Liberal welfare reforms

David Lloyd George was one of the 'New Liberals' who passed welfare legislation

The Liberal welfare reforms (1906–1914) were acts of social legislation passed by the British Liberal Party after the 1906 General Election. It has been argued that this legislation shows the emergence of the modern welfare state in the UK. They shifted their outlook from a laissez-faire system to a more collectivist approach. The reforms demonstrate the split that had emerged within liberalism, between progressive liberalism and classical liberalism, and a change in direction for the Liberal Party from liberalism, in general, to a party of progressive liberalism and larger, more active government.

The Liberal welfare reforms took place after a Royal Commission on how the country's Poor Law provision should be altered. Two contrasting reports known as the Majority Report and the Minority Report were published, and as they differed so greatly the Liberals were able to ignore both reports and implement their own reforms. By implementing the reforms outside of the Poor Law the stigma attached to claiming relief was also removed..

During the 1906 General Election campaign neither of the two major parties made poverty an important election issue and no promises were made to introduce welfare reforms. Despite this, the Liberals led by Henry Campbell-Bannerman won a landslide victory and began introducing wide ranging reforms as soon as they took office.

Causes

The influence of Gladstonian liberalism declined with the rise of progressive liberalism.

• The split within liberalism led to the rise of progressive liberalism within the Liberal Party, and the de-emphasis of what some refer to as "classical" liberalism, which had allegedly been the dominant ideology within the party. Historically, liberalism emphasized a system of government to protect liberty; historically, liberalism viewed the threat to liberty as mainly coming from the force and coercion of the state. The split within liberalism occurred when many liberals viewed threats to individual liberty arising from sources other than the state, such as from the concentration of money, the amalgamation of power, or in the destitution of the poor, the sick, or the elderly. Progressive liberalism was an ideology which promoted an active government as the best guardian of liberty – both theoretical liberty and effective liberty – through government aid. Several 'New Liberals' such as David Lloyd George and Winston Churchill replaced the earlier ideology apparent in figures such as William Ewart Gladstone (see Gladstonian Liberalism) who felt that people should be more trusting of their fate to market forces and the "invisible hand" of capitalism.{
• The social investigations of Charles Booth and Benjamin Seebohm Rowntree. These investigations helped change attitudes towards the causes of poverty. Booth carried out extensive research into the poor living conditions and poverty experienced in London, whilst Rowntree made a social investigation into the problems experienced by the poor in York. These investigations provided statistical evidence for genuine moral concern for the poor. They stated that illness and old age were greater causes of poverty than idleness and moral weakness. Rowntree was himself a close friend of Lloyd George, after the two met in 1907 after Lloyd George became President of the Board of Trade. Rowntree himself hoped that his proposals could influence Liberal policy.
• The threat from the emerging Labour Party. Socialism was an increasingly popular ideology. If the Liberals did not put forward popular policies, they were in danger of losing votes and handing the House of Commons to the Conservatives.
• The trade union movement was growing especially during the period 1910–1912. Unless living conditions were improved, there were genuine concerns that workers may turn to communism or rebellion.
• The fact that the Labour Party allowed the Liberals to return to form a government, as they held the seats needed for a majority after the 1910 General Election, meant that further legislation was passed, since the Labour Party, which was socially democratic, was allied to workers through their affiliated trade unions.
• The condition of soldiers during the Boer War was considered unacceptable. The British government had trouble enlisting enough able-bodied recruits to the British army.
• Germany and the USA were overtaking Britain as economic powers – the success of social legislation in Bismarck's Germany made leading Liberals in the UK such as David Lloyd George and Winston Churchill want to put forward similar legislation.
• The emergence of public works schemes set up to improve living conditions which were often run by the Liberals raised the possibility that such schemes could occur on a national scale.

Previous social legislation

The Conservative government in office before the Liberals came to power passed the Unemployed Workman's Act in 1905 and the Employment of Children Act in 1905. Slum housing was also cleared for new houses to be built. Much of this legislation was left for local authorities to implement – their attitudes affected whether legislation was fully implemented.

Liberal reforms 1906–1914

Children

In 1906 Children were provided with free school meals. However, many local councils ignored this system, as it was not compulsory for them to provide the free meals and the cost to the council was far greater than was subsidised for. The provision of free school meals was made compulsory in 1914, in which year fourteen million meals per school day were served (compared with nine million per school day in 1910), most of which were free. In 1912, half of all councils in Britain were offering the scheme. The government realized that they could not fight WW1 with a force of malnourished and ill children, when they had to conscript. Also, following an unfavourable report by the Board of Education’s inspectors on infant education in 1906, school provision for children under five was restricted (previously, the normal age for the entry of working-class children into full-time education had been three). In 1907, the Notification of Births Act came into being, which sought to quantify and analyse the causes of (and ultimately further reduce) infant mortality.

In 1907, the number of free scholarship places in secondary schools was increased. If working-class pupils passed a scholarship examination, then their fees would be paid for them by the Local Education Authority (LEA). A quarter of places in most secondary schools would be reserved for scholarship pupils. Bright working-class children were therefore provided with the opportunity to climb ‘the educational ladder,’ while for those pupils who failed the scholarship exam, some LEAs had ‘Central Schools’ which provided a practically-based curriculum for children between the ages of 11 and 15. In 1908, the Children and Young Person's Act formed part of the Children's Charter which imposed punishments for those neglecting children. It became illegal to sell children tobacco, alcohol and fireworks or to send children begging. Juvenile courts and borstals were created instead for young offenders so they did not have to stand in adult courts and go to adult prisons for most offenses.

Medical inspections began in 1907 but many poor families could not afford the cost of the doctors fees to get treated; it was not until 1912 that medical treatment was provided. However, education authorities largely ignored the provision of free medical treatment for school children. Tax allowances for children were introduced in 1909 to help families on low incomes, and in 1910 the Education (Choice of Employment) Bill 1910 was passed, enabling local authorities to provide vocational guidance for school-leavers, with the Board of Education providing grants to authorities from 1911 onwards to carry out this purpose. By mid-1912, however, only forty-one local authorities had responded.

Elderly

In 1908, pensions were introduced for those over 70. They were paid 5s a week (estimates of the value of this in 2010 are difficult to ascertain, the average wage of a labourer being around 30s. a week ) to single men and women and 7s 6d to married couples, on a sliding scale. The single persons rate applied to those over 70 earning under £21; this sum could be collected at the local post office. The pensions were means-tested (to receive the pension, one had to earn less than £31.50 annually) and intentionally low to encourage workers to make their own provisions for the future. An example of how low this amount was is that if an elderly person was to live on their pension alone they fell below Rowntree's poverty line. It was a struggle for elderly persons to claim their pension as they had to prove that they were not drunkards, for example. Also, to qualify for the pension scheme, they had to have worked to their "full potential". There were no fixed guidelines as to what "full potential" was, so people who had been briefly unemployed could be penalised. To be eligible, they also had to have lived in the country for 20 years or more, so many immigrants could not claim their pensions, or British people who had worked abroad and returned to Britain to retire. The Labour party argued that most people would not live until their 70th birthday because in the worst industrial slums the average life expectancy was in the mid-40s.

Workers

In 1909 labour exchanges were set up in order to help unemployed people find work, by providing centres where a large number of employers and the unemployed could post jobs and apply for them respectively. By February 1910, eighty-three labour exchanges were open, and proved to invaluable in helping people find employment). In 1913 these labour exchanges were putting around 3000 people into a job each day. Another measure taken was the 1909 Development Fund, which was an attempt made by the Liberals to provide work in times of Depression. This Fund was devoted to increasing employment opportunities through measures such as afforestation and the provision of smallholdings in the countryside. The National Insurance Act (Part I) passed in 1911 gave workers the right to sick pay of 10s a week and free medical treatment in return for a payment for 4d (the payments would last for 26 weeks of sickness). The medical treatment was provided by doctors who belonged to a "panel" in each district. Doctors received a fee from the insurance fund for each "panel" patient they treated. The National Insurance Act (Part II) gave workers the right to unemployment pay of 7s 6d a week for 15 weeks in return for a payment of 2½d a week.

Health Insurance

Under Part 1 of the National Insurance Act 1911 compulsory health insurance was provided for workers earning less than £160 per year. The scheme was contributed to by the worker who contributed fourpence, the employer who contributed threepence and the government who contributed twopence. The scheme provided sickness benefit entitlement of nine shillings (£36), free medical treatment and maternity benefit of 30 shillings (£120). An estimated 13 million workers came to be compulsorily covered under this scheme.

Unemployment insurance

Under Part 2 of the National Insurance Act 1911, which dealt with unemployment insurance, most insured workers were given seven shillings in unemployment benefit which could be claimed for up to 15 weeks a year. This scheme was also financed through the contributions of workers and government. Although only a minority of workers were insured by this scheme, it never the less covered a number of trades and industries, such as shipbuilding, which were particularly vulnerable to fluctuations in employment.

Reforms after 1910

After 1910 the Liberal Party did not have a majority in the House of Commons and so entered into a coalition with 42 Labour Party MPs who had been elected. This led to further reforms as the Liberals required Labour support and Irish support to remain in office. In 1912, school clinics were set up to treat children who had been diagnosed as having an illness during a School Medical under the 1907 scheme. This measure ensured that more children had access to free medical care. From 1912, Exchequer grants were paid to education authorities providing medical treatment for children, and by 1914 214 out of the (then) 317 local authorities were providing some kind of medical treatment for children.

In 1913, a Trade Union Act was passed which clarified the legal position of trade unions while also restoring their political power, together with the financial position of the Labour Party. A year later, Local Authorities received grants from the government to provide maternal and child welfare services.

The People's Budget (1909)

Main article: Parliament Acts 1911 and 1949

The Liberal reforms were funded by David Lloyd George passing his Finance Bill (that he called "the People's Budget") which taxed the "rich" in order to subsidize "working" citizens and the ill and injured.

Lloyd George argued that his budget would eliminate poverty, and commended the budget thus:

This is a war Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests".

The budget met opposition in the House of Lords and, contrary to British constitutional convention, the Conservatives used their large majority in the Lords to vote down the Budget. In response, the Liberals turned to (what they believed to be) the widespread unpopularity of the Lords to make reducing the power of the Lords an important issue of the January 1910 general election.

The Liberals returned in a hung parliament after the election: The Liberals formed a minority government with the support of the Labour and Irish nationalist MPs. The Lords subsequently accepted the Budget when the land tax proposal was dropped. However, as a result of the dispute over the Budget, the new government introduced resolutions (that would later form the Parliament Bill) to limit the power of the Lords. The Prime Minister, Herbert Henry Asquith, asked Edward VII to create sufficient new Liberal peers to pass the Bill if the Lords rejected it. The King assented, provided that Asquith went back to the polls to obtain an explicit mandate for the constitutional change.

The Lords voted this 1910 Parliament Bill down, so Asquith called a second general election in December 1910, and again formed a minority government. Edward VII had died in May 1910, but George V agreed that, if necessary, he would create hundreds of new Liberal peers to neutralise the Conservative majority in the Lords. The Conservative Lords then backed down, and on 10 August 1911, the House of Lords passed the Parliament Act 1911 by a narrow 131–114 vote.

In his War Memoirs, Lloyd George said of this time that "the partisan warfare that raged around these topics was so fierce that by 1913, this country was brought to the verge of civil war."

Limitations

While the Liberal reforms were one of Britain's most ambitious welfare reform programmes, there were several limitations to the reforms they passed. Free school meals were not compulsory. Pensions were refused to those who had not been in work most of their life and life expectancy at this time was only 55 so many people never lived long enough to receive a pension. The labour exchange programme often managed to find people only part-time casual work. The poor had to pay National Insurance Contributions out of their wages and the 7s 6d was not enough to live on. Unemployment and sickness pay also only lasted for a limited time. Free medical care was available to only a wage-earner, not the wife or children or grandparents and other relatives. The welfare measures introduced by the Liberal government concerning the sick, the elderly, and the children did, however, lead to a reduction in poverty, with the total number of paupers falling from 916,377 in 1910 to 748,019 by 1914.

Contemporary criticism

File:Liberal reforms socialism.jpg

The National Union of Conservative and Constitutional Associations criticized the reforms of Lloyd George as "socialist".

The Liberal reforms received criticism from those who saw this level of government action to mitigate social evils as interfering with market forces and thus being antithetical to the operations of a free market. One political cartoon of the time criticised the reforms as socialist in nature. The cost of the reforms was also criticised and there were also critics who suggested that the reforms would not work in practice.

There were classical liberals who opposed these reforms; this included Harold Cox, elected as a Liberal in 1906, and who was almost alone among Liberal MPs in his opposition. He considered them to be "eroding freedom" and "undermining individual responsibility". The Liberal journalist and editor of The Economist (1907–1916), F. W. Hirst, also opposed the reforms and the welfare state in general.

Some workers objected to paying 7d per week to the National Insurance contributions. The chant "Taffy was a Welshman, Taffy was a thief" was chanted at Lloyd George by workers and referred to the suggestion that Welshman Lloyd George was taking their wages away from them. However, Lloyd George responded with his famous phrase "Nine pence for four pence" which referenced to that fact that employers and the government were topping up the workers' contributions.

Legislation

• Trade Disputes Act 1906 – Protected labour unions from frivolous legal claims, such as the subject of a strike claiming economic damages caused by the voluntary withholding of labour by workers, or the subject of a boycott claiming the union economically damaged them by encouraging people to voluntarily shop elsewhere.
• Workmen's Compensation Act 1906 – Granted compensation for injury at work.
• Merchant Shipping Act 1906
• Education (Provision of Meals) Act 1906
• Education (Administrative Provisions) Act 1907 – created school medical inspections .
• Matrimonial Causes Act 1907
• Mines Act 1908 – Miners now worked 8-hour days.
• 1908 Children and Young Person's Act (Children's Charter)
• Old Age Pensions Act 1908
• Labour Exchanges Act 1909
• Trade Boards Act 1909
• Housing and Town Planning Act 1909
• National Insurance Act 1911
• Shops Act 1911 – shop owners could now take half a day off work per week.
• Coal Mines (Minimum Wage) Act 1912

From 1911 MPs were given a salary of £400 per annum, meaning that it was much easier for working class people to stand for election.

Further reading

• Origins of the Liberal Welfare Reforms, 1906–14 (Studies in economic and social history) by James Roy Hay ISBN 978-0333135884

External links

• BBC site assessing reasons for the Liberal reforms
• Liberal welfare reforms 1906–11
• Achievements of the Liberal reforms
• An interactive 'spider diagram' showing reasons for the Liberal reforms
• BBC bitesize revision site
• BBC page on the nature of the reforms
• BBC page on the effect the Liberal reforms had on different sections of society
• Historic inflation calculator