1955 Cabinet memorandum on increased cost of social services

• Do you get the impression that the Conservatives wanted to roll back the Welfare State that Labour set up?
• According to this extract, how serious was the financial position?
• What does this extract reveal about the scale and activities of the welfare state in the 1950s?

SECRET
C.P. (55) 57
1st July, 1955

CABINET

SOCIAL SERVICES: THE NEXT FIVE YEARS

Memorandum by the Chancellor of the Exchequer

1. When we came into office in November 1951, we took over the expanded social services which had been provided by the war-time and post-war legislation. We successfully rode through the financial crisis without set-back to these services which have continued to develop.

2. The cost has grown formidably. As the appended table shows, from 1951-52 to the current year, Government expenditure on the social services, plus the expenditure of the nation insurance funds, has grown by about 35 per cent. This may be contrasted with an increase of about 25 per cent. in the gross national product. The cost of the social services has been rising faster than the national income.

3. There will be substantial further growth of social service expenditure in the next five years. The increase in the number of old age pensioners will cost the Exchequer extra annual amounts rising to £100 millions a year in five years' time; the growing number of children of secondary school age will call for more educational expenditure, and so will the claims for more and better technical education and higher education generally; the hospital-building programme will be an increasing burden itself and will also involve increased running costs; slum clearance will swell the annual housing subsidy bill.

4. Against this background, it will be seen that there is danger that our social service commitments may run ahead much faster than our resources. The result of this in the end is continuing balance-of-payments trouble and a further fall in the value of our money.