The Five Giants: A Biography of the Welfare State, by Nicholas Timmins

New edition (HarperCollins, 2001), pp.xvi+708, £12.99. Order this book
This book announces itself as a ‘new edition’ of the book Timmins published in 1995, and any review of a new edition of a book is inevitably also a review of the original edition, which was a unique history of the welfare state, revealing what a remarkable achievement it was and still is.
The introduction sets out both a plan and some of Timmins’ conclusions. He candidly admits that the book includes those things which interest him, as any biography does; so, fortunately for the purposes of this newsletter, the book contains more on social security benefits than many other authors’ biographies of the welfare state would have done.
Timmins’ initial conclusions are that there was no ‘golden age’; that social policy has always been driven by diverse and often irreconcilable aims; that it is difficult to discover explicitly labour or conservative approaches to reform; that the Beveridge Report and its (partial) implementation were colossal achievements; that anger at continuing inequality is highly appropriate; and that change frequently results in unintended consequences ( – there is a useful section in pp.282f on Family Income Supplement’s (FIS) tendency to depress wage rates and to increase the depth of the ‘poverty trap’, which was first defined in relation to FIS).
In a short review it is not possible to discuss the detail of the historical argument of the remaining chapters. Instead, I shall highlight those parts of the history and of Timmins’ treatment of it which will be of particular relevance to readers of this newsletter.
The remarkable implementation and survival of Child Benefit runs as a seam of gold through the book, and Timmins recognises the importance of not means-testing it (as have politicians of various political hues). Child Benefit was an important element in Beveridge’s plan to ensure that families would be better off in employment than out of it, and this theme too runs throughout the history, and particularly through the revised chapter 20 and the new chapter 21 in the new edition which discuss the recent New Deal, Working Families Tax Credits (WFTC), and plans for tax credits for people without dependent children. Similarly, Beveridge wanted most elderly people to be on non-means-tested pensions, and governments are still pursuing this goal by different means in order to maximise personal savings for old age. (The proposed income guarantee for pensioners will be a wrong turn in this respect).
Beveridge wanted a contributory scheme because he wanted every employee to contribute as well as to receive. When he wrote his report, only higher paid employees were paying income tax, so national insurance contributions paid by every employee were the obvious way to enable everyone to contribute. An important general lesson to draw from Timmins’ history is that a single aim can often be met via different routes; and an important particular lesson is that a tax-based social security system would now achieve Beveridge’s aim that everyone should contribute because now people on relatively low incomes are paying income tax.
Beveridge’s aim was a contributory ‘platform’ and a means-tested ‘safety net’, but because the rates of contributory benefits were set at similar levels to those of means-tested benefits (National Assistance, subsequently renamed Supplementary Benefit and then Income Support), and because means-tested benefits included housing costs and contributory benefits did not, by 1954 the ‘safety net’ was supporting 1,800,000 people. As we shall see, the position has worsened since then.
An interesting subplot is the way in which radical proposals have frequently been made, often several times, before being implemented. Labour’s manifesto of 1964 contained a pledge to integrate tax and benefits and thus abolish means-tests for pensioners, and then for others (p.225); in 1974 the Conservative government was working on tax credits; and the Working Families Tax Credit integrates a means-test with income tax assessment for some employees. The possibility of a Citizen’s Income scheme gets a mention in this context – but the book is biography, not prophecy, so we should not expect Timmins to have explored this possibility further. (Maybe he should write another book).
From 1978 onwards a note of defeatism enters the story as governments continually adjusted and renamed means-tested benefits rather than seeking to replace them with something different. (The account of the 1983 Housing Benefit Supplement fiasco is particularly revealing). Norman Fowler’s 1986 review was intended to be radical, but the outcome wasn’t (though it did for the first time apply the same means test to in-work, out-of-work and housing benefits, making the poverty trap shallower but wider).
It is a pity that the new edition no longer contains interesting tables to be found in the original edition; but interesting figures in the original chapter 20 are still there in the new edition, and they show that by 1992 there were 5.6m people on Income Support, which, when dependents are included, means 20% of the population. The figure was 4% in 1948. Both editions, in different ways, reveal increasing inequality, with the new edition recognising that recent policies have at least arrested the acceleration of inequality for those on the lowest incomes.
It is often difficult to discuss such recent developments objectively, but Timmins has useful sections on developments in social security policy at the end of the last Conservative administration and during New Labour’s first period in office. The continuities are interesting, and particularly those relating to attempts to provide incentives to work and to attempts to reduce means-testing. Also useful is the recognition that Beveridge’s scheme was a development rather than a revolution and that the search for a ‘big idea’ to solve the problems facing the social security system has (so far) ended in failure. The unthinkable has not yet been thought by governments, even if various unthinkables have been thought by various individuals and think-tanks.
An interesting outcome of recent developments is an increase in means-testing (for Working Families Tax Credits is better described as a means-tested benefit than as any other kind, and the pensioner income guarantee will be one too); and Timmins concludes that universal provision is having a hard time of it and will continue to do so.
This new edition of Timmins’ ‘biography of the welfare state’ is essential reading for anyone interested in the current debate on social security reform, a debate which must now be linked with that on income tax reform. Whilst a Citizen’s Income approach to the problem is currently not high on the agenda, Timmins’ book shows that the issues amongst which this approach operates are precisely those within which debate on the future of social security is taking place: incentives to seek employment and to save; income maintenance; housing costs; complexity; inequality; responsibility to contribute …… And he also shows that Beveridge’s aim was to provide a ‘platform’ on which people could build (because to provide a platform is to encourage individual effort) and that our social security system is no longer true to this vision because its chief instrument is a set of means-tested safety-nets. Beveridge would have wanted us to seek a new ‘platform’.
The only conclusion to draw is that discussion of a Citizen’s Income is central to any future discussion of social security reform.