I.

Introduction

Liberal Britain, period of social and political reform enacted by the Liberal government of 1905-1915. The Liberal government came to power in December 1905, on the resignation of the Conservative prime minister Arthur Balfour. The Liberals went on to win a landslide victory in the general election of January 1906, and formed a historic administration, led by Henry Campbell-Bannerman (the prime minister between 1905 and 1908) and his successor Herbert Henry Asquith (prime minister 1908-1916). The Liberal government introduced a raft of social reforms in the attempt to prevent the collapse of the Victorian Poor Law (the system of poor relief that dated from the Poor Law Amendment Act of 1834) in the face of the intolerable burden of poverty that characterized early 20th-century Britain. It continued through two general elections in 1910 until it fused into a coalition wartime administration in May 1915. It was a seminal administration that changed the direction of social reform in Britain by increasing government intervention to a level never known before and establishing that poverty and destitution were the result of a failure of society rather than the personal failing of individuals. It also helped influence the creation of the modern welfare state under the Labour governments of 1945 to 1951 by shaping Labour’s national insurance scheme that provided the minimum conditions for life in modern society.

II.

Reasons for the Liberal Reforms

The Liberals had not come to power on the issue of social reform and poverty relief but on a number of other issues, such as popular outrage at the use of Chinese slaves in British-owned gold mines in South Africa. Nonetheless, social reform became the hallmark of the Liberal administrations of 1905 to 1915. The reason for this development has been subject to intense debate, with the suggestions ranging from the impact of the emergent Labour Party (founded in 1900 by trade unionists and socialists) on New Liberalism, the need to deal effectively with the failings of the Victorian Poor Law, and the rising concern about those whose needs were not being met by voluntary help.

A.

The Victorian Poor Law

At the beginning of the 20th century the Victorian Poor Law, as established by the 1834 Poor Law Amendment Act (see Poor Laws), was faced with enormous financial pressures. According to the 1834 Act, those seeking assistance had to submit themselves to the discipline of the workhouse. The workhouses were overseen by unions of parishes, on which sat local magistrates, Church ministers, and representatives of local ratepayers. By the beginning of the 20th century, more than two million people were falling on the Poor Law for relief during the winter months, mainly seeking indoor rather than outdoor relief, at a time when the Poor Law unions were attempting to move children out of institution buildings and into supervised cottage accommodation.

B.

New Liberalism

The influence of New Liberalism has assumed immense importance in the debate about the rise of the Labour Party and the decline of the Liberals. It is argued that Leonard Trelawney Hobhouse, John Atkinson Hobson, and David Lloyd George attempted to retain working-class support within the Liberal Party by offering a variety of social reforms and compromises to the working classes that became known as New Liberalism. It is further maintained that their prime concern was to reconcile the demands of labour with the need for Liberal Party unity, an equation that was never going to be easily arranged given Liberal reliance upon industrial and capitalist wealth. They offered conciliation for industrial conflict, public ownership to serve the demands of efficiency, and communal responsibility over sectional interests. The distinctive feature of these and other New Liberal policies is that they offered a framework whereby harmony, rather than class or sectional conflict, would be promoted. Indeed, Lloyd George stressed to the National Reform Union in 1914 that “it is better that you should have a party which combined every section and every shade of opinion, taken from all classes of the community, rather than one which represents one shade of opinion alone or one class of community alone”. (Manchester Guardian, November 7, 1914).

C.

The Failure of Philanthropy

Historians have been divided over the scale of impact that the Labour challenge had on the New Liberalism: P. F. Clarke emphasizes its importance in Lancashire and the New Liberalism (1971), and G. R. Searle and Pat Thane have thrown doubt on the importance of social reform as an ambition of the Liberals. Instead it has been argued that it was the rising level of poverty in Britain and the failure of philanthropy to tackle it that forced the state to take action. Indeed, one contemporary writer suggested in 1908 that “in the course of the last two generations the State has been forced again and again to take over the tasks for which private philanthropy had found its resources insufficient” (B. Kirkman Gray, Philanthropy and the State, or Social Politics, 1908). Yet it was the Poor Law in combination with philanthropy that presented the biggest problem. The 1834 New Poor Law offered a solution to destitution, not to poverty, and there was increasing evidence, from Seebohm Rowntree and others, that between 25 and 30 per cent of the population of England and Wales were living in a state of poverty. The revelation came at a time when the Poor Law was in serious crisis, soon to become the subject of a royal commission. Thus, concerned by the failures of philanthropy, threatened by a burgeoning Labour Party, and faced with obvious concerns about the health and well-being of the nation, David Lloyd George, Winston Churchill, and others, took the expedient step not to solve poverty but to reduce its virulence.

D.

The Royal Commission on the Poor Laws

The 1904 Inter-Departmental Committee on Physical Deterioration had already indicated its concern about poverty when it stated that “in the last resort the State acting in conjunction with the Local Authority would have for its own sake to take charge of the lives of whose who, for whatever cause, are incapable of independent existence up to the standard of decency which it imposes”. This need became even more obvious when the Poor Law was struggling to deal with the burden of destitution and poverty in Edwardian Britain. The Royal Commission on the Poor Laws (1905-1909) had been set up to examine how the Poor Law could deal with the two million people falling upon it as a result of rising unemployment. When the Royal Commission reported to the Liberal government in February 1909 it produced two reports. The Majority Report sought to retain the Poor Law as it was and to create local Public Assistance Committees, composed of elected councillors, co-opted members from philanthropic agencies, to run its services in the place of the old poor law guardians. The Minority Report suggested that the Poor Law should be broken up and run by specialist local committees or by central government, in the case of the unemployed. Neither of these reports offered a solution to the problem and it would have taken several years for anything to have been implemented. As a result the Liberal government effectively dismantled the Poor Law by removing the needy groups by a series of measures including old-age pensions, the creation of employment exchanges, the introduction of the National Insurance Act of 1911, and legislation on children. The process had begun before the Royal Commission produced its final reports, the Liberal government being fully aware of the failings of their solutions.

III.

The Liberal Reforms

The Liberal government had already had voluntary municipal school feeding imposed upon it in December 1906. This was a result of a campaign led by Fred Jowett, who had introduced free school meals in Bradford in 1904 as a member of the city council—elected to the House of Commons as MP for Bradford West in January 1906, Jowett continued his campaign by pressing for the 1906 Education (School Feeding) Act, which allowed local education authorities to raise money for school meals through local rates. This was followed by the voluntary provision of school medical facilities in 1907. But these measures were substantially initiated from outside government. The Liberal leaders, and particularly Lloyd George and Churchill, were more pro-active from 1908 onwards.

A.

Helping Children and the Elderly

Initially, after many years of discussion, a plan for introducing a non-contributory pension scheme was introduced by Lloyd George in 1908. Accepted by Parliament, it was introduced on January 1, 1909, and it offered 5s (that is, shillings, in Britain’s pre-decimal currency) per week at the age of 70 and introduced a sliding-scale of arrangements for those with incomes of between 8s and 12s per week, or £21 to £31.10 per year, provided that they had not been imprisoned for any offence, including drunkenness, during the ten years prior to their claim. These pensions were to be paid through the Post Office rather than through the Poor Law. It was thus a pension for the poor, the respectable, and the very old.

The Children’s Act of 1908 codified existing legislation, prevented children under 16 years of age being sent to a prison for adults, and stimulated the Local Government Board to oblige the Poor Law unions to set up boarding-out committees for 1909 onwards, with female inspectors to ensure that their needs were properly attended to. This reduced the direct burden of 11,596 children from the Poor Law by 1914.

B.

The National Insurance Act

Nevertheless, the most important piece of Liberal legislation was the National Insurance Act of 1911, which attempted to deal with the enormous problems of ill-health and unemployment. Health insurance was tremendously important in reducing the burden on the Poor Law. After visiting Germany in 1908 to study the German national insurance system, David Lloyd George introduced his health plans into the House of Commons on May 4, 1911, announcing that “30 per cent of pauperism is attributable to sickness; and noting that a considerable number would have to be added for unemployment” (Hansard, May 4, 1911). He stressed that while six or seven million people had made some provision for sickness their schemes were often inadequate and working-class men were generally unable to afford the 1s 6d (that is, one shilling and six old pence) to 2s per week that they would require to protect them against ill-health. He therefore offered a state scheme that worked with friendly societies, trade unions, and insurance companies and could be supplemented by the purchase of health stamps at the post office. For those workers who were insured, there was to be full medical treatment by a doctor whom they would select from a local list or “panel”. They were eligible for free treatment in tuberculosis sanatoriums but were not entitled to free hospital treatment. The doctors would be paid on a per patient basis while the contributors had to pay 4d per week (3d for females), with the employer paying 3d and the state 2d—the famous “9d for 4d”, in Lloyd George’s slogan—that would be paid into an accumulating fund to finance benefits. The contributors were to be between 16 and 65 and had to earn less than £150 per year. When it came into operation on January 15, 1913, the scheme also provided sickness benefits of 10s for men and 7s 6d for women for the first 13 weeks of sickness, although nothing would be paid for the first 3 days. After 13 weeks, 5s benefit was paid to both men and women and there was also a range of other benefits.

Part II of the National Insurance Act dealt with unemployment insurance. Much of the legislation emerged from the work of Winston Churchill, President of the Board of Trade, and William Beveridge, a young social investigator, who were working together from the summer of 1908. In 1909 this cooperation led to the formation of employment exchanges and there were 423 such exchanges with two million registered members (unemployed and available for work) and providing about 3,000 jobs per day. The trade unions were suspicious of employment exchanges, feeling that they might be used as instruments for strike breaking. They were also suspicious of Part II of the National Insurance Act, which initially covered trades where there was more prospect of employment, being made compulsory for such industries as building, mechanical engineering, and iron-founding. Under this scheme each workman contributed 2.5d per week, as did each employer, and the state provided 1.75d. Since the insurance scheme was first adopted in industries that were almost entirely dominated by men, women were largely excluded from its benefits.

In return the workers received 7s per week for 15 weeks, and there were subsidies for trade unions that ran their own schemes. About two and a quarter million men were covered by the scheme. The first contributions were paid on July 1, 1912, and the first payments made from January 1, 1913.

Such legislation necessitated increased government expenditure and access to this was made by Lloyd George’s controversial “People’s Budget” of 1909, which was passed in April 1910 after having been blocked by the House of Lords amid a constitutional crisis. Once passed it raised the basic rate of income tax to 1s 2d in the pound, imposed a super tax on incomes above £3,000, introduced death duties on estates of over £5,000, and levied taxes on land. This, and other aspects of the budget, established the principle of progressive taxation. This was Lloyd George’s “… War Budget … for raising money to wage implacable warfare against poverty and squalidness …”(Hansard, April 29, 1909).

IV.

The Impact of the Reforms and Their Legacy

The Liberal reforms were a small start towards tackling poverty. They introduced progressive taxation, which led to some redistribution of wealth and, in order to provide state-financed activities, paired this with a contributory national insurance scheme. At first, the number of people involved was small, and the burden on the Poor Law probably fell only by 25,000 to 300,000. Nevertheless, the Liberal reforms were the starting point in the creation of the modern welfare state. Indeed, they left their legacy in providing the roots for the Beveridge Report of 1942 and the comprehensive and all-embracing national insurance scheme that the Clement Attlee Labour government introduced in July 1948. The Labour government went further, particularly with Aneurin Bevan creating the National Health Service and nationalizing health provision, but the Liberal reforms provided the basis of much of the rest of the modern welfare state and still provide the blueprint for social provision in Britain today.