The Welfare State in the Post-WW II and Present Form: An Analysis on the Development of the Welfare State
Great Britain’s welfare state from 1945-1979 mainly centers on the paradigm that after political democracy comes economic democracy. The key elements of the Welfare State is understood as being that of social security, health, housing, education and welfare of children. Within this framework, the nationalization of the core of the economy such as the steel, coal, railroads, airlines, petroleum and other core industries were made in order to have a higher degree of social planning and social control. The National Health Service was also given free and public housing was strengthened.
However, the problems posed by economic stagnation and low growth rate and the strikes and disruption particularly in coal strikes slowed the economic growth of the country. The primary reason was cited as the poor management in public sector industry. This observation was also shared by Butcher. Thus, Margaret Thatcher tried to undo the welfare state and tried to privatize state owned enterprises and lowered the assistance extended by the National Health Service.
This essay explores the political philosophy known as the Third Way, and its approach to the welfare state in the United Kingdom and how it had developed in comparison with the welfare state from the post world war two and the present system in the UK. The shift particularly in the Housing and Adult Community Care is evaluated in relation to the social, economic and political aspect of the changes in the provisions for the welfare state.
Principles of the Welfare State and the Third Way
Traditional welfare states were based on the assumption of stable families and well-functioning, full employment labor markets. Social assistance focused principally on the elderly. Income support for the able-bodied young was designed “to compensate for temporary income loss, not to provide long-term benefits” (Giddens 1998, 16). However, since the mid-1970s, advanced welfare states have been subject to on-going cutbacks and restructuring. The so-called crisis of the welfare state was initially prompted by the oil shock of 1973 which led to slower rates of economic growth, government deficits, excessive unemployment, inflation, and high interest rates.
In addition, changing social patterns have confronted the welfare state with new challenges and pressures including: 1) Labor market changes characterized by persistently high levels of unemployment; 2) Changes in family structures characterized by increases in divorce and single-parent families; and 3) The projected ageing of the populations leaving more elderly citizens dependent on government support for longer periods (Leadbeater 1997, 7; Hills 1999, 39-40).
Many commentators refer to a demographic, fiscal, and legitimization crisis confronting the welfare state (Saunders 1998, 20-31). Consequently, there has been an international trend away from collective and universal principles of social solidarity towards greater individual, family and community responsibility for welfare. One author calls this a shift from a welfare state to a welfare society based on local networks of care (Rodger 2000).
Social democratic and labor parties have responded to these social and economic changes in a number of different ways. Most have struggled to reverse an international shift towards lower social standards and greater inequality. Often the best they can do is to slow down the erosion of social benefits, and to ensure a more equitable process of retrenchment whereby the poor and disadvantaged are protected (Mishra 1999). The ideas of the Third Way arguably reflect the newest centre-left response to this crisis.
The Old Welfare State
The housing and the adult health care in the old welfare state reflects UK’s adherence to a society that gives in more to social services. The state created policies that centers on managing social services in such a way that the people particularly the poor and the elderly to have an access to social benefits.
Much of the present anxiety during this period according to Titmus (1969) was about the effects of an ‘ageing’ population on the social services which can be traced back to the Beveridge Report and the measures that followed from that report. Among a number of factors which heavily influenced the Beveridge recommendations perhaps the most important were the estimates of future population which the report employed (Titmuss, 1969).
On the one hand, then, the policy recommendations of the Beveridge Report were influenced by the assumption of a strikingly large increase in the population of pensionable ages thus presupposing some remarkable achievements in arresting the rate of organic decline; on the other hand and contrariwise, contribution rates were fixed in the expectation of more sickness claims, earlier retirement and widespread unemployment (Titmus, 1969).
The process commenced in the 1980s under previous Conservative governments, which introduced radical legislation throughout state services. This commonly involved the introduction of some form of recourse to competition, usually inter-temporal rivalry through some form of tendering/auction process, and simultaneously the devolution of financial responsibilities within state bodies, which effectively corresponded to a form of vertical disintegration (McMaster and Sawkins 1996) or, as Le Grand (1991, 1262) termed it, a “Post-Fordist adjustment.” While, with the notable exception of the private finance initiative (PFI, discussed later in this section), property rights were not transferred to the private sector, there was to all intents and purposes an attenuation in the role of the state.
The state was no longer to directly provide services, but to ensure provision: a distinction between provision and delivery was forcefully established.
Until the 1980s the United Kingdom, as with much of the rest of Western Europe, relied primarily on the state to provide/deliver the bulk of its social or welfare services (Mcmaster, 2002). The principle example was the National Health Service (NHS), where provision is (allegedly) on the basis of need as opposed to ability to pay, the great majority of NHS services being provided at zero price at the point of consumption. The major source of finance (in excess of 80 percent) is general taxation. The NHS dominates health care provision in the United Kingdom, although there has been a recent increase in the proportion of the population seeking private health care insurance. The state also demonstrated a similar dominance in the provision of education, particularly in further and higher education, Until recently, all levels of education provision were financed directly by the state. The United Kingdom’s relatively small private sector tended to be confined to primary and secondary education (with an increasing presence at pr e-school levels). Finally, the state (latterly through local authorities and other housing bodies) was heavily involved in the provision of housing, especially in cities, as a means of attempting to address a legacy of multiple social issues including overcrowding and poverty.
With the advent of the “Great Capitalist Restoration” in the early 1980s, such funding and organizational arrangements were criticized for generating inefficiencies and acting as a drag on the private sector and hence (UK) economic performance (see for example, Bacon and Eltis 1976). Also, the pressure for reform was strongly advocated in much of the academic economics literature; witness Friedrich von Hayek and the Austrian School, the rise of free market branches of new institutional economics, such as Erik Furubotn and Svetozar Pejovich’s (1972) notable contributions to the economics of property rights, the Public Choice School, as well as the growth in academic popularity of Chicago School monetarism, and notions of negative freedom (see, for example, Sen 1987).
Contemporary Welfare State UK’s current welfare policy emphasizes individual responsibility and biases the role of the state towards promotion of equality of opportunity and the provision of services targeted on specific lower income or disadvantaged groups. However, some policy-makers and professionals in the public services adhere to a different understanding of the operation of state welfare that identifies problems as the outcome of structural inequalities and not as the failure to grasp opportunities. They therefore reject the emphasis on enhancing equality of opportunity promoted by the government.
The administration of the welfare state has undergone two major reforms since its inception. The first phase, covering the 1960s and 1970s, saw central government reformed in order to allow the planning and control of public expenditure by the Treasury. The aims of this reform were managerial efficiency and economic planning. The effect was to create a system in which the Treasury allocated resources to departments, and departments to services.
During previous Conservative governments, the state provision of housing was also radically overhauled with the initial introduction of “right to buy” and restrictions on the ability of local authorities to construct new housing in the early l980s, followed by devolved provision in “social housing” to commercially oriented housing associations (Klein, 1995).
Right-to-buy legislation offered considerable financial incentives for council tenants to purchase their dwellings from the relevant local authority at a considerable discount, which frequently entailed that mortgage repayments were lower than rental payments. Indeed, subsequent increases in local authority (and social housing rents more generally) to market rates provided a further inducement to purchase. There has been a sharp increase in home ownership, and subsequent polarization in tenure patterns, in the United Kingdom since the introduction of this legislation (see, for example, Hills, 1998). Housing stock that remained within the state sector was also subject to market-oriented reform. Householders were provided with the opportunity to vote on their desire to remain tenants of their local authority. Local authorities were compelled to seek tenders for the management of their housing estates, and newly created housing associations had the right to construct “social housing” and to evict tenants.
A more significant break with the past occurred with the creation of the National Health Service. A contributory health insurance scheme first paid illness, disability and maternity benefits in 1913 (Horrell, 2000). This scheme covered most employees and entitled insured workers to out-patient care but did not provide hospital treatment, nor provide for the ill health of dependents, leaving many reliant on Poor Law and charitable assistance (Mckinnon, 1994). The ‘Beveridge Report’, Social Insurance and Allied Services (UK 1942) identified five evils – want, disease, ignorance, squalor and idleness – that comprehensive insurance and provision of services were designed to eliminate. The improvements are evident: there has been a fairly continuous increase in life expectancy and declines in infant mortality, deaths caused by pregnancy-related illnesses, tuberculosis and childhood diseases (such as measles, whooping cough, scarlet fever and diphtheria), and typhoid and paratyphoid fever and a decline in notifications of respiratory tuberculosis and smallpox.
Analysis
The United Kingdom’s welfare state services (education, health, and housing) are subject to extensive, and on-going, reform involving greater recourse to commercial firms and “the market” in the delivery of state activities (Mcmaster, 2002).
The present (New Labor) government has not to date reversed the nature of previous governments’ legislation. Indeed, the current government’s rhetoric of “change,” “new,” and “modern” may, de facto, result in a change in trajectory, as opposed to abandonment or radical overhaul, of the geist of previous reform.
British people who depend on the state for their income have been getting progressively worse off relative to average earners since the link between rises in benefits and earnings was abolished in 1981 (Hirsch, 1997). Most have to survive on incomes that have dropped by about one-fifth compared to in-work earnings. This has created a double sting. It has helped make more people dependent on means-tested benefits (because contributory ones are inadequate) and it has made life on those benefits harder. Even if a link with earnings were restored for future upratings, there seems little prospect that benefits would rise to a level that provides an adequate living standard in terms of 21st-century norms.
Such an aspiration is not alien to the prevailing political philosophy in this country – if we think carefully about our social priorities, and do not mix them up with arguments about the means of attaining them. The case of long-term care for the elderly and providing housing for poor people is again instructive. There is wide agreement on the need for better protection, not just for the poor but for middle-class people who do not wish to impoverish their offspring in old age and shelter them. This creates a strong case for a compulsory scheme, whether it is funded and run through public, private or hybrid means.
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