that the Soviet Union would be smashed. But in July, Stalin announced his horrific but awe-inspiring ‘scorched earth’ policy. By September British ships were on the nightmarish Arctic convoys to Archangel carrying aircraft and other supplies. At the end of that month ‘Tanks for Russia’ week was launched in British factories: they came out with the legends ‘Stalin’, ‘Marx’, ‘Lenin’ and ‘Another for Joe’ chalked on the sides. And as Hitler became bogged down in the Russian winter snows and Moscow held, admiration for Soviet sacrifices grew. A conviction became widespread well outside the ranks of the Communists and Labour’s left that the Soviet system could not be all bad. There can be few more symbolic exemplars of this particular time than the Christian and Conservative T. S. Eliot, then based at Faber & Faber, turning down the manuscript of Animal Farm, the savage and prophetic satire of the Russian revolution and Soviet system written by the atheist and socialist George Orwell. Eliot did so on the grounds that it did not offer ‘the right point of view from which to criticise the political situation at the present time’.83

The success of Beveridge’s report with its universalist and collectivist themes has to be seen against this complex backdrop. There were three more factors which were to give it the greatest impact of any British social document of the twentieth century.

The first is that Beveridge argued along the grain of current thinking. He may have drafted his report before he saw the evidence, but he already knew what much of its substance would be. Jose Harris writes:

One of the most striking features of the evidence submitted to the Beveridge Committee was the very widespread expectation among witnesses that the inquiry was going to lead to radical, even ‘Utopian’ social change. Quite where this expectation came from is not entirely clear, but it may well have derived from Beveridge himself and from his frequent references in articles and broadcasts to the abolition of poverty and to post-war social reform. A second striking feature was the very wide degree of support among witnesses for the kind of reform that Beveridge already had in mind – a measure of the extent to which Beveridge himself was interpreting rather than creating the spirit of the times. Again and again witnesses pressed spontaneously and independently for measures which afterwards became the main policy proposals of the Beveridge Report – namely, family allowances, full employment, a universal health service, a uniform system of contributory insurance, subsistence-level benefits and the reduction or abolition of public assistance.84

Not everyone believed in planning for a New Jerusalem, let alone a Utopia. Sir John Forbes Watson, Director of the Confederation of British Employers, virtually urged Beveridge to abandon the report:

I want to say here – it will go on the shorthand note, but I do not know that I want to say it publicly – we did not start this war with Germany in order to improve our social services; the war was forced upon us by Germany and we entered it to preserve our freedom and to keep the Gestapo outside our houses, and that is what this war means.85

Others shared that view and believed improvements could not be afforded. J. S. Boyd, vice-president of the Shipbuilding Employers’ Federation told the committee:

I am saying something I would not like printed – there may have been excellent reasons in the last war for talking about homes fit for heroes and there may be excellent reasons today for talking about improving the social services, but at the same time any of us who are trying to think at all do realize and do appreciate that the problems after the war are not problems that the man in the street concerns himself about, and you may be causing a much greater degree of danger by telling him something which in fact even the most optimistic of us may fear will be impossible after the war.86

The industrialists’ desire not to go on the record may be significant; and the employers were not united. In November 1942, when Beveridge’s report was complete but not yet published, 120 senior industrialists including the head of ICI produced ‘A National Policy for Industry’ which called for companies to be responsible for proper housing for their employees, for supplementing the state pension and for subsidies to prevent unemployment. They also sought family allowances and the raising of the school leaving age to sixteen. The report had as much of corporate paternalism as state action about it. But in suggesting that big companies should almost become miniature welfare states the industrialists, if not in the same regiment as Beveridge, were marching to a similar beat.

The route Beveridge took, however, was not preordained. Evidence to the committee threw up alternatives of which he was already aware and which were to be recurring themes in the post-war years. Several witnesses argued for the abolition of contributions. Benefit should be funded either from taxation or from an identifiable surcharge on income tax. That Beveridge opposed, first because of its implied extension of means-testing, and second because of the Treasury’s longstanding opposition to earmarked taxes. Equally, there were arguments for flat-rate benefits paid for by graduated contributions: those who earned more would pay more. Both Political and Economic Planning and the Association of Approved Societies, who ran health insurance, pressed for that measure, which Beveridge dismissed, Jose Harris records, as the epitome of the ‘Santa Claus state’. ‘I believe there is a psychological desire to get something for which you have paid … the tradition of the fixed price is very strong in this country. You do not like having to pay more than your neighbours.’ Others including the International Labour Office praised the kind of ‘earnings-related system commonly found on the Continent’, where benefits were not flat but graduated according to previous earnings.87

All these Beveridge rejected, objecting that earnings-related benefits would damage savings. In so doing he took the British social security system down a road that was both recognisable – the insurance basis already used for both employment and health – and very different from the earnings-related systems adopted over most of the rest of Europe after the war. For all the rhetoric in the early part of the report that ‘a revolutionary moment in the world’s history is a time for revolutions’, Beveridge in many ways was far from revolutionary. He produced something people would recognise. And he recognised himself what he had done. In paragraph 31 he stated that his proposals ‘spring out of what has been accomplished in building up security piece by piece’. In important ways, he added, the plan was ‘a natural development from the past. It is a British revolution.’ Both in its incrementalism – the way in which in large measure it stuck to the old system of flat-rate benefits paid for by flat-rate contributions split three ways between employee, employer and state – and in its choice of a path other countries did not follow, Beveridge’s report was indeed a very British revolution.

The second additional factor in the report’s reception was that Beveridge through broadcasts, articles and half-leaks – he was an occasional member of the massively popular radio ‘Brains Trust’ – had made very certain that the world knew it was coming. He had repeatedly referred publicly to ‘equality of sacrifice’ and the possibility of abolishing poverty. In March 1942, more than six months before the report, Picture Post could write: ‘Everybody has heard of Sir William Beveridge.’88 As early as April 1942, a Home Intelligence report noted: ‘Sir William Beveridge’s proposals for an “all-in” social security scheme are said to be popular’, and by the autumn Home Intelligence was recording that: ‘Three years ago, the term social security was almost unknown to the public as a whole. It now appears to be generally accepted as an urgent post-war need. It is commonly defined as “a decent minimum standard of living for all”.’89

Harold Wilson had turned down the secretaryship of the committee. But Frank Pakenham (the future Lord Longford) was a friend and assistant of Beveridge, sympathetic to his work, and well connected in Fleet Street. He acted as an unofficial public relations officer.90 Brendan Bracken, the Minister of Information, wrote to Churchill in October: ‘I have good reason to believe that some of Beveridge’s friends are playing politics and that when the report appears there will be an immense amount of ballyhoo about the importance of implementing the recommendations without delay.’91 There was indeed. In mid-November the ever-tactful Beveridge unwisely told a Daily Telegraph reporter that his proposals would take the country ‘half-way to Moscow’, a statement he promptly disowned but which only lowered by a few more degrees the icy reception the report was to receive from right-wing Tories and parts of government.92

A frantic debate in fact was already under way over what facilities Beveridge should be given to publicise his recommendations. It was finally resolved on 25 November by Churchill minuting Bracken: ‘Once it is out he can bark to his heart’s content.’93 Bracken changed tack. He apparently saw the report as a great morale-booster at home and for the troops, and a useful propaganda weapon overseas. His ministry recognised the force of Beveridge’s own declaration in the report that ‘the purpose of victory is to live in a better world than the old world’. Beveridge added that ‘each individual citizen is more likely to concentrate upon his war effort if he feels that his Government will be ready in time with plans for that better world.’ Where ministers were to part company with Beveridge was over the third clause of that sentence: ‘that, if these plans are to be ready in time, they must be made ready now’.94

The final piece of luck and timing which ensured the report’s ecstatic reception lay with Montgomery and the British Eighth Army. The Japanese attack on Pearl Harbor a year earlier had seen the United States finally enter the war, but apart from survival, and the heroism of the Soviet Union, there had been little else to celebrate since 1939. Monty had gone into action at El Alamein at the end of October. The battle started badly. But on 4 November a BBC announcer, his voice shaking with excitement, delivered General Alexander’s Cairo communique stating that Rommel was in full retreat in Egypt. The news from North Africa only got better. Churchill in one of the war’s best remembered aphorisms pronounced on the 10th: ‘Now is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.’95

Suddenly, after three years, there was a future to look forward to – and one that the times demanded should be very different from the past. On 15 November, for the first time since war was declared, Churchill ordered that the church bells ring out, not to announce invasion but to celebrate Monty’s victory.96 A fortnight later the Beveridge report was published, its own words ringing out like a great bell. In his final paragraph Beveridge became more Churchillian than Bunyanesque:

Freedom from want cannot be forced on a democracy or given to a democracy. It must be won by them. Winning it needs courage and faith and a sense of national unity: courage to face facts and difficulties and overcome them; faith in our culture and in the ideals of fair-play and freedom for which century after century our forefathers were prepared to die; a sense of national unity overriding the interests of any class or section. The Plan for Social Security in this report is submitted by one who believes that in this supreme crisis the British people will not be found wanting.97

There were – and still are – many battles to be fought against Beveridge’s five giants. His report’s popular impact was a matter, in Jose Harris’s judgement, ‘partly of luck and partly of careful calculation’ but partly also simply of the times in which it was made.98

Beatrice Webb commented rather acidly how odd it was that Beveridge of all people had become a national hero. But if one sentence had to sum up popular reaction, it is the breathless enthusiasm of the Pathé News interviewer on the night the report was published. The white-haired, waist-coated, oh-so-Edwardian figure of Beveridge intoned to the massed cinema audiences of the great British public: ‘I hope that when you’ve been able to study the report in detail, you’ll like it. That it will get adopted, and, if it’s so, we shall have taken the first step to security with freedom and responsibility. That is what we all desire.’

The interviewer replies, all italics and capital letters and deference: ‘Thank You – Sir William’.

CHAPTER 2

‘From cradle to grave’

This is the greatest advance in our history. There can be no turning back. From now on Beveridge is not the name of a man; it is the name of a way of life, and not only for Britain, but for the whole civilized world.

Beveridge to Harold Wilson shortly after his report came out, recounted in Wilson, The Making of a Prime Minister, 1986, p. 64.

THE PUBLIC RECEPTION of the Beveridge report was indeed ecstatic. The leader writers of all the newspapers, the Daily Telegraph excepted, blessed it.1 The Times called it ‘a momentous document’ whose ‘central proposals must surely be accepted as the basis of Government action. The main social standards on which the report insists are moderate enough to disarm any charge of indulgence.’2 A survey of public opinion shortly after publication showed 86 per cent in favour and a mere 6 per cent against. Most notably, the better off favoured it almost as enthusiastically as those who stood to gain most. Among employers only 16 per cent felt they would gain directly, but 73 per cent favoured its adoption. For those defined as upper-income groups, 29 per cent felt they would gain, but 76 per cent supported the plan. Among the professions the figures were 48 and 92 per cent.3 Home Office intelligence reports monitored, in Paul Addison’s words, ‘an extraordinary anxiety that somehow the report would be watered down or shelved’.4

Such anxiety was not without justification. Some instantly said it could not be afforded, even as others argued that the benefits Beveridge was proposing were too low. The journalist J. L. Hodson recorded in his diary the evening he heard Beveridge broadcast the details of his plan:

Some of the Big Business gentlemen are already calling it a scheme that will put us all on the Poor Law. Unless prices are to fall a good deal after the war, the scheme errs on the side of modesty of benefits paid. £2 a week [the sum Beveridge recommended for the pension and an unemployed married man] won’t go very far. T. Thompson writes me from Lancashire: ‘Beveridge has put the ball in the scrum all right. I wonder what shape it will be when it comes out.’5

It proved to be a rather different shape. But the first question was whether it would come out at all.

Sir Kingsley Wood, the Chancellor of the Exchequer, struck first, even before the report’s publication. On 17 November he minuted Churchill that the plan involved ‘an impracticable financial commitment’. Wood in his youth had led the battle by the Friendly Societies against Lloyd George’s 1911 health insurance package. He now told Churchill that Beveridge’s plan would increase taxation by 30 per cent. It would not abolish want, but it would give money to those who did not need it. ‘The weekly progress of the millionaire to the post office for his old age pension would have an element of farce but for the fact that it is to be provided in large measure by the general tax payer,’ Kingsley Wood declared, launching a theme that would be echoed time and again down the years. He added: ‘Many in this country have persuaded themselves that the cessation of hostilities will mark the opening of the Golden Age (many were so persuaded last time also). However this may be, the time for declaring a dividend on the profits of the Golden Age is the time when those profits have been realized in fact, not merely in imagination.’6

By contrast Keynes, whom Beveridge had repeatedly consulted over dinners in West End clubs, believed the plan broadly workable and affordable.7 He was later to argue that ‘the suggestion that is being put about in some quarters that there are financial difficulties is quite unfounded.’8 After listening to Keynes, Beveridge had in fact trimmed his original ideas considerably in an attempt to keep costs down. The biggest single factor here was his proposal that old age pensions should be phased in over twenty years as people’s contribution records grew. But he had also agreed that family allowances be paid only for the second and subsequent children, and he had dropped plans to have full insurance for housewives, and benefits for those unable to work because they were caring for sick or aged relatives.9

Some of Churchill’s closest advisers also disputed Wood’s view. Lord Cherwell, his economic adviser and close personal confidant, thought it ‘altruistic but worth its cost’, and likely to ‘improve rather than worsen our economic position’. But he worried that the expenditure would alienate opinion in the United States on whom Britain’s economy was now heavily dependent. Americans would think they were being asked to pay for British social services. But he observed perspicadously: ‘On the other hand there has been so much carefully engineered advanced publicity that the Government’s hand may have been forced.’10

While Churchill’s advisers argued, the government began desperately playing for time. The report was promptly referred to a committee of officials chaired by Sir Thomas Phillips, an old adversary of Beveridge who had originally worked for him in the Board of Trade. The committee accepted the principles of universality and a comprehensive health service, but still challenged key aspects of the social security side of Beveridge’s scheme.11 It fell to Sir William Jowitt, who had replaced Greenwood as the Minister for Reconstruction, to tell the Commons on publication day that the government would merely ‘formulate its conclusions’.12 The government, however, had a real problem. As a coalition it was almost bound to be divided between its Labour and Tory parts on such issues; moreover, the Labour and Tory parts were themselves divided internally. Some Conservative ministers supported the plan: Leo Amery, for instance, described it as ‘essentially Conservative’;13 others like Kingsley Wood damned it; yet others believed simply that no commitment could yet be made. Labour ministers, unsurprisingly, were in favour. But Bevin, his old distrust of Beveridge surfacing, took strongly against it, declaring – inaccurately – that many parts were unacceptable to the unions. Attlee and Dalton were in favour but remained lukewarm in pressing for implementation. Dalton in particular had noted a minute from Churchill in which the Prime Minister said he could not commit himself without a general election to test popular support.14 Dalton feared Churchill would win such an election by a landslide, taking Labour off the map.

It was left to Herbert Morrison, newly in the War Cabinet, to argue vigorously and in some financial detail the case for a firm immediate commitment.15 To accept the Treasury’s pessimism, ‘would be a surrender to idiocy in advance,’ he declared. The social benefits of the plan were ‘very great’ and it represented ‘a financial burden which we should be able to bear, except on a number of very gloomy assumptions’.16 He lost, but Churchill shifted his ground. The government would undertake to prepare the necessary legislation, but it would require a new House of Commons to commit the expenditure.17

Two months after the report’s publication, parliamentary pressure finally forced a debate. Sir John Anderson, Lord President of the Council, ‘a dry old civil servant-turned-minister’,18 led for the government with so little enthusiasm for Beveridge’s plan that he inflamed not only the Labour benches but a significant minority on his own side. MPs heard him declare ‘there can at present be no binding commitment. Subject only to that… I have made it clear that the Government adopt the scheme in principle.’19 The following day Kingsley Wood, the Chancellor, ‘lingered with apparent satisfaction over the financial perils of the plan’.20

Since the start of the war, however, the Conservative Party had ceased to be a coherent body of opinion. The thirty-five-year-old Quintin Hogg (the future Lord Hailsham), neatly characterised by Angus Calder as ‘a frothing, bubbling, mockable but curiously clever young man’,21 had returned from the front to join a dining group of other youngish Tory MPs which met at ‘a little restaurant in the Charing Cross Road’22 (Conservatives having always had a penchant for plotting in supper clubs). The MPs were much attracted by Macmillan’s Middle Way view of a mixed economy steering a course between socialism and old-style laissez-faire capitalism, and were busy forming themselves into the Tory Reform Committee which was to receive tacit encouragement from Conservative ministers such as Butler, Eden and Macmillan himself. ‘What brought us together,’ Lord Hailsham recalled almost fifty years later, ‘was our feeling that the attitude of our leaders in the corridors of power as exemplified by their pussy-footing over the Beveridge Report was unduly unconstructive and unimaginative.’23 Taking as his formula ‘publicly organized social services, privately owned industry’,24 Hogg saw Beveridge as ‘a relatively Conservative document’ and tabled a motion seeking the immediate creation of a Ministry of Social Security. More than forty other Conservative MPs signed it.