A generation of change, a lifetime of difference?

Social policy in Britain since 1979

Martin Evans, Lewis Williams, Evans, Martin, Williams, Lewis

• Publisher: Policy Press
• Year: 2009
• Print ISBN: 9781847423054
• eBook ISBN: 9781447317074
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

This innovative book addresses the historical development of social and fiscal policies from the late 1970s to the present day by asking what has changed, how these changes have affected the lifecourse and what the potential lifetime impacts of policy change are.

This book provides an overview of the development of policy change over the period and uses an innovative and unique lifetime approach "from the cradle to the grave" to put it into perspective.

The authors begin by reviewing the political changes and policy story since the 1970s and demonstrate the economic and social changes that have occurred alongside.The book then takes an innovative approach in looking at specific programmes about crucial aspects of the lifecycle - from maternity and childhood, through to adult events and risks before finally looking at retirement, survivorship and death.Finally, profiles of three hypothetical "families" - the Meades, who are median earners, the Moores, high earners and the Lowes who are low paid - are developed for 1979, 1997 and 2008 to provide a comprehensive discussion of policy change and make innovative insights for the future.

This is the first book to join up the history of policy direction with an analysis of outcomes over the whole period. It will therefore be ideal for students of social policy and attract a wide readership interested in pensions, children's support and related issues.

Part One

A generation of change

TWO

The changing British welfare state

The spotlight may fall on 1979 as a turning point in social policy but it is notably only the half-way point in the post-war welfare state. This chapter puts the past 30 years of policy change into a longer historical context and broadens the focus to consider a wide range of policy and social policy, and governmental and political change. These wider and longer-term views allow us to concentrate more on programmes of taxes and benefits in later parts of the book. Looking back, how has social policy changed and developed in Britain and how do such changes fit into the policy history before and after 1979?

The first 25 years of post-war policy

The post-war welfare state was forged under the wartime coalition government and the 1945 Labour government. Inspired by a ‘never again’ attitude to the pre-war economic crash, and the experience of solidarity and planned economy during the Second World War along with a good dose of socialist idealism, a raft of social policy legislation effectively created the post-war welfare state between 1944 and 1948. This vision of a more egalitarian Britain, dubbed by some commentators as being one of a ‘New Jerusalem’ (Addison, 1975; Barnett, 1995), was based on a welfare state and full employment.

The 1944 Education Act enacted free secondary education up to the age of 15 as a right for all, removing the elementary ‘all age’ schools and fees from state secondary schools (Timmins, 2001). Nye Bevan’s 1946 National Health Service Act introduced the National Health Service (NHS) based on universal healthcare free at the point of use, ending limited and uneven access to healthcare from a combination of fees and means tests. Bevan’s legacy on housing was short-lived. His universal vision of council housing estates being communities of all classes and occupations was based on a high standard of housing and proved impossible to sustain due to cost and material and skills shortages. The severe housing shortage began to be solved by lower-quality mass building and this programme was basically adopted by the Tories in 1951. Private sector house building and private renting were restricted and highly regulated.

Local authorities as ‘plannable instruments’ became mainstream housing providers and holders of planning powers. The role of local authorities also expanded to include direct responsibility for the new education provisions and for personal social services, including domestic help, health visiting and residential care and child protection. On the other hand, local authorities lost responsibility for health and social assistance. The reviled Poor Law system of social assistance was finally ended by the 1948 National Assistance Act, which established a unified, cross-country, means-tested safety net for all and banished the hated old-style household means test (see Deacon and Bradshaw, 1983).

The 1946 National Insurance Act implemented most of Beveridge’s publicly popular plan. The new unified and universal social insurance scheme paid flat-rate benefits in return for flat-rate contributions from workers and covered risks to livelihood from maternity, through unemployment and sickness to old age, widowhood and death. Alongside Family Allowance (introduced by the 1945 Family Allowances Act) and the NHS, this meant that Beveridge’s vision of a comprehensive system to ensure freedom from ‘want’ that covered everyone from the cradle to the grave was essentially realised. National Assistance was seen as a minor element in the new post-war, full employment welfare state. Thus at the heart of the post-war welfare state was an approach that was both lifetime in conception and universal in coverage. This forms the background to all that follows in Parts Two and Three of this book.

The development of the welfare state from this point to the 1970s is subject to some controversy. Was there an evolving political consensus on economic and social policy, ‘a commitment to the welfare state, support for full employment, Keynesian demand management, a corporatist approach to involving trade-unions in government considerations, a mixed economy and an Atlantic Alliance foreign policy’ (Fraser, 2000, p 348)? Such views tend to emphasise 1979 as a fundamental turning point (Addison, 1975; Dutton, 1997; Kavanagh and Morris, 1989). This rosy picture of consensus has been criticised by Pimlot (1988), Jones and Kandiah (1996) and Glennerster (2000), all of whom describe it as a ‘myth’. The truth lies somewhere in between. Conservative and Labour adhered to different belief systems during the so-called consensus period, placed different interpretations on the post-war settlement and differed in policy detail. Yet there was a demonstrable post-war settlement of sorts, a broad agreement on a commitment to the welfare state and Keynesian demand management until the mid-1970s. The notion of there being a ‘golden age’ of the welfare state might, though, truly be considered a myth, even if welfare spending as a percentage of gross domestic product (GDP) did grow year on year without check until the mid-1970s (Glennerster and Hills, 1998).

Radical talk, continuing consensus: Heath, 1970-74

A shift to the right was promised by the Conservative manifesto in 1970 that contained antecedents to Thatcherism: curbing inflation and trade union power, reducing income tax and shifting from direct to indirect taxation, controlling government spending, encouraging the sale of council houses and private pension provision and the highlighting of alleged ‘shirkers and the scroungers’ (Conservative Party, 1970). Edward Heath surprised most forecasters with his election victory and, in practice, his government remained grounded in the post-war Keynesian consensus as a series of policy u-turns led to the state playing a very interventionist role in the economy in the face of rising unemployment and a letting go of the right-wing model. Social policy emphasised a more targeted approach. These were the heady days of arguments over welfare principles; of universal versus means-tested approaches; and of Richard Titmuss arguing against the Institute of Economic Affairs that drew on Friedman, Hayek and the Chicago School of economists in the early days of British social policy. Overall, however, and in practice, elements of policy retrenchment (famously including the ending of free school milk) were generally outweighed by the huge rises in social expenditure that were also put in place.

Policy on secondary education between the two main political parties apparently stood in stark contrast. By 1970, Labour pledged to vigorously pursue comprehensivisation; whereas the Conservatives pledged to letting local authorities decide what sort of school was best for their area. However, comprehensivisation actually accelerated under Thatcher, despite her fundamental opposition to it in principle and her favouring of selection and grammar schools. To her later chagrin, and despite her rejection of many reorganisation proposals, Margaret Thatcher sanctioned the closure of more grammar schools than any other education minister. The percentage of children in comprehensives rose from 32% to 62% between 1970 and 1974 (Lowe, 1996).

Another architect of Thatcherism, Keith Joseph, was in charge of the ‘super-ministry’ of the Department of Health and Social Services previously created for Richard Crossman (overseeing health, the personal social services and social security). The NHS underwent extravagant reorganisation in 1974. The notion here was to create unity between hospital, general practitioner and local authority services and to introduce more efficient lines of management through a clearer hierarchy of regional, area and district levels of the NHS. Simultaneous local government reorganisation added to the ensuing short-term chaos, but even in the medium to longer term commentators agree that the 1974 reorganisation of the NHS was both expensive and had limited success (Lowe, 1996; Holmes, 1997; Glennerster, 2000; Timmins, 2001). The personal social services also saw large increases in spending under Joseph and faced two costly rounds of reorganisation, first as the unified social service departments were created in 1971 in the wake of the Seebohm Report (HMSO, 1968) and second as part of the NHS reorganisation in 1974.

In the area of social security, a number of new benefits were introduced under the Heath administration. Family Income Supplement (FIS, discussed in more detail in Chapter Four) was introduced in 1971 and was intended as a temporary measure while more radical plans to introduce a negative income tax or tax credits scheme were being considered. Attendance Allowance (discussed in more detail in Chapter Eight) was also born in 1971, albeit as an enactment of plans devised previously under Labour, and became the first categorical non-means-tested benefit to recognise the additional costs of disability. Invalidity Benefit (discussed in more detail in Chapter Seven) was also introduced, as a social insurance benefit that recognised the higher needs of the long-term incapacitated while short-term sickness remained covered by Sickness Benefit. In 1973, Supplementary Benefit was reformed to provide for higher ‘long-term’ rates for those claimants not required to sign on as unemployed – pensioners, single parents and the long-term incapacitated. Other reforms with lasting impact initiated under the 1970-74 Conservative government included the introduction of category D pensions (payable purely on the basis of age to those over 80 regardless of contribution record), the 25 pence over-80 age addition to the basic pension1, Christmas bonuses for pensioners and a commitment to annual rather than ad-hoc uprating of the basic pension. The Conservatives’ version of secondary state pensions was enacted in 1973, but never implemented, as it was repealed by Labour.

Housing policy encouraged owner-occupancy but escalating house prices and interest rates meant that the rise in owner-occupation under the Heath government was only marginal. The 1972 Housing Finance Act, however, marked a fundamental shift in housing finance in the public sector towards income-related subsidies to tenants, while at the same time extending a parallel system of rent allowances to those renting in the private sector to allow for the deregulation of rent controls. Rent rebate schemes became nationwide and compulsory. Public sector house building continued under the Heath administration, but the number of new homes built fell as a result of policy preference for the improvement of existing housing. Despite this, the percentage of overall new-builds that were in the public sector was actually greater under Heath than it had been under the previous Labour government (Timmins, 2001).

The troubled economy and industrial unrest overshadowed social policy and led to the fall of the Heath government in February 1974. In the face of rising unemployment, which would exceed the then politically sensitive one million mark in January 1972, the government abandoned the approach of its manifesto in favour of the orthodox Keynesian response to unemployment of reinflating the economy through high public expenditure. To control inflation, which was at around 10% and rising in the latter part of 1973, the government’s ultimate strategy was a statutory incomes policy legally restricting wage increases. This brought the government to a stand-off with the National Union of Mineworkers in the winter of 1973/74, a crisis that resulted in the ‘three-day week’, an early general election with Heath asking the country ‘who governs Britain?’ and Labour returning to power.

Universal vision under the economic cosh: Labour, 1974-79

Labour originally formed a minority government in a hung parliament and a second election in October 1974 resulted in an overall Labour majority of just three. Labour held power for a further four-and-a-half years, with Liberal Party support in the later stages. Inflation and unemployment rose to higher levels after external shocks to the economy, notably the global quadrupling of oil prices in 1973-74. So-called stagflation, with low growth and high unemployment combined with high inflation, was a combination of macroeconomic circumstances that challenged orthodox Keynesian approaches and the belief that a certain level of unemployment was associated with low inflation (the so-called Philips Curve). In 1976, the Labour government went to the International Monetary Fund (IMF) for a loan of £2.3 billion to save sterling. The loan was granted on condition that public expenditure would be substantially reduced and Prime Minister James Callaghan famously informed his Party conference in no uncertain terms that the orthodox Keynesian era was over:

We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the War by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step (Labour Party, 1976, p 188).

Labour had entered office on a left-leaning manifesto that promised ‘a fundamental and irreversible shift in the balance of wealth and power in favour of working people and their families’ (Labour Party, 1974) and began by increasing income tax and public expenditure to achieve this. By 1976, significant cuts were made to spending plans and the opportunities for further expansion of social policy were constrained. Even so, the five years of Wilson and Callaghan governments marked a final expansion and consolidation of social welfare.

Labour’s manifesto promised to complete the comprehensivisation of secondary education and to withdraw all forms of funding and charitable status from private schools as well as expanding pre-school and higher education. After 1976, growth in education spending was held in check (Glennerster, 1998). Mandatory plans for going comprehensive were introduced and all authorities had to submit plans to do so. Only a small number of authorities managed to delay change until the Conservatives were returned to power, with the consequence that some selective grammar schools, around 150, remain to this day. Nevertheless, the battle for comprehensivisation had effectively been won when Labour left office and the percentage of children in comprehensives continued to rise after 1979. Against a background of growing concern over educational standards, Callaghan made clear his desire to see a core curriculum, closer involvement of parents and industry in schools and the monitoring of performance against national standards. Such views would later be reflected in Conservative and New Labour education policy.

In health policy, Labour came to power with an expansionist agenda and mildly socialist commitments. Rapid growth in government expenditure on the NHS and the personal social services were seen in the first two years, but these were followed by low and negative rates of growth (Evandrou and Falkingham, 1998; Le Grand and Vizard, 1998). Labour never made good its February 1974 manifesto pledge to abolish prescription charges. Reallocating NHS resources towards deprived regions on the basis of a better appraisal of health needs using the Resource Allocation Working Party was, however, ‘quite successful’ (Le Grand and Vizard, 1998; Le Grand et al, 1990). However, no real inroads were made on the promise to drive out private practice within the NHS. The proposed abolition of pay beds was eventually compromised to a reduction of around a quarter and had the perverse consequence of expansion of private sector medicine outside the NHS to replace capacity and to cater for those who perceived the NHS as in crisis and who wanted a private alternative.

Labour ended the Tory policy on council house rents and initially froze and then increased rents by less than inflation. The national rent rebate scheme remained in place. Left-wing opposition to owner-occupation was mostly ignored and policies continued the Conservatives’ help for first-time buyers and the provision of mortgage interest tax relief. Even the sale of council houses was permitted to con...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Acknowledgements
• ONE: Introduction
• Part One: A generation of change
• Part Two: From the cradle to the grave
• Part Three: A lifetime of difference?
• References