Political Commentary

Reveridge is dead

Patrick Cosgrave With the third reading of the Government's Social Security Bill on May 8 the elaborate System of National Insurance created by the Attlee government under the inspiration of Lord Beveridge was laid to rest. True, formal Obsequies will be delayed, because of the necessity of scrutiny of the legislation by the House of Lords: but the quiet and reasonably constructive tone of the Opposition during the last Commons stage amply demonstrated the Government's success in bringing about a revolution in social provision, whether for good or ill. Because of this remarkable success for Selsdon Man (the Minister principally responsible for the Bill, Mr Paul Dean, first Unveiled the proposals which underlie it at the famous Selsdon Park seminar), because of the very nature of the legislation itself and be, cause the Conservative Party were spurred '0 detailed action by the presentation of Mr Crossman's now forgotten but massively s„ssialistic and radical pension plan during the "fe of the Wilson government, the whole Ihatter deserves much wider publicity and attention than it has so far received.

. When this Government first came to power

Its avowedly ideological character frightened

some and stimulated others. When discussing

Social service benefits it is appropriate to re

?all that it was Mr Crossman who most loudwelcomed the prospect of a real clash in oritish politics, not merely between two e„roups of men with different ideas about ma'ttging the country, but between two differ

'IQ Political and social philosophies. Many of thue distinctions that were then so evident ave since disappeared; in so far as they are !till to be observed in the economic field that Is because the Labour Party have moved raIPIIttlY and steadily to the left, while the Tories bave moved towards the managerial centre. cven in National Health Service matters, Sir li.Ceith Joseph has concentrated on the fight ,91. Managerial efficiency and Labour opposi,`Iclo to him, though strident, has been unable su find any grounds for suggesting that he is ab ,kout to dismantle, or even seriously alter, 1,,ile Character and purpose of the Service. But " the matter of pensions and social security Idtrovision there has been a real Clash between Iferent views of the world, and the Tories ha . v

thve Imposed theirs. The manner in which , eY have done so tells us a great deal, not tlit:IY about the likely quality of provision for l ose in financial need in the future (particuatlY the old) but about the nature and illiaitty of the work that it is possible for a %Ill' to do in opposition. o. to understand the character of the change 1:ir Keith and Mr Dean have brought about it 1; necessary to understand something of the LisIory of British national insurance. In 1911 t„°Yd George introduced a social insurance eern which laid it down that everybody iti,?tild contribute at an agreed rate to a ti,uu—to which employers were also obliged ti: contribute—"On the understanding,' in 0':.e Words of M. Penelope Hall, the historian ILthe system, "that if certain contingencies rhiall them they can claim benefits from the helld at standard rates, without any test of pr.,.,d." Pre-war governments extended this ro"letPle to cover sickness and unemploy

tioent, widows, orphans, the retired, and NaHealth. Beveridge tried to synthesise of „develop the mixture thus created as part L41121s attack on "Disease, Ignorance, Squalor tou Idleness." For the pensioner he intended Provide a subsistence income, sup

plemented by National Assistance.

Since everybody paid the same contribution, this had to be fixed at a rate within the capacity of lower paid workers. Pensions were therefore low, and subsistence level was never reached. The growing number of pensioners, the fact that they survived longer, and inflation, all created greater difficulties for the system. These were met in two ways—by a supplement to the fund from the Exchequer, and by deciding to pay for current pensions out of current income, thus building up no savings for the future, and turning what was supposed to be an insurance, scheme into a tax scheme. At the same time, better-off workers began to join occupational pension schemes, which grew more and more popular over the years, and provided increasing security against inflation, because their payments depended on investment income. Rapidly the state expenditure began to get out of hand and, in order to rescue the Beveridge system from its own increasingly serious contradictions, Mr Crossman proposed to introduce a new plan, the essential nature of which would have been greatly increased earnings-related contributions (the Tories had introduced an earnings-related element in 1959), and which would have involved great damage to, if not the destruction of, the occupational schemes, since it would have been much more difficult to contract out of part of one's obligations to the state to pay dues to an occupational scheme. The Crossman—and Labour—principle was that need should be met principally by state provision. The Conservative principle, enun ciated in opposition, is best expressed in the words of the pensions White Paper of 1971, "Social security is not the exclusive responsi bility of the Government." Behind this formulation lay the great Conservative social prin ciple of selectivity—the principle that those who can should look after themselves, and those who cannot should be helped. Thus, the great majority of workers and their ern: ployers should contribute to occupational funds, the quality of which is to be supervised by an Occupational Pensions Board. Those. who cannot find a good scheme to join cbecause their firm, say, is too small), should be long to a State Reserve Scheme. And everybody should contribute to a State Basic Scheme, the income from which, aided by the Exchequer supplement, will continue to provide for existing pensioners.. (The intro duction of this honest principle of taxation removes the hypocrisy practised by both Labour and Tory governments, which insist ed that what is a tax was a mode of insur ance.) If it works, the new system will be wealth-generating, instead of inflationary, as the present system is, and as the Crossman scheme would have been to a much greater extent; and it will induce greater self-reliance, as well as enabling governments to identify the needy clearly, and concentrate help on them.

If it works. Labour objections are two. Fundamentally, the Labour Party believes in state provision, and hates the selectivity principle..

More immediately, they point to the fact that the new system is as yet only rudimentary; that it contains a number of anorpalies; that it makes less than fully equal provision for women (though it does greatly improve their second class status); and that it contains an element of deliberate discrimination in favour of occupational schemes as against both state schemes. The Tories are choking the state.

In practice the Government believes that contributors to both state schemes, although they do not receive the same inducements and concessions as do contributors to oc cupational schemes, will have to pay out less than they do now, in real terms. More important, ministers are content with the present inadequacies. "We have laid the founda tions," Mr Paul Dean told me, "and we have added the scaffolding. That is all." In that sentence lies everything we need to know about the political character of the whole operation.

In opposition there was no doubt that the Tories were frightened by the grandiose pre sentation of the Crossman scheme. It in volved massive public expenditure, and was ultimately highly inflationary: but public ex penditure is always popular. Keeping their nerve, however: they decided deliberately to limit the horizons of expectation of their al ternative, and, trusting that self-interest and the will to independence alike of workers and insurance companies would create a healthy pensions system, decided merely to create a structure within which individual enterprise would be encouraged. To this end the work of the pensions policy groups was directed.

And in the test the Government has discovered a highly unlikely secret weapon—the trade unions. It is January 1971 since Mr Jack Jones called for strikes for better pensions.

• Now union leaders as asking for briefings from the DHSS to tell them how best to build provision for better occupational pensions into wage negotiations, and they do not always feel it necessary to seek equivalent briefings from Labour shadow ministers.

Even the TUC has nibbled, and the operation of the new Social Security legislation will be an essential part of the talks soon to open on pay and prices. Moreover, provision and plans under the new scheme operate outside the policy of pay and prices restraint. At the same time existing occupational schemes are being improved, and women, in particular, are being brought into them in increasing numbers. It is most important, from the Government's point of view, that the unions are cooperating, because it is in the interests of their members; and most important politically that the unions are cutting Labour's feet from underneath them even while the Oppo sition work out their alternative proposals. Whatever the final judgement on the Bill—it might be disliked, for example, because it kicks a hole in that policy of redistribution of income which is a cardinal socialist tenet, and to which the Tories have in the past paid some obeisance—it is a remarkable triumph of pragmatic vision.