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Social Insurance and Allied Services - The Beveridge Report


Born 1879. First journalist on Morning Post , then civil servant, academic and politician. Lifetime expertise in unemployment and labour-market problems. Pioneered first national network of labour exchanges (job centres) in 1910 - in today's terms, Chief Executive of Employment Services Agency. Permanent secretary aged 39, then Director of LSE, later Master of University College, Oxford. Chaired new Unemployment Insurance Statutory Committee 1934-44.

Rejoined civil service in World War II. Asked in June 1941 - to own disappointment - to chair inquiry on improving administration of benefits.

Report Social Insurance and Allied Services (pub Dec 1942) focused lifetime's experience of social policy. Vision of defeating the Five Giants of Want, Disease, Ignorance, Squalor and Idleness roused euphoric public reaction. By Feb 1943 National Government committed in principle to most of plan's recommendations despite reservations about cost and raising expectations.

Further influential but unofficial study, Full Employment in a Free Society , pub 1944. Briefly Liberal MP for Berwick on Tweed 1944/45. Created peer 1946. Died 1963.


Pre-1948, some benefits existed for most risks, but provision fragmented and uneven:

  • responsibility split between 9 central departments, 5 types of local committee, 6,600 Approved Societies
  • many workers excluded from insurance. Cover lost by pay increases above a threshold, changes of job and changes of marital status
  • extent of insurance inconsistent. Employments could be insured for sickness but not unemployment; unemployment but not sickness; pensions but not sickness or unemployment
  • no rationale for benefit levels. One-third of elderly people needed means-tested top-ups. Increases for dependants with unemployment benefits, but not sickness benefits or pensions
  • national system of means-tested top-ups not available to sick, disabled, widows etc - only to unemployed and elderly
  • no agreed uprating policy. Income threshold for old age pensions remained unchanged for 40 years.
  • equal statutory contributions yielded unequal benefits. Amounts paid by Approved Societies differed


Unified, universal and comprehensive insurance-based system - available "to all classes for all purposes" - backed up with universal access to consistent means-tested benefits. Based on six fundamental principles:

  • flat rate of benefit: same level of subsistence for all, whether pensioners or unemployed
  • flat rate of contribution: equal pay for equal return
  • unified administration for both insurance and assistance - no primary role for Approved Societies
  • adequacy of benefit to meet need, eg including additions for dependants
  • comprehensiveness: covering all classes for all purposes
  • classification: population divided into groups such as employed, self-employed, housewives with different contribution rates and entitlements

Essential preconditions:

  1. by universal family allowances to preserve incentives among low-paid workers with children;
  2. by free health service;
  3. by full employment , ie no more than 3% unemployment

Other significant recommendations:

  • pensions paid on retirement from work , not simply on age. Based on contributions over the whole working life , rather than (as previously) the last five years. Increments for deferred retirement
  • new higher pension rates to be phased in gradually as contribution income accumulated. Recommendation rejected. Full benefits introduced - at a slightly lower rate - from Day 1
  • maternity and death grants: Churchill's "social security from the cradle to the grave"
  • Unemployment Benefit should be unlimited. Recommendation rejected: 180-day time-limit continued, but extended for people with good insurance records. Increased to one year in 1966, returned to 26 weeks in 1996 with introduction of Jobseeker's Allowance
  • benefits to be at subsistence level , with only residual role for means-tested top-ups. Recommendation rejected. Government argued that "social insurance must necessarily deal in averages of need and requirement. It cannot adapt itself to the almost infinite variety of individual conditions"
  • married women could elect not to pay personal insurance but instead obtain pension through husband's insurance as one of "married team". Housewives not working outside the home excluded from insurance


Enormous simplification compared to previous arrangements. Rational, logical, inconsistencies eliminated. But inflexible and difficult to fine-tune

Flat-rate contributions simple but - over time unsustainable. Flat rates affordable by lower-paid workers not capable of financing benefits at politically acceptable levels. From 1961, earnings-linked contributions introduced to avoid deficits - full earnings-relation from 1975

Common benefit rates for unemployment, sickness and pensions rational but did not take account of:

  1. political pressures to favour "deserving" groups or
  2. differences in duration on benefit

Concept was for state foundation on which individuals could build through their own efforts. In practice State role dominant: created excessive expectations from State, lacked structures to encourage non-state provision

Insurance-based scheme focused on interruptions in/cessation of employment in normal working life. Took insufficient account of inability to acquire contribution record through disability or caring responsibilities. Later seen as serious weakness in overall vision

Provisions for married women based on rigid assumption of male breadwinner/female homemaker. Unresponsive to post-war social and labour market changes. One in three married women opted out of insurance in 1948, laying long-term basis for gender disparity in income in old age

Fundamental structural problem caused by Government's rejection of Beveridge's recommendation for subsistence-level insurance benefits combined with the 1948 introduction of pensions at lower than recommended rate. This forced large continued post-war reliance on means-tested National Assistance - intended by Beveridge only to be residual


  • probably originated in Germany in 1920s, with same pejorative overtones as in USA today "on welfare"
  • term first defined in OED 1955 as "a polity [state] so organised that every member of the community is assured of his due maintenance, with the most advantageous conditions possible for all"
  • not used by Beveridge, who derided the "Santa Claus" state. Believed benefits must be earned


"To plan for the prevention of individual poverty resulting from those hazards of personal fortune over which individuals have little or no control" (Cmd 6550, 1944, para 1)

"Freedom from want must be achieved in the first instance by social insurance - benefits must be earned by contributions" (Cmd 6550, 1944, para 7)

Why a universal scheme?

"In a matter so fundamental it is right for all citizens to stand together , without exclusions based upon difference of status, function or wealth" (Cmd 6550, para 33)

"The scheme as a whole will embrace, not certain occupations and income groups, but the entire population. Concrete expression is thus given to the solidarity and unity of the nation , which in war have been its bulwarks against aggression and in peace will be its guarantees of success in the fight against individual want and mischance" (Cmd 6550, 1944, para 8)

Why start NHS and National Insurance together?

Pre-1948 sickness insurance combined cash benefits and payment for medical needs in one contribution. Beginning a free health service and the other new schemes together avoided altering contributions

Why 5 July?

Marked end of contribution year for existing health insurance - itself linked to the start of national sickness insurance in 1912 under Lloyd George's 1911 Act

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Key dates
The Beveridge Report
Before the Welfare State
Building National Insurance
Benefits then and now
Women, children and child support
The aftermath of war
The contemporary view