Why did democracy develop in Britain after 1850? Introduction

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The Unemployed
Labour Exchanges (1909)

  • Labour Exchanges (job centres) were set up as a response to rising unemployment. It was argued that it would be a more efficient method of providing employment opportunities than having men simply standing outside factory gates looking for work.

  • Employers would provide detailed information about job vacancies, whilst prospective employees would register by providing details of their skills, experience and requirements.


  • The first Labour Exchanges were set up in 1910, and by 1913 there were 430 of them throughout Britain. By 1914, 3,000 people per day were being fixed up with work.

  • However, as wages were generally quite low, many people saw Labour Exchanges as simply a source of cheap labour.

  • The scheme was only voluntary.

The National Insurance Act, 1911 (Part 2)

  • This Act entitled insured workers, who had been unemployed for a week, to unemployment benefit of 7s per week for a maximum of 15 weeks in any 12 month period.

  • Workers contributed 2½d per week, employers contributed 2½d per week and the Government contributed 2½d per week.

  • By 1914, 2.3 million workers were covered by the scheme, mainly in construction, shipbuilding and engineering – trades which were susceptible to fluctuating employment levels (cyclical/seasonal pattern of unemployment).

  • The insured worker had to register as unemployed at a Labour Exchange from where he would draw his pay.


  • The Act only covered 7 trades, which left many workers without any insurance against unemployment.

  • Unemployment benefit was only payable for 15 weeks per year.

  • For many workers, the contributory nature of the National Insurance schemes (sickness and unemployment) meant a cut in their wages, and therefore may have further encouraged poverty.

The Employed
The Liberal Government also passed a number of acts which sought to improve workers’ conditions:

  • Workmen’s Compensation Act, 1906 – this allowed compensation for injury to health caused by working conditions as well as accidents.

  • The Merchant Shipping Act, 1906 – this introduced stringent regulations on food and accommodation on British ships.

  • The Coal Mines Act, 1909 – this introduced the 8 hour day for miners.

  • The Trade Boards Act, 1909 – this set up boards to set minimum wages in 4 sweated trades. Almost 400,000 workers were covered by the scheme, mostly women.

  • The Shops Act, 1911 – this gave shop assistants a statutory ½ day off each week. However, it did not limit the hours of work, which led to shop assistants often being made to work later on other days to make up the time.

  • The Minimum Wages Act, 1912 – this set up local boards to set wages in each mining district.

All of these reforms are significant, especially to those most directly affected. However, they were reforms aimed to help specific groups of workers who had specific problems. They were not really measures that contributed to the setting up of a Welfare State.

The Liberal social welfare reforms of 1906-1914 were significant reforms. They had a very positive impact on the lives of many people and they undoubtedly eased hardship for many thousands of working people. These reforms attempted to tackle specific problems in society and tried to make life easier for many. They were a huge advance on what had happened in the 19th century and marked a clear move away from laissez-faire. However, in most areas, the reforms were inadequate and certainly did not represent the creation of a Welfare State. Important areas such as housing were neglected; there was no attempt to create anything approaching a National Health Service. Education was largely untouched. The Government made no effort to influence in any way employment and unemployment. A degree of social security was introduced but it was very limited and patchy. Even the Liberals responsible for the reforms, such as Lloyd George and Churchill, recognised this but considered it the best they could do at that time. They also saw it as a first step on which later governments could build. It is this that is the real success of the Liberal reforms. They did not create a Welfare State to any extent but they did lay a very considerable foundation on which a Welfare State could be built.
How successfully did the Labour Government of 1945-51 deal with the social problems identified in the Beveridge Report of 1942?



Or a bit of both…


(poverty or need)

This could not be tackled in one easy step:
National Insurance Act (1946)

This is a contributory system of insurance (i.e. you, your employer and the government contribute or ‘chip in’ towards it) to cover you against illness, unemployment, maternity leave, widow’s pension, retirement pension and a death grant to cover funeral costs. In other words, for all eventualities “from the cradle to the grave”. This is basically an expansion of the Liberals National Insurance Act of 1911.

Good points: Provided cover for those who needed it most.

Weak points: People could only benefit from it after 156 contributions.

People were only covered from illness for a year and a half.

It was very costly to run due to the large number of officials needed to operate it.

Weekly contributions took up about 5% of average earnings! Would they have been better off keeping their money?

People joining the insurance scheme for the first time were not entitled to full pension benefits for ten years.

The level of payment did not rise with the cost of living so did not provide enough money for many. Even by “appointed day” on 5 July 1948 the levels set in 1946 were too low!
National Assistance Act (1948)

Provided benefits for those not covered by the National Insurance Act. National Assistance Boards were set up to help citizens whose resources were insufficient to meet their needs.

Good points: A “safety net” for those who missed out on National Insurance cover because they were unemployed or hadn’t made enough contributions yet.

One off payments could be given for essentials (bedding, clothing, etc) as well as weekly payments

Weak points: Benefit levels were set too low.

Because people had to pay 156 contributions towards National Insurance before receiving it the National Assistance was over subscribed.

It was “means tested” so unpopular especially with the old even though it was not as harsh a test as earlier means tests. This put some off applying.

Family Allowances Act (1945)

Although started by the wartime government, this was passed to attack household poverty to ensure wages could be spent on other areas while children were securely looked after. A small amount was paid to all mothers of two or more children.

Good points: Wasn’t means tested.

The money was not paid to the fathers but to the mothers, who it was felt were more likely to spend the money on what the children and household needed

Industrial Injuries Act (1946)

This was a big improvement on previous legislation, under which it had been difficult and expensive for a workman to prove that an injury or disability had been caused by his job.

Good points: The act made insurance against industrial injury compulsory for all employees.

Under the terms of the act, industrial injury benefits were to be paid at a higher rate than for ordinary sickness.

Compensation was paid by the government, not individual employers, and all workers were covered.


(lack of health care)

National Health Service Act 1946

For the first time every British citizen could receive free medical assistance.

Good points: medical, dental and optical services free of charge. Treatment by GPs and in hospitals was free also.

These benefits were free at point of use, no patient being asked to pay for any treatment.

Weak points: Many of the hospitals were old and out of date.

National Insurance only covered 9% of the running costs so it had to be paid for through general taxation – the public are never happy at tax increases.

By 1950 the idea of free treatment for all was undermined when charges were introduced for spectacles and dental treatment.

Doctors could still run private surgeries. Money could still buy better health which went against the ethos of the NHS.


(poor housing)

Most of Britain still had slum areas and overcrowding was a serious problem made worse by bomb damage during the war. To deal with the problem of squalor the government concentrated on the building of homes for the working class after the war. The government aimed at building 200,000 houses a year and many of these were prefabricated houses which were assembled quickly onsite.
Housing Acts 1946/1949

Good points: Local authorities given financial assistance and access to building materials (which were in low supply at the end of the War) to build 1.25 million new permanent homes

Weak points: No where near enough new homes were built and many people remained in “prefab” homes, army barracks and even train carriages by the end of 1951. Although Labour’s building programme compares poorly to previous governments, people are not too critical of them over this considering the level of house destruction during the War along with the lack of building materials, increase in marriage and “baby boom” after the War.
New Towns Act (1946)

Good points: 14 new towns were built across Britain, including Glenrothes and East Kilbride in Scotland providing clean safe homes away from the old overcrowded and war damaged cities.

Weak points: The towns were soulless and often left working class families cut off from their previous areas due to a lack of transport.
Access to the countryside Act (1949)

Opened up public footpaths in rural areas.

Good point: Got city people into the fresh air away from their disease ridden city slums.


(lack of education)

Education Act (Butler Act, 1944)

This was actually passed by the 1944 war time Coalition government and was proposed by the Conservatives. But it was the Labour government that implemented its measures.

Good points: Secondary education became compulsory until the age of 15.

Provided meals, milk and medical services at every school.

Weak points: The building of new schools concentrated on the primary sector to cope with the baby boom; the secondary sector was largely neglected.

An examination at age 11 years (called the '11+') placed children in certain types of school, according to their ability. Those who passed this exam went to senior secondary schools and were expected to 'stay on' after 15 years and possibly go to university and get jobs in management. Children who failed the exam were not expected to stay at school after 15 years and they were expected to get the unskilled types of employment. This did nothing to create more equal opportunities for working class children.

Employment and Training Act (1948)

Linked closely to Idleness.

Good points: To create a skilled work force

Funding for school leavers to train for a new skilled job


(being unemployed)

After the war, there seemed to be work for everyone as Britain rebuilt itself. The Labour Government succeeded in its commitment to maintain high levels of employment after the war. By 1946, unemployment was reduced to 2.5 % (even Beveridge had not though it possible to get it below 3%) and this was in spite of huge post-war problems such as shortages of raw materials and massive war debts.
Employment and Training Act (1948)

Linked closely to Idleness.

Good points: To create a skilled work force

Funding for the unemployed and “demobbed” soldiers to train for a new skilled job.

One way in which the government kept almost full employment was through “nationalisation” - this means that the government took control of certain industries such as iron, coal and steel manufacture. Careful with this one though! Nationalisation can be done for many reasons at different times so is not technically part of a normal Welfare State so you need to make it relevant. Emphasise that the Labour government Nationalised on purpose to help create employment at this time.

Good points:The government could use tax money to keep a “nationalised” business going even if it was a failure so that they could keep people employed and paying their tax and National Insurance contribution.

Weak points: Much of this success was built on the Marshall Plan. A giant loan of £1263 million given by the Americans to stop Communism spreading into Britain.

Nationalisation on this scale was very costly especially as many were poorly operated. However, the economic arguments about Nationalisation are not so important here. The key point is that it made jobs when needed.

This is a good link to the BBC. It looks at who is responsible for the Welfare State and how successful it was:

Check out this guy as a good revision tool. But be careful… He does a great job describing what Labour did but isn’t very critical in analysing the success or not of their action. There is a good link to the Liberal reforms and other relevant parts of our course as well:


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