Bread for All – the Origins of the Welfare State

Chris Renwick

Allen Lane, £20

Review by Iain Macwhirter

WE LIVE in an iconoclastic age – literally, as statues of the great and the good of past centuries are torn down to atone for historic crimes. You wonder how long British reformers like William Beveridge, father of the welfare state, will survive the trashing of reputations. For, as Chris Renwick explains in Bread For All, Beveridge believed in eugenics, the idea that the human race could be improved by selective breeding.

The origins of the welfare state confirm how misguided it is to dismiss historical figures because of wrong thinking. It's what they did that counts, and Beveridge was, if nothing else, a brilliant salesman of radical ideas. When he submitted his report, “Social Insurance and Allied Services” to the wartime UK cabinet in 1943 proposing to abolish “want, disease, ignorance, squalor and idleness”, it was treated with tolerant scepticism. Winston Churchill didn't subscribe to its philosophy; he was an old-style liberal who thought the state should be kept out of peoples' lives. But he saw the usefulness of the idea of “cradle to the grave” social provision as a way of motivating the British working classes to win the 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?

It did happen, and under the most difficult economic circumstances. 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, it also introduced the economic policies that thinkers like Beveridge believed were necessary to guarantee a civilised society. Beveridge had also submitted a report “Full Employment in a Free Society” which argued that it was the responsibility of the state to guarantee that everyone had a decent job.

It was said of Clement Attlee, the downbeat Labour Prime Minister in 1945 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 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%. The Post War Settlement, as it was called, endured long after the Labour government lost power in 1951. Wealth taxes lasted right through the 1950s 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. Keynesians 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 Piketty.

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 Renwick has performed a valuable service to those of us who fear its days are numbered.