Poverty and the Rise and Fall of the Welfare State in Britain, 1900 to the Present

I have been very disturbed by recent statistics of poverty in Britain and accounts in the media of so many children, older people, and families starving and freezing because they cannot afford food or heating, using food banks to survive, living in damp overcrowded housing, or homeless. After working for many years on the history of welfare, I have been astonished, when reading recent poverty surveys, to realize that we are now, in a very different world, experiencing the worst poverty since the beginning of the twentieth century, at similar levels with similar causes and effects. Then and now most households in poverty contain/ed at least one worker so poorly paid and insecure that he or she cannot earn enough to support the family. Of course, social and economic conditions were different then, but poverty researchers have always been aware of this and take it into account when making comparisons over time, as I will discuss. One big difference is that revelations about poverty then caused widespread shock and pressures leading to the first measures of modern state welfare and a gradual reduction in poverty, though it has never been eliminated. Now a major cause of poverty is the decline of the Welfare State under successive Conservative governments, but awareness of this and pressures and proposals for reform seem fewer. I will explore how these changes came about and why we again need radical change.

Around 1900 major poverty surveys were published by Charles Booth and Seebohm Rowntree, both prosperous, philanthropic businessmen. Booth’s massive survey of London concluded that about 30% of Londoners lived ‘in poverty or in want’, especially in certain districts.¹ London was large, with a complex economy including some of the richest and the poorest people in Britain (as it still does) and some thought its level of poverty was exceptional. Rowntree surveyed poverty in York, which he knew well because he lived there and the family business was based there. He reckoned it was a typical English town, so might better indicate conditions across the country. He was shocked to discover that almost 28% of York’s population was in ‘obvious want and squalor’ as he put it, based on a house-to-house survey of income and spending. ² They had incomes insufficient, he wrote, to cover the ‘absolutely necessary’ basic requirements of diet, clothing, rent, light, and fuel. Both researchers stressed the extent of malnutrition among children, adults who skipped meals so that children could eat, and the appalling housing of the lowest paid. It all sounds very familiar.

Booth and Rowntree agreed that the major cause of poverty was not, as widely believed, the Poor Law and failure to work by the irresponsible lower classes, but low pay for full-time work, or under-employment, inability to get regular, full-time, decently paid work despite best efforts, now called the ‘gig economy’. Other lesser but major causes of poverty, they both identified, were family size, single motherhood (mainly due to widowhood), and old age. Booth also conducted a national survey of old age poverty. His findings made him a campaigner for state pensions.³ Further surveys in towns and countryside before 1914 produced similar findings.⁴ Studies also revealed great inequalities of income and wealth: 87% of private property was owned by 882,000 people in a UK population of 41.4m; 90% of the population left no recorded property at death.⁵

These revelations of the extent of poverty and inequality in one of the richest countries in the world caused widespread shock and demands for state action, since only the state had resources to eliminate such deprivation. Charities did their best but could not meet all needs. The demands were supported by the Labour Party which was founded in 1900 with a central mission to improve the lives of working-class people and reduce inequalities. The outcome was the first measures of what was later called the ‘Welfare State’, introduced by a Liberal government which won the 1906 election following a secret arrangement with Labour that they would not compete in seats where splitting the vote would keep the Conservatives in office following 20 years in government bringing no improvement to living standards.

A Labour Bill delivered the first free school meals for needy children in 1906. The first state old age pensions were introduced in 1908, at a low level, strictly means-tested and paid only at age 70, on the Treasury’s insistence to save money. UK pensions have never provided enough to live on without a supplement, but they were welcomed by the first 490,000 pensioners as better than anything before.⁶ In 1909, Labour Exchanges (now known as Job Centers) were inaugurated to help people find secure work, on the advice of William Beveridge who began his long career as a government advisor, following volunteering at the Toynbee Hall settlement in East London.⁷ National Health Insurance and Unemployment Insurance were introduced in 1911, with adequate benefits including free access to a GP under NHI, funded by contributions from workers, employers, and the state. It was the first Unemployment Insurance scheme in the world, also invented by Beveridge, who was always strongly committed to reducing unemployment. But low-paid workers and women not in employment could not afford contributions and were excluded, though the wives of insured workers received a 30s (£1.50) maternity benefit to fund skilled care in childbirth, which many could not afford causing high death rates of mothers and babies. The government designed the schemes primarily to improve workers’ health and sense of security and consequent capacity to contribute to economic growth. State welfare has never been just about reducing poverty. The Liberals funded reforms by gradually making the tax system more redistributive, introducing from 1908 the first graduated income tax in Europe, later raising inheritance and other taxes on the wealthiest, arousing strong opposition in the Conservative-dominated, wholly hereditary House of Lords.⁸

State welfare slowly expanded during and after World War One, funded by rising taxation which aroused less opposition due to overriding war needs. It included further funding for health and welfare services for mothers and babies, for which women continued a long pre-war campaign.⁹ The government was motivated by the need to replace the thousands of young men lost or severely injured at war by enabling babies to survive. Women’s activism, initially in Glasgow, driven by rising rents in centres of war production with growing populations, led in 1915 to the first rent controls. Unprecedented full employment due to the demands of war, plus food rationing and controls on prices, raised living standards and expectations.¹⁰

Further reforms were implemented immediately after the war, to reward people for their sacrifices and avoid a return to pre-war conditions, especially when in 1918 the vote was extended to all adult men at age 21 and above, younger men who fought in the war and to mainly middle-class women at age 30. Forty percent of adult men, mostly working-class, previously lacked the vote. The coalition Liberal/Conservative government feared working-class men would be lured to socialism by the growing Labour Party and the 1917 Russian revolution. They sought to counter this by limiting the vote for which women had long campaigned to older, better-off women whom they believed (not always correctly) were more likely to be conservative. The reforms included state subsidies for Britain’s first major council house building programme, improved state education, further funding for health and welfare services, especially for mothers and young children, and extended unemployment benefits.

Thereafter came steady, though locally uneven and incomplete, extension of publicly provided welfare despite the economic depression, especially under the first Labour governments in 1924 and 1929–1931. Welfare improved more in some areas than others because local government had much greater independence than now in delivery and funding of services. Government legislation concerning housing, education, school meals, health care, delegated to local government decisions about the extent and nature of provision, which central government subsidized but did not wholly fund, leaving the balance to local taxes (known as ‘rates’) and other resources. By 1934 Labour controlled most larger cities, including London and Glasgow, and many smaller towns and played a major role in expanding health and welfare, council housing, and education, among other services in these areas. But poor districts with the greatest problems had least funds from their rates to provide adequately for local needs. This caused protest in poverty-stricken Poplar, East London, leading to a system of rate redistribution from richer to poorer London boroughs.¹¹

There were intermittent cuts to state welfare funding as the economy was hit by the international Depression, but protests, including in the 1930s ‘Hunger Marches’ of emaciated, unemployed men from the north to London, exposed their conditions, publicized by the growing media outlets of the BBC, films, and the popular press, and led to modification of the cuts. Conservatives, who controlled most inter-war governments, sought to prevent the rise of movements of the far right and the far left, of fascism and communism, as in continental Europe, by representing the British state as benign and liberal. And quite successfully, since neither movement had a significant impact in Britain.

Poverty surveys fuelled media representations and demands for change. They revealed reduced but continuing poverty especially in areas of high unemployment in Northern England, Southern Scotland, and South Wales. Older industries, including mining, textiles, and shipbuilding, concentrated in these areas, declined, causing major regional differences in living standards. Unemployment did not fall below 1 million from 1920 to 1940 and in some years was much higher. From the later 1920s, new industries, including the manufacture of motors and electrical goods, expanded in the Midlands and South, improving living standards but not eliminating poverty. Health care for the lower-paid was seriously inadequate everywhere, leading to growing calls for a national health service and expansion of other services. Among other reformers, radical Bertrand Russell and academic and Labour Party adviser G.D.H. Cole promoted solutions including universal allowances, as cheaper to administer and less stigmatizing than means-tested benefits, repayable in taxes by the better-off and potentially expanding the economy through increased spending. Women, led by feminist Eleanor Rathbone, campaigned for, among other things, ‘family allowances’ to reward women who stayed home to raise children and care for working men, arguing that this was work, as vital to the economy and society as paid employment. Nationally, wealth and income inequality narrowed slightly between the wars.¹²

World War Two again brought full employment and improved living standards. The coalition government, mainly its Labour members, introduced further improvements to care for mothers and young children, to health care generally, free or cheap milk and meals for all schoolchildren and improved work conditions. There were many proposals, official and unofficial, for welfare reform originating in pre-war experiences and a widespread determination that the war should lead to better social and economic conditions.¹³ The best remembered and most popular of these was the Beveridge report of 1942.¹⁴ Beveridge was appointed to chair a government committee on reforming and expanding the social insurance system. His report proposed a comprehensive programme of state action to abolish ‘want’, as he called it, he rarely referred to poverty. He stated dramatically that Britain needed ‘an attack upon Want. But Want is one only of five Giants obstructing the road to comprehensive social improvement. The others are Disease, Ignorance, Squalor and Idleness’. He proposed that they could be destroyed by introducing a national health service, universal free education, sound affordable housing, full employment, improved universal social security benefits, and family allowances for all children, all designed, as he put it, to provide a ‘safety net’, protecting everyone from destitution ‘from the cradle to the grave’. But he was only appointed to reform the social insurance system, so his detailed proposals concerned only this, not the National Health Service (NHS) and other measures which were outside his brief. They were developed by other wartime investigations and proposals.

Beveridge proposed a unified system of national insurance providing old age and widows pensions, unemployment, sickness, disability, maternity, and other benefits for the whole employed population in all classes—not restricted to manual workers like previous benefits. They should provide enough to live on, covering all essential needs for food, housing, clothing, heating etc. The contributions of employed men would also cover benefits for their wives if they were not employed outside the home. He accepted the argument of his friend Eleanor Rathbone that their vital work in the home should be rewarded. He did not believe, as has been argued, that he assumed dependence of wives upon husbands.¹⁵ He described them as ‘partners’.¹⁶ He believed that if everyone contributed to their benefits these would be regarded as a right they had paid for and claimants would no longer be stigmatized as idle dependents on hard-working taxpayers as they had long been, an attitude Beveridge was determined to eliminate. He believed that if all workers, including the middle-classes, received insurance benefits, the system would promote social cohesion.

He proposed means-tested National Assistance to replace the much-hated Poor Law for people who could not work and pay contributions and needed help, including long-term disabled people, though he expected his system to be so comprehensive that claimants would be few. He strongly opposed means-testing because it was stigmatizing, costly to administer, and inefficient because, in all known systems, many people in need failed to apply because of stigma, the complexities of applying, or ignorance of their eligibility. This remains true of means-tested benefits. The report immediately grabbed the headlines and much support. It sold 600,000 copies, unprecedented for an official document. Churchill was dubious but Labour, led by Clement Attlee, strongly supported it and its popularity was a reason for Labour’s victory in the 1945 Election.

Labour was committed to substantially expanding state welfare and developing the economy and introducing full employment. In government they held back welfare spending and prioritized achieving full employment and economic growth. Labour had always argued that the best route to higher living standards was full employment at decent pay, reserving welfare benefits for those unable to work due to age, sickness, or any other reason.¹⁷ It achieved economic growth, including by nationalizing key industries and controlling supplies and prices, and full employment for the first time in peacetime, lasting to the 1970s.

Labour also expanded state welfare, in particular by introducing the NHS in 1948, for the first time providing free health care for everyone, which was hugely effective and popular. It transformed many lives, especially of working-class women who previously had little access to good medical care, providing free access to hospitals and GPs. Free optical care and spectacles, dentistry, and chiropody were transformative, especially for many older people. But due to economic constraints, no new hospitals were built until the late 1950s and the stigmatized area of mental health care lagged behind services for physical health.

Labour also introduced major reforms to state education and a version of Beveridge’s comprehensive social insurance system, producing real improvements in living standards. But it could not afford to extend state welfare as much as it hoped, despite substantially raising taxes on higher incomes. It provided smaller benefits than Beveridge recommended to his great disappointment. By 1950 one million pensioners needed means-tested National Assistance to supplement the pension, which was still not enough to live on, and they have needed supplements ever since because British pensions are lower than in most comparable countries. The new national insurance system was massively better than the old one and benefits were higher, but not enough to banish poverty. Labour built council houses to much higher standards than before, well-built, cottage style, with adequate space, indoor toilets, bathrooms, and gardens, but could not afford to build as many as it hoped.

The reforms brought real, unprecedented improvements, later known as the ‘Welfare State’. The term was not used by Labour, nor by Beveridge, despite his subsequent popular association with it. He disliked what he believed was its implied dependency of individuals on the state. It did not come into common use until the 1950s, initially as a term of right-wing Conservative abuse of measures they claimed, as Beveridge feared, created dependency.¹⁸ Labour later appropriated it positively. It hoped to remain in government long enough to complete its ambitions as the economy grew, but it narrowly lost the 1951 election. Many middle-class voters resented high taxes and continuing controls including rationing. Labour achieved a lot in six years, but less than it hoped.

The following ‘thirteen wasted years’ of Conservative government, as Labour described it, produced little improvement in welfare and some deterioration, though living standards and security improved due to continuing full employment. There was not the policy ‘consensus’ between the parties some historians have believed, though differences between them were less than in future decades. Taxes were cut, pensions and other benefits declined in real terms due to rising prices, and private provision was encouraged. The Conservatives aspired to privatize the NHS and appointed an expert committee headed by a Cambridge economist, Claude Guillebaud, expecting it to recommend this. But in 1956 it concluded that the system provided excellent value for money and should be expanded. The Conservatives were constrained by its popularity and proceeded to implement the Guillebaud recommendations to build more hospitals. They built more council homes than Labour because this was also popular with voters, but they were cheaper, of lower quality, and increasingly in unpopular high-rise blocks.

It was widely believed that Labour’s welfare state had eliminated poverty, except among pensioners. Then in 1965 two academics, Brian Abel-Smith and Peter Townsend, published the results of their national survey of poverty, based upon official data, which became known as ‘the rediscovery of poverty’.¹⁹ They consciously sought to discover what had changed since Booth. They revealed that under the Conservatives the number of UK households in poverty rose from 7.8% in 1953–1954 to 18% in 1960, due mainly to rising prices and the failure to raise low incomes and benefits accordingly. In 1960, 3 million pensioners and, much more surprisingly, 2.25m children were in poverty, 41% of them in households including a worker on low pay, almost all in families with four children or more; large families with single mothers were worst off. Beveridge had proposed family allowances to protect such families, but Labour introduced them at lower levels than he suggested and excluded the first child in every family. It was a much worse situation than expected, causing widespread shock and pressure for more state action, including from increasing numbers of voluntary organizations including the Child Poverty Action Group (CPAG), which was established in response to the findings.²⁰ Voluntary organizations remained important in the welfare state and steadily expanded especially at times of crisis when they sought to remedy the failings of the state.²¹

The researchers recognized that poverty should be defined differently in the 1960s compared with the 1900s. In modern Britain with higher living standards, people, especially children, living on incomes adequate for bare survival but way below prevailing norms were so disadvantaged in their educational and work opportunities, by poor health and exclusion from activities most people now judged normal, that they should be defined as being in ‘relative poverty’. Townsend proposed incomes at or below 60% of the national median as the measure of relative poverty. It has since been adopted internationally including for recent poverty surveys.²²

Labour narrowly won the 1964 election, now led by Harold Wilson, aiming to develop the welfare state and expand and modernize the economy which was falling behind its competitors. But they inherited an unexpected, massive budget deficit and later financial crises further held them back. Yet full employment continued. The economy grew, though by less than Wilson hoped.²³ Modernization and development of manufacturing to match overseas competitors was his main ambition. A National Plan set targets and provided advice for industries on investment, output and productivity. In 1965 London and Manchester Business Schools opened to improve the quality of management, providing Britain’s first Masters in Business Administration courses.²⁴

The Ministry of Technology was established to lead the drive for technological innovation in manufacturing. ‘Mintech’, as it was known, absorbed the responsibilities of existing departments for research and application of science and technology to industry. It gave limited funds to the private sector to develop new technologies and encouraged research and development in the public sector leading to technological change and increased efficiency in postal and telephone services, mining, and gas supply. It particularly sponsored development of four key industries: computers, electronics, telecommunications, and machine tools.²⁵

Labour transformed secondary education by introducing comprehensive schools to replace the selective system which research revealed most benefitted middle-class boys. They built more council houses each year than the Conservatives, to higher standards, and subsidized rehabilitation rather than replacement of sound Victorian housing, which was plentiful. They raised pensions and other benefits and introduced redundancy payments. Earnings and living standards rose and poverty fell but was not eliminated. Also in 1967–1970 they introduced an unprecedented succession of liberal reforms, improving the welfare of many people, including legalization of abortion, easing of divorce regulations, and partial decriminalization of homosexuality—all excoriated by critics for encouraging ‘permissiveness’. In 1970 they introduced the first Equal Pay Act for which women had long campaigned.²⁶

Labour narrowly lost the 1970 election. Edward Heath’s Conservative government from 1970 to 1974 aimed to cut and privatize benefits and services, replace universal contributory benefits with means-testing, or ‘selectivity’ as they preferred to call it, and end nationalization and state controls. But they also could not achieve their ambitions partly because an international rise in oil prices in 1973 brought severe inflation, and trade unions became increasingly militant to protect incomes.

Labour returned to government from 1974 to 1979, initially under Wilson (1974–1976) and then James Callaghan (1976–1979). Unemployment rose above 1m for the first time since the war and inflation continued to rise, mainly due to problems in the international economy especially the oil price hike. Manufacturing and mining declined. Yet the government raised welfare services and benefits to their highest level of the century. They introduced Child Benefit, a more generous replacement of family allowances, to reduce child poverty, and a State Earnings-Related Pension System (SERPS) providing improved pensions similar to those elsewhere in Europe. Pay generally improved, owing much to trade union action as they reached their peak membership of the century. The Institute for Fiscal Studies calculated that the mid-1960s to mid-1970s saw poverty and inequality of income and wealth at their lowest levels of the century, mainly due to improved pay, the welfare state, and increased taxation of higher incomes, contrary to popular representation of the 1970s as a ‘dismal decade’ of high unemployment, industrial conflict, and general misery.²⁷ The welfare system provided adequate, though not generous, protection against the effects of unemployment and inflation. Food banks were unheard of. Unions negotiated agreements with the government which maintained wages and work conditions in hard times, supported by sound public services and benefits. Poverty was not eliminated but it was massively lower than in the 1980s and since 2010.²⁸

In 1976 the government was persuaded by the Treasury that it was in such severe deficit it should seek an unprecedented loan from the International Monetary Fund (IMF). In return the Chancellor of the Exchequer, Denis Healey, had to cut spending including on welfare. It then emerged that the Treasury had over-estimated the deficit. The government took only half the loan, it was wholly repaid by 1979, and cuts were restored in 1977.²⁹ But this was little recognized then or since, and Labour faced relentless assault by the growing right-wing press and Conservative politicians for over-spending and over-taxing. Opponents also exaggerated the extent and negative impact of strikes, contributing to Labour losing the 1979 election to the Conservatives, now led by Margaret Thatcher.

From 1979 to 1990, Thatcher’s Conservative governments were vigorously committed to neoliberal ideas which had been spreading internationally through the 1970s, promoting unfettered free enterprise and a small state, cutting back and privatizing state welfare, arguing that this would stimulate economic growth. But growth declined and by 1982 unemployment rose above 3 million, the highest level of the century, remaining very high throughout Thatcher’s time in office and that of her Conservative successor John Major to 1997, due partly to their refusal to subsidize manufacturing to halt its decline or support development of new industries while encouraging the growth of the financial sector. Child poverty rose from about 13% in 1979, the level Townsend and Abel-Smith had found so shocking, to 34% in 1991, due to unemployment and cuts to benefits, withdrawing the safety net which had stopped those on lowest incomes falling too far behind the rest since 1945. Meanwhile the financial sector boomed, owing much to deregulation. Directors of one, quite typical, City of London bank earned an average £45,000 per year in 1979, £225,000 in 1986.³⁰ Britain became one of the most unequal countries in the OECD. Thatcher believed inequality was the natural and desirable state of society, incentivizing the disadvantaged to strive to do better.

Thatcher held the old Poor Law view that poverty was caused by personal not societal and economic failings and people must be incentivized to adopt a commitment to self-help, hard work, and family support she believed had been destroyed by the welfare state. There were still prominent liberally inclined Conservatives, including members of her Cabinet, who tried, sometimes successfully, to restrain her cuts. But over time she became less willing to compromise and most of them were demoted or resigned. Voluntary organizations, increasingly called Non-Governmental Organizations (NGOs), which Thatcher wrongly believed had been destroyed by the welfare state, as ever did their best to meet societal needs but were increasingly over-stretched despite (limited) government subsidies.

Council houses were sold at giveaway prices and local authorities were not allowed to replace them, while the rent controls that had existed since 1915 were abolished, beginning a long-term decline in affordable housing. Homelessness and rough sleeping increased. Rent rises in the private sector were so severe that in 1982/1983 a means-tested Housing Benefit was introduced to assist low-income tenants, at high public cost. Non-profit housing associations were subsidized to provide affordable rentals, replacing council houses in what was now called ‘social’ housing, but they had limited resources. Council tenants were now predominantly on low incomes and council estates were disparaged, in contrast with the original ideal, and reality, of socially mixed communities. Social inequalities became ever more visible. Local authority funding was cut, and care, youth, and other services were ‘outsourced’, privatized, and deteriorated at growing costs to the public and to users. Families had to take still greater responsibility for caring than was normal, putting them under increased strain. Prices rose but average incomes did not. For many people, the 1980s was a far more dismal decade than the 1970s.

National insurance contributions, effectively a regressive tax, rose to replace state contributions which were wholly withdrawn for the first time since 1911. Social security benefits were cut and, where possible, means-tested (‘targeted’ as Thatcher preferred to say) or privatized on the grounds that they encouraged idleness. Basic state pensions fell from 23% of average male earnings in 1981 to 15% in 1993, cutting their cost but increasing the number of pensioners claiming means-tested supplements, which were also cut, increasing pensioner poverty. Labour’s SERPS scheme was severely revised, becoming less generous especially to low-paid workers, including many women. Private pensions were de-regulated and tax relief increased. Many workers were persuaded to leave public sector pension schemes for more disadvantageous private schemes, creating a mis-selling scandal reversed at considerable cost in compensation by the next Labour government. It became increasingly difficult to qualify for unemployment benefit as unemployment rose. Job insecurity grew as controls were dismantled and EU directives on workers’ protection ignored. Trade unions, ‘the enemies within’ in Thatcher’s view, were undermined by restrictive legislation, shrank in membership, and could not effectively resist the changes.

Child Benefit was raised in 1983 just before a general election, then frozen in 1986. Due to rapidly rising family and child poverty, it was supplemented by a means-tested Family Credit in 1988. From 1980 councils were no longer required to provide free school meals except to families receiving means-tested benefits. Family poverty rose from c.5m families in 1980 to over 11m in 1990.³¹ Thatcher was convinced this was due to ‘irresponsible’ single parenthood, state welfare, and general moral deterioration encouraged by Labour policies. There was considerable poverty among the growing number of single-parent, overwhelmingly single-mother, households mainly due to their difficulty in gaining adequately paid work or affordable childcare. Thatcher refused to subsidize childcare on the grounds that it would discourage mothers from staying at home, as she, as mother of two employing carers at home funded by her millionaire husband, had not. She blamed ‘feckless fathers’ for the poverty of families they had left and her final act before losing office was the Child Support Act, 1991, which strengthened the legal obligation of fathers to maintain their ‘first families’. It proved costly and unworkable for its failures to understand human circumstances.

Thatcher shared the Conservative desire to privatize the NHS, though its popularity held her back. Funds were cut and services ‘outsourced’ to private firms, including hospital cleaning which deteriorated, causing severe infections and deaths. Waiting lists grew. The government tried to encourage private health insurance, but it was unpopular. Central control tightened; prescription, dental, and ophthalmic charges rose. It became hard to find an NHS dentist as charges rose to a point at which dentists thought it hardly worth staying in the NHS. Local inequalities grew and spending on mental health declined, also on older people as their numbers grew.

Local authorities were no longer required to abolish selective secondary education, though comprehensives were now almost universal and few reintroduced it. The government subsidized free places in independent schools and tightened central control over state schools. There was no reason for the changes on grounds of low attainment which had been rising since comprehensives were introduced. Through the 1980s, education experienced the biggest cut in state funding of the century. By 1990 there was growing concern about large class sizes, shortage of books and equipment especially in poorer areas, falling real pay, and increased workload of teachers, whose morale and numbers sank. But more children stayed longer at school, and the percentage of 18–21-year-olds in higher education rose from 12.7 to 20.3 in 1977–1991, still lower than in most other developed countries, and higher social classes continued to be over-represented in universities and Black and ethnic minority communities under-represented. Despite growing numbers, university funding was cut by 18% and increasingly centrally controlled, though Conservative backbenchers opposed proposed fees, alarmed at the likely response of their constituents. Student grants were reduced and replaced by loans.

The government feared serious protest following high levels of unemployment and poverty and maintained basic support but it was minimal and means-tested, and it encouraged denigration of claimants as idlers and frauds scrounging off taxpayers, notions taken up enthusiastically by right-wing tabloids, while manufacturing was declining and work hard to find and disability and long-term sickness kept many from work. Thatcher’s governments comprehensively undermined Beveridge’s conception of welfare as a universal right, confirming his belief that means-tested alternatives caused unjust disparagement of claimants.

Despite the cuts, social spending increased due to increased poverty and unemployment, the administrative costs of means-testing, and the need to compensate for cuts with costly new measures like Housing Benefit. And, despite pledges to ‘roll back the state’, central state control increased and the independence of local authorities shrank. Those believed to assert too much independence were closed, including the largest, the Greater London Council, in 1986, along with the other seven large metropolitan councils, all Labour-controlled and regarded as dangerously socialist. All local transport was deregulated, enabling private companies to run public transport for the first time, not always efficiently.³²

Among many others, the Church of England criticized Thatcher’s social policies in two devastating reports. It established a fund to help inner cities and upheld the Beveridge report’s principles as closer to those of the Church than current government policy.³³ Thatcher became increasingly unpopular and lost office in 1990, after introducing the ‘poll tax’, a regressive flat-rate reform of local taxation which disadvantaged many people, requiring those with low incomes to pay relatively more than the better-off and further cutting the capacity of local authorities to raise funds to meet local needs.³⁴ Thatcher effectively shattered the welfare state and Labour’s regulation of the labour market causing a return to severe poverty and insecurity for the first time since the 1930s. There was little improvement under John Major, which contributed to his defeat in 1997.

Things got better under Tony Blair and ‘New Labour’, as he called it, from 1997 until the financial crisis of 2007–2010. Unemployment fell below one million; welfare benefits and services improved. Funding for education and the NHS increased, tripling for the NHS. Hospital waiting times fell, hospitals were cleaner with fewer infections, and many more nurses and doctors were trained. Work conditions and incomes were improved by adopting EU practices including the UK’s first minimum wage. From 1997 to 2008, poverty among pensioners fell from 20 to 14%. Pensions increased but were still inadequate for survival. An improved means-tested supplement, Pension Credit (PC), was introduced in 1999, plus free travel on public transport, an annual winter fuel payment for all pensioners, and free TV licences from age 75. Support for training and work rather than blame for the unemployed helped reduce unemployment. In 1999 Blair pledged to end child poverty by 2020. Higher employment levels, support for single mothers to find work or training, and increased Child Benefit and Tax Credits introduced to supplement low incomes helped reduce it from 27% to c 17%, to 1.1m, by 2010. The ‘Sure Start’ programme for children under four helped improve family circumstances and children’s life chances from their earliest years. Benefits for disabled people improved.

Labour did much to reverse the cuts to welfare and social conditions and the economic decline of the previous eighteen years, but they could not reverse everything. They did little to improve the housing crisis, and Blair introduced university fees of £1000 pa for home students. They aroused student protest and were not adopted in Scotland. Tax and social security changes under New Labour were more redistributive than any since 1979, but they focussed on improving opportunities at the bottom not on holding back those at the top. Low and median incomes rose but the top 1% of incomes rose faster. Income inequality continued to grow though more slowly than before. In the international financial crisis of 2007–2010, welfare benefits rose to protect people unemployed or on low incomes, but Labour lost the 2010 election. It was unfairly blamed by opponents for an international crisis originating in the USA. Gordon Brown, as Prime Minister from 2007 to 2010, received less credit than he deserved for ameliorating its effects.³⁵

The 2010–2015 Conservative/Liberal Democrat Coalition severely cut welfare benefits and services with policies they labelled ‘Austerity’, unjustly blaming Labour’s public spending for the crisis. It was described by the Institute for Fiscal Studies (IFS) as ‘the longest, deepest, period of cuts to public services since at least the Second World War’.³⁶ Successive Conservative governments followed suit. NHS spending rose, much of it on administration, while pay of nursing and allied hospital staff was frozen and demand for services rose in an ageing, increasingly impoverished, unhealthy society. Following devolution to Scotland and Wales in 1999, there was growing diversity across the countries in services and conditions. In England (only) the Health and Social Care Act, 2012, encouraged outsourcing of NHS services to the private sector. Public spending on private health care rose by £1bn 2014–2019. Staff numbers declined along with conditions, nurses in England from 408,000 in 2008 to 333,000 in 2013, 322,637 in 2022; GP numbers also fell. Hospitals fell into deficit and poor care caused a succession of scandals in maternity, mental health, and other services. Waiting lists grew and ‘non-essential’ operations were reduced and delayed, including for cataract removal or joint replacement—not life-threatening conditions but seriously hampering the independence especially of many older people and increasing their need for other services.

Officially, unemployment fell to the lowest level since the mid-1970s, but, unlike the 1970s, work was often poorly paid and insecure following diminished regulation in what became known as the ‘gig economy’ (an economic arrangement in which members of the workforce (known as gig workers) engage in freelance/casual work). More employers evaded the ‘living wage’ as the minimum wage was labelled, though it was not, and providing sickness, holiday pay, and pensions by imposing fake self-employment and insecure contracts. Unemployment ‘benefits’ became smaller and harder to access. It was estimated that if in 2023 ‘the same share of GDP was paid out in wages as in 1976 the average working-age household would have an extra £9,744 a year’.³⁷

Surveys by respected independent organizations, the Joseph Rowntree Foundation (JRF), IFS, CPAG, the Resolution Foundation, found that by 2017 around 23% of the UK population, including 33% of children, were in poverty based on official data and employing the internationally accepted measure of poverty described above.³⁸ The numbers increased further following the pandemic, higher in some regions, notably North-East England and parts of London, than in others, and among some ethnic minority groups especially Pakistanis and Bangladeshis. Successive surveys concluded that changes to the benefit system, in particular the introduction of Universal Credit (UC) in 2012, increased poverty. Its main objective, according to the government, was to force anyone judged capable into work—any work—a return to ancient Poor Law principles. But a high and rising proportion of claimants were in work though insecure, low-paid work. Processing of claims was slow, causing starvation, rent arrears, and debt, increasing already severe deprivation. Households with at least two children were allowed no further payment for additional children born after April 2017. By 2023 this resulted in more than 1m children living in poverty, more than half in households including workers.³⁹ UC was inefficiently run, more costly than the schemes it replaced and damaging to claimants. Housing costs were another cause of poverty as the supply of affordable housing shrank further and homelessness grew.

Growing poverty created widespread use of food banks—barely heard of in the UK before 2010, a significant example of voluntary action responding to a welfare crisis for families who could not otherwise afford to eat. In 2017/2018 the largest national food bank, the Trussell Trust, gave out 1.3m food parcels. In 2020 it reported that 95% of recipients were ‘destitute’, unable to afford to eat or stay warm.⁴⁰ At their best these and the many other smaller food banks (the total is unknown, but it was large) also provided clothes, bedding, toiletries, and nappies. In 2023 former Prime Minister, Gordon Brown, described how users of a food bank he helped to establish in Fife included ‘Families with children… sleeping on the floor under one sheet. Four children taking it in turns one night in four to sleep on a settee’.⁴¹

In November 2018 the UN Special Rapporteur on Severe Poverty and Human Rights, Philip Alston, travelled around the UK studying poverty—an exceptional visit to a high-income country. He delivered an excoriating report expressing shock that a country with the fifth largest economy in the world had one-fifth of its population (14m) in poverty and 1.5m in destitution. He blamed ‘the politics of austerity since 2010’ for the ‘shocking increase in food banks and major increases in homelessness and rough sleeping’. He concluded that ‘The bottom line is that much of the glue that has held British society together since the Second World War has been deliberately removed and replaced with a harsh and uncaring ethos’. ‘British compassion has been replaced by a punitive, mean-spirited and often callous approach’. ‘A system supposedly designed to bring major and much needed improvements is fast falling into Universal Discredit’.⁴² His report was brushed aside by the Conservative government.

In 2023 the Trussell Trust announced that in the past year it had donated a record 2,986,203 food parcels from its 1646 outlets, 37% more than in 2021–2022 during the COVID pandemic, as the cost of living rose. One in five users was in work, including teachers and nurses. More than a million children lived in households receiving food parcels. The biggest increase was in North-East England, 54%; in no region or nation of the UK was it below 28%.⁴³ Simultaneously a UK-wide survey by the Warm Welcome campaign reported that more than half a million people visited ‘warm rooms’, known as ‘warm banks’, because they could not afford to heat their homes. This unprecedented, growing, voluntary innovation was due to high energy prices and an impoverished population.⁴⁴ Some Ministers applauded this extensive voluntary action rather than seeking to eliminate the deprivation that made it necessary. In October 2022 Alston’s successor, Olivier de Schutter, repeated his warning about the disturbing extent of poverty in the UK compared with other high-income countries.⁴⁵

The unprecedented closure of schools during COVID lockdown caused further problems especially for poorer families. The government responded to the crisis by raising UC by £20 a week from April 2020, reducing poverty, but out-of-work households still received £1600 pa less in benefits than they would have received in 2010.⁴⁶ JRF estimated that of the 13.4m people in poverty in 2020/2021 46% were on UC. ⁴⁷ The uplift was terminated in October 2021 despite protest, further increasing poverty. Rising poverty caused life expectancy to decline after rising for a century. Through the 2000s, the gap in average life expectancy and healthy life expectancy between the poorest and the rest narrowed. From 2011 to 2018, among women in the most deprived areas of England, life expectancy fell to just above 78, while in the least deprived it rose above 86.⁴⁸ Health inequalities exacerbated by poverty combined with declining NHS services increased maternal deaths during pregnancy or childbirth: 9.6 mothers died within six weeks of childbirth for every 100,000 births. Deaths were most frequent in the most deprived areas and among Black (34 in 100,000 maternities in England) and Asian (c 16 deaths/100,000) mothers.⁴⁹

The pandemic revealed other features of the declining welfare state, in particular the reduced number and quality of care services for older and disabled people, due to privatization, cuts to local authority funds and the low pay of care workers and consequent shortage of workers, exacerbated as Brexit in 2020 drove many European workers in the social care and health systems to leave Britain. The decline put further mental and physical pressure on the growing number of family carers, many themselves pensioners.

As the poor grew poorer, the rich got richer. The Office of National Statistics (ONS) reported that in 2020/2021 the richest 1% of households in Great Britain (263,000) each had fortunes of over £3.6m. The poorest 10% had £15,400 or less, almost half with more debts than assets. ONS calculated that the income inequality gap between the richest and poorest had widened since 2010 to 36.3%. The investment bank Credit Suisse calculated that in 2021 more than 258,000 UK people became millionaires, the total reaching a record 1.5m, following the surge in value of financial assets during the pandemic.⁵⁰ Median wealth was 2.5 times higher in South-East England than in the North-East, mainly due to a rise in house prices. There were large inequalities within each age group, among younger people fuelled by inheritance and parental support. ⁵¹ Many older people benefited from past rises in house prices and good occupational pensions, while very many others suffered poverty.⁵² The state pension rose by only 3% in 2022, while inflation rose by 12%, and the pension age rose to 66 in 2020, leaving many 65-year-olds in poverty when they could not keep or access employment for the additional year. Many were unable to work to pension age due to poor health; the working-age benefits for which they qualified were inadequate. Despite mistaken assertions about the universal wealth of aged ‘baby-boomers’ born in the 1940s and 1950s, there were significant inequalities among them.⁵³

The UK suffered more than comparable countries from poverty and poor economic growth following Austerity, Brexit, and the pandemic. The Resolution Foundation reported in 2022 that from 2010 incomes in France grew by 34%, in Germany 27%, while in the UK they fell by 2% because the Conservatives made cuts at a time of recession when they should have invested. Britain experienced exceptional destitution, with levels and causes comparable with the early 1900s. But evidence of poverty arouses far less shock and horror and demands for change among politicians and the wider public than it did then. Poverty then led to the beginnings of a welfare state. Poverty now owes a lot to the decline of the welfare state. The situation is so serious that the time has come for a comprehensive vision of how to improve social and economic conditions, reversing the return of the Five Giants, of the sort Beveridge provided and Labour achieved after 1945, though they hoped to do more. Surely this is possible again.

One current suggestion is the Universal Basic Income, comparable with past proposals by Bertrand Russell and others. It has been trialled successfully in several countries but nowhere adopted, mainly due to cost.⁵⁴ There is an encouraging growth of proposals for change from well-informed independent bodies. The New Economics Foundation proposes the Social Guarantee. It would guarantee workers a real living wage and job security, with equivalent benefits, combined with high-quality, free public services including for health, social care, housing, education, and child-care. These services would be run where possible by adequately funded devolution to local authorities, who can best identify local needs and work to develop their local economy. Some local authorities are already successfully experimenting with similar schemes, notably Preston. It can be funded through redistributive taxation, including ideally a revaluation of Council Tax for the first time in England since 1991.⁵⁵

In February 2023 JRF and the Trussell Trust made a relatively modest proposal that the government provide an ‘essentials guarantee’ granting needy claimants legal entitlement to the ‘essentials’ of life, including food and energy, with benefits set by an independent body. JRF estimated that, at current prices, the standard allowance should be £120 per week for a single person, compared with the current £85 on UC.⁵⁶ This won the support of more than twenty health bodies including the BMA and the Royal College of Nursing, concerned about the impact of poverty on health. The Liberal Democrats agreed that the level of UC should be decided by an independent body. A Guardian editorial argued that raising the local housing allowance (frozen since 2020) and removing the two-child benefit cap were more urgent priorities. It reported survey findings that most respondents believed benefit claimants deserved more than basic food and utilities, including such additional comforts as haircuts, celebrations, and internet connections, suggesting some popular support, at least on the centre-left, for a more generous benefit system.⁵⁷

From a different political perspective, the Poverty Strategy Commission, established in 2021, chaired by Philippa Stroud, adviser to Iain Duncan Smith when he was Minister for Work and Pensions and established the UC, aims to forge a national political consensus on reducing poverty and includes former ministers from the three main parties, alongside the Trussell Trust and New Economics Foundation. It argued in a report published in September 2023 that millions of low-income families were ‘surviving not living’, forced to endure unacceptable levels of poverty.⁵⁸ It estimates that increasing hardship affects six million families and it would cost £36b to provide them with £6000 a year in benefit and wage rises, plus investment to lower housing and energy costs and improve health services. Their current recommendations include a 5% uplift in benefits, to rise with inflation, with provision for housing and childcare costs, the additional costs of disability and energy and travel costs, all funded by higher taxes. It continues to consult on further proposals, seeking to put poverty on the political agenda before the next general election which is expected in 2024. It is concerned about the lack of urgency from the two main parties over the scale and nature of poverty and the failure to offer adequate protection to the poorest.

It is a hopeful sign that proposals for state action to relieve poverty are coming from a range of sources. Action is urgently needed to relieve the intolerable conditions in which too many people are barely surviving in a rich country, but when and how it might emerge remains unclear.