Britain has a new, very different government – and now that he is in No 10, Keir Starmer confronts a landscape of social and economic desolation in a country that never recovered fully from the financial crisis of 2008, and the austerity that followed it. Since then, the country has endured the further economic hammer blows of Brexit, the pandemic and also wars in both the Middle East and Ukraine, which caused a surge in inflation and worsened the cost of living crisis.
With meagre productivity growth, an ageing population and a preceding Conservative government paralysed by ideological arguments over Europe, Britain drifted for over a decade, sliding into a state of calamitous national mismanagement, the consequences of which are clear in our dysfunctional public services.
The way out will require nothing less than the re-making of Britain, on a scale not seen since the end of the war. The extent of the change necessary to build Britain’s postwar society was captured in the 1942 report by William Beveridge, which offered a vision of a new Britain.
The Labour government of 1945 took the report – with its recommendations that included a new programme of social security and a state-run health system – and put it into practice. It worked.
Beveridge’s starting assumption was that society was stalked by five great evils: squalor, ignorance, want, idleness and disease. But if Beveridge were alive today, what would those five evils be, and how can a new government confront them? Here, in a series of essays, the New European takes aim at those questions, and sets out its “Beveridge Report 2.0”, a manifesto for how to pull Britain back from the brink, offering five new themes: technological over-reach; health; despair; want; and climate. They differ from the 1942 original, but the sense of urgency is just as acute and the need for action equally pressing.
Starmer’s new government has already launched into action, with announcements on planning reform and private sector investment especially eye-catching. Urgency is good – but in time, it will be the quality of the ideas and the will to put them into practice that will count.
The five ideas that follow in this updated Beveridge Report, set out by some of Britain’s leading policy thinkers, describe some of the most important challenges facing Britain today. If Starmer is to succeed, he will need to confront them.
Introduction
by Nick Timmins
On a chilly November night in 1942, in the midst of the second world war, huge queues formed outside the headquarters of His Majesty’s Stationery Office in Kingsway, London. They were there to buy a document with the distinctly unexciting title of “Social Insurance and Allied Services”. It is now widely seen as the founding document of Britain’s modern welfare state. In HMSO folklore, nothing was to outsell it until the Denning report into the sex and spies scandal of the Profumo affair 20 years later.
The report’s author was Sir William Beveridge, a deeply atypical 62-year-old civil servant. A man with more careers behind him than most, Beveridge had been a journalist, permanent secretary and academic, heading both the London School of Economics and University College, Oxford. He was well known as a newspaper columnist and as a member of the massively popular radio “Brains Trust”. He was egotistical and had a distinct talent for self-publicity.
Beveridge had initially been asked to do something of a tidying up exercise on the incoherent mess of pre-war benefits. He had, however, unilaterally extended hugely his terms of reference, declaring that “a revolutionary moment in the world’s history is a time for revolutions, not patching” and that “the purpose of victory” (which was still more than three years away, and still very uncertain) “is to live in a better world than the old world”.
The core of the report does indeed deal with the social insurance that is in its title, setting out what became Britain’s postwar “cradle to grave” social security system (it included both a maternity and a funeral grant). This was to be paid for by weekly national insurance contributions – and without any form of means test. Beveridge, like many others, had a loathing of the household means test of the 1930s, one so punitive that he said it was offered only “on terms which make men unwilling to have recourse to it”.
The aim of this national insurance-based social security system was to abolish what Beveridge dubbed “want” – and what we would call poverty.
However, in Bunyanesque prose, with the points hammered home by the use of giant capital letters, he declared that merely creating a system of social security was “a wholly inadequate aim”. It could be 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.” In other words, this tidying-up exercise had turned into a clarion call to tackle not just poverty, but health, schooling, housing and unemployment.
On top of that – and to make his social security system work – Beveridge made three “assumptions”. First, there would be tax-funded children’s allowances paid regardless of means (so that larger families would have some protection both in and out of work). Second, that there would be a national health service “without a charge on treatment at any point”. And third, that governments would commit themselves to a policy of full employment.
The public reaction was ecstatic. Beveridge described the experience of speaking to packed halls as “like riding an elephant through a cheering mob”. The reaction of the wartime coalition government was much more mixed. Labour was broadly in favour. But Winston Churchill warned publicly against imposing “great new expenditures on the state” without knowing the postwar circumstances. Kingsley Wood, the chancellor, condemned the whole thing as “an impracticable financial commitment”.
The report’s detailed, practical proposals – other than its three huge “assumptions” – are centred on social security, not the other evils. But its assault on “the five giants on the road to reconstruction” – Want, Disease, Ignorance, Squalor and Idleness – captured postwar aspirations perfectly. The report, in effect, defined the postwar settlement.
The Beveridge report made history. But it was also the product of history.
From the minority report of the 1909 Royal Commission on the Poor Law onwards, there had been growing calls for a national health or medical service of one sort of another – including from the British Medical Association, which was so vehemently to oppose the health minister Aneurin Bevan’s plan for the NHS. The “Homes fit for Heroes” that Lloyd George promised at the end of the first world war had failed to live up to initial promise.
But over the 20 years between the two world wars, local government had built well over a million council houses. The economics of John Maynard Keynes had made a policy of full employment look possible, and the great depression, coupled with the household means tests of the time, had created a sense of “never again”.
That sentiment was neatly captured in the visit of the Conservative Churchill and Labour’s Ernest Bevin to the troops just before D-day. Bevin, who was minister of labour, recalled the question he was repeatedly asked: “‘Ernie, when we have done this job for you, are we going back on the dole?’ … Both the prime minister and I answered: ‘No, you are not.’”
Even during the war, some progress was made. The coalition government legislated for family allowances. White papers on social security, housing and employment policy were produced. Butler’s mighty 1944 Education Act reached the statute book, but it was largely unimplemented. The Conservative Henry Willink produced a white paper on a National Health Service, promising a service “free to all”. But the way he proposed to organise it satisfied nobody, and it was that structure which Bevan tore up – nationalising the hospitals and making the NHS largely tax-funded.
It was to Labour, too, that the detailed creation of the new social security system fell. Hugh Dalton, the chancellor, agreed the cash for that and for the NHS “with a song in my heart”. After a slow start, a million council houses were built by 1951, with Bevan – also the housing minister – insisting on generous space standards, which meant they were the first to be snapped up when Margaret Thatcher’s government introduced the right to buy.
The new welfare state brought huge gains, not just for the least well-off but for the middle classes and above, even as they paid the taxes to fund it. No longer did they have to pay school fees or the market cost of private healthcare or insurance. Their children received maintenance grants at university, and it was disproportionately their children who entered higher education. It is little wonder that “free” health and education remained the most popular parts of the welfare state.
The middle classes also gained, from maternity benefits and family allowances, along with the prospect of a state pension and a death grant of a size that at the time would cover a basic funeral. But their stake in the social security system was smaller than that of the less well-off, thanks to the design Beveridge went for – the original sin in the view of his harshest critics.
Other European countries built modern welfare states after the war, but in general they went for earnings-related contributions and earnings-related benefits – the better-off paid in more, but they also received more in higher benefits. Beveridge went for a flat-rate system for both elements, aiming to provide only a minimum of out-of-work and other benefits – not a system that, at least for a period, better preserved an individual’s economic place in society.
In other words, his very British approach of flat-rate national insurance created a minimum platform on which individuals could stand. But it was a platform down to which they fell when unemployment or long-term illness struck. For many years the middle classes, by and large, were at less risk of unemployment, but they had further to fall when that did happen. As a result, support among the better off for social security has never been as strong as it has for health and education.
If Beveridge were around today, he would be looking at a very different society to that of the 1940s. The population is half as large again, is massively more diverse, has much greater life expectancy and the role of women has been transformed – Beveridge expected most women to return to being housewives once their war work was done. The school leaving age was 14 in Beveridge’s day, and fewer than 3% went to university, against almost 40% of 18-year-olds now.
Nonetheless, he would recognise the NHS, although he would doubtless be stunned by its size and scope. He would likewise recognise the basic state pension, which, after many travails over the years, is now broadly back to being what he proposed. But he would be horrified at the way the working-age benefit system – in many ways the core of his report – has become so means-tested. The national insurance element of it is barely clinging on by its fingertips.
Many factors have driven that – the rise in divorce, and more women having children on their own, neither of which are insurable risks. Greater recognition of the costs of disability, which again does not fit easily with the insurance principle. Housing benefit is like trying to run upwards on a down escalator, as its means-tested help with rising (and more market-like) rents has replaced “bricks and mortar” building, which allowed councils and housing associations to offer cheap rents. Plus the way the benefit system – through tax credits and Universal Credit – is used to support people in low-paid work, not just when they are out of it or ill.
Beveridge would have to acknowledge, and the new Labour government must also now take as its starting point, that while elements of his five giants have been tamed to varying degrees and at various times over the decades, none have actually been slain. And he would note that, as a result, there have been calls over the years for a new Beveridge. One that would look not just at the original issues, but at pressing modern ones, such as climate change.
What follows in these pages is an attempt to provide exactly that.
