Britain’s new bargain: Social Security for One Nation Britain

by Liam Byrne | 01.12.12 | in: Communities, Equality, Public services, Squeezed middle, Universal credit, Welfare reform, Work and Pensions

My speech to the Fabian Society on the 70th Anniversary of the Beveridge Report, 1st December 2012, Toynbee Hall

I can’t tell you what a privilege it is to deliver a few words to day to mark the 70th anniversary of the Beveridge Report.

I can’t think of a better place to speak than here at Toynbee Hall.

And I can’t think of a better host than the Fabian Society.

The Beveridge Report is part of our new testament.

Toynbee Hall is a hallowed spot.

And the Fabian Society has always been full of the best evangelists.

It was in this Society, and in this place, my political hero, Clement Attlee was taught his socialism a century ago.

Here he found his calling for politics and his practical idealism.

A calling he heard here and in the streets around us that inspired him to join the Fabians.

And in his autobiography, he tells of the fateful moment.

When together with his brother Tom, he walks into a lecture hall to be greeted by the sight that triggers profound alarm.

Every man on the panel is sporting long beards.

He whispered to his brother in horror;

‘Have we got to grow a beard to join this show?’

I know I speak for many here when I say I for one am glad that the Fabians no longer insist on beards.

And Clem Attlee joined regardless.

 

The lesson of our history

So, what of the report we celebrate today?

It’s play with three acts that should be better known.

The story opens with Sir William Beveridge allegedly weeping on his appointment.

He wanted a different job. He wanted to be organising manpower on the Home Front to help defeat the Nazis.

But officials working for the second hero of our tale, Ernest Bevin, said in no uncertain terms, that Sir William was simply impossible to work with.

So Bevin recommended the disappointed knight to his colleague, Arthur Greenwood, to lead an enquiry into the small matter of social insurance and Beveridge simply seized the moment.

In the first 9 months of 1942, he took evidence from 127 individuals, pressure-groups and lobbyists.

In April, Home Intelligence reported big support for his idea of all-in social insurance.

In May, the Labour party voted for one comprehensive scheme of cash payments for emergencies, family allowances and a NHS.

In July, Beveridge unveiled his five giants.

By summer, he had struck a ‘deal’ with Keynes on the money.

And finally as the winter drew in, on 1 December seventy years today, the BBC began broadcasting from dawn the details of the plan in 22 different languages.

His timing was perfect.

In November 1942, the Allies had beaten Rommel in the Battle of Egypt, counter-attacked in Stalingrad and secured the Pacific base of Guadalcanal in a decisive naval battle.

It was not as Churchill said, the beginning of the end.

But it was the end of the beginning.

Interest in what it was the country was fighting for hit a new high, and that interest swept the Beveridge Report off the shelves.

It immediately became the most popular government white paper – until the Profumo report.

Sex and social security was never going to be a fair competition.

And then the second act began.

The Cabinet did not discuss the report until January 1943.

Before the Cabinet met, Clement Attlee told the newspapers that ‘social security to us can only mean socialism’.

He minuted Churchill to say planning for Beveridge must begin;

‘Mere preparation of paper schemes’ he said was not enough.

But the government was divided about whether a war-fighting government could advance a peace-time plan.

So, the Parliamentary Labour Party forced the question.

97 Labour MP’s rebelled against the government in February 1943, to demand planning for Beveridge to begin at once.

And in his last vote, David Lloyd George, supported the motion to advance the welfare state he had helped to create.

The following month, Churchill relented.

He gave the green-light for a powerful Reconstruction Committee to be established, with as he put it;

‘a solid mass of four socialist politicians of the highest quality and authority’. Morgan, 226.

It was here, here amongst this group of politicians that the planning for Beveridge began.

It was here, here in the Reconstruction Committee that the critical fusion between the ideals of social insurance and its motive force began.

For it was here that Ernie Bevin coupled the ideals of social insurance with the ideals of full employment.

Bevin was profoundly shaped by the experience of the 1930s.

And he had come to see how full employment and social security were two sides of the same coin.

When he spoke to the Scottish TUC in April 1943, Bevin set out how for Labour, the Beveridge Report had to be set within a wider story of employment, wage standards, housing.

‘What we are doing is to bring the whole of this thing together and try to fit it into one blue-print or plan’.

In 1944, the keystone to that plan was finished:

The famous White Paper on Full Employment which famously declared;

‘The govt are prepared to accept in future the responsibility for taking action at the earliest stage to arrest a threatened slump’. Chapter 4.

Bevin presented the White Paper to Parliament a week after D Day.

He was roundly attacked by his own backbenchers – but he was not knocked off course for the third act of the story was opening.

Preparations were giving way to action.

By the end of 1944, a white paper and then a bill and then a ministry were created.

By 1945, Labour’s manifesto ‘Let Us Face the Future’, declared a policy of ‘Jobs for all’ arguing ‘production must be raised to the highest level’ to create with the proceeds;

‘Social Insurance against the rainy day’

It boldly declared:

‘There is no reason why Britain should not afford such programmes but she will need full employment and the highest possible industrial efficiency in order to do so’

Just 6 months later at 3.48 in the afternoon on 6th February 1946, Jim Griffiths, the Minister of National Insurance, got to his feet to move the National Insurance Bill be read a second time, replete with its first clause;

Every person who on or after the appointed day being over school-leaving age and under pensionable age… shall become insured under this act’ (Col 1738)

A nation battered by war and determined to win the peace was passing the Beveridge Report into law.

The lesson of history is this:

Even in the toughest times, our country can afford to put ambition into action when we put people into jobs.

 

The lessons of Beveridge

I wanted to tell the story of the Beveridge, because I think sometimes amidst all the debate, the essential principles get lost.

I think the principles are simple, inspired by old British values;

Ambition and compassion;

Dignity and duty;

Seventy years on I think the principles are battered and bruised. But they’re still bang-on.

They are only missing that something extra we need in these new times.

The cardinal principle is this:

Full employment first.

When Jim Griffiths moved the National Insurance Bill, he began his speech with Keir Hardie.

The founder of the Labour Party:

The man who 51 years previously had stood ‘a lone figure in that Parliament’ and insisted in the first speech as the first Labour MP, on the principle of work or maintenance.

But for Labour then, just as for Labour now, the right to work brings with it the responsibility to work if you can.

I hate to remind the Fabians here, that the Webb’s in their Minority Report proposed detention colonies for those who refused work or training.

Forty years later Morrison had softened the line a bit.

But not much;

‘We have no hands and brains to waste and no resources to fritter away on those who don’t contribute to our common effort’.

He told party conference: ‘Let us point the finger of public scorn at such parasites who make themselves comfortable at the expense of the whole community’.

Today, we would not – and I would not – use language of the Webbs or Morrison – but we must insist the right to work comes with the responsibility to work if you can.

The second principle was contribution. Beveridge famously insisted on a contributory principle:

“Benefit in return for contributions, rather than free allowances from the State, is what the people of Britain desire.

And third, Beveridge knew that a combination of jobs for all and contribution from all would give him the cash and consensus for universal services.

Universalism became the third leg of the stool.

Beveridge knew this;

‘However comprehensive an insurance scheme, some through physical infirmity, can never contribute at all and some will fall through the meshes of any insurance.’

So, the 1944 White Paper on Social Insurance set out to embrace the entire population;

‘concrete expression is thus given’ said the Report ‘to the solidarity and unity of the nation, which in war has been the bulwarks against aggression and in peace will be its guarantees of success in the fight against individual want and mischance’ (para 6)

Two big and basic causes of poverty were targeted;

Households where the ‘breadwinner’ was either ‘ill, out of work or past working age’ and those households with children.

A system of unemployment and sickness benefits, pensions, and family allowances; was proposed.

With contribution from the individual, from employers, and from the state.

To this was added;

  • Disability benefit
  • A national scheme of insurance against industrial injurires;
  • A comprehensive rehabilitation scheme ‘as a permanent social service’.

It was a very British and a very grand design.

Seventy years on these principles are battered and worn but they’re right.

But let’s be honest with each other.

Today the welfare state isn’t popular.

Today its finances are under pressure.

And the world around is radically different to 1942.

If we want to save social security we have to renew it for the 21st century and not freeze it in the past.

Nearly two-thirds of Britons say the benefit system does not work well in its current form.

In the future, we will have fewer people in work to pay to resolve these problems.

Yet, 70% of agree that the creation of the welfare state is one of Britain’s proudest achievements.

People like the theory and not the practice.

So let’s keep the theory, and update the practice. Let’s restore the founding principles.

And let’s start with full employment.

Today the foundation stone of social security is gone.

The right to right and responsibility to work are empty.

Let’s look at contribution.

Starting with Phillips’ Committee in 1954 and what Ruth Lister called, Mrs Thatcher’s “two decades of attrition”, the contributory principle has been well and truly done in.

And there is one challenge more.

Today, Britain feels the biggest squeeze in living standards since the 1930s.

It’s a challenge the Beveridge welfare state never really confronted.

Beveridge’s basic instincts were shaped by the mass unemployment of the 1930s.

So his blue print tackled poverty and set out to “minimise disruption to earnings”.

But today, the economic challenge to working people is different. It’s delivered by the great squeeze on wages.

So our challenge is not simply to “minimise disruption to earnings”.

It’s to maximise potential of earnings.

Our challenge is not simply unemployment and poverty.

It is the cruel truth that British workers are producing more, but they’re earning less.

So, right now British workers are working harder and producing more.

But what did they get in return?

They’re income has fallen by 7%.

Their jobs are more insecure.

There’s a quarter of a million fewer middle-skilled jobs to choose from.

Pension coverage has halved

And if workers lose their job, there’s four people chasing every new one.

Personal borrowing has more than tripled since the mid-1990s as workers struggle to balance the bills with pay-packets that aren’t big enough.

Now this may surprise you, but Wonga was not part of the Beveridge Report.

This crisis for working Britain is profoundly changing our country.

The men and women who came back from world war two came home determined to build a better country for their children, the generation we call the baby-boomers.

And they did it.

The combination of full employment and the Beveridge Report delivered the greatest increasein social mobility our country has ever seen.

In the Fifties, almost 40% of children born in the lowest social income groups grew up to join higher earners.

But, social mobility for baby boomers children is going into reverse.

The Resolution Foundation say incomes for low to middle income households will shrink by 5% by 2020.

Yet higher income households will see incomes rise.

Now I think this is why working people look hard at social security and asking themselves just what they get out for all the money they put in.

And for many the system is not truly in balance.

A man who has worked all his life will have contributed around £62,000 in national insurance more into the system than he will withdraw through his state pension.

They pay in but they get nothing back.

No wonder that so many are frustrated with the “nothing for something” problem.

Now, under any insurance scheme, they will be the lucky ones.

Those who pay in but never need it.

But what angers some people today is that they have huge needs – yet social security offers too little. No matter how much they’ve put in.

Today, working people need very different things from social security to what they needed in 1942.

Full employment has gone.

The job for life has gone.

Industry is radically restructured.

The labour market is all different. In fact 4/10 jobs in Britain today are part time, self employed or temporary.

Women go out to work. Female employment has risen by over 50% since 1971 – 4.5 million more women work than when my mum had me – and went back out to work.

We built and sold off all the council houses and didn’t build anymore. We have chronic undersupply.

We’re ageing. Levels of disability are higher. Care obligations have multiplied.

Working people today need new things:

  • Millions need a job and a government committed to full employment and a strong bridge to the world of work from school and retraining when what they learn at school is out-dated
  • Thousands need support to work and not a scrap-heap if they become disabled
  • Parents need childcare, not just child benefits
  • Millions need new housing, not just subsidised rent
  • Millions need social care, and help to care
  • And most of us need help to save not long term because we need a private pension in the future and not just a state pension

These are the things that working people need.

But for all the money working people put in, they don’t get these things back.

The social contract as they see it has broken down.

 

The Tories: A step backwards fails the 3 basic tests

Today, every single one of these principles is under attacks from a Conservative party drowning in the cost of its own failure.

I think it is fair to say, the Conservative party have never been especially keen on social security.

When Clement Attlee campaigned to popularise the Webb’s Minority Report it was Conservatives who heckled him.

When Beveridge reported it was a committee of Conservatives who tried to persuade Churchill to drop it.

In the 1980s, the contributory principle was all but destroyed.

The earnings link for pensions was snapped;

Earnings-related supplement done away.

Contributory unemployment insurance halved from twelve months to six.

And today, we hear from the Conservative party, an echo down the years.

Does anyone here remember Ronald Reagan and his attack on “welfare queens” 30 years ago?

Reagan never named his welfare queen but his myth inspired a movement that started with a call to responsibility and ended by ignoring every cry for help.

Today we hear the same from the government.

But here’s the truth:

Compassionate Conservatism is dead. Contemptuous Conservatism has taken its place.

Of course, we were promised something else.

We were promised a revolution.

Well, where is it?

Rising welfare bills. Rising long term unemployment. Falling living standards.

I don’t know anyone who would say that’s a success.

The bottom line is this:

It is impossible for the Conservative Party to offer meaningful renewal of the welfare state – the welfare state for working people – because they simply do not believe in charting a course for the full employment that it is necessary to pay for it.

Yet for all their words, the Tories’ failure are pushing up a welfare bill that is un-capped and uncontrolled.

Two years after David Cameron told us Britain was out of the danger zone unemployment is still far too high.

This government’s failure to get our economy moving again is pushing up the welfare bill £20 billion higher than forecast.

To pay for the cost of their failures they turn to short-changing Britain’s strivers.

The result is very stark.

It is 5 minutes to midnight for Beveridge.

Contributory benefits, already small are set to become a rounding error.

Excluding pensions, by the end of this Parliament they will be just 3% of the benefits bill.

This Government is destroying the rewards for work and the respect for dignity.

A working family on 40,000 will lose nearly £2,000 this Parliament.

If you have children, your help with childcare has been cut – over £500 for the average family.

Part time workers are now £728 better off on benefits than in a job.

And don’t think it’ll get better under Universal Credit.

Universal Credit will mean second earners see their effective tax rates go up.

1.1 million households working full time will lose £1,200 a year under Universal Credit, a cut to striving families of almost £1.4 billion.

If you’re hurt or fall ill at work, the benefits that you’ve paid in for stop paying after just 12 months, regardless of whether you’re better or not.

Reform of Incapacity Benefit is so botched that some-one is 11 times more likely more likely to end up in a tribunal hearing than in a job.

And, you’ve little protection against a pensions industry that in a worst case scenario might eat half your savings pot.

They offer us the politics of division when we need the politics of unity, the politics of One Nation, to pull our country through.

Ambition. Compassion. Dignity. Duty.

We use these words as the foundations for a country we love.

They use them as a punchline.

And that’s why we need to win government in 2015.

With a bold, popular plan for social security.

 

One nation social security

I believe that one nation is built on two old-fashioned British values: duty and decency.

I believe that one nation doesn’t build itself.

It’s built by work.

That’s why the duty to work if you can is the first principle of one nation social security.

We’re right to insist on it.

But we’re right to support it and reward it too.

I believe that we are strongest as one nation when we pull together as we pull ahead.

Pull together to look out for each other.

Pull together so we don’t leave some of our neighbours behind.

Pull together in the way that Clem Attlee saw in the streets around us nearly a century ago.

I have a very simple philosophy.

If working people are strong, Britain is strong.

That’s why we have to help working people.

I think we have to go beyond Beveridge’s narrow definition of rewarding contribution and think more widely.

I think the rules for social security should encourage the kind of behaviour that we know fosters individuals’ contribution to building one nation.

We should renew the rewards for the three good behaviours that together constitute the foundation of a one nation society; working, saving, caring.

Now, as Attlee once said: ‘It has always been our practice, in accord with the natural genius of the British people, to work empirically.

So we have to think how we help workers, carers and savers, deal with the eventualities that life today throws at them.

The challenge of getting a job.

The challenge of setting up home.

The challenge of being a working parent.

The challenge of falling sick.

The challenge of caring for another.

The challenge of saving for the future.

These are the challenges of the real world that aren’t solved by finding another group in society to blame.

Together, this is an agenda for making sure people can get into jobs – and work the hours they want, save for a home, and save for a decent retirement.

For creating a country where people who go to work won’t be worse off – because we reward responsibility.

It’s a country where childcare problems don’t hold anyone back if they want to get a job and get on.

It’s a country where if you do the right thing you stand a better not a worse chance of getting a home.

But, let’s be honest today about the scale of the challenge.

I come here on this anniversary to pay tribute to the remarkable legacy of the Beveridge report, but also to say in all candour that while the spirit, the ideals, the principles of the great man live on, we must forge a new settlement for our own times, not constantly seek to recreate a world that has in fact moved on.

I believe a return to full employment is the key to our advance just as it was in 1945.

This government is spending £9 billion more than planned on unemployment and housing benefit because it throttled the recovery. That is money we’re wasting.

If we had childcare like Denmark’s and an employment rate for women to match, we’d have 1 million more women in work, and £4.5 billion in extra tax receipts.

If we had a many over 50s in work as Japan, we have nearly have a million extra in work, and £3 billion in new taxes.

But I have to be honest even this is probably not enough to pay for our ambitions.

We will have choices to make if we want to deliver the social security working people need in Britain today.

And we will have new responsibilities to ask.

Beveridge offered us five giant evils he wanted to slay;

Let me offer today five giant challenges we have to conquer if we want to deliver social security that helps working people get on.

First, work.

We need a government recommitted to full employment.

Prepared to make sure work pays more than benefits.

Prepared, for example, to offer a Real Jobs Guarantee to our young people.

But in return, we have to insist that young people have a responsibility to take the jobs they are offered and not stay on benefits. This is the only way we will drive down the costs of failure.

Second, homes. We spend £9 billion on paying rent to private landlords. Government has a responsibility to help meet their costs. But landlords take too little responsibility for driving up conditions and bringing down prices – so we’d have more to spend on social housing. That has got to change.

Third, care. We have to find ways to support parents and carers juggle their responsibilities to loved one. But, when government lifts burdens, we won’t raise the employment rate unless parents and carers take responsibility to contribute in new ways like going back out to work.

Fourth, we have to unlock ability not simply see disability. We have an absolute cast iron obligation to support disabled people better.

But we should make their right to work a reality whenever it’s possible.

That’s why we’re calling for fast and fundamental reform of the WCA so it linked to real back to work support.

And given 50% of households in poverty are home to someone with a disability we will not roll back poverty unless we sort this out.

Fifth, savings. People have a responsibility to save for their future. Not just rely on a state pension, but to save for a private pension too. But government has a responsibility to ensure the industry is not ripping them off.

Over the last year, Labour has set in action the detailed work to develop the policies that will make the duty to work a reality and to renew the way we support and reward the basic discipline of getting our jobs.

We will have much to say over the year to come.

Today, I want to finish by setting out the case for extra help for those who have paid so much – yet get so little.

Britain’s army of older workers;

Older workers have made huge contributions to the National Insurance fund by working all their lives.

But older workers find it difficult to find jobs following a spell of unemployment:

Did you know that half of all unemployed workers over the age of 50 have been unemployed for more than a year?

How can it be right that we leave our most experienced workers, who have paid in more than anyone else out in the cold without help?

Other countries like Sweden, like Germany, like Japan don’t make this mistake.

They make sure that they help and harnass their experienced workers.

This government has put in place nothing, repeat nothing, for older workers.

Yet giving older workers the chance to re-skill will prolong their working lives and allow employment rates in the UK to catch up with those in Scandinavia, Germany, Japan and Korea.

It’s good for living standards, its good for the deficit, its good for growth and its the right thing to do.

All offer help for low-qualified employees to finance their learning and employability, with priority for older workers.

In Japan, there are specialised offices for older job seekers and older workers.

They match workers to jobs and increase employability.

There’s help with career life-plans, Education and Training Benefit, part-subsidises for training.

Today, I can announce that Labour are looking at how we can follow suit as part of our policy review.

 

What kind of country do we want to be?

Why do good people care about the anniversary of a report first set out seventy years ago?

Because it tells us so much about the vital question to which we must cling in these times; what kind of country do we want to live in?

Some days I walk past a wonderful memorial near Whitehall, to the Royal Tank Regiment.

Its motto is one we should ponder, “From Mud, Through Blood to the Green Fields Beyond”.

Back in 1942, those lines meant an awful lot to a country in the midst of total war were hungry for a vision of what they were fighting for.

Today, millions of families are asking themselves the same question.

As we struggle to re-build our country, what is it that we are fighting for?

Those who fought in world war two forged a different country for the their children.

What kind of country are we to build for their grand-children and their great grand children?

I believe there’s one man who can inspire us to answer that question.

And he is not Sir William Beveridge.

If there was one leader who made a reality of the Beveridge Report, it was not a civil servant,or a minister, but a prime minister.

Clement Attlee.

It was in the streets around here that he was inspired to spend a life fighting for his country, in war, and in peace.

It was what he saw on these streets that inspired him.

Here was a place, he said where;

‘I found there was a different social code

‘Thrift, so dear to the middle classes, was not esteemed so highly as generosity.

‘The Christian virtue of charity was practiced not merely preached’

When he was campaigning to become Prime Minister in 1945, Attlee’s appeal was rooted in this community that practiced what it preached.

To a war-battered nation hungry to move from mud and blood to the green fields beyond, Attlee said this;

‘We call you to another great adventure which will demand of you the same high qualities as those shown in the war;

‘the adventure of civilisation

An adventure where ‘all may have the duty and the opportunity of rendering service to the nation, everyone in his or her sphere, and that all may help to create and share in an increasing material prosperity free from the fear of want’

Free from the fear of want. Free from the fear of war.

As we mark this 70th anniversary of the Beveridge report, as we mark that milestone in the progress of our country, as we seek to plan out a different kind of future, a future where we are once again One Nation.

I think those are fine words to guide us.

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