Beveridge, Covid and unfinished business

William Beveridge’s 1942 Report shaped the founding of the welfare state—but the plan was never fully implemented. Now is the time to complete the job

March 11, 2021
William Beveridge. Pictorial Press Ltd / Alamy Stock Photo
William Beveridge. Pictorial Press Ltd / Alamy Stock Photo

Recent weeks have seen growing calls for a new “Beveridge plan” to rebuild Britain’s increasingly fragile society. Covid-19 is just the latest of a succession of devastating shocks—from the 2008 crisis to Brexit—which have played havoc with people’s livelihoods. One of those calls, if short on detail, has come from Labour’s leader, Keir Starmer.

So is an updated version of the sweeping post-war welfare reforms instituted by William Beveridge and Labour’s Clement Attlee the right strategy for creating a more secure future? Beveridge’s 1942 Report embraced two key principles. First, it rejected the hated and intrusive pre-war system of means-testing in favour of greater universalism. And secondly, it called for a guaranteed, if basic, minimum income below which no-one would fall. For centuries, visionary thinkers had been advocating such a universal floor as a fundamental right. Beveridge believed that his measures—a mix of national insurance, family allowances, free health care, full employment and the safety net of national assistance—would provide just such a guarantee. 

In the event, his plan, as radical as it was, was never fully implemented, and the gaps have never been filled. Beveridge later acknowledged that the reforms fell short of their goals. “The picture of yesterday’s hopeful collaboration in curing the evils of want and disease, ignorance and squalor… looks like a dream today.” 

Seventy years later, progress has been limited. There is still no guaranteed minimum, leaving millions to fall through the state’s meagre and patchy “social security net.” Benefit levels are amongst the lowest in Europe, many still lack entitlement, while 5 million sanctions have been issued in recent years, often leaving claimants with no income.

At least three of Beveridge’s “five giants”—“want,” “squalor” and “idleness”—have yet to be conquered, while poverty levels and rates of destitution are near post-war highs. The principle of universalism has been eroded in favour of a complex and punitive system of mass means-testing. This carries a very different message from universalism: not of entitlement, but of “them” and “us.” For claimants it too often means dependency, and being second-class, with capped opportunities. In some ways the dark shadow of the Victorian “poor law,” built on the idea that poverty was self-inflicted, and more anti-poor than anti-poverty, remains a key driver of modern social policy.

There have been attempts to re-design the system of social protection. One of the most promising was the Commission on Social Justice established by Labour’s leader, John Smith, in 1992, and chaired by Sir Gordon Borrie, former Director General of Fair Trade. But despite its symbolic appointment on the 50th anniversary of the Beveridge Report, it largely ducked the challenge of creating a progressive blueprint for a new age. 

Covid-19 provides a golden opportunity to tackle the unfinished business from 1945. Central to a new plan must be a guaranteed, automatic, non-means-tested income floor. The think-tank Compass has shown that constructing a floor to be grafted onto the existing system would be feasible and affordable. Starting rates could pay, say, £60 a week for working-age adults and £40 for children, giving a significant £10,400 a year for a family of four. These levels could be raised over time. Such a scheme would create, for the first time, an “income Plimsoll Line” that would boost the incomes of the poorest families, cut poverty levels, boost security and strengthen universalism. With a series of tax adjustments to pay for the floor, the gains could be concentrated among low-income households and clawed back from those on high incomes.

Beveridge and Attlee insisted that cash support needed to be reinforced by other measures, including access to free health care. That principle now needs to be extended to other key necessities on which a decent life depends, such as child and social care.

But levelling up incomes at the bottom and the rebuilding of a shrunken “social wage,” vital as they are, would not be enough on their own to counter today’s return to the normalisation of poverty. A more sustainable solution requires moving beyond Beveridge by ending the built-in inequality bias of the current economic system, and rewriting Leonard Cohen’s lyrics: “The poor stay poor, the rich get rich. That’s how it goes, everybody knows.”

Inequality was a blind spot for Beveridge. He was not an egalitarian and inequality was not one of his “giants.” As with Tony Blair a half century later, his goal was to raise the floor, while ignoring what was happening at the top. Yet poverty and inequality are critically linked. The roots of today’s heightened levels of impoverishment lie in the mechanisms used by a small and powerful elite to secure runaway fortunes at the expense of wages, livelihoods and taxpayers. Poverty has become institutionalised, baked into the inequality-driving practices of big business, the uneven division of gains from economic activity, and the rise of new social and economic turbulence. Tackling it ultimately means building new pro-equality and anti-poverty forces that ensure the cake is more evenly shared.

Today there’s much talk, but still no plan and no vision about a post-crisis society. During the war years, alongside the blueprint for social security, there were bipartisan social reforms and reports on child care, education and unemployment, aimed at securing a better future. “Patching,” as Beveridge declared, was not enough. A good start for a post-pandemic society would be to learn the lessons of the 1940s.