The Evolution of the British Welfare State

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Thus far, much of scholarly endeavor has been either about welfare state expansion or welfare state retrenchment, and accordingly the resilience of welfare states in relation to change. More recently, though, a number of research projects have begun to examine the new risk configurations that have emerged in the transition to postindustrial societies and that in turn have challenged welfare state arrangements that were established in the context of old, traditional risk contexts of industrial societies (Taylor-Gooby 2004; Bonoli 2005; Armingeon and Bonoli 2006). Numerous risk categories peculiar to postindustrial restructuring make an entry (Esping-Andersen 1999). Yet the central driving force of this postindustrial change is the notable rise in the international mobility of capital, which has an unprecedented impact on the welfare state. Swank has argued that Marxists, neoliberals, political scientists, economists, and popular analysts utilize “nearly identical reasoning to argue that the globalization of capital markets has effectively increased the power of capital over governments that seek to expand or maintain relatively high levels of social protection and taxation” ( 2001:203).

An enquiry was established in 1941 to propose how best to tidy up state welfare. Beveridge seized the opportunity, rewrote the script, and then redesigned the contours of British welfare. The publication of his report was fortuitously delayed. When it was produced in November 1942 it followed hard on the heels of the Allies' first major victory of World War Two. Implementing Beveridge was immediately seen as part of winning the peace. Historically informed work by the likes of Esping-Andersen ( 1990), Baldwin ( 1990), Immergut ( 1992) and Skocpol ( 1992) could all be grouped under this tradition, particularly in their articulation of the ways in which institutions and interests interact and in their claims that different paths of welfare state development have occurred over an extended period of time. It is recent debates surrounding globalization and the crisis of the welfare state, however, that have brought with them a fresh wave of theorizing in the realm of the institutional analysis of social policy. The present Government has now embarked on its programme of welfare reform. Time will tell how well it succeeds in implementing the unthinkable. Making reform workable is a more important objective. As I resigned as Welfare Reform Minister I will inevitably be seen as a biased observer. And bias in the welfare debate is something about which readers should continually be on their guard. An increasingly interdependent world economy has also led many scholars to anticipate a significant degree of convergence (Scharpf 1991; Mishra 1996; Greider 1997; Martin and Schumann 1997; Gray 2002). Indeed, many countries have embraced the free market policy prescription as a solution to a range of policy problems, and some scholars predict a long-run decline – a race to the bottom – of the welfare state (Rodrik 1997; Allard and Danzir 2000) or a future of “permanent austerity” (P. Pierson 2001b:456). On the other hand, many studies of welfare state trajectories during the 1990s and the early years of the twenty-first century indicate that various welfare states respond differently to more or less similar sets of challenges, thereby negating a second coming of convergence thesis. The key to this divergence has been the politics of reform in each country, which has produced very different results and reform paths (Esping-Andersen 1999; Scharpf and Schmidt 2000a; 2000b; Huber and Stephens 2001; P. Pierson 2001a).

Mutual Information System on Social Protection in the Member States of the European Union 1(MISSOC). At http://ec.europa.eu/employment_social/spsi/missoc_en.htm, accessed Jul. 2009. Provides basic information regarding social protection measures in the Member States of the European Union and of the European Economic Area. It is therefore smaller in scope but provides more detail and is strongly embedded in social policy discussions at the European level.

In 1909 the Trade Boards Act set up trade boards who fixed minimum wages in certain very low paid trades. Also in 1909, an Act set up labor exchanges to help the unemployed find work. In 1908 an Old Age Pensions Act gave small pensions to people over 70. The pensions were hardly generous but they were a start. From 1925 pensions were paid to men over 65 and women over 60. Widows were also given pensions. During the 18th century, the Poor Law continued to operate. In the 17th century, there were some workhouses where the poor were housed but where they were made to work. They became much more common in the 18th century 19th Century Poor Law By 1979 occupational pensions had grown from the modest initiatives recalled earlier into the great welfare success of this country. Alongside these pensions the Tories planted individually owned schemes, known as personal pensions. The advent of these schemes was their major welfare innovation. This advance, however, has been hampered by miss-selling - i.e. persuading people to leave occupational schemes almost invariably against their best interest - often accompanied by the imposition of very high charges and the absence of an employer's contribution. Even so, by 1979, Britain had more assets owned by occupational and personal pension schemes than the whole of the asset portfolio owned by other European Community schemes combined. Welfare had to work with the grain of human nature. Self-interest, one of the most powerful of human instincts, had to be the cornerstone around which welfare reform was built. Those subscribing to such views believe that the high-spending welfare regimes are coming under sustained pressure to reduce the size and cost of their welfare programs because failure to make “domestic investment conditions attractive to internationally mobile capital” (Evans and Cerny 2003:55) will lead to capital flight from their economies. Drawing from the international relations literature, Evans and Cerny ( 2003) argue that the era of postindustrialism is remarkably different from the period that preceded it. In the postwar boom period, social policy was a relatively autonomous field of policy, a domestic issue that was unimpeded by wider economic concerns and so favorable to continual increases in state spending on welfare state activity. Yet “globalization has undermined these conditions.” Hence they anticipate the emergence of the “competition state,” which is “the successor to the welfare state, incorporating many of its features but reshaping them, sometimes quite drastically, to fit a globalizing world” ( 2003:20, 24).

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Pensions and unemployment benefits were made more generous in 1928 and in 1930. In 1931 unemployment benefit was cut by 10% but it was restored in 1934. Furthermore, prices continued to fall during the 1930s. By 1935 a man on the ‘dole’ was about as well off as a skilled worker in 1905, a measure of how much living standards had risen.