This Act was the core of the Beveridge report: state-run insurance, paid for by employers, employees and the general taxpayer, from cradle to grave. Flat-rate contributions in return for flat-rate benefits, but twice as many of them as the schemes they replaced: unemployment and sickness benefits, maternity grants and allowances, allowances for dependants, retirement pensions and the £20 death grant which was enough, just, to pay for a minimal funeral.
The basic benefit rates were set at 26s. od. (£1.30) for a single person and 42s. od. (£2.10) for a married couple. And in one of the two key breaks Griffiths made with the Beveridge plan, old age pensions were to be paid in full from the Appointed Day. As an economy measure, Beveridge had recommended they should be phased in, starting (in 1942 prices) at 10s. od. (50p) a week and rising by two-year instalments over twenty years to the full rate. ‘I found this unacceptable,’ Griffiths said. The proportion of pensionable age population had risen from 6 per cent at the turn of the century to 13 per cent by 1946. But ‘the men and women who had already retired had experienced a tough life. In their youth they had been caught by the 1914 war, in middle age they had experienced the indignities of the depression, and in 1940 had stood firm as a rock in the nation’s hour of trial. They deserved well of the nation and should not wait for twenty years.’28 The new pensions started within three months of the 1946 Act becoming law and although it was a mighty expensive decision, almost certainly nothing else would have been politically tenable. Even the wartime coalition, with Churchill at its head insistent that expenditure could not be committed until the war was over, had in 1943 rejected phasing in.29
The final plank in the new vessel, the National Assistance Act, followed, piloted jointly through Parliament by Griffiths and Bevan. It redesigned the means-tested safety net to be stretched beneath the minimum platform of insurance benefits that Beveridge had devised. The most hated part of the old system, the whole household means-test, had already been abolished in 1942 and replaced by means-testing of individuals and couples. The Bill’s self-declared and bold aim was ‘to terminate the existing poor law’. It nationalised the responsibility for cash payments, removing them from the old local government-based Public Assistance Committees, and renamed them National Assistance. The local authorities, however, did retain welfare services for those who by ‘age, infirmity or any other circumstances’ were in need.30 These included old people’s homes, which were already steadily replacing the old workhouses, meals on wheels, and other services – the precursors of the social services departments.
Apart from paying pensions in full, the other key change from Beveridge was the level at which benefits were pitched. Beveridge had insisted they must provide ‘subsistence’ – enough to live on – despite the difficulties of defining that sum. Thomas Sheepshanks’s civil service committee, set up in 1943 in the wake of Sir William’s report, had abandoned subsistence, using different arguments to reject the principle for different benefits, while the Treasury had argued that subsistence simply could not be afforded.31 The benefits Griffiths paid were higher than those the coalition had subsequently proposed in its 1944 White Paper, and he told the Commons: ‘I believe we have in this way endeavoured to give a broad subsistence basis to the leading rates.’32 In his 1969 autobiography, he still appeared to believe that was the case.33
But as Brian Abel-Smith has recorded: ‘The index measuring the cost of living had been fiddled by both governments. The prices of sub-items which figured in the index were held down while comparable items were allowed to increase in price. By the time the full scheme was introduced in 1948 … benefit rates were nearly a third below what Beveridge had recommended as necessary for subsistence.’34 More important, he adds, they were only just above the means-tested National Assistance payments, and those applying for assistance usually had their rent paid in full. Those on the non-means-tested insurance benefits did not. As a result, many more people than had ever been intended were to fall back on to the safety-net of means-tested benefits, because retirement, unemployment and the other insurance benefits were pitched too low and did not provide separately for housing costs (one of the problems Beveridge had wrestled with and failed to crack).
In addition, the benefits were not indexed to increase with inflation. Griffiths did consider linking benefits to prices, but officials took a narrow, compartmentalised view of the national insurance fund and persuaded him that contributions would have to change each time benefits were increased. ‘In the end I provided in the Act that the minister should review the scale of benefits every five years.’35
All this attracted little attention at the time. But the impact of the decisions was profound and forms part of the next fifty years’ history of the welfare state. Their effect by the early 1990s, as summed up by Professor Abel-Smith, was that ‘in so far as freedom from want is attained in Britain, it is by undergoing a means test, not through national insurance. Beveridge’s residual safety-net has grown to become the key agency, providing ultimate protection to more than eight million persons.’36 But on 5 July 1948 such considerations were not even a cloud in the sky. The safety net was a safety net. In 1938 there had been 1,600,000 claimants of means-tested benefits. By July 1948 the figure was virtually half that, and many of the 842,000 affected were claiming only small supplements to insurance benefits.37
If the great day was a spectacular political and social achievement, it was also a magnificent administrative one. Organising the new National Health Service had been a large undertaking. It was nothing to setting up family allowances and insurance cover for the entire adult population. Work had started in 1944 after the Ministry of National Insurance was created with just ninety-seven staff. At its most mammoth, in the 1970s, its successor department was to employ well over 100,000. Even in 1948 a vast central office had to be created to handle the 25 million contribution records there would be, plus the records for 6 million married women eligible under their husband’s contributions, and the expected 300,000 references to them each day. Former prisoners of war were roped in to help build Newcastle Central Office on the massive sixty-acre site that was to become the nerve centre for Britain’s social security system. H. V Rhodes, the ministry’s Director of Organisation, has told the tale of how the operation was put together amid austerity, desperate materials shortages and hopelessly scattered manpower. Looking back in 1949, he said, was ‘rather like reviving a nightmare’.38
The still privately-run local railway company was persuaded to build a halt purely to service the central office site, on which fourteen acres of ‘temporary’ buildings were erected. They would ‘no doubt last for a while’, Rhodes predicted drily in 1949 of buildings that were still in use in the 1990s. By 1948, the ministry had combined the work of six government departments and the 6128 approved societies which ran the existing health insurance scheme. But before the national insurance benefits started, the ‘small operation’ of providing family allowances to 2.75 million families by August 1946 had to be achieved. A disused airscrew factory in Gateshead was commandeered and 6500 staff were transferred in April 1945 from the Home, Health and Labour departments to the new ministry.
Of these new staff, 3500 were scattered around Blackpool, working in the bedrooms of 413 different hotels and boarding houses. They had been evacuated from London for the war, and had no desire to go to Newcastle. The new Family Allowance, with a baby printed on the cover of every order book, nearly did not make it. The special security paper needed proved almost unobtainable, and the ministry found it could neither beg, borrow nor steal the 150 addressing machines needed. ‘Almost at the last moment, a considerable number of the machines were flown in from Germany,’ Rhodes recalled.
As national insurance day was contemplated, Griffiths insisted on having 1000 local offices, even if some were part-time, so that every member of the population would be within five miles of one. The Ministry of Works pronounced in July 1946 that that was ‘probably impossible’. Griffiths just went ahead, ordering the 800 National Insurance Inspectors to ‘keep a sharp lookout’ for any likely property, while appealing to MPs and local councillors to join the hunt. Meanwhile the ministry turned its mind to finding 1000 safes for the local offices when lack of steel was holding up