When William Beveridge submitted his report to the wartime UK cabinet proposing the abolition of “want, disease, ignorance, squalor and idleness”, he was regarded with tolerant scepticism. Winston Churchill, didn’t believe a word of it, though he saw the usefulness of the notion of what he called “cradle to the grave” social provision as a way of motivating the British working class to fight the Second World War. Few around the cabinet table believed that a comprehensive national insurance system, and a free health service, would ever happen. Who would pay for it all?
But happen it did, and under the most difficult economic circumstances amid the ruins of post-war Britain. In 1945, a third of Britain’s wealth had been consumed by the war, along with most of the British Empire. National Debt had risen to more than 200% of GDP. Yet the Labour government of Clement Atlee implemented the Beveridge plan almost in its entirety. It not only established the comprehensive system of national insurance and the National Health Service free at the point of need, but also changed the very nature of British capitalism.
It is not often recognised that many of the interventionist economic policies implemented by Atlee’s government had come from Beveridge. As Chris Renwick explains in this vivid account of the intellectual origins of the Welfare State, Beveridge also submitted a parallel report called “Full Employment in a Free Society” which insisted, against the views of laissez faire economists of the day, that it was the responsibility of the state to guarantee that every citizen had a decent job. This was a radical proposal which not even Jeremy Corbyn’s Labour Party would perhaps fully endorse today.
It was said of Clement Attlee, the downbeat Labour PM, that “if he had got up in the Commons and announced The Revolution, it would have sounded like a change in a regional railway timetable”. But the former solicitor was as close to a revolutionary leader as Britain has seen. His government nationalised the Bank of England, the coal industry as well as gas, electricity, the railways, iron and steel. Labour implemented the Butler Education Act which introduced free secondary education and free school meals.
To pay for the NHS, council housing and schools, death taxes of up to 75% were levied on large estates, and the top rate of income tax reached 90%, though the basic rate was lowered from 50% to 45%. The Post War Settlement, as it was called, endured long after the Labour government lost power in 1951. Wealth taxes lasted right through the 50s and 60s. The top rate of income tax was still 83% in the 1980s when Margaret Thatcher reduced it to 40% and the basic rate to 25%.
It seems to us almost incredible that such a radical change could have been possible in a capitalist society. Partly of course, it was the very existence of an alternative in the shape of Soviet Communism, that persuaded the British ruling classes that they had to change to survive in 1945. However, as Renwick argues, it wasn’t simply fear of revolution that motivated the Beveridge reforms. He was a member of the Liberal Party, like John Maynard Keynes, the economist upon whose economic theories Beveridge constructed his welfare state. They in turn built on the theories of liberal thinkers and reformers of the previous century, including the Scot, John Stuart Mill, and J.A. Hobson.
Hobson’s theory of “underconsumptionism” in 1890 held that unemployment was a result of too much of society’s wealth gravitating to the wealthy, who don’t spend it on goods, but save and speculate with it, thus causing a failure of demand. This is essentially what John Maynard Keynes believed had happened before the Great Depression. Keynesian thought the state could prevent this happening again, but they weren’t Marxists. They wanted to save capitalism from itself, not abolish it.
Reading this book you realise the extent to which three decades of Thatcherite and free market dogma has driven out of public debate a whole range of social and economic ideas which were never seen as particularly left wing. William Beveridge was no communist; he was a patrician, socially conservative Oxbridge don. But his policies entailed state intervention and redistribution on what is today an unimaginable scale. Hobson’s theories were essentially the same as those of the radical economist, Thomas Picketty, author of “Capital in the Twentieth Century”.
It is as if we have turned full circle, yet most of us don’t realise it. Jeremy Corbyn owes far more to William Beveridge than to Leon Trotsky. “Bread for All”, doesn’t tell us a great deal about where the Welfare State is going today, but by laying out with great clarity and authority, where it came, from Charles Renwick has performed a valuable service to those of us who fear its days are numbered.