welfare state

Political system under which the state (rather than the individual or the private sector) has responsibility for the welfare of its citizens, providing a guaranteed minimum standard of life, and insurance against the hazards of poverty, illness, and social deprivation. Welfare services include social security, which makes provision against interruption of earnings through sickness, injury, old age, or unemployment. They take the forms of unemployment and sickness benefits, family allowances, and income supplements, provided and typically financed through state insurance schemes. The services also include health and education, financed typically through taxation, and the provision of subsidized ‘social housing’. Subsidized public transport, leisure facilities, and public libraries, with special discounts for the elderly, unemployed, and disabled, are other noncore elements of a welfare state.

The phrase ‘welfare state’ was first used by Alfred Zimmern in the late 1930s, to distinguish between the policies of the democracies and the ‘war state’ of Europe's dictators. Elements of a welfare system began to be constructed in parts of Western Europe from the late 19th century, with Germany taking the lead in 1883 with a compulsory national accident and sickness insurance law, introduced by Chancellor Otto von Bismark and financed by a state subsidy. New Zealand introduced pensions in 1898, while Austria-Hungary (late 19th century), Norway (1909), Sweden (1910), Italy, UK, and Russia (1911), introduced national health insurance. The USA followed later, with the Social Security Act of 1935. The developments came in response to political and social pressures, including the extension of voting rights. They provided minimum standards, but not to all groups in society. It was not until the early 1940s, with the UK taking the lead, that a comprehensive welfare state, covering all its elements and available to all, was established.

History, UK In Britain under the poor law, which dated back to 1601 and was revised in 1834, local parishes provided for their community's poor through a parish tax. During the 19th century, groups of parishes combined to build workhouses to house and maintain those unable to earn their own living, including the poor, the aged, the disabled, and orphaned children. There were also widely-used infirmaries for the poor. Charities also provided much needed welfare services for housing, health, and educational services. Individuals, such as William Booth and Catherine Booth (of the Salvation Army) and Thomas Barnardo set up organizations to try to address poverty. The studies of Henry Mayhew, Charles Booth, and B Seebohm Rowntree demonstrated that poverty was not the fault of the poor, and changing attitudes allowed a more liberal approach to welfare. In the late 19th century, local authority spending rose rapidly as local welfare demands increased, and by 1905 they accounted for more than half of all government expenditure.

However, it was becoming increasingly clear that voluntary action was not enough. During the Boer War (1899-1902) the public were shocked to find that almost half the volunteers for the army were unfit to serve; welfare, it could be argued, was a matter of national security. Also, welfare reform was seen as a way of fighting socialism; the working class had had the vote since 1884.

The Liberal Party government 1906-14, with David Lloyd George as chancellor, introduced a series of welfare measures, including school meals and school medical services in 1906, financed by rates paid by local inhabitants; the Workmen's Compensation Act of 1906, providing compensation to workers injured at work; the Old-Age Pensions Act of 1908, giving pensions to those aged 70, subject to personal wealth; labour exchanges in 1909, to help the unemployed find work; and a National Insurance Act in 1911, a scheme whereby, in return for a weekly payment of 4d (about 2p), made up by contributions from the employers and the state, a worker could claim 10 shillings (50p) a week sickness or unemployment benefit for up to 15 weeks a year. However, compulsory unemployment insurance was only imposed on certain trades, such as shipbuilding, with irregular employment patterns.

The 1916 National Insurance Act extended unemployment cover to war-related industries and the 1920 Unemployment Insurance Act extended unemployment cover to nearly all workers except domestic services and agricultural labourers. The period of insured benefit was limited to 26 weeks in any year. Central responsibility for pensions and health insurance was extended in 1925 when old-age pensions changed to a contributory basis and were offered to many more people. Pensions for widows and orphans were introduced for the dependents of workers who made contributions. Meanwhile, local authorities provided (with financial help from central government) education and housing support, including, after the 1918 Education Act, free places in secondary schools to scholarship winners.

During the economic depression of the 1920s and 1930s, however, ‘the dole’ was seen to be an inadequate form of poor relief - it allowed only half the minimum living wage, and it was stopped after 26 weeks and replaced by the means-tested public assistance. The Jarrow Crusade of 1936, a protest at the high level of unemployment following the closure of the town's shipyard, served to highlight its inadequacies. Some unemployed people starved rather than suffer the indignity of applying. World War II substantially changed attitudes to welfare - it fostered a feeling of shared community, and evacuation allowed many middle-class families to see at first hand the results of poverty on the children they were looking after. Also, the idea that a welfare state would emerge after the war was used by the government as a motivator to keep the nation fighting.

The welfare state The idea of a welfare state developed in the UK was largely due to the influence of William Beveridge. Beveridge looked to a welfare system that would destroy the five ‘giants’ of unemployment, disease, ignorance, squalor, and want, and would protect people ‘from the cradle to the grave’. The 1942 Beveridge Report committed the government after World War II to the provision of full employment, a free national health service, a system of state education, council housing, and a social security system. The wartime coalition government accepted its main provisions, passing education (1944) and family allowances (1945) acts. However, it was the Labour government 1945-51, under Clement Attlee, which created the modern welfare state. The 1946 National Insurance and Health Service Acts established the principle of ‘universality’ in granting sickness, unemployment, and pensions benefits, as opposed to means-tested selectivity (which takes personal wealth into account), the criteria which was used in the years between the two world wars.

In July 1948 a new National Health Service (NHS) came into being, providing free health care for all, regardless of background or wealth. It has remained one of the most comprehensive health systems in the world, being financed by National Insurance contributions payable by employees and employers, as well as by general taxation. Almost all UK hospitals were within the NHS and the benefits provided include general/family practitioner consultations, operations, and unlimited care both in and out of hospitals. In the 1950s, the Conservative government accepted Labour's welfare state reforms and built upon them, with ‘social housing’ construction initiatives, and a graduated state pension scheme, which lasted from 1961 to 1975.

The modern welfare state The general concept of the welfare state was accepted as an unchallengeable idea by successive Labour and Conservative governments between 1945 and 1979. However, since its foundation, economic stringencies and changes in political attitudes have done something to erode the original scheme, though the concept remains as an ideal. In 1951 the Labour government introduced charges for NHS patients seeking spectacles, and in 1952 charges were introduced for dentures, dental treatment, and prescriptions. The Child Benefit Act (1975) replaced family allowances with child benefit and lone-parent benefit. In the 1970s the Conservative government, with Margaret Thatcher as minister of education and science 1970-74, ended the supply of free school milk to children, and charges were introduced for eye tests in the 1980s.

Following the election of Margaret Thatcher's Conservative government in 1979, the erosion of the welfare state became more substantial. Thatcher introduced free market economics increasingly into all aspects of British life, including the welfare state. The Conservative government sought to reduce the welfare budget and to encourage people to help themselves rather than relying on the state and other taxpayers to do so. Attacks on ‘benefit cheats’ and ‘scroungers’ were a regular theme of the years 1979 to 1997, as the concept of a universal welfare state was no longer accepted. This attitude was displayed in a speech by Conservative minister of employment Norman Tebbit, in 1981, in which he advised the unemployed to ‘get on their bikes’ and find work.

In October 1994 a Commission on Social Justice, established by the Labour Party, recommended a radical review of the welfare state. Once Labour was in government, from 1997, this was implemented with a March 1998 ‘Green Paper’ (‘A New Contract for Welfare’), proposing significant changes to the Beveridge model. The aim was to end ‘welfare dependency’ and ‘social exclusion’ through encouraging work (known as the ‘welfare to work’ initiative, implemented by workfare and a working families tax credit) and greater self-support. The adoption by the Labour government of policies such as workfare and the use of phrases such as ‘welfare dependency’ suggested that many believed that the welfare state system created during the 20th century in Britain had become too expensive to maintain, and indicated a changing climate of opinion on its future in Britain. However, in July 2000 Labour announced an extra £51 billion to be spent over the following three years, mainly on the health and education services - the biggest spending increase by a UK government for 25 years.

History, US President Franklin D Roosevelt's Democrat New Deal administration introduced unemployment service programmes in 1933 and, through the Social Security Act (1935), laid the foundations of the US welfare system. Disability benefits were added in 1956 and Medicare benefits (health care for persons aged 65 years or more) were introduced in 1965. US welfare programmes typically involve a partnership between the federal and state governments, though increasingly the design of such programmes has been devolved to state control. The chief elements are Unemployment Compensation; Old Age, Survivors', and Disability Insurance (OASDI); Aid to Families with Dependent Children (AFDC); Medicaid (health care for the poor and unemployed under the age of 65); and Medicare (medical benefits for all citizens over 65). Health provision in the USA is chiefly through private health insurance.

Unemployment compensation, first established in 1935, is a federal-state system, with benefit laws varying widely. The benefits are typically set at around 50% of an average worker's previous wages and are paid for up to 26 weeks. OASDI benefits received depend on age and earnings. They are financed by employee and employers' payroll tax contributions. AFDC and Medicaid programmes, designed for the needy, are administered by the states, which receive federal grants. States decide which groups are eligible for Medicaid, which provides basic hospital care and physicians' services. Typically, those eligible include families and children who qualify for public assistance, the blind, and the disabled. Medicare, a federal health insurance for the elderly, provides basic hospital care and home health services, funded via social security contributions, as well as a voluntary medical insurance scheme covering physicians' fees and hospital outpatient services. It covers around 35 million people. An attempt made by President Clinton 1993-94 to extend health insurance to all citizens was rejected by Congress.

In August 1996 President Clinton signed into law a bill sponsored by the Republican Party which, designed to limit dependency on welfare, abolished automatic federal welfare entitlements to poor families (which had been available since 1935). The bill restricted federal aid to a limited period (up to two years), after which recipients would be expected to work. The responsibility for the design of welfare programmes was also devolved to the states. Within a year, it was reported that the number of welfare recipients had fallen by 25% to 10.7 million, and by July 1999, the number of US citizens living on welfare had nearly halved from the 1996 level.

International welfare systems Internationally, the aim of creating a welfare state has been adopted in several countries, particularly in Scandinavia, but, again, often more as an ideal than a reality. The welfare state concept was built into the political structures of communist states, led by the USSR, but there too, economic realities tempered its practical implementation.