National Insurance Scheme
National Insurance Scheme
The Cabinet discussed on 6 December 1945 the National Insurance Scheme. There was disagreement on the payment of continuous unemployment benefit without a time limit, the payment of old age pensions to single pensioners, the payment of old-age pensions to persons who had not retired and the cost of the scheme.
The following extracts give a flavour of what was said in Cabinet:
Party & T.U.C. accepted Bev. principles. Follows they shd now be
related to current c/living figure.
Future: automatic adjustmt. wd. brk. down: prefer therefore
review after 5 yrs.
Formidable financial burden. Can´t advise Cabinet to accept this plan
as it stands. Cost: see p.1. of my memo. Increased Exch. cost
£10 m. p. decade. Contributors´ share remains constant. Rises
even after 20 years.
a)Can´t therefore justify higher rate of o.a.p. for single person:
accept rate for couple.
Original 20/= & 35/=. I agreed 20/= & 40/=. S.S. Cttee. have
now gone further. People aren´t really expectg. 26/=. Wd.
accept 21/= and 42/=. Diffce initially £27 m. + £3/4 m.
permanently out of £10 m. increase.
b)Unwilling to abandon Lab. Party policy tht. pensions shd. be
retirement pension. Incentive to postpone retirement. Agree
½ a wk. not enough: wd. be ready to go up to 2/6 and 5/= a
week extra for each year for wh. retirement is p´poned.
c)Unlimited duration of u. benefit. Can´t agree unless real
assurance tht. malingering can be prevented. Don´t suggest
training as a check: cdn´t change of job or residence be
General. Approachg. period of numerous claims. Must counsel
caution. Can´t deal with this on basis of mere generosity.
On c) above. J.G. believes existg. safeguards to check malingering.
M/L. didn´t fully agree.
a) above. Doubtful wtr. 26/= cd. be accepted.
b) above. Now favour, on reflection, inducement of 2/6 and 5/=.
On c). Greatly concerned. After last war much improper claiming on
Fund. Feel somethg. stronger than last time. Refusal of work not
training. T.U. pressure: but all T.U. schemes have limited
Under full emplt. we shd. be able to offer some job. Wd. like
therefore unlimited duration. Job in other area - & allowances.
On balance - against unlimited duration.
On b) - support retirement pensions. People shd. not have pensions
On c) - u. benefit must be hedged round with condns. Unwilling tht.
u. benefit shd. be payable to anyone unwilling to accept work
on proper T.U. condns.
With remainder of H.D.´s case I disagree. Ours is expansionist policy -
liberal resources in cash & in kind. H.D. seems to assume
encroachg. on Exch. involves burdens on nation: but not for
transfer, wh. this is.
To extent you promote full emplt. policy you reduce cost to Exch. -
tho´ they go on paying contns. Must decide wtr. you have
courage of this conviction. If you´re not sure of this policy you
must pay higher rates, for if u. longer pay shd. be more. Same
with effect of N.H. Service.
On a) don´t ask single o.a.p. to live on 21/=. Coal at 4/2 p.cwt.
a) - 21/= is 15/9. at ´39 values.
b) wd. enable them to raise the amount. Support that. Also (c).
But want 26/= for single o.a.p.
c) might be real economy. Cd. hold 30 wks. if work available.
Workers will support efforts to keep slackers off Fund. But
breaks down in period of long unemployment. Then if
duration limited, State must provide public works. "Unlimited
benefit" bad phrase: put it on basis of "benefit or work".
Decide: pensions not except on retirement. Any other decision wd.
give rise to v. gt. trouble.
This is ques. of best method of inducg. old people to stay on working.
8.000 o.a.p. already working. } P.M
400.000 vol. contributors - will have to be paid at 65 by contract}
Those drawing - don´t stop. Others, however, only on retirement.
Best way of keeping o.a.p. age groups at work. My concln was -
divided pension wd. be best. If Cab. prefer the other
inducements, I will accept - at 2/6 and 5/=. It is a balance
Is H.D.´s offer of 2/6 condl on 21/= vice 26/= for single rate.
Believe 2/6 wd. be too high if 26/= adopted.
They are linked.
Agreed: o.a.p. on retirement, and financial inducements
to continue work after retirement age.
The o.a.p. rate for single person.
We cd. say 26/= is same as other single benefit rates. Don´t have to
defend special rate for o.a.p. If put fwd. as separate rate, it will
be forced up.
Supported 26/=. Diff to defend 21/=. Supplemn: diffy. is 1/3rd. are
It is not improper tht. people shd. get more in case of real need.
Neither 21/= nor 26/= cd. be defended as enough where no resources.
It may be too much in too many cases.
General - this Rpt. seems to be based on doing better than Coalition,
not on merits. This £10 m. p.a. will preclude help in future years
to the active section of community - in education etc.
21/= can be raised to 26/= by staying on in work for 2 years.
Men will pay for pensions. Mistake to put increased cost of this on
Exch. Average paymt. 7/= p. wk. for benefits to be covered by
whole scheme. This is largely diversion.
When we accepted Bev. figures, we reserved our posn re c/living. We
never took the figures w´out saying actual rates wd. have to be
fixed when Bill intd.
O.a.p. Take 2/= p. wk. p. year. Wd. prefer 1/= for every 6 months.
H.D. Agreed. But diff. between 21/= and 26/= is not increase of
p. power. If you were going to take 20/= on Bev. figures, 26/-
buys no more now. It means 6 more tokens to buy what they wd.
have bought in 1938 for 20/=. But let a bigger propn of addl.
5/= be carried by contributors - less Ty. savings on supplementn.
My troubles are in future - it mounts. Old people increase as contrib.
remain constant. Wd. you agree tht. State shd. pay less & same
"Continuous" not unlimited. Doesn´t last after refusal of job.
Nothg. yet devised wh. caught the shirker. They penalise the
innocent. Believe enough safeguards already in Act. Stopping
benefit doesn´t solve it. They all come back to "genuinely
seeking work". That test won´t work. Lab. Party view -
only real test = offer of job.
I reported to Coaln Govt. on this. This Fund is not answer to
unemplt. That is why I commended a limit. The cost after
30 wks. shd. not come on the contrib. I wasn´t concerned with
dodges at all. State shd. carry this cost. He contributes only to
cost of mtg. normal unemployment.
Taken from C.M. 60(45) - Meeting held on 6 December 1945.
The Cabinet again discussed the problems concerning the National Insurance Scheme on 13 December 1945 and the following extracts reflect the Cabinet´s discussion:
Supported J.G. What point in ceasing benefit after 30 wks. if State
has failed to find work or training before then. State is obliged
to maintain: ques. only by what means, benefit or assistance.
What of married women?
Shd. deal with special cases specially, not by general rule. M. women
case always raises diffy: but if no job can be offered locally she
shd. be treated as havg. fallen out of insurable class and treated
as such by Regn.
What of seasonal workers - worst case if any. H´to worked 16 wks.
& drew benefit for remainder. If you try to define by Regn
you´ll be driven back to Anomalies Act methods.
Continuous benefit wdn´t cost State more.
Strongest argument against = take them off the Fund.
But cd. be so administered tht. it was tighter on shirker than
Recogn. m. women = crucial diffy. Meet it by makg. marriage a
break unless in industry where she wd. normally go on working.
Point if diff. - Many women now workg. who wdn´t normally work.
Can´t see how Regn proposed by A.B. is diff. fr. "gen. seekg.
Diff. = onus of proof. Exchange must offer work.
Is it just to put on contns the cost of abnormal unemployment? That is
the issue. Insurance: shd. be definite contractual basis. Any
discretionary adminn shd. be outside Fund & outside Labour
Exchange. If abnormal unemplt. occurs, remedy shd. not be on
insurance. Pay the same, if you like, but not out of Fund.
x/ Arguable that assistance payable to unemployed shd. not be
the same as that designed for o.a.p.
State and not the Fund must bear the responsibility if abnormal
unemplt. occurs. On E.W. argument we don´t want to
encourage a marriage break. Policy of maternity grants etc., is to
encourage them to go on in emplt.
Remedy is in x/: look into that.
Recalled experience of 1931 - degeneracy of U.I. Fund - strongly
supported E.B. After 30 wks. new situation arises. Govt. must
be forced to look at econ. situation, generally locally & by
Must retain 30 wks. - both for E.B.´s reason: also for financial
reason that some, when situation reviewed, will cease to draw
fr. any sources. We can´t balance our Budget etc., unless
unemplt. for more than 30 wks. is cut to minimum.
Consider this - after 30 wks. State to pay, but at insurance rate,
subject to needs test. Genuine workman wd. have no diffy. in
provg. need. But m. woman wdn´t get away with it. Not pers.
"need": but ques. whether they are in the employment field.
A.B. harking back to conditions of depressed areas betwn. the wars.
Problem now is rather the individual cases such as M. women
who are not genuinely in the emplt. market.
If full emplt. is our policy - long before 30 weeks State must take
But need shdn´t be introduced after the 30 wks. - only tests re
willingness to take work or training.
Those tests must be considered separately - as tests for unemployed
class w´in the assistance field.
This fight on u. benefit & assistance betwn. the wars has caused
national indiscipline in this sphere. - cheating the Fund instead of
pride in not claiming.
Let us agree that liability of Insurance Fund shall be limited to 30 wks.
y/ That is all we need decide for Bill. Condns of payment after
30 wks. can be considered subsequently & separately.
More diff. than m. women = men between 50/65 who can´t go on
working and can´t be moved. Agree Fund shdn´t maintain them.
By alteration of assistance rules in 1941/2 I added 30-40 m. State
pensioners not really un-employed at all.
Some heavy industries - special scheme w´out age limit. It is
invalidity not old age. Can´t define an age - e.g. in coal or steel.
Two separate problems a) m. women. Ques. there
is wtr. they satisfy the first condition -
available for work. Agree on that with W. Paper.
Not a 30 wks. problem. Arises in 1st week. Not merely
m. women only.
b) People who can´t be placed w´in 30 wks. Agree State not
Fund shd. carry it. Ques: how shall it be discharged. I must
answer that in H/C. on this Bill. Only answer I can give now is
Assistance. And remember test of need is in the Act & can´t
be changed by Reqn. Sending them to Assistce Bd. will revive
v. bitter controversy
Why not give pledge to consider form in wh. State´s oblign shall be
z/ discharged. Separate legn. We aren´t tied to existing law.
Assurance in genl. terms.
Don´t say anything to commit this Govt. to abolish test of need -
Agreed as at y and z. Statement at z to come to Cabinet.
Pensions. Agree to 26/=. But no giving way to pressure for increases.
Say nothg. at this state re special schemes for particular industries.
Don´t want any reference to possibility of Exchequer assistance.
But there are existg. schemes - will have to be adjusted. These are
prized. Cd. J.G. say we wd. welcome or encourage specl.
schemes - wd. be willing to allow State scheme machinery to
be used in proper cases.
No objn qua existg. schemes. Don´t want talk about new schemes.
Need to keep people longer in industry.
Diffy. - existg. pension schemes in mines. Can´t leave it with them.
For they are bound to extend. Want it said we wd. look with
favour not only existg. but on further schemes so long as don´t
involve addl. charge on Exch.
Inducements. Alarmed at magnitude. Owing to ….. greater longevity.
Problem of o.a.p. But also relief because can work to later age.
Suppose he remains at work up to 70 because stronger and in
favourable industry - then gets 50% more pension. Disparity
with less fortunate neighbour. Fear you won´t hold that
Inducements stop at 70.
Want to get them to go on working.
Difference is only 10/= or 20/= for a couple. Deserved well of the
Human fortunes. Equally hard luck if a man dies at 61!
Agreed: as in memo. P.L. drawing attentn to dangers.
Taken from C.M. 62(45) - Meeting held on 13 December 1945.