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International Socialism, Summer 1993


Ann Rogers

Back to the Workhouse


From International Socialism 2 : 59, Summer 1993, pp. 3–36.
Transcribed by Camilla Royle.
Marked up by Einde O’Callaghan for ETOL.



The very essence of the capitalist system is that it makes profits from the exploitation of individual workers. But, as capitalism develops, it finds that it is unable to maintain this level of exploitation without spending on the infrastructure of its own system. This infrastructure is much wider than the welfare state, involving areas such as transport, but welfare is a key part of it. The quality of labour required by the system is constantly increasing, requiring more and more spending, as capitalism needs to innovate to remain competitive. So the existence of the welfare state is a sign that capitalism is riddled with contradictions. The speed of technological development over the last 20 years is indicative of this process. Innovation in computer science has created a new demand for computer literate workers. Changes in communications technology have meant every office now has machines such as faxes and photocopiers. The system increasingly needs workers educated enough to learn new skills and keep up with these changes. Whereas 20 years ago a woman office worker would have needed to type, now she needs to be able to work a word processor and periodically upgrade her knowledge as new word processing packages come onto the market. Where one skill was necessary, several are now needed. The increased globalisation of capital has meant language skills have become much more important for workers.

Educating workers is expensive. But it has knock-on effects that shape the wider system as well. Young people are economically inactive for far longer. In Britain today, more young people are pulled into higher education. Internationally it is now common for young people to stay in full time education at least until the age of 18. In 1945, only 2 percent of British youngsters went into further education. The figure is now 25 percent. In short, the system has to spend more and more money putting resources into the next generation of workers before it can start making profits out of them.

The cost of this process has meant that trained workers have become an ever more precious commodity. There is little point in spending a fortune educating a worker only to have him or her die in an epidemic or from an industrial accident. Therefore, along with increasing resources spent on education, the system is forced to spend ever more on health care for workers. Again this is not new. In the 1840s public health acts were passed to try to control the number of epidemics in the new industrial cities. By the turn of the last century free school meals and rudimentary health checks within the education system were introduced. By the 1930s workers got some level of free medical care through national insurance schemes, and in 1945 the whole welfare system was rationalised and centralised.

The huge levels of welfare spending create constant tensions within the system. Spending on infrastructure involves a level of planning which stands in direct contradiction to Adam Smith’s ‘invisible hand’ of market mechanisms, it involves a level of intervention which means the state gains the power to regulate and control individual capitalists to a certain extent. It can cut into profit margins by extracting taxes to support this spending. Large bureaucracies are set up to administer welfare services, and these bureaucracies can develop ideologies which bring them into contradiction with elements of the ruling class.

The development of welfare spending has therefore been double edged: it has been welcomed by workers as improving their standards of living, but has also been essential to the efficient development of capitalism itself. So the Liberal government introduced pensions in the first decade of the century because of the increasing pressure from a growing and better organised working class, but also because the experience of the Boer War had shown the ruling class that it was losing its competitive edge because of its miserable level of social provision compared to that of its rivals. The introduction of a much more comprehensive welfare state after the Second World War was partly influenced by the fear that upheaval would threaten the order of society if substantial concessions were not granted. This mood was summed up by Tory MP Quintin Hogg’s famous phrase, ‘If we don’t give them reform they will give us revolution;’ But much of the ruling class also agree that a better organised and centralised system of social provision was necessary if Britain was to compete in the post-war world.

On both occasions, two elements were in place. The ruling c!ass was forced to spend money in order to make money; to compete with its rivals it needed a healthier and better educated working class. But the ruling class rarely spends money gracefully; any new piece of social legislation is always fiercely fought over as various sections of the ruling class try to keep spending down.

In addition, social spending has ideological dangers for the ruling class. This spending is largely in the interests of that class, insofar as it ensures the quality and stability of labour necessary to make profits, but it also usually improves working class living standards. Having created the expectation of education, free medical treatment, pensions, unemployment benefit and income support, it is very difficult for the state to take them away at some later date. This is true even in cases where there was no great working class demand for the service in the first place. So, for example, there was no great agitation for the introduction of comprehensive schools, but now, when the government wants to reintroduce some form of two-tier selective system, they face resistance from teachers and parents who perceive comprehensive education as preferable.

As the crisis has deepened the pressure to cut social spending has become greater and greater. The consequences today are obvious for everyone to see. Hospitals become ever more run down. Lack of cheap rented housing results in homelessness on a scale unprecedented since the Second World War. Crumbling schools with insufficient teachers provoke outrage from teachers and parents alike. Pensioners see their meagre incomes continue to fall, while the government plans to putt the pension age up. This worsening social provision is not unique to Britain. In Germany, a much richer economy, the government openly discusses raising the pension age to cut down on pension payments. In the United States, still the biggest economy in the world, the poor are forced onto workfare schemes in return for inadequate benefits.

Yet the amount spent on much of the welfare state is not going down. Health spending, for instance, is actually going up. The recession, with its rising unemployment, has led to higher spending on unemployment benefits and income support. Social changes are adding to the bill, especially the increasing number of old people who are costing ever more in pensions and health care. This increased cost is a problem for the ruling class: for our class it is the reward for hard won battles. We are costing the welfare state more because of the very real gains the working class has made since 1945. Workers live longer because of better food, housing and a universal system of health care. There are more single parents because women have achieved a degree of independence and sexual liberation. They no longer feel they have to be tied to a man at any cost.

Yet the government is determined to keep this spending down. Behind most of the Tories’ ‘reforms’ lies a desperate attempt to cut the resources going into the welfare state. Policies such as ‘community care’, which forces the chronically sick or permanently unproductive ‘into the community’, (usually into the care of relatives), are saving the government a fortune;but they have their limits. The social structure of contemporary Britain makes things difficult for the government to make sufficient cuts. For example, there is no substantial move to send women back into the home because they form an essential part of the labour force. Yet any moves to reduce institutional care will force more women to give up work to look after the old or the chronically sick. The fact that Britain was the first industrial nation means that the extended family, common to rural peasant economies, disappeared centuries ago. The family does not provide a safety net in the same way it does in less industrialised countries. This means it is difficult for the ruling class to completely take away unemployment benefit or sickness benefits. In addition, it is unlikely that any government could seriously contemplate withdrawing all state benefits from this group, from pensioners or the unemployed, since this would cause levels of discontent and upheaval which would be politically unacceptable to any party.

Although it is expensive, the, ruling class also recognises that the welfare state is an important selling point when it comes to attracting foreign investment. Britain has appealed to countries such as Japan for two reasons: because it has a low wage economy, and because the costs of the reproduction of labour are carried more by the state than by private employers. A Japanese car firm investing in Britain, for example, knows that it will not have to pay private health insurance premiums on its workforce. But this doesn’t mean the Tories will just continue to spend money on the welfare state in its current form. The Tories want to cut welfare provision and will continue to attempt to do so. But they cannot wholly abolish it. The whole history of social spending in Britain is a story of the ruling class being forced to spend more to enable it to compete, to mould the workforce in the way it wants and to offset social discontent. Which of these is uppermost varies from time to time-but the ruling class never spends money unless it has to.

The origins of welfare – in whose interests?

From relatively early in the history of capitalism the ruling class was forced to spend money on certain social provisions. Transport, sewage, water and elementary education were all in place by the latter part of the 19th century. Throughout the early part of that century elements of the ruling class attempted to reduce factory hours for children. By the 1820s the emerging trade union movement was also beginning to raise its demands. The Hobhouse Act of 1825, which cut night working and Saturday hours, was partially influenced by pressure from the Manchester cotton spinners’ union. Some of the mill owners fought tooth and nail against the Factory Acts. But the casualty rates of industrial workers in this period made other sections of the ruling class keen to introduce some controls. Evidence given to Sadler’s committee, which formulated the 1833 Factory Act, included this litany of the wounded from a Methodist school in Bolton: 165 boys were factory workers, 46 had been injured by machinery, three had lost fingers, three were deformed at the knees, 17 had coughs, six had loss of appetite, nine were consumptive. Of 171 girls, 27 had been injured by machinery, five were deformed at the knees, 19 complained of coughs, 31 had loss of appetite, nine were consumptive. Increasing organisation of the mill workers had led to a network known as the Short Time Movement which aimed to cut hours for all workers, adult or child. The introduction of the 1833 Act was partly an attempt, by granting some reductions in child working, to stop further agitation by adult workers.

As early as 1840 Poor Law Guardians were ordered to provide free vaccinations. [1] By 1848 Parliament established a national Board of Health, which could force the appointment of a local sanitary board in areas where the death rate was very high. [2] These measures were undoubtedly of benefit to the poor (although they were frequently used by local worthies who sat on such committees as an excuse to bully and ‘improve’ the working class), but they were also of very direct benefit to the ruling class. Disease in the new urban areas constantly spread from the fetid inner city ghettos to the respectable areas, killing members of the ruling class and their families and seriously threatening the future supply of labour to the new factories. By the early 19th century the death rate was rising, reversing the decline of the previous century. Increasing scientific knowledge about the spread of disease meant it was possible for the ruling class to act to protect its own interests. The towns were appallingly unhealthy places for the working class, but as the following table shows the rich suffered as well.

We can see that geography was nearly as important as class. The difference in age of death between the professional classes of Rutland and Manchester is almost the same as that of the labouring classes. No wonder a movement to clean up the cities grew. The more privileged classes wanted to protect themselves from disease.

Average Age of Death in 1840 [3]



Age in


Age in

Gentry and professional classes







Mechanics and labourers



But the more far-sighted members of the ruling class were also concerned about the provision of skilled and trustworthy labour and the cost of poor relief. The diseases and epidemics that swept through the industrial areas were no respecters of skill or age. A cholera epidemic could sweep away the skilled engineer as easily as the feckless pickpocket and much was made of the difficulty of replacing skilled men. Edwin Chadwick, the force behind the Public Health Acts of the 1840s, complained that epidemics meant the removal of responsible men in their prime and their replacement with those who were a danger to the established order. Chadwick described them as ‘young, inexperienced, ignorant, credulous, passionate, violent, and proportionately dangerous, with a perpetual tendency to moral as well as physical deterioration.’ [4]

The ruling class was willing to engage in public spending to protect its own health and to protect its labour force. This was especially true where the workforce was skilled and established. Money was always avai+-lable when It looked as tf the established social order was under threat. But in this case it was fear of what would happen to the working class, rather than any direct agitation from the working class, that made the ruling class take action. Unlike the issues of hours and wages, public health legislation did not arouse any great struggles from within the working class. Certainly working class agitation is not always necessary for the ruling class to begin social spending programmes. Sometimes the ruling class has to spend money to defend its profits even if it is under no immediate threat from the working class.

But, even without working class agitation, the measures passed throughout the 1840s didn’t go through without opposition from sections of the ruling class. Proof that the rich would eventually gain from any spending was necessary. Chadwick was not above drawing up balance sheets that showed the costs of urban filth. He would balance the cost of a drainage system against the cost of maintaining widows and orphans, loss of working days through sickness and the ‘national loss’ the state incurred because of the bad health of the population. Most of these accounts were guesswork, but they achieved their aim. The bulk of the ruling class became convinced, although slowly and reluctantly, that drains and sewers were the least costly option if profits were to continue to roll out of the factories.

It was not just cost which caused fury in certain sections of the ruling class. The Public Health Act of 1848, along with other social legislation of the time such as the Factory Acts, also marked the extension of state power above the power. of the individual capitalist. The individual capitalist no longer had complete freedom to do what he wanted with his workers. In particular these pieces of legislation meant the state could compel certain capitalists to improve things and introduce taxes to pay for these improvements. Organisation was ramshackle and complex, corruption frequently crept in, and the ruling class found it much easier than anyone else to avoid the new laws. Yet these Acts marked a new way of organising things. They were an expression of the interests of the ruling class as a class, rather than as a set of individuals, in a new area. They were an admission by the ruling class that unfettered free capitalism could not work without some social planning and state expenditure. New industrial towns that were the source of the new wealth would collapse in a festering mass of cholera, sewage, unburied bodies and subversion unless something was done. These subterranean fears burst to the surface in 1848 when the twin horrors of Chartism and a cholera epidemic frightened the ruling class into passing the Public Health Act. But the hatred of any limits on the powers of untrammelled capitalism took their toll By 1853 the leading figures on the General Board of Health, including Chadwick and Lord Shaftesbury, had been forced to resign under a backlash of accusations of despotism, meddling and interference with the rights of individual capitalists.

Nevertheless, they left behind a system operating at local level that was firmly based on the notion of taxation on the one hand and public spending on the other. Local Boards of Health could be set up if one in 10 ratepayers petitioned for them or the death rate exceeded 23 per 1,000 in a year. They were expected to approve plans for new roads, execute laws on sanitation of new houses, prevent or control dirty trades and inspect common lodging houses. In addition they could provide parks and cemeteries where deemed necessary and pass by-laws allowing fines for breaking any of these regulations.

Full time officials were employed to carry out these duties and the lot was paid for by levying various rates. This had a very direct effect on the ratepayers: for example, after Leicester created a Board of Health it raised its rates from 9d to 2s 4d. Of course this meant that the working class had to pay for the reforms (usually in the form of increased rents) at a time when its own circumstances were often dire. Undoubtedly, this was one reason such reforms were unpopular among the working class in some areas. Chartist leaders in Hanley summed it up: ‘Good sewerage may increase our personal comforts and conveniences, but if it tends to deprive us all more of onr now scanty living, we fear the introduction of it.’ [5] Besides this, many recommendations of government bodies, while sound enough in their own right, were completely out of touch with working class life. In the 1848 cholera epidemic, Health Boards advised workers to eat properly and destroy their bedding where there had been infection. This crass advice provoked a furious response from the working class. At best they regarded it with derision and at worst with outright hatred. Workers couldn’t afford to eat properly and if they had one set of bedding they would count themselves lucky. Local Boards were forever trying to get workers to stop keeping livestock, especially pigs, in their dwellings on the grounds that they were a health hazard. This was undoubtedly true, but the fantily pig may also have been the difference between fresh meat at Christmas or none for the whole year.

Along with the cuts in hours, and raising of the age when children could start work in factories, an element of compulsory schooling was introduced. This was sometimes in factory schools and parents had to pay for this privilege. It was not until 1847 that a law was passed to prevent employers calling children out of the schoolroom whenever it needed them. But the movement towards some sort of universal education had begun.

By the middle of the 19th century the mixture of Bibles, beating and rote-learning, which comprised early forms of education, was obviously not even achieving a basic level of literacy. It was commonly estimated that only about one fifth of the children in school could read with ease but it wasn’t until the 1870s that compulsion and state financing in education became general. Until the end of the Second World War the emphasis was on the most basic sort of learning for working class children. Although the need for ever more complex skills forced the school leaving .age upwards, By 1918 it had been fixed at 14 years. Working class children were not expected to go beyond this basic level. In 1935, only 600,000 children were in secondary education after the age of 14 years.

The turn of the century and the need for efficiency The Boer War, extended male suffrage and a rising level of class struggle and union organisation all conspired to raise the issue of social reform to the top of the political agenda at the beginning of the 20th century. The formation of bodies such as the National Committee of Organised Labour for Promoting Old Age Pensions showed workers’ willingness to fight around such issues. But this fight was far from unite with certain working class organisations such as the Friendly Societies opposing the introduction of state pensions on the grounds that they took control away from working class organisations and gave it to the state. Unfavourable comparisons were made between the organisation of German capital, seen as efficient and scientific, and that of British capital, see as hidebound and old-fashioned. [6]

By 1901 a section of the ruling class was firmly committed to reform, which it called ‘national efficiency’. The Earl of Rosebery, in a speech in 1900, summed up the ideas behind this movement:

An Empire such as ours requires as its first condition an Imperial Race – a race vigorous and industrious and intrepid. Health of mind and body exalt a nation in the competition of the universe. The survival of the fittest is an absolute truth in the conditions of the modern world ... (nations) must constantly sharpen their intelligence and equipment. They need constant co-operation and vigilance with commerce, of the teachers with the taught and with the age in which they teach. [7]

The Fabian reformers had similar concerns and operated within the same framework. Sidney Webb spoke of the ‘pompous inefficiency of every branch of our public administration ... that transfers our commercial supremacy to the United States.’ [8]

Ability to compete was at the centre of the movement for social reform. The belief that change was necessary if Britain was to compete successfully with Germany and the United States remained central. Whether the argument was formulated by the Fabians or by Liberal imperialists (and there was not a rigid distinction between the two) the concentration was on the damage that poverty was doing to society rather than the misery it caused individual workers. Workers got a walk-on part in the statistics that poured out of learned journals and government reports at the time. Efficiency, social reform and using science to improve the health of the nation became the watchwords of this movement, but the underlying reason for the desire to improve the health of the working class was the need for a healthier labour force in the factories and the army.

A national panic developed. The Times editorialised on the crisis of British industry, the Westminster Review spoke of ‘England’s Peril’ and the Prince of Wales claimed: ‘The old country must wake up if she intends to maintain her competitive pre-eminence in her colonial trade against foreign competitors.’ [9] Central to this panic was concern about the physical condition of young British men. The Boer War had meant that for the first time large numbers of workers had been physically assessed by the state. What the ruling class discovered horrified them. Three out of five soldiers trying to enlist in Manchester were found unfit, as were over a quarter in York, Leeds and Sheffield. The generals believed that unless something was done the Empire was in danger. The mood was summed up in an article by General Maurice entitled Where to get men in which he claimed, ‘... a state of things in which no more than two out of five of the population below a certain standard of life are fit to bear arms is a national danger which cannot be met by any mere scheme of enlistment and that true patriotism requires that that danger be recognised.’ [10]

The role of the working class family quickly came under scrutiny. It was claimed that Jewish women in the East End of London were healthier than other women in the population because they did not work. ln 1903 the British Medical Journal bemoaned the number of children at work, claiming that this was leading to physical degeneration in the population.

By 1904 the government had set up a committee on physical deterioration which reported that working class children did not get enough to eat (among 1ts proposals was a system of school meals in state schools and regular inspection of pupils by school medical inspectors). A bill from Labour MP William Wilson established the principle that feeding of children was part of an education service rather than a charity. The bill was eventually adopted by the Liberal iovermnent and passed ill December 1906. [11] The new bill allowed, rather than forced local education authorities to provide meals. It provided no central funds: but permitted the authorities to raise a halfpenny in the pound rate if they so desired.

Most important of the social legislation of this period was the Old Age Pension Act of 1908. It had been known from the 1870s that the largest and fastest growing group of Poor Law recipients were the elderly. The Old Age Pension Act provided for the payment of a 5s a week pension to all individuals who had reached the age of 70, provided they could fulfil various criteria which showed that they had been working members of society and did not have an income of more than 10s a week, The effect on ordinary people was massive. Postmistresses frequently found that pensioners gave them gifts, because they were so grateful to be given the pension. [12] The pension did not really succeed in its rum of cutting Poor Law spending. Although outdoor relief fell dramatically, indoor relief (the workhouse infirmary) went down much less. Obviously indoor relief was taking up a medical need which old age pensions couldn’t replace.

The provision of old age pensions did not weaken the growing mood for change and increasing level of class struggle. The steadily widening male franchise played a role as well. If the Liberal Party was to retain power, it had to be seen to be doing something in the field of social provision. However, as a party committed to the preservation of the status quo, it faced a problem of cost. No ruling class party at the time believed that a system of universal benefits was affordable. Therefore the principle of contributory benefits was introduced in the National Insurance Act of 1911.

Cuts in the crisis – the interwar years

The most notable achievement of the 1924 minority Labour government was John Wheatley’s Housing Act. This outlasted the government by nearly ten years and led to the erection of 521,700 houses. But it was a drop in the ocean, given the appalling housing conditions prevailing in every town and city. It was also very cheap. The legislation allowed local councils to borrow money for housing and subsidised the cost for up to 40 years.

Wheatley was the most left-wing member of the cabinet, he was also Minister of Health. As such he was responsible for local government so it fell to him to decide what to do about Poplar council. The local councillors in Poplar in east London had raised wages for local authority employees, raised unemployment allowances and introduced many social benefits. The results were easy to see; the death rate halved, infant mortality went down by around 40 percent. The councillors had been willing to go to jail to defend these reforms and had the active support of the vast majority of the workers in the East End. Yet on its election the Labour government refused to defend the gains of Poplar. If 1924 showed Labour’s inability to redistribute wealth in order to gain the resources necessary for social spending, 1931 showed its inability to defend social spending when faced with an economic crisis, a pattern which was to be repeated in the 1970s.

Ramsey MacDonald’s response to the slump was to propose a 10 percent cut in unemployment benefit (at a time when more than one in five workers were unemployed). As in the 1970s and today, the government’s meanness cannot be explained just in economic terms. The savings made by cutting social provision were insignificant when compared to the scale of the crisis. For example, the 1931 government disqualified married women from claiming dole, thereby saving the grand total of 5 million pounds. The message not the money was the key thing. By this sort of cut the Labour government showed world capitalism that it would make the poor, rather than the rich, pay for the crisis.

1945 and the welfare state

Any government elected in 1945 would have enacted new social legislation. Family Allowance had already been introduced by the interim Tory government before the 1945 election. The Beveridge Report of 1942 had detailed the problems that British capitalism faced, recommended the immediate introduction of a system of social security and suggested the formation of a National Health Service and other social reforms. In addition, the demands of wartime had led to much more centralisation and state intervention. The fact that it was a Labour government that won a landslide victory in 1945 meant that a universal system of benefit was introduced – had the Tories been elected they would probably have introduced more selective benefits. But Labour, elected on a wave of high expectations, was determined to avoid any system that brought back memories of the means tests of the 1930s.

In health, there was great feeling that the same level of treatment should be given to all. In the 1930s it was usual for panel patients to receive a much worse level of treatment from the same doctors as private patients. The National Health Insurance Scheme had given some workers insurance that allowed them to be treated free by a panel doctor, but it was limited. The principle behind universality was supposed to ensure that everyone had access to the same services. It was thought that this would remove any stigma associated with state services and therefore guarantee that the state service would be a high quality service. Yet problems caused by underfunding of the system were soon evident, especially in the case of social security. The social security system didn’t even begin with the principle of universality. Instead it was dependent on workers paying National Insurance contributions and, in effect, was just an update of the old system. Almost before the benefits were introduced they were falling behind the cost of living. The National Insurance system was meant to be self-financing, but it never even came close to this since old age pensions took up two thirds of its budget almost immediately. Because of the shortfall means tested benefits, dispensed by the National Assistance Board, were never abolished.

The National Health Service was supposed to be universal. Access to treatment did not depend on insurance contributions and was free at the point of service. The war economy had meant that the notion of planning, rather than leaving services to market mechanisms had become widely acceptable. The new health service was to be the zenith of planning. The wartime system of emergency hospitals became the basis for the new National Health Service hospitals. But the system never gave the same level of service to everyone; there was provision for private pay beds m the national health hospitals and general practitioners were allowed to continue their old private practice. Nye Bevan, the Minister of Health acknowledged that the health service did not live up to the promises of a free and equal service for all. The old medical establishment was given a decisive role in shaping it.

The notion that all health care should be free was short-lived as well. By 1950, the British government was embarking on a huge rearmament package, in response to the onset of the Cold War. In September 1950 it increased arms expenditure to £3.6 billion over the next three years. The Korean War forced this up even further so, by January 1951, the projected figure stood at £4.7 billion. In April of that year Hugh Gaitskell imposed prescription charges and charges for dental treatment and spectacles, which saved the government around £25 million – obviously not enough to stop a balance of payments crisis a few months later, but enough to send the Daily Express into paroxysms of glee. It wrote: ‘Mr Gaitskell introduces a Tory budget. He puts a charge of 50 percent on teeth and spectacles. That is what the Tories would have done. Now the job is done for them.’

The welfare state and the boom years

Whatever its shortcomings, the welfare state as developed after 1945 played an important role in improving the health of the working class. The Tory government which came to office in 1951 did not slash social spending. Indeed in some areas it was increased; for example, house building under the Tory government in the 1950s stood at 100,000 a year, more than when Labour had left office. The long boom which took place in the 1950s led to a high level of spending. This was necessary since full employment meant labour was precious, and the government could afford the levels of spending without much trouble. In 1970 industrial production was 30 percent greater than in 1960, and 80 percent greater than in 1950. [13] Unemployment did not rise above 3 percent of the population until the 1970s. Increased prosperity also led to an improvement in health. Food consumption improved, with a rise in the amount of meat, eggs and fresh vegetables which people ate. Between 1953 and 1973 a total of 7 million homes were built and the number of households having their own bathroom went up from 62 percent to 88 percent. If less children died, infant mortality went down, and people lived longer and grew taller. These social factors played an important role alongside the new hospitals and health centres. Yet even within this prosperity 10 percent of the population were still living below the poverty line. The system had come nowhere near to abolishing poverty, and state benefits for the very poorest still meant a miserable standard of life.

At the same time Britain was slipping behind its rivals. In 1945 it had a welfare system which was better than that of its major rivals. By the mid to late 1950s other countries were catching up. Although British industrial production rose by 40 percent between 1951 and 1962, France’s doubled, West Germany’s went up two and a half times and Japan’s quadrupled. Other countries began increasing the amount they spent on welfare. Until 1969, National Health Service spending never exceeded 4.5 percent of Britain’s gross national product. Yet in 1969 countries such as the Netherlands spent 5.9 per cent of GNP on health and Canada spent 7.3 percent. This situation got worse not better. Britain slipped down the league, as we can see if we look at the percentage of GDP at current prices going to social and health services and social security. [14]

Health and Social Spending
(as a percentage of GDP)













West Germany
































This general pattern remained broadly the same whether it was a Labour or a Tory government in office: The Wilson government elected in 1964 did marginally increase the sums spent on housing, education, welfare and health. Between 1964 and 1968 spending on education rose from 4.8 percent to 5.9 percent of GNP, on health it rose from 3.9 to 4.6 percent and on housing from 2.8 percent to 3.0 percent. The old National Assistance system was abolished and replaced by supplementary benefits. This was a significant change, in that supplementary benefits were paid as a right and this removed some of the stigma attached to claiming benefits.

But these improvements were minor. And they were largely financed by the working class. Under the Wilson government the tax system actually became more regressive. The tax threshold dropped sharply, so by the late 1960s many people below the official poverty line were having to pay tax. The meagre benefits gained on more social spending were offset by the increase in poverty at the bottom end of the scale. This situation was especially unfair to the very poor. A large part of the rise in spending was to modernise the education system. Comprehensive schools were being introduced and there was a massive expansion in higher education. The people who benefited most from this were the middle classes, but the poor had to pay.

The onset of the crisis and Labour’s reaction

The Labour government of 1974 was elected at a time when the world system was entering deep crisis. At the same time it came in on a wave of working class struggle which had raised workers’ expectations. With the introduction of the Social Contract (in agreement with the union leaders) Labour carried through a programme which cut real wages for the first time since the Second World War. By April 1975 the government put a sharp curb on spending. A nil rate of growth was set for personal social services (home helps, meals on wheels, transport for the chronically sick). The NHS was placed under ‘severe financial restraint’ and local authorities were told to start means testing in order to cut the cost of the services they provided. At the same time spending on the police went up. [15] Another round of cuts followed in November of that year. In 1976 three separate rounds of cuts heralded the first big reduction in hospital services since the war.

Between 1976 and 1978 public spending fell by 9.5 percent in real terms. Throughout the 1970s the number of hospital beds fell, from 473,000 in 1973 to 395,000 in 1978, and waiting lists grew longer. Even with the swingeing cuts of the late 1970s, costs still rose. Between 1973 and 1979 they went up by more than 10 percent at constant prices, but Britain was still spending less on health than other industrialised countries. The Labour Party had no answer to this crisis. It could administer a system of social benefits when there was enough spare cash for the ruling class to allow an increase in spending. But it would not take on the ruling class to get more money for the welfare state. This meant that the Labour Party, as the government of the day, oversaw a health service which was widely perceived as crumbling. This created a political vacuum which Margaret Thatcher was only too happy to fill. Labour’s failure to defend the welfare state meant that the Tory government which came to office in 1979 could blame the crisis not on a lack of funding, but on the system itself. Central management and bureaucracy went out of fashion and market mechanisms and a degree of privatisation came in. The trouble is that these mechanisms don’t work, so the system has become less efficient, more chaotic and people get an even worse service. The current mess is partly caused by a lack of money. But things have been made much worse because of the Tories’ obsession with market mechanisms. This has meant they have frittered away fortunes on management initiatives in the health service and changes in the management structures of schools, all to little effect. To understand what has happened we need to look at the different areas separately.

A two tier system of education?

One noticeable thing about the recent furore over testing among teachers is that it is not just the traditionally militant areas that have taken action. The Observer described a typical scene at a middle class school in rural Oxfordshire:

The summer term will see the biggest eruption of civil disobedience since the refusal to pay the poll tax, as thousands of teachers refuse to set or mark the government! s statutory national curriculum tests. The poll tax revolt led to Lady Thatcher’s demise and the latest disobedience casts a shadow over the future of John Patten, the Education Secretary.

In part the test boycott is union-inspired but not in Banbury-Chenderit is not that type of school. In the heart of middle England, it could be a thousand miles from the inner city comprehensives of London, Liverpool and Leeds.

Vastly over-subscribed and with a flourishing sixth form, it is proud of its academic reputation, boasting an impressive number of Oxbridge entrants. It is listed in the Daily Telegraph Good School Guide, alongside the pick of the private sector, and its staff have little time for union politicking. ‘To be frank, we’re not a school noted for taking up issues. We are more interested in curriculum development than union matters,’ explained Trevor Arrowsmith, the deputy head.

Yet ... teachers are about to break the law. On Friday the High Court ruled that teachers could, as part of a trade dispute, boycott the tests. but the Chenderit boycott is not a trade dispute – it is because the teachers believe that tests seriously damage pupil’s educational health. David Martin, the head, is clear on this point: ‘The Government has forced heads to choose between two evils. Either we have to break the law or we have to administer tests we believe are professionally wrong. We have a moral duty to the children, so we will break the law.’ [16]

This sort of reaction reflects the depths of the Tory crisis over education. And it is a reaction which has caught them unawares. They genuinely believed that their plans for opting out, local management of schools and testing would win them popularity with parents. Yet all the evidence is that neither parents nor teachers now trust the Tories with the education of their children. The Tory changes pit school against school-opting out, local management of schools and open enrolment mean that schools can tout for business. This alone increases divisions between schools as they compete for the ‘best’ pupils. The original plan behind opting out was to encourage schools in Labour boroughs to leave local authority control. In fact, many schools that have opted out have been in Tory areas. There is also a level of financial chaos looming over the horizon for some of these schools. Whatever their original aims, one main effect of the Tory education changes has been to create an unprecedented level of instability in the education system. Opting out has also been a failure ideologically for the Tories. Parents have often voted to remain within local authority control. Even where schools have opted out, their funding has remained quite low. The idea of opted out schools being much better resourced centres of excellence hasn’t come about, because the level of funding necessary to achieve this has not been forthcoming from the government.

But the opting out proposals have introduced a level of division into the education system, since their introduction means that suddenly, within the state sector, teachers are being employed under different conditions and by different bodies. Local management of schools (LMS) goes down this road to some extent. Under LMS the authority has to delegate the vast proportion of its budget to schools. Out of this money. schools have to pay for staffing and buy into any outside services, such as school trips. This is going alongside an increased contracting out of services, which could be extended to areas much more central to teaching, such as curriculum advisory services. The proposed allowance of increments for excellence is performance related pay by the back, door. Though each school still has a relationship with a local authority, the vastly increased power of the governors means that increasingly disputes will be more localised.

The 1944 Education Act was based quite explicitly on slotting different groups of the population into different schools: the ruling class went to public schools, the middle class and a few clever working class kids went to grammar schools, where they were taught how to be managers and administrators, and secondary modern schools provided a basic level of education for working class pupils who would go into low grade office or factory jobs. Although this system looked quite neat on paper it was far too rigid to adequately fulfil the needs of capitalism. The booming capitalism of the 1950s and 1960s constantly found itself short of skilled labour. A single system of comprehensive education was introduced from the late 1960s to increase flexibility and enable the system to educate more working class pupils to a higher level. The comprehensive system fitted with the needs of capitalism, but it was also seen as an advance for the working class.

The old grammar school system had never given working class pupils equal access to education. The whole system involved passing a test at the age of 11 years. Primary schools in middle class areas would direct their efforts to ensuring that children passed this test. Therefore, children did not go into the 11 plus on an equal footing. The comprehensive system seemed like a move to one system for all and therefore was widely perceived as fairer. But the system was still not equal. Under the comprehensive system the area where people lived became the all important thing. In middle class areas of a town it was common for comprehensive schools to achieve the same rate of exam passes as the old grammar schools – in fact they were often physically the same buildings with the same teachers as the old grammar schools. In contrast, comprehensives on housing estates still churned out the factory and office workers. But even with these faults the fact that children weren’t selected at 11 did give some working class children a better chance.

The Tory proposals will recreate the divisions in the education system which were abolished decades ago. They have already brought down the waiting period before an opted out school can go for grammar school status. Local management in schools will create sink schools as those with more money and a better reputation tout for business anywhere and cream off the best pupils. Testing and the introduction of league tables will make this process easier and more public. Popular schools, who get more applicants than they have places, will be able to select the pupils they want. Increasingly schools are expected to compete in the market. It is becoming common for schools to produce glossy brochures that tout their wares to prospective parents.

In apparent contradiction to increasing local control and Tory encouragement of schools to be different from each other, is the national curriculum. This aims to, standardise and impose government control over what every child learns at school. The contradiction between this highly prescriptive approach and the marketisation around local management of schools is more apparent than real. To understand what is going on we need to appreciate the crisis of education which the Tories face. They know that they lag behind their major industrial competitors when it comes to educational standards. There is already some evidence that highly technical enterprises prefer to locate in Germany because of the higher skills base, even though wages are also considerably higher. The Tories are terrified that their low wage economy will not be enough to continue to attract foreign investment into Britain unless they can do sometning about educational standards. But they haven’t got enough money. Therefore, they are trying to catch up on the cheap.

They hope that they can create enough reasonable schools to produce a bigger and more competent layer of workers with technical and administrative skills. To do this they are relying on parents putting more money and time into their children’s schools. On the other hand they are concerned that too many children are coming out of school without even the most basic numeracy and literacy skills, at a time when technological developments mean there are fewer and fewer jobs which can be done by people who don’t have these skills. The Tories imagine that they can solve this through the national curriculum, by issuing prescriptions about what every child must know at a certain age. The two strategies feed each other as the national curriculum and testing enable the sort of measurement that will help parents to select the good schools. The tests themselves are set at different levels, which means in effect that children are being selected as bright or not so bright. This will affect the whole of their school career. But the Tories have created a level of chaos in the education system which goes against these aims.

Mortgages and homelessness

Housing provision is the post-war social reform that has been the least successful. There has never been enough housing. Even in the local authority building boom in the 1950s and 1960s access to housing was still means tested through a system of points allocation, and waiting lists were long. The reasons for this are complex. In the first place housing is expensive to build and no government – not even the 1945 Labour government – had the political will to nationalise building land. The political weight of building companies effectively protected the private housing market, which has become increasingly more important. In the period 1986–1991, local authorities built only one eighth of the housing they had built between 1961 and 1970. Unable to get local authority housing, more people have been forced to take out mortgages. Even if people can keep up with mortgage payments, the privatisation of housing has represented an attack on working class incomes. Since the inflation in house prices and the massive rise in interest rates in the late 1980s housing costs take up more of the household budget than ever before. Greater numbers than ever are without homes – in 1986, 249,000 households applied to local authorities as homeless but by 1991 the number had gone up to 344,000. In the same period the numbers councils decided were intentionally homeless doubled, while the numbers who applied to councils but were classified as not homeless went up from 68,000 to 88,000. [17] Even those who were lucky enough to get housing were often placed in unsatisfactory accommodation. In 1986, the number in temporary accommodation was 23,000 – in 1991 this had gone up to 64,000. [18]

These huge increases are closely linked to Tory housing policy. As a matter of ideology and political expediency the government encouraged .an increase in home ownership and ran down public sector housing. The sale of council houses may have won them favour with a certain sector of the electorate, but it created a level of instability in the housing market which has been detrimental to the general interests of British capitalism. This is why there is now a belated and half hearted attempt to reintroduce a level of housing for rent into the housing market through the mechanism of housing associations. But there is no chance that they will fill the gap. They face two problems. There is simply not enough housing association housing being built to fill the gap, and it is too expensive. The current rents for housing association properties mean many people, especially single parents, are better off on state benefits than in low paying jobs.

The Tories’ housing policies have actually done damage to the interests of British capitalism by forcing more and more workers to take out mortgages and driving up the amount of their income which they need to spend on housing. This creates potential pressure on wages which the ruling class is anxious to avoid. Things were made even worse by the onset of the recession. Falling house prices and lack of cheap rented accommodation has also affected the mobility of labour. On a wider level, the privatisation of housing means it has come to occupy a far too important role in the economy. Yet, as we have seen since the late 1980s, house prices are unstable. The cost of privatising the housing market has been an increase in economic instability and inflation.

Community care, the market and the cuts

The community care provisions are targeted at those groups within society who are the least productive in capitalist terms, for example the elderly and those with serious physical or mental disabilities. At base they are a cost cutting exercise – local authorities in England and Wales claim that their community care budget is underfunded by £200 million. This should come as no surprise. Behind the rhetoric which claims that community care provisions mean people have more choice and will be better looked after lies the stark fact that it is cheaper. Although there is no evidence that elderly people go into residential care unnecessarily, community care aims to get people out of residential care and keep them in their own homes. The Audit Commission admitted as much in 1987, when it stated: ‘Too many people are cared for in settings costing over £200 a week when they would receive more appropriate care in the community at a total cost to public funds of £100–£130 a week. [19]

The desire for the ruling class to cut spending, especially on the old, has become intense. Improvements in general levels of health care, in diet and standards of housing has meant that people are living much longer. The increase in the number of old people in society has been described as a ‘time bomb’. Life expectancy has gone up sharply in the last decades. Between 1958 and 1966, it was 73.9 years for women and 68.1 years for men, by 1988 to 1990 it had gone up to 78.5 years for women and 73.0 years for men. [20] The number of very old people has risen even more steeply: In 1951 there were 1.4 million people over 80, by 1991 that had gone up to 3.7 million and by 2001 it is projected to rise to 4.2 million. [21] The system could possibly cope with this without any great tensions if the number in the age groups that are most productive (because they are at the peak of their working life) and least costly (because they are at their healthiest) were also rising. But the signs are that this group will start to contract. In 1951 there were 31.4 million people aged between 16 and 39 years old, by 1991 this had risen to 35.2 million, but on current birth trends it will have fallen back to 32.6 million by 2001. [22] In short there will be fewer productive workers, costing little to the system, making profits and paying tax, servicing a larger group of elderly. ·The plan to raise pension ages for women is one ruling class response to this.· Added to this, the mechanisms of the younger members of the family looking after the old in the home no longer work as well as in the past. The increased numbers of women in the workforce, increased geographical mobility and changes in social attitudes have altered family structures and housing patterns. Between 1961 and 1991 the number of pensioners living in one person households more than doubled. [23] These changes in demographic and social structures have proved very costly to the state. In the decade from 1981 to 1991 the cost of health and personal social services went up two and a half times. [24]

The need to cut these costs lies behind the current restructuring of the welfare state. The present proposals spring from a report by Sir Roy Griffiths, former managing director of Sainsbury’s and one time health adviser to Margaret Thatcher. One of the key aims of the community care legislation is to cut the numbers in expensive residential care and save money by keeping them at home. If the government can achieve this they will save a fortune since residential care is very expensive. For example, in 1991–92 Strathclyde council spent £36.3 million to provide 3,944 residential places. Its home help service cost £39.1 million and had 34,650 cases. [25] As the government white paper Caring for People put it, its aim was ‘to secure better value for taxpayers’ money by introducing a new funding structure for social care. The Government’s aim is that social security provisions should not, as they do now, provide any incentive in favour of residential and nursing care.’ [26]

This is partially just an attempt to cut spending. But the way this is being done reflects certain political priorities. Fancy phrases such as ‘the mixed economy of care’ are used to justify the fact that the government expects all sorts of people to continue to work for nothing to care for their relatives or even their neighbours, in order that it can continue to save money. At root the proposals are an attempt to turn the clock back and force people to take ever more responsibility for caring for elderly or disabled relatives. The Griffiths report put it this way:

Publicly provided services constitute only a small part of the total care provided to people in need. Families,friends, neighbours and other local people provide the majority of care in response to needs which they are uniquely well placed to identify and respond to. This will continue to be the primary means by which people are enabled to live normal lives in community settings. The proposals take as their starting point that this is as it should be. [27]

This is an exact echo of the current Tory view, which attempts to create a myth of perfect little village societies where everyone has time to care for everyone else and the sun always shines. The reality for Britain’s 6 million carers is very different. Most carers are well into middle age themselves, between 45 and 65 years old. Recent surveys show high levels of poverty, stress and illness among carers. There is also evidence that stress leads to carers abusing elderly people. [28]

Behind the proposals is the belief that the market is a better provider of services. Again the rhetoric and the reality are very different. The Community Care Act speaks of a ‘package of care’ which can be individually tailored to need. This is nonsense. Although the act gives elderly and disabled people the right to have their needs assessed there is no legal right for these needs to be met! There is also a move to make elderly people sell property to meet the cost of residential care. Rodney Luff, managing director of Advisory and Brokerage Services told the Observer, ‘A growing number of pensioners and their families will have to contribute to the cost of residential or nursing home care. If fees rise at an average of 6 percent a year, then a home currently charging £300 a week will cost £205,000 over ten years.’ [29] Local authorities have been given legal powers to seize property in lieu of unpaid care fees. The number of old people who own property has rocketed because of the rundown in the building of cheap housing for rent and also because of the government’s ‘right to buy’ scheme. If the government manages to now get its hands on this property it will have pulled off a clever and a cruel trick: persuade people to buy their homes, telling them that, although this means they will now be responsible for repairs and improvements, they will have a house to pass on to their children. Ten years later the government plans to take the house away to pay for residential care – heads old people lose, tails the government wins. Old people and the disabled will lose, but big business will rake in the loot. Providing care to the elderly is a multi-million pound business and one which is certain to continue to grow. Since 1980, while the public sector has declined, the number of private beds has risen at an annual rate of 16 percent. The private market in care provision is worth £3.3 billion. Six companies specialising in care homes have a combined stock market value of £375 million. Big companies are rapidly establishing a monopoly in the care business. There are now two major operators, Takare and Westminster Health Care which are likely to account for 50 percent of all new beds provided this year. It is likely that smaller companies will be pushed out as they will not be able to compete on price, especially in a recession.

As in so many other areas, the government has deliberately rigged the market to favour private over public provision. The Community Care Act builds in a financial incentive for local authorities to place people in private homes. People entering private homes will receive higher levels of income support to pay towards supplementation. In plain English it will be cheaper for local authorities to place people in private homes than in local authority homes. In case that doesn’t work, the act has provisions to force those buying care services to spend 85 percent of their budgets in the private sector. This whole system may be good news for residential home owners, but the big pension companies are far from happy. An official of a health insurer told the Observer that the Community Care Act could become a government ‘hot potato’. He added, ‘Many commentators believe that the fundamental government motive is to close the “black hole” of income support for care in residential or nursing homes which has exploded from £20 million a year to £2.5 billion in the past ten years.’ [30]

The government faces problems, since it would probably like to completely remove care provision from sectors of the elderly population. This would be politically unacceptable, so instead it is trying to cut away at such provisions. This is a high risk strategy since it risks the possibility of a mass loss of faith in pension schemes. To understand the problem the government faces we need to look at not just the demographic changes in the population over the past years, but the expectations people now have. Of adults in work, nearly two out of three now contribute to some sort of private pension plan. They do this not because they imagine that they will have to finance their own geriatric bed at 85, but because they want to continue to be able to go on holiday, run a car and generally have a good time at 65 or 70. People are willing to contribute to private pension plans to improve the quality of their lives, not to replace the National Health Service. The terror of pension fund managers is that if people get the idea that the hard earned cash they are putting away every month is to pay for a home help or hospital care rather than for the occasional holiday they may well have second thoughts.

The market and the Health Service

There is a feeling among some health professionals that the Tories are hell bent on privatising everything, that very soon trust hospitals will be forced to become limited companies, as will budget holding doctors’ practices and this will mean the end of the NHS. There may be strands within the Tory Party and some of their more right wing think tanks who would like to go down that road, but there are also strong pressures against them doing so. Although they would like to be able to tum health provision into direct profit, they also need a system that can produce and maintain a healthy workforce relatively efficiently. This is producing conflicts within the ruling class as well as between the ruling class and the rest of us.

The existence of a National Health Service has been an important factor in pulling foreign capital into Britain. Foreign companies investing here have known that they will not have to pay for private health insurance. A complete privatisation of the system would send these costs rocketing. British capitalism knows that it cannot compete for foreign investment if companies have to start paying the sort of rate for health insurance that is common in the United States, where big companies can spend as much insuring their workers as they spend on research and development.

The conflicts within the ruling class about the health service are no different in essence from the conflicts over water or rail privatisation. Privatisation looks good to the ruling class at first because it enables the ruling class to cream off profits from what were publicly owned services, but the more radical privatisations have made at least some sections of the ruling class realise that wholesale privatisation may damage the infrastructure that is essential for the generation of profits.

In health this means there are a number of conflicting schemes and ideas being developed. Long term problems which have never really been solved are suddenly coming to the surface. The health service has never resolved the problem that, however much is spent, people continue to get sick. In 1945 it was commonly believed that with better housing, antibiotics and a universal system of health care, ill health would disappear. Planners believed that within a few years there would be a declining demands for medical treatment. Of course this did not happen. The social causes of disease proved to be much more complex than that. The problem was made more difficult to spot, let alone solve, because public health (housing, sanitation and the like) was never included as part of the National Health Service, it tended to remain in the domain of local councils. Even if there had been the will, the link between social conditions and ill health could never be made clearly while the services were not all under one roof. The demand for health service treatment constantly went up, not down, and with it the costs.

Throughout the health service now the Tory strategy is to separate off the provision of care from the commissioning of care. One strand of thought among Tories is that commissioners should be given a certain sum of money, then they can spend that sum of money within a private market place. Presently they are producing many targets and initiatives. It is then up to the health service to meet those targets by placing contracts with whichever part of the private market is giving best value for money for a particular service. The problem with this is that it is not adequately resourced in the first place, which means that in many cases the government’s targets will not be met. The second problem is that the anarchy of the market cuts against achieving these targets.

There is also an underlying agenda of ‘victim blaming’ and individual solutions. The dominant feeling about health at the time the NHS was set up was that the job of a health service was to be reactive. People got ill, went to the doctor and were cured. Now the NHS is moving towards a doctrine of prevention. On the surface this is a very good thing as quality of life is undoubtedly improved by healthy life style: good diet, not smoking or drinking too much, exercise and the like. The problem is that calls for healthy living leave out the social pressures on people that mean that they cannot match up to the ideal. There are obvious factors here, such as income – eating a healthy diet is more expensive than eating cheap processed food. But there are less obvious factors as well. People who are poor, and especially people who are unemployed, tend to suffer from stress related illnesses, are more likely to become mentally ill and generally suffer from worse health. Telling them to behave better is no solution. Giving them more money, so they could buy better food or participate in some form of exercise for example, would help, but the money is not on offer.

Taking the whole subject of health and well-being into the narrower area of the health service is, in many ways, a reactionary step. Illnesses that are caused by social conditions, whether these are related to the stress of unemployment or industrial illnesses or anything else, become the problem of the individual patient and the individual doctor, rather than a problem of the way society is organised. It is significant that the changes in the National Health Service are taking place at a time when bodies such as the Health and Safety Executive are being cut to the bone and housing cuts have meant that increasing numbers of children are being raised in conditions that are detrimental to their health. On the one hand workers as individuals are being told to take more care to prevent themselves becoming ill, on the other more and more people are exposed to working or living conditions that are bad for their health. The rise in a disease like asthma, for example, cannot be explained by individual behaviour but is tied up with general levels of pollution, housing conditions and possibly levels of stress. Diseases of poverty, such as tuberculosis, are on the increase for the first time since the Second World War. Doctors in Liverpool, who are now seeing one new case of tuberculosis a week, say there is a close correlation between poverty and the disease. The areas where it is rising fastest are the poorest areas of the city. The government health experts deny that any such link has been proven. This is not surprising as the Tories turn a blind eye to the social causes of ill health. They say that people behave in ways that are bad for their health because the health education message is not getting across properly.

A two tier health system?

Our ruling class has always made sure that it has separate and better health provision than the rest of us. But it has also been forced, from very early in the history of capitalism development, to spend money on the social reproduction of the working class. In that sense there has always been a two tier system. Today, however, when people speak about a two tier system, they don’t usually mean a division between that tiny minority that make up the ruling class and everybody else. They are much more likely to be thinking of a system where the middle classes and perhaps the skilled working class get one sort of provision, while the very poor get nothing at all or the most basic services. To some extent this already happens and has always happened. Education is the clearest example of this. With health care, however, the problem is more complex. The introduction of the market into the area of health care tends to militate against a firm dividing line between private and public care. Because it is possible for different fund holders to buy different provisions in different places it is difficult for the government to accurately target where the money is going. The anarchy of the market means that it is difficult for the government to shave off a level of people who it does not consider worthy of care. Added to this, ruling class aims in health are not the same as its aims in education. It is easier for the ruling class to target the educational levels it requires from different sectors of the population. With health it is more difficult: for the vast majority of workers, from highly skilled post-degree workers to production line workers, state provision is their only access to health care. Although an employer will lose more in potential surplus value if a highly trained and skilled worker becomes ill and that worker will be harder to replace, the employer still wants the production line worker at work rather than off sick. The same basic service is needed for both, to create the same general result – a healthy workforce.

As we have already seen, the community care plans can be a break in this universal health provision. But here the government has quite deliberately targeted those groups in society who are not productive: old people, those with chronic disabilities and so on. This is an area where it can make quite a clear division between the productive and the unproductive members of the working class. It is quite another matter to make such a division between different groups of workers or potential workers. Firstly, because of the anarchy of the system, it is impossible for the ruling class to predict what groups of workers it will need in a few years time, because they cannot predict which sectors of the economy will grow and which will contract. Even with the levels of current unemployment the engineering union, for example, is predicting that any upturn in the economy will lead to an immediate skill shortage in the industry.

Secondly, even in areas of very high levels of unemployment, a proportion of the population will still be in work. If there is a 50 percent unemployment rate in a borough or area it becomes very difficult to target health care to the 50 percent in work and leave out the 50 percent who are out of work. It is impossible for the ruling class to draw a line which says on this side is the working population, on this side is some sort of underclass. It is impossible even on the static model just described, but the real world is much more fluid and much more contradictory, with people moving in and out of work all the time.

Thirdly, even if the ruling class as a whole wanted to get rid of state health care, the ruling class as individual owners of capital would take a different view of the matter. It is one thing as a member of a Tory think-tank to pontificate on the possibility of expanding private health insurance and the wonders of the market; it is quite another when the owner of a factory finds that he has to foot the bill for the workforce’s health care. The argument between the mill owners and the rest of the ruling class in the 1840s was the first version of a dilemma which has faced the ruling class ever since. The system as a whole needs to spend money in order to make profits, yet every individual capitalist wants to spend as little as possible. This dilemma cannot be resolved, and it reappears constantly in different guises. One recent example is the attempt by the Tories to cut health service waiting lists. This was partly a response to increasing political pressure. But it was also an example of a failure in the NHS that was worrying to the ruling class. The concentration on getting the waiting lists down reflects the concern of the ruling class that workers are wasting time off work because they are having to wait for quite simple operations. At the same time the nature of the system does not allow the ruling class to carry out this aim in anything like an efficient or a planned way. The parlous state of British capitalism, the market ideology of the Tories and the chaos of the system all prevent actions that would be in the long term benefit of the ruling class. But does this matter in a recession? When more than one in ten of the workforce is out of work then why should the ruling class care if people are off work and stuck on NHS waiting lists for a long time? Things don’t work like this however. A boss in the recession will be desperate to save every penny. When profit margins are being cut, bosses are more likely to want to avoid costs of training a new worker because an existing worker is going to be off sick for a long time.

Even taking these factors into account, the NHS is biased in favour of the richer sectors of society. There have always been mechanisms within the NHS which allow weighting for social class. Any system that gave health authorities money just based on the size of the population would discriminate against the working class, as working class people get twice as many illnesses as other groups in society. Authorities in working class areas do get some extra money. However the whole mechanism of ‘weighted capitation’ fees is a useful device to cut provision in working class areas. This is what has happened in London, where a few years ago money was shifted out of the capital, which now means that parts of inner London are getting less than their ‘weighted capitation’ should be. Yet the goverrunent has no plans to bring them back up to the correct level for another five or ten years. Another area of change has been the increase in costs at the point of use m such services as dentistry, where most of the cost is now borne by the user. Charges to users of services within the National Health Service have gone up by more than three times between 1981 and 1991. [31] The repeated increases in prescription charges, which have run well above the level of inflation, is another example.

All these factors suggest that, apart from a few right wing ideologues, the majority of the ruling class does not want to go all out for privatisation. The nightmare of uninsured people in the United States has shown the dangers of going down this road. But what is happening, currently with a measure of success, is a blurring of the distinction between private and public provision and an increase in the amount of private provision within the National Health Service. This is largely being done by allowing the users of the service, through their doctors, to buy services from private providers. One of the aims behind trust hospitals is to make the management of such hospitals completely separate from the purchasing of health care services. This division will mean that health authorities no longer have any loyalty to any particular provider institution and will be in a position to play the market as they want to. There is a growing tendency for health authorities to merge into much larger bodies, so the purchasing power of these authorities is larger than the providing power of the individual trusts. This is a change from even a couple of years ago, where the trust hospitals tended to be larger and more important than the health authority. Budget holding general practices are also tending to merge in order to get themselves more purchasing power.

The problem in Britain is that any rational planning of social service provision immediately runs up against two brick walls: the marketisation plans of the Tories, which have introduced an unprecedented level of anarchy into the system, and the gross underfunding of the whole system. The changes currently being introduced are likely to be disastrous. Already they are extremely wasteful. If we look at spending within the health service, we can see that costs on managers and administrators have risen out of all proportion. Here is a picture of what has happened to salaries over the past few years [32]:

Health Workers Salaries
(1987–91 total expenditure £,000s)






General managers









Non-NHS personnel



The Child Support Agency

As we have seen, changes in social and demographic structures have a great effect on levels of social spending. The most important of these is the rise in the number of old people in society, The other great social change is;the rising number of lone parents. There are three times as many households with a lone parent and a dependent child now than in 1961. [33] Here the government feels that it make cuts. The Child Support Agency is about saving money. It has cost £150 million to set up the agency, but it is expected to save between £530 million and £600 million a year. Its activities will be of very little benefit to parents. Until 1996 it will concentrate almost wholly on single parents (overwhelmingly mothers) on income support. It is expected to more than double maintenance payments, the standard rate for each child has been set at £48 a week, but the better off will be expected to pay more. Obviously these amounts are beyond what many divorced parents not living with the children (usually men) are able to pay. By this mechanism, the government hopes to reduce social security payments. But it also wants to increase the availability of women for work. The head of the new agency explicitly says that the ultimate aim is to ‘get more women back to work.’ This reflects the patterns of women’s work. Because women’s wages are so low and childcare is so expensive a woman who is the sole wage earner in a household is unlikely to be better off at work than on state benefits. Where a woman is living with a man the situation is different, even if the woman is badly paid. If a woman has been on income support, the increased maintenance payments may make it worth her while to get a job. So the Child Support Agency is not just about cutting the numbers on state benefits, it is also about protecting the ruling class’s most important source of cheap labour.

The Labour Party and universal benefits

The aims of the 1945 Labour government in establishing a welfare state was to cover the whole population. It was based around the idea that the care of the population, especially the very young and the very old, was a task which society as a whole not only had to but should undertake. Although the provisions were never enough, the welfare state did redistribute wealth on a limited scale by funding provision out of taxation. This meant that, in theory at least, the rich paid more in tax but got the same benefits as everyone else-they paid more for the same service.

This principle was argued for by the Labour Party right back in the first decade of the century. The distinctive feature of Labour’s post-war attitude to the welfare state was that it should be universal if it was not to be a second class service. The argument ran that if everyone had to use the same service then it would be a better service than if only the poor used it and everyone else paid for something better.

The Labour Party’s abandonment of even the most limited reforms that it put forward in 1945 has meant that it is preparing to drop the principle of universal benefits. John Smith raised these issues before he even won the Labour Party leadership. His leadership manifesto, New Paths to Victory, suggested replacing universal child benefit with some form of means testing and merging the National Insurance system with the tax system. He launched the Commission for Social Justice last year to draw up a policy blueprint, but the direction it will take looks clear. Based on the belief that Labour lost the 1992 election because of its plans for tax rises, its brief is to produce a social security system without increasing costs, in the hope that this will win over middle class voters. Run under the auspices of the Institute for Public Policy and Research, the 16 strong Social Justice Commission was set up by the Labour Party but will operate independently of it. It sees its job as much more than tinkering with the system, claiming that it will carry out a thorough rethink of issues of social justice and social provision. Given this grandiose task it is no surprise that it expects to take at least 18 months to report.

In the meantime a bizarre doublethink, under the guise of radical new rhetoric, is taking place within the Labour Party. Paying benefits, rather than being a means of alleviating poverty, becomes a means of creating poverty. Frank Field, the Labour MP who chairs the all-party Social Security Select Committee, sums up this trend best. On the day that John Smith launched the Commission for Social Justice, Frank Field published his own paper in which he argued that ‘an expanding welfare system is a failing welfare system – not because of any deep faith in the philosophies of the minimal state, but because it means people are being dragged down and snared in the safety net.’ [33a] He adds, ‘An increasing proportion of the electorate see Labour as a backward looking party, intent on holding them down’ [34], and ‘the aim must be to illustrate the potential for redistribution in our society and how the main forms of redistribution to be enacted by a future Labour government does not involve more taxes.’ [35] Of course this is nonsense.

Firstly, for the Labour Party to refuse to even partially reverse the massive redistribution of income in favour of the rich which the Tory tax changes have meant is giving up any hope of a decent social policy before it has even started. But it also reflects a view of social provision which would have been right wing even in the Tory Party a few years ago: that is, that people, through some mysterious and demoralising process, become dependent upon benefits. This completely ignores the real reasons people are caught in the poverty trap – because unemployment is a constant feature of the system and wages are very low. One of the biggest and most publicised groups trapped on welfare are single mothers with dependent children. There are two reasons why these women can’t afford to get jobs: women’s wages are very low and child care costs are very high. The solution is to increase wages and provide a free system of child care – obvious solutions which do not seem to occur to the Labour leadership.

Yet the state has done little to provide the sort of child care that would enable women to go into full time employment. The number of under fives in full time education has actually fallen in the last 25 years. In 1966 there were 26,000 children under five in full time education, in 1991 there were only 16,000. [36] But the numbers in part time child care of one sort or another have rocketed. In 1961 the number in part time nursery care was 16,000, in 1991 it was 68,000. [37] The number of places provided by registered child minders has increased from 32,000 to 273,000. [38] The sort of child care that would enable a single mother to do a full time job and escape the poverty of living on benefits is rarely available. The great increases in child care provision have enabled women to work part time, not earning enough to support a family on just one wage, or to use privately paid child minders, at a cost of about £70 a week per child. This is not an option for many single mothers.

Whether or not the Labour Party retains universal benefits, the arguments that the welfare ‘safety net’ is outmoded and even ‘bad’ has become the common sense of the mainstream of the Labour Party. In December 1992, John Smith said: ‘We should no longer be thinking just in terms of providing a safety net, but of creating a springboard to independence, self-reliance and personal fulfilment. People don’t want handouts, they want a chance to achieve.’ [39] This is very much the language of the Clinton Democratic Party in the United States, with its workfare schemes, and not far removed from John Major’s ideas of working for benefit. It skirts around the inescapable fact that people claim benefit because society cannot provide the whole of the working population with jobs at decent wages. Those people claiming benefit because they are unemployed lack jobs, not the correct attitude, a new springboard, a chance to achieve or any other meaningless and newly fashionable bit of jargon. Unless these people can get jobs, they need the safety net.

The prospects now

The privatisation and marketisation which the Tories have introduced since 1979 has taken a heavy toll on public services. But we have seen that the Tories have not had everything their own way and have no clear aim. They are desperate to cut costs, but they know that they need a level of social spending if they are to compete on the world market. They have sold Britain to international investors on the basis of its low wage economy, but these low wages have gone along with a reasonably high level of skill and health in the workforce. This balance has made Britain attractive to some foreign investors. A much lower level of social infrastructure would upset this balance – and rob British capitalism of any advantage it has over, say, Taiwanese capitalism. So the Tories bluster and try out schemes which attempt to square the circle. They need to improve the quality of the British working class at a minimum cost, but they don’t really know how.

The other factor which is of key importance is the expectations and combativity of the working class. It is becoming increasingly obvious that most people, whether as workers or consumers, do not like what the Tories are doing to the health service, to education or to other services. The Tories are not on strong ground even on their own terms, a concerted push from the workers who run and use their services can reverse many of the current schemes.

Social spending is a reflection of, not a negation of, the class system. Welfare provision is essential to enable capitalism to make profits and becomes more costly as capitalism develops. So it is necessary for the ruling class to spend a certain amount on educating and maintaining its workers. But this fact should not blind us to the wider picture of social spending in capitalist economies. The amount the ruling class spends on itself and its supporters puts the amount spent on the working class in proportion. The billions lost on the money markets on Black Wednesday, for example, would have paid for several hospitals. The money spent in the Gulf War would have done the same. The ruling class spends to defend its own interests or just to cover up its mistakes. The cost of introducing and then abolishing the poll tax alone runs into several billions of pounds. As we have seen governments, whether Labour or Tory, will always cut social spending as a softer option than cutting arms spending or taxing profits.

The tax system itself is weighted in favour of the rich, and has become even more so since the election of the Tory government in 1979. Direct taxation falls disproportionately on the poor. On top of this the better off get various tax advantages from the system, mortgage tax relief and tax relief on company cars being the two most obvious examples. The better off are more likely to receive various perks associated with their jobs; things such as private pensions, private health schemes, help with private education for children. These benefits are tax deductible and obviously benefit the rich rather than the poor.

When it comes to free state provision, the middle classes do much better than the poor. Middle class children are much more likely to go on to higher education, which will be largely financed by the state. In the health service the take up of preventive services is much higher among the better off. Middle class people use council services, from libraries to sports services, more than working class people. This is becoming more true as these services become scarcer. The closure of a local library or local swimming pool hits working class people harder since they are less likely to have a car than the middle classes who will be able to travel to take advantage of state provided facilities.

Rather than being something the system gives for nothing, workers pay a disproportionate amount for welfare services. Yet the fact that these services are free at the point of use and fairly universally available means that the ruling class perceives it has won a victory any time it succeeds in cutting these services. This is one reason why the loony right of the Tory Party revels in attacking welfare provisions. But most of the ruling class know that some level of social spending is necessary. Therefore they cannot completely dismantle the welfare state. But because of the depths of the crisis internationally and the long term weakness of British capitalism, they will be under constant pressure to cut and restructure social spending. How much they get away with this, and what form such restructuring takes, will depend on the balance of class forces.



Thanks to Kambiz Boomla, Ian Ferguson, Mike Haynes, Ben Masters, Annie Northcote and Jeremy Weinstein for supplying information for this article.

1. Bentley B. Gilbert, The evolution of national insurance in Great Britain, The Origins of the Welfare State (London), p. 17.

2. Ibid.

3. V. Henriques, Before the Welfare State (London), p. 68.

4. Report of the General Board of Health on the administration of the Public Health Act, 1848–1854.

5. W.E. Townley, Urban Administration and Health, a case study of Hanley in the 19th century.

6. See, for example, B. Webb, Our Partnership (London 1948).

7. Quoted in the Times, 17 November 1900.

8. S. Webb, Lord Rosebery’s escape from Houndsditch.

9. Quoted in Bentley B. Gilbert, op. cit.

10. Contemporary Review, January 1902.

11. Education (Provision of Meals) Act 1906 and Education (Administrative Provisions) Act 1907.

12. Bentley B. Gilbert, op. cit.

13. The British Economy – Key Statistics 1900–1970 (Cambridge).

14. V. Navarro, Welfare States and the Redistributive Effects, Political Quarterly, April–June 1988.

15. International Socialism, old series 75.

16. The Observer, 4 April 1993.

17. Social Trends 1992, table 8.13.

18. Ibid., table 8.14.

19. Audit Commission, Making a reality of community care (1987).

20. Health and Personal Social Services Statistics (London 1992)

21. Social Trends 1992, table 1.3.

22. Ibid.

23. Ibid., table 2.4.

24. Health and Personal Social Services Statistics, 1992, table 2.1.

25. Scotland on Sunday, 28 March 1993.

26. Caring for People, Government White Paper (London 1989).

27. Griffiths Report (London 1987).

28. Confronting Elder Abuse (SSL 1992).

29. Observer, 4 April, 1993.

30. Observer, 4 April1993.

31. Health and Personal Social Services Statistics, 1992, table 2.9.

32. Ibid., table 2.1.

33. In the printed version there are two notes numbered 33, the second one has been numbered 33a in this edition of the text. The reference for the first note 33 has not been found. [Note by ETOL]

33a. Daily Mail, 21 December 1992.

34. Ibid.

35. Ibid.

36. Social Trends 1992, table 32.

37. Ibid.

38. Ibid.

39. Channel 4 News, 15 April 1993.

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