Full text of Professor Peter Townsend's Lecture: 1909-2009: Beatrice Webb and the Future of the Welfare State on Tuesday 20th May at Church House Conference Centre.

^{Political and professional drumbeats for the welfare state became more insistent at the turn of the 19th Century and reached a crescendo in the years 1906-11 and then again in 1942-45. In 2008, these or the drumbeats for the international welfare state are discernible but are still gathering strength. Across the world people are not yet convinced that the evolving nature of global capitalism will oblige national politics to be practised differently, and national and international politics practised simultaneously. I mean that the construction of global social policy will have to be given pride of place over the construction of national social policy. National policy-making will become subordinate to global. This sets the scene for what I wish to say.} 

 ^{This lecture, as Tim has pointed out, commemorates the centenary of Beatrice Webb’s Minority report to the Poor Law Reform Commission and looks forward as well as back. It is part of a Webb Memorial Trust series and as Vice-President of the Fabian Society there is a lot for me to live up to.}

^{Social justice is an unending struggle. Just when means are found of subordinating the worst horrors of the human condition to the rules of law and science the changes taking place in that condition oblige those rules to be urgently updated and even transformed. The aspirations of democratic socialism pose similar problems. It is hard simultaneously to be consistent to one’s beliefs and experience and digest the flood of new information. We have a duty to re-interpret the past continuously but also to foretell the future.}

^{There was a moment in my personal history that linked social analysis and politics. I was a child of the depression years of the 1930s and of war-time struggle. I was a teenager and young adult during the period of post-war social re-construction. That crucible of experience prompted my interest in sociology and social investigation and also in democratic socialism, in particular through the Labour Party and the Fabian Society.}

^{I did not have to find why new social policies were required to reconstruct society. I lived at a time and in a country where that was taken for granted. But I had the luck to find in my first job that I was required to check how social reconstruction was being done and whether there were things that needed to be added.}

^{The early Fabians gained applause for their sustained analysis of social and economic conditions and for practical recommendations for action. The Fabian Society was an intellectual elite who had a fitful relationship with the mass of the working class and their representatives. That was evident to me when I learned more about Beatrice Webb, who was not an early member but who was captured by the Fabian essays. Although she rightly disavowed the work of the Charity Organisation Society and their "hard-heartedness" (Mackenzie, 1979, p. xxxvi) and concluded that chronic poverty was caused by an unsatisfactory system rather than by unsatisfactory character there remained an autocratic and condescending edge to her make-up. In issuing devastating criticisms of out-relief in the Minority Report she could also write that it "can be demoralisingly attractive to those who are depraved" (p.54). Among early democratic socialists there lurked the uneasy belief in "them and us." A distinctive feature of Fabian’s at that time.}

^{The Fabian Society was one of those organisations which became known for helping some of its members to fulfil the highest political ambitions. In my time I can recall regular contacts with similarly elected members of the Executive of the Society, like Harold Wilson, Tony Crosland, Tony Benn, Roy Jenkins, Denis Healy and Shirley Williams. Break-away members joining the SDP were eventually ejected but it was a close-run thing.}

^{When a devoted member of the Fabian Society, H.H. Hutchinson, died in 1884 his will instructed a trust of five members, including Sidney Webb as Chairman, three other Fabians and his daughter Constance to be set up to promote its objectives. The Webbs seized on the idea of an educational institution like the Free school in Paris and established the London School of Economics to provide lectures on special subjects and encourage students to produce "original" work. "Hard thinking" it was stated, rather than "reform and shouting" (Harrison, 2000, pp 284-5). In 1895 Charlotte Payne Townshend, a relatively wealthy socialist, succeeded Constance as the fifth Trustee and married George Bernard Shaw three years later. The foundation stone for the School was laid in 1902. In the early years Fabians could enrol as students at half-price.}

^{Richard Tawney lived and taught at Toynbee Hall for several years from 1903 after leaving university and toured the country for the Workers Educational Association; which I happened to work with for best part of a year. He joined the Fabian Society in 1906 and the Independent Labour Party in 1909. He was appointed to the LSE in the early 1930s and became Director of the Indian Ratan Tata Foundation to find "methods of preventing and relieving poverty and destitution" (Wright, 1987, p. 8). That objective has grown in importance with the passage of time – as have his books written earlier on Equality and The Acquisitive Society. Wealth, he said, was squandered on "futile activities" and lip service was paid to the eradication of poverty. His standard of comparison was clear. Redistribution of existing wealth was not enough. A "Functional Society" according to him would be one which "sought to proportion remuneration to service and denied it to those by whom no service was performed" (Tawney, new edition, 1982, p.31.) It could not be one in which, I quote again, "the evils of the existing order can be removed by leaving it as it is and heaping regulation upon regulation to check its abuses" (quoted by Wright, op cit, p. 56)}

^{When Beatrice Webb was appointed to the Poor Law Reform Commission she was able to take an independent line and, with Sidney’s constant support, to draft an impressive alternative of 715 pages to the report of the majority – who wanted to keep the Poor Law, with its deterrent basis, but to reform and re-organise its administration. The Minority were inspired by the Fabian doctrine of the "national minimum" well-being, guaranteed by the State and administered by local authorities. They argued for the scrapping of the Poor Law Amendment Act of 1834 and of Boards of Guardians. Responsibilities for assistance should be taken over by local councils, the representatives of which are duly elected, and assistance would be administered according to category of need for health, education, mental health treatment and pensions. The Minority Report also called for positive employment programmes, including labour exchanges, to defeat chronic unemployment, and for a comprehensive free medical service to be administered by the Public Health Authorities through the Medical Officers of Health. Austen Chamberlain said the proposals established "an intolerable bureaucratic tyranny" but in the same year Churchill published in the Nation a manifesto propounding a policy of the national minimum. At the time the Labour Party was making considerable inroads and after the elections in 1910 the Liberals no longer had a clear majority. They depended on Labour support, which itself was divided between Webbs supporters opposing the contributory principle of the Bill, and trade union leaders who were friendly but suspicious of Lloyd George (Bunbury ed., 1957) .}

^{The Report was a blow for social planning and comprehensive organisation but not yet for collective trust, and therefore for the welfare of the people. The Royal Commission had been appointed in 1905 and during its work other things were going on. Government measures for needy children and mothers were adopted and in 1908 a modest non-contributory means-tested scheme for the over 70s, Old Age Pensions, was enacted. It was in 1908 that Lloyd George had visited Germany to learn about the German system of social insurance and by October of that year he was already discussing outline plans for compulsory insurance with actuaries and even I gather with the Webbs, who, according to Beveridge, "disliked them extremely." However, on April 29 1909 his budget proclaimed a social welfare programme for the sick, for the invalided, and for widows and orphans. The National Health Insurance Bill of 1911 was not a great man’s improvisation. It was the decisive culmination of movements and controversies gaining unstoppable momentum.}

^{However, as I found in investigations across Britain at the end of the fifties, despite Beatrice and Sidney’s Minority Report, and despite Nye Bevan’s ambitious declaration about the National Assistance Act of 1948, poor law attitudes and practices still lingered in institutions and in the administration of those living in their own homes (Townsend, 1961, for example pp. 432-3).}

^{By 1958, by the second stage, Gunnar Myrdal saw the welfare state as a feature of all rich Western countries, reflected in "their specific commitments to the broad goals of economic development, full employment, equality of opportunity…social security and protected minimum standards as regards not only income, but nutrition, housing, health and education for people of all regions and social groups" (Myrdal, 1958, p.45). As a concept the "welfare state" appears to have been first adopted in the Weimar Republic in the 1920s and used in Britain in 1934 by Alfred Zimmern, Professor of International Relations at Oxford – as traced by Ann Oakley (1994) - and popularised in 1941 by the Archbishop of Canterbury in Citizen and Churchman, in which he contrasted the "welfare state" with the "power state."}

^{In most decades the theory of the welfare state that has gained influence is the anti-collectivist or "residual welfare" theory – as described by Richard Titmuss in his final book of lectures (1974) and down to the present day as a distinctive and key element of the so-called Washington Consensus of neo-liberalisms long standing evolution. The theory is important in the UK because idea of welfare reform – emphasising conditionalities and reduction in public costs through privatisation, self-help and charitable initiatives – is driving the Government’s relationships with the millions who cannot be in the labour market as well as the thousands who might be. The Washington neo-liberal approach is interpreted as diminishing welfare in its historical agreed sense by one means or another in rich and poor countries alike.}

^{There have been many books devoted to explaining the origins and development of the welfare state. One school from Dicey to Hayek, to Friedman and their successors consists of little scientific analysis and a really great deal of polemic. Their belief was that laisser-faire economics was right and natural and state intervention to establish the institutions of welfare is explained almost solely by individuals bewitching public opinion with collectivist views and capturing public opinion and being the agency for consequential legislation. This school of thought takes as axiomatic the superiority of the market mechanism for the allocation of resources. And following growth of output and the re-establishment of a "free" market, state intervention could be minimised and the institutions of the welfare state progressively dismantled. At bottom it is monetary incentives, it is believed, that are essential to make humans work. Historically the school of thought builds on Victorian values of thrift, individual self-help and independence.}

^{The "functionalist" by contrast sees the welfare state as necessary to the survival of capitalism. Many writers have adopted this interpretation. Left without control and regulation the market would lead inevitably to waste and inefficiency on a grand scale and deepen class struggle so that it would break out into open rebellion and rupture the fabric of society. The trouble with this approach is that while it is empirically grounded in conditions, there is little scope for explaining why in different countries the balance between the public and private sectors has become what it is and what has led to some important social features in particular societies. It is lacking explanation.}

^{T.H.Marshall argued that welfare institutions and services were necessary to achieve the equality of status required for the functioning of the market mechanism. Important historically was the political consensus reached in the war years and the long period of austerity afterwards (Marshall, 1963). This breaks with the more historical and anodyne school of functionalism by opening the door of analysis in vain of (qua E.P. Thompson and Eric Hobsbawm) to the critical role of collective uprising and struggle, campaigning on issues on behalf of groups, and the various social and political initiatives that compel the attentions of governments, particularly those that are democratically elected, and accountable to voters to introduce and amend legislation to bring into being the social and economic institutions on which society is, and always has been, based. The market is necessarily part and parcel of those institutions and its practices are conditioned by them. Economic structures are not independent of social structures and economic development is not independent of social development.}

^{Our problem is that the market is overreaching itself, to the detriment of human security and development. Inequality between so-called developing countries and high-income industrialised countries has been growing fast. A generation ago the great majority of social scientists would have agreed with the conclusion that "the trends moving towards a wider spread of national welfare states and eventually towards an international welfare system are larger and stronger than the forces moving in the opposite direction" (K.W. Deutsch in Mommsen W.J., 1981, p. 437). But today the evidence of social and economic polarisation suggests this was over-optimistic.}

^{Let me pose the sharpest of contrasts in passing. On the one hand, the world is faced with conclusive evidence of the growth of inequalities within as well as between countries. This trend carries great dangers for our future – as we can understand because of conflicts in which 43 countries are presently involved, the huge scale of HIV/ AIDS, the disastrous prospects of climate change, young children engaged in bonded labour, the hundreds of millions still existing in extreme poverty and, at the other end of the spectrum, the relatively few but growing number of dollar billionaires.}

^{On the other hand, there is widening allegiance to human rights. Most countries of the world have continued to put their signatures to the continuing stream of treaties about human rights and have ratified them. Despite grim trends in the facts about inequality and poverty – there exists the paradox of global hope. Discouraging evidence about developing economic and social divisions co-exists with encouraging news about the willingness to agree the beliefs and values shared by more and more countries.}

^{There has been a very rapid historic evolution of human rights treaties since 1948. The latest treaty to be signed was the Convention on the Rights of Persons with Disabilities of March 2007. The need to establish equality with other people is felt more and more keenly, but at the same time this equality is disintegrating before our eyes.}

^{Human rights instruments provide a framework for the analysis of development as well as for the eradication of multiple violations of rights that occur every year. The operational scientific definition and measurement of a meaningful poverty threshold, in contrast to the dollar a day pretence, demands professional time and attention and early international agreement. An example is the link between reiterated agreement on the fundamental rights to social security and an adequate standard of living and the development of quite substantial social security systems in proportion to GDP in all the OECD countries.}

^{There are many examples of inequality lying behind high rates of malnutrition and premature death even in countries with mass poverty. In 2007 the WHO was able for the first time to distinguish between the wealthiest and poorest 20% in many countries, using an approximate indicator of asset ownership. The results showed, for example, that widespread stunting of children under 5 years of age applied in India and Sub-Saharan Africa to families above the poverty line. The problem applied to more poor families in India than in SSA. Other scientific studies have been demonstrating the value of measuring multiple deprivation rather than single forms of deprivation in low-income countries.}

^{The World Bank, by providing us with a very rough figure about a dollar per day poverty, is taking a leading role in influencing international social policy about inequality and poverty. The WB lending reached $22 bn in 2005, but that represents a very tiny percentage (five hundredths of one percent of world total GDP) through DWP. The figure compares unfavourably even with the social security spending in the rich states like the UK currently spending a total of 210 billion dollars a year on public social security (for the elderly, children, disabled unemployed and sick). The OECD (30 countries) total public expenditures on "social protection" in 2005-6 was 4,150 billion dollars. Such figures dwarf the spending on the non-working poor in low-income countries and suggest or imply what change of strategy is required}

^{In social security, we see very high levels of commitment of the Northern countries to their social security systems. One illustrative table of statistics shows that the total public social security expenditure as % of GDP in selected high-, middle- and low-spending countries. France, UK, Germany, for example, are spending around 14 to 16% of GDP on social security, a very considerable fraction is redistributed through social security. The average for all 30 OECD countries is 13.5 % of GDP has been growing in the last 10 years.}

^{For the low-income countries, including India and China, the percentage of GDP in these forms of redistribution is between 1 - 3% and that is a huge difference. If we apply the OECD history to the low-income countries, they need to be allowed some chance of developing similar systems. New forms of international taxation will also be needed. The Tobin tax or a currency transfer tax could easily be introduced regionally or by the UN. Experts have estimated that a Currency Transfer Tax could easily raise 400-500 billion dollars a year and the UN could use half or more of these proceeds as an investment fund for children and a setting up of a child benefit programme. Last week I was in Ethiopia and a new movement on child poverty in Africa adopted a manifesto that included the priority of building a universal child benefit scheme – long denied or obstructed by the World Bank’s policies of minimalist state supervision, structural adjustment, poverty reduction strategy programmes and social funds.}

^{The northern and western countries that were first to industrialise have all developed substantial social security systems. Among their other functions, these systems have greatly reduced domestic poverty. In the 15 EEC countries, poverty (by European standards) is reduced on average from 45% to 15% if incomes are assessed before and after social transfers (Townsend, 2007, p.10). Governments continue, however, to face strong pressure to do more for those in poverty, especially children.}

^{In the UK serious concerns arose after the rapid increase of child poverty in the 1980s and early 1990s. In 1999, the Prime Minister, Tony Blair, gave a commitment to end child poverty in a generation. The aim was to eliminate poverty among children by 2020 and by a half, relative to 1999, by 2010. As in other OECD countries, there are in the UK a range of direct and indirect schemes affecting children, including child benefit, child tax credit, income support and allowances to families that are based on national insurance contributions. Progress in reducing child poverty has been slower than necessary to meet the ultimate objectives since 1999, a fact admitted by Ministers.}

^{One non-Government commission on Life Chances and Child Poverty found that, in 2005, life chances remained very unequal. "Children from disadvantaged backgrounds have much worse chances in terms of their infant mortality rates; their subsequent physical and cognitive development; their experience of childhood; their outcomes at school; and later access to higher education and jobs. In many cases these inequalities are found to be as wide now as they were in 1997, and in some cases they are widening." (Fabian Commission, 2006, p.201).}

^{As in low income countries, developments in recent years in the rich countries, like this example from the UK, point towards wider acceptance of children’s fundamental rights to social security and an adequate standard of living by means of emphatic endorsement of benefits that are universal or which cover social categories of the population, such as children under five, all children, or groups like the over-75s or disabled people.}

^{Poverty is increasingly conceptualised as a denial of human rights, so that the links between equalities, human rights and the elimination of poverty can be a more automatic part of all governments’ agenda. Since 1997, the UK has taken decisive action on economic and social rights in Europe and in the world. The Human Rights Act of 1998, coming into force in 2000, and the UK’s signature to the Economic and Social Charter imply greater coordination of anti-poverty measures at home and overseas. The UK signed the Convention on the Rights of the Child in 1990 and ratified the Convention in 1991. In 2007, it stated that its commitment to the implementation of the rights of children "remains unwavering}

^{Accounts of the past and the future of the welfare state have to be grouped according to the ideological but also scientific knowledge and powers of analysis of the authors. Past history sets limits on whether and how the evidence will be logically exploited in the public interest. Government action turns out to be a medley of whim, accident, coincidence and pressure. The good and the bad have to be sorted out and the result of changes to structure assessed.}

^{There is evidence of vertical and horizontal redistribution of income, services and facilities in the high income countries, which have been steadily maintained, and in respect of wealth and authority, their ascendancy over low-income countries. The consolidation of neo-liberal power has undermined world social stability. Greater inequality continues to apply within as well as between countries. Even in the UK after 11 years in office, the latest estimate is, as measured by the Gini co-efficient, that successive Labour administrations have allowed broad-brush inequality to go on increasing. If the loss of free and subsidised public services could be properly assessed, as well as the income equivalent of augmenting wealth at the top, the gap that has grown would be wider.}

^{The idea of planning, so insistently applied and illustrated by the Webbs, and freedom under planning, as so ably argued by Barbara Wootton immediately after the publication of Hayek’s Road to Serfdom, must be newly invoked to tame the biggest Trans National Corporations, the international financial agencies and the G8 into constructive development of the social good. The lessons of Enron, WorldCom, ImClone, Hollinger International and Adelphi Communications have not been built into pre-emptive law, nor into the routine independent monitoring and scrutiny of the multinational giants each wielding financial resources greater by far than the GDP of most nation states. The construction of new international company law, new forms of international taxation and urgent democratisation of the United Nations are daunting objectives.}

^{In describing actual and potential stages of social development in the UK long ago I listed three sets of principles underlying the stages: conditional welfare for the few; minimum rights for the many; and distributional justice for all. Beatrice and Sidney Webb successfully exposed the first and Clement Attlee and Nye Bevan sought to confirm the second. There were leaders like Bevan, Dick Crossman and Barbara Castle who engaged with the transition from the second to the third, but the result was a mixed and even tentative story. All too often, New Labour has retreated to the first while clinging to some features of the second.}

^{In breaking out of current paradoxes The best course would be to combine global with domestic strategies, argue for direct and not indirect filter-down aid or economic growth and use the human rights treaties to re-build social security for all, and especially for children, sick and disabled and elderly everywhere. Last week I was delighted to find at the African Child Policy Forum in Addis Ababa that a manifesto to reduce child poverty was drawn up with one of its priorities being the establishment of universal child benefit systems.}

^{In the UK successive Prime Ministers have called for the halving of child poverty by 2010-11 and its eradication by 2020. The best bet is a substantial rise in universal child benefit. It is easy to administer and efficient in coverage, as well as providing a monetary base for families in paid work as well as outside paid work and therefore not diminishing incentives to seek paid work or an increase in earnings. A recent Parliamentary answer shows that a 50 per cent increase in relation to earnings would reduce child poverty by around 300,000 at a stroke. The extra cost would be around £2.5 bn (or about 2 per cent of current annual expenditure by the DWP). Like child benefit in low-income countries, such provision is affordable as well as easily accountable, and has multiplying good social and health effects for entire populations. If offset in cost by a higher threshold of Inheritance and Corporation tax it would become attractive in present economic terms and is likely to bring overwhelming public support.}

^{The synchronisation of domestic and international strategy to establish and enlarge universal child benefit would catch world attention and quickly reduce the abject poverty of many millions of children and ensure the survival and better health of many of them. In developing the strategy complementary action for chronic sick and disabled people, including those with HIV/ AIDS and the elderly, would logically follow.}

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