The National Insurance Act covering health (Part I) and unemployment (Part II) was the kingpin of the social policy of a Liberal Government. (Fraser et al: 2003/ p.188) Churchill and his advisers had been working on unemployment insurance scheme since 1908. Churchill relied on Beveridge and Llewellyn Smith, Permanent Secretary at the Board of Trade, to work out the details of an unemployment insurance scheme.
Beveridge had insisted in 1909 that ‘the principles of proportioning benefits to contributions must clearly be embodied in the Bill’ (cited in Frasier et al: 2003/p.188) and as a consequence the Act of 1911 established a ratio of one week’s benefit for every five contributions paid. The scheme was compulsory in a clearly defined range of industries susceptible to fluctuations (building, construction, shipbuilding, mechanical engineering, iron founding, vehicle construction and sawmilling).
The unemployment insurance was funded by workers, employer and government contribution, in which employees and employers paid 21/2d. (1p) each and the state subsidy was a third of the total, approximately 11/2d. (0.6 p) Benefits were to be 7s.(35p) per week up to a maximum of fifteen weeks. ‘In all, some 21/4 million men were to be covered against unemployment, the major hazard in working man’s life’. (Fraser et al: 2003/p.188)
Nonetheless, the insurance scheme only dealt with a small part of the unemployment problem but it did make an attempt to reduce its impact.
There was departmental discussion on whether benefits should be withdrawn from men who were to blame for their own unemployment. However, Churchill believed that insurance entitlement made any moral connotations irrelevant. As a result Churchill explains the rules of insurance as they had to be mathematical and not moral. ‘Churchill believed that any insurance scheme would have to compromise all the factors in the risk, which might include alcoholism… or trade depression’ (Fraser et al: 2003/p.186). In this view nothing at all would be gained by deviation into moral aspects of individual responsibility.
Nevertheless, there was some opposition in the country with some trade unionists still feeling that it was part of the attempt to regiment labour and to break strikes. ‘Many workmen felt that the scheme was not a solution to unemployment but just a shifting around the problem’. (Laybourn et al: 1995/p.179)
In conclusion the National Insurance Act 1911 gave the British working classes the first contributory system of insurance against illness and unemployment. Churchill defended the scheme as providing a lifebelt for those in temporary trouble, however it did not cope with the long term unemployed and it left out many occupations where there was short term unemployment.
Word Count; 493
Bibliography
Brown J. The British Welfare State a Critical History (1995)
Fraser D. The evolution of the British Welfare State (3rd edition 2003)
Harris B. The Origins of the British Welfare State: Social Welfare in England and Wales, 1800-1945, (2004)
Laybourn K. The Evolution of British Social Policy and the Welfare State (1995)
Thane P. The Foundations of the Welfare State (1982)
