Harold Wilson - First Term As Prime Minister (1964–70) - Domestic Affairs - Social Services and Welfare

Social Services and Welfare

According to A.B. Atkinson, social security received much more attention from the First Wilson Government than it did during the previous thirteen years of Conservative government. Following its victory in the 1964 general election, Wilson's government began to increase social benefits. Prescription charges for medicines were abolished immediately, while pensions were raised to a record 21% of average male industrial wages. In 1966, the system of national assistance (a social assistance scheme for the poor) was overhauled and renamed Supplementary Benefit. The means test was replaced with a statement of income, and benefit rates for pensioners (the great majority of claimants) were increased, granting them a real gain in income. Before the 1966 election, the widow’s pension was tripled and redundancy payments for laid-off workers were introduced. Due to austerity measures following an economic crisis, prescription charges were re-introduced in 1968 as an alternative to cutting the hospital building programme, although those sections of the population who were most in need (including supplementary benefit claimants, the long-term sick, children, and pensioners) were exempted from charges. The widow’s earning rule was also abolished. Altogether, the increases made in pensions and other benefits during Wilson’s first year in office were the largest ever real term increases carried out up until that point. Social security benefits were markedly increased during Wilson's first two years in office, as characterised by a budget passed in the final quarter of 1964 which raised the standard benefit rates for old age, sickness and invalidity by 18.5%. In 1965, the government increased the national assistance rate to a higher level relative to earnings, and via annual adjustments, broadly maintained the rate at between 19% and 20% of gross industrial earnings until the start of 1970.

Increased funds were allocated to social services during the First Wilson Government's time in office. Between 1963 and 1968, spending on housing increased by 9.6%, social security by 6.6%, health by 6%, and education by 6.9%, while from 1964 to 1967 social spending increased by 45%. During the six years of the First Wilson Government, spending on social services rose much faster than real personal incomes, and from 1964 to 1969, spending on social services rose from 14.6% to 17.6% of GNP, an increase of nearly 20%. Altogether, from 1964 to 1970, spending on the social services rose from 16% to 23% of national wealth between 1964 and 1970. As noted by the historian Richard Whiting, spending on social services under Wilson rose faster than the growth in GNP, by 65% (excluding housing) as against 37% for GNP, "a substantially better record than that achieved by the preceding Conservative governments.”

In terms of social security, the welfare state was significantly expanded through substantial increases in national insurance benefits (which rose in real terms by 20% from 1964 to 1970) and the creation of new social welfare benefits. A variety of measures was introduced under Wilson which improved the living standards of many people with low incomes.

Short-term unemployment benefits were increased, while the National Assistance Board was merged with the Ministry of Pensions and National Insurance to become the new Ministry of Social Security, which replaced national assistance with supplementary benefit, improved benefit scale rates, and provided a statutory right to benefit for the out-of-work needy. Although people were kept above a new unofficial poverty line, however, many thousands lived only just above it.

The government also succeeded in persuading people to draw assistance to which they were entitled to but hadn’t claimed before. The number of elderly Britons receiving home helps rose by over 15% from 1964 to 1969, while nearly three times as many meals on wheels were served in 1968 as in 1964. In 1968, the Ministry of Health and the Ministry of Social Security were amalgamated into the Department of Health and Social Security, the purpose of which was to coordinate benefits in cash with benefits in kind since “the services needed to deal with social insecurity are not cash benefits only, but health and welfare as well.” An Act was passed which replaced National Assistance with Supplementary Benefits. The new Act laid down that people who satisfied its conditions were entitled to these noncontributory benefits. Unlike the National Assistance scheme, which operated like state charity for the worst-off, the new Supplementary Benefits scheme was a right of every citizen who found himself or herself in severe difficulties. Those persons over the retirement age with no means who were considered to be unable to live on the basic pension (which provided less than what the government deemed as necessary for subsistence) became entitled to a “long term” allowance of an extra few shillings a week. Some simplification of the procedure for claiming benefits was also introduced. The new Supplementary Benefit scheme included a fixed basic weekly rate that those with an income below this level would now have a right to claim, while extra payments were made available on a discretionary basis for additional needs. In 1966, the period for which flat rate unemployment was payable was extended to twelve months, while the earnings limit for pensioners was extended. A long term addition of 9 shillings (which was subsequently increased to 10 shillings) a week was provided for the allowances of all pensioners and for the long term sick, while the real value of most existing benefits was increased, (such as family allowances, which were substantially raised in 1967 and 1968) with benefits rising at roughly the same rate as salaries over the course of the First Wilson Government, while family allowances were significantly increased. By 1969, family allowances were worth 72% more in real terms to a low income family with three children than in 1964. The single pension was raised by 12s 6d in March 1965, b y10s in 1967 and by a further 10s in 1969. From April 1964 to April 1970, family allowances for four children increased as a percentage of male manual workers aged 21 and above from 8% to 11.3%.

The First Wilson Government kept the old age pension rising roughly as fast as average earnings during its time in office, while campaigns were launched by the government to encourage people to take up means-tested benefits to which they were entitled to. For instance, a publicity campaign launched by the government increased the fraction of children eligible to get free school meals.

Under the 1966 Social Security Act, newly unemployed individuals were no longer denied assistance during their first month of unemployment, while men who had had their unemployment benefit disallowed for six weeks (on the grounds that they had been at fault for losing their job) were no longer subjected to a harsh rule applied by the National Assistance confining their payments to below “benefit rate.” Instead, a policy was adopted of paying these individuals their full entitlement less 15 shillings.T he Act also introduced a long term addition of 9 shillings for all pensioners receiving supplementary benefit and for others (with the exception of those required register for employment) receiving supplementary benefits for two years. In 1967, the earnings limits for retirement pensioners were raised, while other changes were made in the administration of the earnings rule.

Redundancy payments were introduced in 1965 to lessen the impact of unemployment, earnings-related benefits for unemployment, sickness, industrial injuries and widowhood were introduced in 1966, followed by the replacement of flat-rate family allowances with an earnings-related scheme in 1968. In 1968, the universal family allowance was raised for the first time in a decade. This measure was considered to be redistributive to some degree,

“from richer to poorer and from mainly male taxpayers to mothers who received family allowances, a tentative move towards what Roy Jenkins called ‘civilised selectivity’".

The National Insurance Act of 1966, which introduced supplementary earnings-related benefits for short-term sickness and unemployment, had far-reaching distributional consequences by “guaranteeing that insurance benefits rose at the same rate as wages in the late 1960s.” Trade unions were supportive of the advances made in social protection by the Wilson government, which had a considerable impact on the living standards of the lowest quintile of the population. A statement by the TUC argued that the unions’ acquiescence to the government’s incomes policy was justified given that “the government had deliberately refrained from attacking the social services."

The introduction of earnings-related unemployment and sickness benefits significantly reduced inequalities between those in work and those who were unemployed. In 1964, the net income received by the average wage earner, when on unemployment or sickness benefit, was only 45% of what he received at work, whereas by 1968 the figure had increased to 75%. The earnings-related supplement for unemployment benefits was made available to those who had earned at least £450 in the previous financial year. The supplement was paid after a twelve-day waiting period, and the rate was one-third the amount by which the average weekly earnings (up to £30) exceeded £9. The earnings-related supplement was based on the assertion that a person’s commitments for mortgages, rents, and hire purchase agreements were related to their normal earnings and could not be adjusted quickly when experiencing a loss of normal income. As a result of this supplement, the total benefit of a married man with two children went up by 52%, and that of a single man by 117.% The duration was limited to 26 weeks, while the total benefit was restricted to 85% of average weekly earnings in the preceding financial year.

As a result of the introduction of earnings related supplements to sickness and unemployment benefits and widows’ allowances, the total benefit for a man earning £30 a week now represented 50% of his earnings rather than 27% with just the flat rate (for a married couple).

Personal social services were integrated, expenditure increased and their responsibilities broadened following the enactment of the Children and Young Persons’ Act (1969) and the Local Authority Social Services Act (1970). The Children and Young Persons Act of 1969 reformed the juvenile court system and extended local authority duties to provide community homes for juvenile offenders. The legislation provided that “remand homes,” “approved schools,” and local authority and voluntary children’s homes became part of a comprehensive system of community homes for all children in care. This provided that children who got into trouble with the police should more certainly and quickly than ever before receive special educational assistance, social work help or any other form of assistance (financial or otherwise) that the community could provide. In addition, subsidies for farmers were increased, while under the Health Services and Public Health Act of 1968, largely as a result of their insistence, local authorities were granted powers to “promote the welfare” of elderly people in order to allow them greater flexibility in the provision of services.