Beveridge: Provisional Rates of Benefit and Contribution

27.Social insurance should aim at guaranteeing the minimum income needed for subsistence. What the actual rates of benefit and contribution should be in terms of money cannot be settled now, and that for two reasons. First, it is impossible today to forecast with assurance the level of prices after the war. Second, determination of what is required for reasonable human subsistence is to some extent a matter of judgment; estimates on this point change with time, and generally, in a progressive community, change upwards. The procedure adopted to deal with this problem has been: first, from consideration of subsistence needs, as given by impartial expert authorities, to determine the weekly incomes which would have been sufficient for subsistence in normal cases at prices ruling in 1938 ; second, to derive from these the rates appropriate to a cost of living about 25% above that of 1938. These rates of benefit, pension and grant are set out in para. 401 as provisional post-war rates; by reference to them it is possible to set forth simply what appears to be the most appropriate relation between different benefits and what would be the cost of each benefit and of all benefits together ; it is possible to show benefits in relation to contributions and taxation. But the provisional rates themselves are not essential. If the value of money when the scheme comes into operation differs materially from the assumptions on which the provisional rates are based, the rates could be changed without affecting the scheme in any important particular. If social policy should demand benefits on a higher scale than subsistence, the whole level of benefit and contribution rates could be raised without affecting the structure of the scheme. If social policy or financial stringency should dictate benefits on a lower scale, benefits and contributions could be lowered, though not perhaps so readily or without some adjustments within the scheme.

28. The most important of the provisional rates is the rate of 40/- a week for a man and wife in unemployment and disability and after the transition in addition to allowances for children at an average of 8/- per head per week. These amounts represent a large addition to existing benefits. They will mean that in unemployment and disability a man and wife if she is not working, with two children, will receive 56/- a week without means test so long as unemployment or disability lasts, as compared with the 33/- in unemployment and the 15/- or 7/6 in sickness, with additional benefit in some Approved Societies, which they were getting before the war. For married women gainfully occupied, there will be a maternity benefit at the rate of 36/- a week for 13 weeks, in addition to the maternity grant of £4 available for all married women. Other rates, as for widowhood and for industrial disability, show similar increases, as set out in detail in paragraph. 284, in dealing with the Social Security Budget. There will be new benefits for funerals, marriage and other needs, as well as comprehensive medical treatment, both domiciliary and institutional, for all citizens and their dependants which, subject to further enquiry suggested in para. 437, will be without a charge on treatment at any point. At these provisional rates, the total Security Budget, including children’s allowances and free health and rehabilitation services, is estimated to amount to £697,000,000 in 1945 as the first year of the plan, and £858,000,000 twenty years after, in 1965. The extent to which these sums represent new expenditure which is not now being incurred and the division of the total cost between insured persons, their employers and the Exchequer are discussed in Part IV of the Report and provisional rates of contribution are suggested in para. 403. The most important of these is the contribution of 4/3 a week by an adult man in employment and 3/3 a week from his employer. At this rate, with corresponding rates for other classes, the contribution of insured employees in class I for cash benefits, when the plan, including contributory pensions, is in full operation, is estimated to amount to about 25 per cent. of the cost of their cash benefits exclusive of allowances for children ; the balance will be provided by the employers’ contributions and by taxation based on capacity to pay. At the outset, the contributions of insured persons will represent a larger proportion of the total cost ; the net addition to the burden on the National Exchequer in the first year, as compared with expenditure under the existing arrangements, will be about £86,000,000.

29. The attempt to fix rates of insurance benefit and pension on a scientific basis with regard to subsistence needs has brought to notice a serious difficulty in doing so in the conditions of modern Britain. This is the problem of rent discussed in paras. 197-216. In this as in other respects, the framing of a satisfactory scheme of social security depends on the solution of other problems of economic and social organisation. But subject to unavoidable difficulties in giving a numerical value to the conception of a subsistence minimum, the scheme of social insurance outlined in this Report provides insurance benefit adequate to all normal needs, in duration and in amount. It is at the same time a scheme from which the anomalies and overlapping, the multiplicity of agencies and the needless administrative cost which mark the British Social Services today, have been removed and have been replaced by co-ordination, simplicity and economy.


30.  The advantages of unified social security are great and unquestionable. They can be obtained only at the cost of changes in the present administrative machinery whose necessity needs to be proved and can be proved case by case. The principal changes from present practice that are involved in the plan are set out below. The reasons for each of these changes are given in Part II in one or two cases they are set out there only briefly, in anticipation of fuller discussion.

1.            Unification of social insurance in respect of contributions, that is to say, enabling each insured person to- obtain all benefits by a single weekly contribution on a single document (paras. 41-43).
2.            Unification of social insurance and assistance in respect of administration in a Ministry of Social Security with local Security Offices within reach of all insured persons (paras. 44-47).
3.            Supersession of the present system of Approved Societies giving unequal benefits for equal compulsory contributions [combined with retention of Friendly Societies and Trade Unions giving sickness benefit as responsible agents for the administration of State benefit as well as voluntary benefit for their members] (paras. 48-76).
4.            Supersession of the present scheme of workmen’s compensation and inclusion of provision for industrial accident or disease within the unified social insurance scheme, subject to (a) a special method of meeting the cost of this provision, and (b) special pensions for prolonged disability and grants to dependants in cases of death due to such causes (paras. 77-105).
5.  Separation of medical treatment from the administration of cash benefits and the setting up of a comprehensive medical service for every citizen, covering all treatment and every form of disability under the supervision of the Health Departments (para. 106).
6.  Recognition of housewives as a distinct insurance class of occupied persons with benefits adjusted to their special needs, including (a) in all cases [marriage grant], maternity grant, widowhood and separation provisions and retirement pensions ; (b) if not gainfully occupied, benefit during husband’s unemployment or disability; (c) if gainfully occupied, special maternity benefit in addition to grant, and lower unemployment and disability benefits, accompanied by abolition of the Anomalies Regulations for Married Women (paras. 107-117).
7. Extension of insurance against prolonged disability to all persons gainfully occupied and of insurance for retirement pensions to all persons of working age, whether gainfully occupied or not (paras. 118-121).
8. Provision of training benefit to facilitate change to new occupations of all persons who lose their former livelihood, whether paid or unpaid (para. 122).
9. Assimilation of benefit and pension rates for unemployment, disability, other than prolonged disability due to industrial accident or disease, and retirement (para. 123).
10.          Assimilation of benefit conditions for unemployment and disability including disability due to industrial accident or disease, in respect of waiting time (paras. 124-126).
11.          Assimilation of contribution conditions for unemployment and disability benefit, except where disability is due to industrial accident or disease, and revision of contribution conditions for pension (paras. 127-128).
12.   Making of unemployment benefit at full rate indefinite in duration, subject to requirement of attendance at a work or training centre after a limited period of unemployment (paras. 129-132).
13.   Making of disability benefit at full rate indefinite in duration, subject to imposition of special behaviour conditions (paras. 129-132).
14.          Making of pensions, other than industrial, conditional on retirement from work and rising in value with each year of continued contribution after the minimum age of retirement, that is to say, after 65 for men and 60 for women (paras. 133-136).
15.          Amalgamation of the special schemes of unemployment insurance, for agriculture, banking and finance and insurance, with the general scheme of social insurance (paras. 137-148).
16.  Abolition of the exceptions from insurance
of persons in particular occupations, such as the civil service, local government service, police, nursing, railways, and other pensionable employments, and, in respect of unemployment insurance, private indoor domestic service;
of persons remunerated above £420 a year in non-manual occupations (paras. 149-152).
17. Replacement of unconditional inadequate widows’ pensions by provision suited to the varied needs of widows, including temporary widows’ benefit at a special rate in all cases, training benefit when required and guardian benefit so long as there are dependent children (paras.153-156).
18.          Inclusion of universal funeral grant in compulsory insurance (paras. 157-160).
19.        Transfer to the Ministry of Social Security of the remaining functions of Local Authorities in respect of public assistance, other than treatment and services of an institutional character (paras. 161-165).
20.        Transfer to the Ministry of Social Security of responsibility for the maintenance of blind persons and the framing of a new scheme for maintenance and welfare by by co-operation between the Ministry, Local Authorities and voluntary agencies (paras. 166-170).
21. Transfer to the Ministry of Social Security of the functions of the Assistance Board, of the work of the Customs and Excise Department in respect of non-contributory pensions, and probably of the employment service of the Ministry of Labour and National Service, in addition to unemployment insurance, and the work of other departments in connection with the administration of cash benefits of all kinds, including workmen’s compensation (paras. 171-175).
22. Substitution for the Unemployment Insurance Statutory Committee of a Social Insurance Statutory Committee with similar but extended powers (paras. 176-180).
23. Conversion of the business of industrial assurance into a public service under an Industrial Assurance Board.] (paras. 181-192).

31.This considerable list of changes does not mean that, in the proposals of the Report, either the experience or the achievements of the past are forgotten. What is proposed today for unified social security springs out of what has been accomplished in building up security piece by piece. It retains the contributory principle of sharing the cost of security between three parties -the insured person himself, his employer, if he has an employer, and the State. It retains and extends the principle that compulsory insurance should provide a flat rate of benefit, irrespective of earnings, in return for a flat contribution from all. It retains as the best method of contribution the system of insurance documents and insurance stamps. It builds upon the experience gained in the administration of unemployment insurance and later of unemployment assistance, of a national administration which is not centralised at Whitehall but is carried out through responsible regional and local officers, acting at all points in close co-operation with representatives of the communities which they serve. It provides for retaining on a new basis the association of Friendly Societies with national health insurance. It provides for retaining within the general framework of a unified scheme some of the special features of workmen’s compensation and for converting the associations for mutual indemnity in the industries chiefly concerned into new organs of industrial co-operation and self-government. While completing the transfer from local to national government of assistance by cash payments, it retains a vital place for Local Authorities in the provision of institutions and in the organisation and maintenance of services connected with social welfare. The scheme proposed here is in some ways a revolution, but in more important ways it is a natural development from the past. It is a British revolution.

32. The Plan for Social Security is put forward as something that could be in operation in the immediate aftermath of the war. In the Memorandum by the Government Actuary on the financial aspects of the plan, which is printed as Appendix A to the Report, it is assumed, for the purpose of relating the estimates of expenditure to the numbers of the population, that the plan will begin to operate on 1st July, 1944, so that the first full year of benefit will be the calendar year 1945. But in view of the legislative and administrative work involved in bringing the plan into force, so early a date as this will be possible only if a decision of principle on the plan is taken in the near future by the Government and by Parliament.