The second stage was the participation of the State in supplying services for the population. The principles underlying this were both traditional and new. The traditional approach was the empowerment of the local authorities, by the government, to commence measures at their own cost. This provided the foundation for the School Meals Act of 1906, which gave the local education authorities the power to offer a free school meal for children of the poor. Initially, this careful measure involved the local levy of a half-penny rate, however, the government assumed half the cost in 1914. There are two main examples of new ventures involving the provision of services being undertaken after 1906. The first was the 1907 schools medical inspection service, which was centrally organised from a new medical department within the Board of Education and involved the regular visit to schools by doctors and nurses. The second was the Labour Exchange Act of 1909, which was a nationally based and regionally operated system for providing information about vacancies to the unemployed. For the first time the State accepted a new accountability as a consultative service.
The third stage was much more complicated than the previous two. This stage involved state intervention in the improvement of the quality of people’s lives, while also insisting that the people were ultimately accountable themselves. This involved a contributory benefit scheme otherwise known as the National Insurance Act of 1911. The national insurance included unemployment benefit, 7 shillings a week for 15 weeks, and was paid into the fund in equal parts by the worker himself, his employer and the government and was, “perhaps the most important piece of social legislation of the 20th Century” (Pearce and Stewart). This was led by Winston Churchill. The other half of the national insurance fund, led by David Lloyd George, was concerned with health insurance. If sick a worker would be paid 10 and a half shillings a week and if disabled they would be paid 5 shillings a week. It said by Pearce and Stewart that the National Insurance Act, “laid the foundations of the modern welfare state”.
The fourth step was the involvement of the State to introduce services which were not based on contributory systems and which disposed of the “self-help” belief. This was really the most extreme change the Liberals made as it was in no way linked to past measures. In 1909 the universal benefit of old age pensions was introduced. Even though there was a high age requirement, the over 70s, to receive the pension and it was not very generous, 5 shillings a week provided they had less that £21 per annum from other sources, it was still a step in the right direction and it removed the stigma of the workhouses. The government were willing to take this short cut rather than introduce a time consuming contributory pension as it was time they, “did something that appealed straight to the people” (Lloyd George).
The fifth and final stage affected all of the above mentioned and went well beyond what previous governments would have deemed acceptable. A new Budget was introduced and taxation was increased to pay for the existing reforms and the ones planned for the future. At the end of his 1909 Budget speech in the House of Commons, Lloyd George declared, “This is a War Budget. It is for raising money to wage implacable warfare against poverty and squalidness.” Income tax was increased by the Chancellor to 1shilling 2d in the pound on incomes over £3000; supertax was levied at 6d in the pound on income over £5000; and unearned increments on land values were taxed at 20 per cent on resale. This was a great departure from the principles of Gladstone in the 19th Century.
In conclusion, I would say that they did not create the modern welfare state, but instead, laid strong foundations for it. It I clear, however, that without the changes that were made by these Liberals, a welfare state might never have been created. This leads me to the deduction that the Liberals partially helped to create the modern welfare state. The most important step in my opinion was stage number four. I think this, as it was the first point where the Liberals invented something completely new and different. Although step five may have been seen as more radical and may have led to more changes it would have never arisen without stage four.
