Some writers mark this as the beginning of ‘retrenchment, restructured or erosion’ of the welfare state, at the 1976 Labour conference, Prime minister Callaghan’s speech was seen as a formal break with Keynesianism. Consensus of welfare policy and Keynesianism were so interlinked one would not stand up without another, therefore it meant an end to the ‘Classic welfare State’ (Loney 1986; Wicks 1978 Leonard 1979).
So the question still begs answering, what were the principles of the welfare state, and how have they been eroded? The main ideals of the Beveridge report was flat rate contributions and in return flat rate benefits in ‘time of need’. A clear sign of erosion was in Mrs Thatcher’s third term when means testing which was currently used became the norm for benefit collection and distribution (Powell 2002). Another principle which has been taken away form the classic welfare state is the idea of a universal ‘national minimum’, again under Thatcher. The way the national minimum was calculated changed, not by earnings but inflation, which does not increase in the same capacity earnings do, this certainly caused much controversy when the same was applied to pensioners (SERPS).
A conservative white paper (1979) read “Public expenditure is at the heart of Britain’s present economic difficulties” (Timmins 1996: 371). From this we can speculate the era of consensus politics of the welfare state was over. This is clear in Geoffrey Howe’s first budget of 1979; reduced income tax, cuts in social security benefit, freeze of child benefit with an attack on benefit fraud. Still unemployment was high and the cost of benefits was spiralling. It was published in a green paper (1985), ‘To be blunt Britain’s social security system has lost its way’, a report by Norman Fowler followed and it was styled ‘New Beveridge’ but fell short of its claims and was widely discredited (Powell and Hewitt 2002).
Great symbolic changes were made in the period 1979-87 under the conservatives, the attempt to abolish SERPS was met with anger, and many felt the state had turned their backs on them. In conjunction with the change of meeting ‘exceptional needs’ with grants, the ‘social fund’ gave loans from a capped budget as a last resort after approaches from voluntary sector (charities) had failed. One of the most distinguishing features of the Beveridge report was ‘cradle to grave welfare’ however this concept was lost/eroded with the termination of maternity grant and death benefit (Timmins 1996).
Education and the NHS went under the conservative knife; greater market orientation was placed under the NHS, alongside better managing at ‘every level’ (Powell 1998; Timmins 1996). Roy Griffins the managing director of ‘Sainsbury’s’ was given the task of the 1982 NHS ‘reorganisation’. With reference to education parents were given greater freedoms to choose where there child was going to be educated, parallels can be drawn with the up and coming Labour Education policy (As seen in Roof Kelly’s White paper Reforms).
The NHS had some bitter reforms. Ministers pushed the idea of ‘Producer and Customers’, trying to create competition in the private and public sector. People were given NHS vouchers for spectacles which they could use in the private market. Also NHS dentistry fell off the map, clear signs that the conservatives were not ‘rolling the state back’ but was ‘chipping away’ at the welfare state. (Powell 1998).
Once of the best examples of the erosion of the welfare state was the 1980 Housing Act. The Act was seen to help people climb the property ladder who would not usually get a foot hold due to rising house prices and fluctuating interest rates. However the selling of Council houses at cheap below market rates combined with the failure to replace now privately owned council houses had a knock on effect. Only the tower block’s and most impoverished Council estates were left for the people needing housing benefit. Crime and destitution soon engulfed these areas, “Bevan’s dream of a high quality, mass tenure of socially mixed tenants was becoming a nightmare of ‘no-go areas”. (Timmins 1996:380).
The third term of Mrs Thatcher was considered the most radical in social policy, the introduction of internal quasi markets, which separated finance from the production of welfare state, competition in all services was escalated or/and introduced. Selectiveness soon haunted these services and critics still argue league tables etc are counter productive as failing services find it hard to pick up lost momentum (Modern schools being the main victim of this policy).
The National curriculum, testing, changes to universities and abolishment of the Inner London Education Authority was bought in under Kenneth Baker (Education Minister) ‘Great Education Bill’. It was greatly opposed by professionals, as their power seemed to be diminishing and critics argued it would create two tier schooling as the best schools would attract more pupils and receive more funding and failing schools would continue to do so.
Notably the third Thatcher government (1987-90) was seen as the most radical in social security terms; however it was marked by the ‘chipping away’ at the welfare state (Glennerster 1995). John Moore was appointed Secretary of State and despite a manifesto commitment Mr Moore froze child benefit in 1987 and 1988. It has been noted, “Freezing universal benefit pushes more people into ‘dependency’ of means-testing”. We can see how the welfare state has been transformed from the derived Beveridge model.
The conservative leaders Thatcher to Major (1990), based the welfare state direction with notions of ‘responsibility and prudence’ (Hay 1996). For example ‘Poll tax’, was very unpopular (important contributor to her resignation) but Thatcher felt everyone should pay equal amounts as everyone gets the same service (Timmins: 1996). Major’s ‘Job seeker allowance’, unemployed people are given their allowances if they are shown to be taken steps to find employment, a sign of ‘responsibility’ (to make people more independent) and ‘prudence’ (as it was the right thing to do for the country).
The 1992 election saw the surprise return of the Conservative’s, this resulted in Labour to review its tax policy (tax and spend). When a massive landslide victory was given to Labour in 1997 even though there was a transformation from Old to New Labour many thought links with trade unions would be strengthened and redistribution of wealth aimed at poorer families would be the main focus. However this has failed to happen and it clearly marks a point where the classic style welfare state will not arise in British politics again.
However Labour’s aims has aroused some frustration from the Old Labour, an increase in spending has been centred on the ‘New NHS’ (Department of Health 2001) and Education. I consider the changes illustrated by; encouragement of specialist schools, the set up of the National Institute for Clinical Excellence etc more reformist or innovations rather than erosions. However a good point to make is that the ‘joined up Labour government’ are trying to tackle some of the ‘five giants’ which Beveridge concentrated on. This is in the form of campaigns to improve individuals rather than a society as a whole, ban smoking campaigns, ASBO’s on drinking etc. (Powell and Hewitt 2002).
The future of the welfare state has been laid down on a green paper report (DSS 1998) that talk of the ‘Forth age of the welfare state’ it sights the three core values ‘Work, Security and opportunity’. Whether the welfare state will enter a ‘Forth age’ remains to be seen, but the journey of the ‘State providing a safety net for the community’ has been one of evolution, devolution, reform, transformation, retrenchment and erosion. However continuity has been its main feature and should withstand the changing economic and social wide world environment.
In conclusion there are clear signs of erosion within the welfare state. However to what degree has been debated since Downs published ‘An economic Theory of Democracy’ (1957), which touches on these issues discussed above. Many of the fundamental features of post war Britain have remained (benefits for those who cannot/do not work) but many have been lost (maternity grants and death benefits). If we take the above as true, it is impossible to say the welfare state has been completely eroded; it then follows it is impossible to say the welfare state has remain stagnant. The only rational way forward is to take the middle ground. The welfare state has been partly eroded through circumstance conversely it could be argued it has evolved with the times.