What would Beveridge 2 look like?
If the Liberal giant returned to write another report, what would he seek to address?
William Beveridge’s 1942 report paved the way for the modern British welfare state. Beveridge had carefully scrutinised British society and identified 5 different ills: Ignorance, Squalor, Want, Disease, Idleness. To combat these ills, his report made several proposals. It called for: the creation of the NHS, a national insurance scheme to cover pensions and unemployment, the State to guarantee full employment. These bold reforms were enacted after the war had ended, fostering a spirit of solidarity.
If Beveridge returned today, what would he make of our society? No doubt he’d be impressed by the level of technological progress, the relative wealth (and number) of pensioners, the availability of universal healthcare. On the other hand, he’d be less impressed by glaring issues like: Regional Inequality; Climate Change; Ill Health; Housing; and Wages that Won’t Rise. The response will be to ensure that everybody has a right to housing, offering citizens in the provinces opportunities for gainful employment, that the employment pays a fair wage, and that the lives we lead are healthy and meaningful. His proposal would constitute a form of Shire Liberalism.
The Shires have been sheared of their wealth. Since Roman times, the South East has always been the wealthiest area of the British isles, on account of its better soil and proximity to shipping networks. Following the industrial revolution, Britain’s wealth depended on 1) being more technologically advanced than other countries and 2) setting the terms and conditions of global trade, using force if necessary. For example, it had been easy for Britain to sell steel to India when Britain could prevent India from making any steel itself. The steelmakers of Sheffield had a captive market for their goods, British industrialists used to allocate steel, rather than sell it. After Indian independence India set up its own steel mills. The price of making steel in them was lower because local wages were lower and this made Britain’s goods too expensive. Subsequently the industry shrivelled up and today steel employs barely anyone. Yet rising regional inequality is a defining issue of post-war Britain. Since 1945, Bitain’s regional industries have withered across the country that triggered the industrial revolution USE STATISTIC HERE. Our regional economies have shrivelled under a continued onslaught of globalisation: economic liberalisation and technological catch up by international competitors have hit the UK hard.
Traditional local employers of all trades have shed jobs, with particularly emotive examples being mines, steelworks and fishing. Technological advances in agricultural have depleted the number of jobs in rural areas, entrenching rural poverty and contributing to an ever-widening gap between city and countryside. Just as damaging but less lamented has been the steady progress of merger and acquisitions in regional businesses, transferring provincial jobs and wealth elsewhere. Yet while some cities have faced death and decay, others have experienced renewal and resurgence.
The new post-industrial knowledge economy is concentrated in a small number of cities, notably London, Edinburgh, Bristol, Cambridge and Oxford. Access to good quality jobs has become a postcode lottery. The U.K now sees Italian-style internal migration, primarily among young people leaving their home towns or cities for university and employment elsewhere.
The climate emergency. Today climate change is an issue that cannot be ignored but didn’t feature in Beveridge’s report. Temperatures are rising across the globe, average wildlife populations have dropped by 60% in just over 40 years and there’s more CO2 in our atmosphere than any time in human history. Despite the alarming statistics, it doesn’t look like humanity is anywhere near reversing these developments. Carbon emissions are still rising, the world lost 120,000 square kilometres of tropical forest in 2018 alone. National grids continue to run off coal power and new cars are still being made to run off petrol and diesel. Developed economies have been reluctant to decarbonise their economies while rapid levels of industrialisation among developing countries are adding to overall levels of pollution. Tackling the climate emergency will require a concerted effort from individual nation-states. The world will need a return to the spirit of international cooperation fostered by the international institutions that were created in the wake of World War Two but have since fallen into abeyance. Beveridge would call for urgent government intervention.
Ill health. There have been great improvements in material wellbeing since 1945. Numerous diseases have been eradicated, child mortality rates have fallen, and average life expectancy has increased. But if a healthy body means a healthy mind, then the UK is gravely ill. The rise in material standards of living have not been matched in terms of spiritual wellbeing. Indeed, an overabundance of material wealth has made us unhealthy; Covid-19 exposed a population that was ill-prepared to fight a deadly disease. Research from Cancer Research UK found that 63% of UK adults (aged 18+) were overweight or obese.
In contrast to Beveridge’s time, we are fortunate to live in a time when society is beginning to accept that mental health is as important as physical health. According to the mental health charity Mind, “Approximately 1 in 4 people will experience a mental health problem each year. In England, 1 in 6 people report experiencing a common mental health problem (such as anxiety and depression) in any given week[1]”. A study by the British Red Cross revealed that over 9 million people in the UK identified as feeling often or always lonely[2]. Half a million older people go at least five or six days a week without seeing or speaking to anyone at all[3]. Also, the population is ageing rapidly. The Office for National Statistics (ONS) projects that more than 24% of people living in the UK will be aged 65 or older by 2042, up from 18% in 2016. It is far from clear that the future is bright[4].
Housing. Home ownership levels have decreased substantially over the past 20 years. In 1995–96, 65% of those aged 25–34 with incomes in the middle 20% for their age owned their own home. Twenty years later that figure was just 27%.[5] House prices have soared while average wages have plateaued.
Housing is the single greatest financial asset held by individuals in the UK yet younger generations are locked out of owning it, contributing to a growing sense of intergenerational inequality. Home ownership is an effective wealth creation vehicle, as every mortgage payment increases the size of the owner’s asset. Yet homeownership rates have declined rapidly, becoming an increasingly forlorn hope for many. Without a solution, future generations will live poorer lives than their elder relatives.
Beveridge would spot that the current housing crisis was created in the 1980s. Following Margaret Thatcher’s decision to sell off council housing, an expansion of money lending poured huge sums of money into the housing industry, inflating property prices. The ex-council houses were never replaced by government building programmes; Shelter estimates that the UK has a shortfall of 3 million units of social housing[6]. Subsequently the government has paid billions of pound of housing allowance to private landlords. Inflexible planning regulations have constricted the power of the market to address the fall in supply, private developers have stretched their profits by building big houses rather than the required affordable housing. Politicians of all backgrounds have refrained from tackling the problem, in fear of aggravating the NIMBY brigade in marginal constituencies. Beveridge would call for a mass house-building programme.
The decision to base the recovery from 2008 on protecting banks and businesses has come at the expense of workers. The governments prioritised keeping the employers alive without effectively analysing conditions for the workers. The objective was to secure jobs, almost at any cost.
Wages that won’t rise. Almost 80 years ago Beveridge called for the state to guarantee full employment, defined as an unemployment level of about 2.5–3%. He believed that full employment would guarantee constantly rising wages, as a shortage of labour would make companies pay more to attract employees. For many reasons full-unemployment hasn’t turned out to be the panacea he hoped for. Over the past decade the British government has reduced the unemployment rate from a high of 8.1% in 2011 to 4% at the beginning of 2020. Yet the fall in unemployment hasn’t been matched by a corresponding increase in wage growth. Real wages have been stagnating since the 1980s.
Even the way “unemployment” is calculated masks the reality of our economy. People who have given up searching for work aren’t counted as unemployed. There’s no measure of underemployment — people working 15 hours a week who might want to be working 40. Underemployment has other meanings too, in terms of university qualifications the British workforce is more qualified than ever before but many well-qualified workers are doing jobs that don’t match their level of education. The government has made much of its support for apprenticeships but in reality there is still a massive skills gap. There are thousands of unfilled vacancies in well-paying careers like IT. There are gaps in crucial public services like healthcare…
Beveridge would conclude that the result is an underproductive economy, undermined by stagnating wages and employees who live precarious lives. He would probably say that the true measure of ‘employment’ should be whether or not people can find a job that pays enough for them to afford the things they need to buy: hardly a surprising conclusion but an important one.
[1] https://www.mind.org.uk/information-support/types-of-mental-health-problems/statistics-and-facts-about-mental-health/how-common-are-mental-health-problems/
[2] https://www.campaigntoendloneliness.org/the-facts-on-loneliness/
[3] https://www.campaigntoendloneliness.org/the-facts-on-loneliness/
[4] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/howwouldyousupportourageingpopulation/2019-06-24
[5] https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf
[6] https://england.shelter.org.uk/media/press_releases/articles/three_million_new_social_homes_key_to_solving_housing_crisis2
