for family allowances, employment and coverage under the family allowance system are the basic criteria.

Social security proper covers old-age pensions, sickness and medical benefits, and maternity benefits. It is financed through taxes on employers, and to some extent on employees. The proportion of contributions which come from the employer is the highest of any industrial country in the world. Unemployment compensation is administered separately from social security, is paid by local government units out of public funds, and involves no special levies on either the employer or employee. Workmen's compensation, although under the social security, is financed by a tax on the employer only.

The French social welfare system has two objectives: assurance of a minimum living standard for all citizens; and a more equitable distribution of income. It has accomplished the first objective more successfully than the second. However, there is the question of whether the second is compatible with a high rate of economic growth. French fiscal policy during the post-World War II period has favored measures to stimulate saving and investment and discourage consumption.

CHAPTER III

GREAT BRITAIN

INTRODUCTION

Aid to the poor in Great Britain began with the Elizabethan poorlaw system, initiated with the Act of 1598, which, with various amendments, the most significant of which was the Poor Law Amendment. of 1834, remained the law of the land until 1948. The National Assistance Act of that year opened with the statement, "The existing poor law shall cease to have effect."

The modern British social welfare system began with the Beveridge Report of 1942.1 The report was the first comprehensive survey of the British system of social insurance ever made, and it provided a carefully reasoned scheme the Beveridge plan-for the abolition of wants, as they had been known during the interwar period. The Beveridge plan was essentially an insurance scheme, giving in return for contributions, benefits up to a subsistence level, as a right and not based on a means test. In return for contributions which all would pay, a minimum income sufficient to meet basic needs, would be guaranteed for all periods of interrupted earnings, whether through sickness, disability, unemployment, or old age. In addition, there would be grants for the normal incidents of life that called for unusual expenditures; for birthmaternity grants, for children-family allowances, and for deathfuneral grants.

From 1945 onward, the Labor Government enacted about as complete a system of public welfare measures as could be imagined-the phrase used to describe it, "cradle to grave," was apt. From before birth when expectant mothers were provided with medical care, special foods, and compensated vacations until death when grants toward funeral expenses were provided by the state, the individual Briton was insured against every hazard and insecurity possible. The British went in one respect far beyond what any free society had previously ventured: they gave every citizen free medical care. The National Health Service Act of 1946 provided that doctors should accept patients for whose treatment they would get paid by the state. Medicines, appliances like glasses and false teeth, and hospital treatment were all provided free to everyone in Great Britain, including foreigners.

Currently, social welfare expenditures comprise a large part of total government expenditures. The growth in this area has been rather pronounced. In 1957 expenditures on national insurance, pensions, family allowances, and other forms of social welfare assistance were less than

1 Sir William Beveridge, "Social Insurance and Allied Services," London: His Majesty's Stationery Office, Cmd. 6404, 1942.

2 The greatly-despised means test, which was utilized extensively during the 1930's, is the key to the philosophy which underlies the entire British social welfare system. To attempt to differentiate between rich and poor, is to bring back memories of the means test. The British welfare system is available to all persons, whether they need it or not. There is no anti-poverty program which distinguishes between groups on the basis of income.

half of current expenditures. Financing of the British social welfare system, however, is different from the French approach in two important respects:

1. The cost is financed in part from social security contributions and in part from general revenue.

2. In France the cost of social security falls largely on the employer; in Great Britain, employers and employees contribute pretty much the same amount.

FAMILY ALLOWANCES

Family allowances, as a percentage of gross national product and household income, are not nearly as large as in France. Also, they are of much more recent origin in Great Britain, dating back to 1946, whereas the French system dates back to the middle of last century, even though it has formally been in effect through legislative fiat since 1932. The Government finances the allowance out of general revenue; there is no tax on the employer or on the employee. In this connection, it must be emphasized that there is much greater reliance on direct taxation, specifically the personal income tax, in Great Britain than in France. Taxes on income and wealth account for approximately 54 percent of government revenue in Great Britain compared to 30 percent in France. In 1965, social security contributions amounted to 16.6 percent of gross national product in France compared to 5.4 percent in Great Britain.

Family allowances are cash payments for the benefit of the family as a whole. They are paid to families with two or more children under certain age limits. No allowance is paid to a family with only one child under the age limit. The allowance is 15 shillings a week for the second child and 17 shillings a week for subsequent children.* For example, a family with three children would receive 32 shillings a week and a family with five children would receive 66 shillings a week. There is no income limit or means test but allowances must be declared as income for tax purposes. Allowances do not in any way depend on national insurance schemes.

Allowances can be paid to an adult member of any family in which there are two or more children. In the case of a married couple, either the wife or husband may draw the allowances, but they belong by law to the wife and it is she who must claim them. Every claimant must satisfy a residence requirement of at least 26 weeks, and there are reciprocal family allowance arrangements with other countries.

Family allowances were included in the Beveridge plan. He stated the case for them on several grounds:

1. There was a need for a national minimum income in employment, no less than in unemployment: prewar surveys had shown how much want existed, even when a wage earner was at work.

2. There was an anomalous situation by which, without additional assistance for children, wages might be no more, or even less, than unemployment benefits.

To count for family allowances, a child must be either under the minimum schoolleaving age, 15 years, or of over that age, under 19 and undergoing full-time education. Roughly, speaking, therefore, family allowances continue up to university entrance.

The shilling is worth $.12. There are 20 shillings to a British pound. The above rates went into effect in April 1968, marking the third time on 21 years that the family allow ance has been increased. In October 1968 the allowance will be increased to 18 shillings a week for the second child and 1 pound a week for each child after the second.

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3. Lastly, there was the need, with a falling birth rate, for the utmost care for children, and the greatest possible encouragement for having them.

Under the Beveridge plan, unlike other welfare benefits, family allowances were to be paid from national taxation and not based on insurance contributions. The allowances were to be essentially for the benefit of the family, and were to be paid for each child after the first. The family allowance fitted with the Beveridge policy of socializing demand rather than production, in that it helped to attach directly the central weakness of the unplanned market economy of the interwar period-failure to generate effective demand for products. Socialization of demand, according to Beveridge, would make it possible to retain the private enterprise system in England.

Family allowances became the first of the new welfare services to be introduced. The necessary bill was introduced to Parliament in 1945, in the last days of the coalition government, and actually became law during Churchill's short-lived second Ministry of May-June 1945.

The average earnings of adult male workers in Great Britain in 1967 were 21 pounds, 7 shillings a week. Expressed as percentages of annual earnings, family allowances would amount to 312 percent of earnings for the family with average earnings and with two children, 12 percent for a family with four children, and 20 percent for a family with six children. For the average wage earner's family, the allowances modify only slightly the fall in living standards resulting from an increase in family size. The lowest paid male workers, however, earn only about half the average wage. At this level of earnings, family allowances can be a significant component of family income. However, for a family with two children aged between 11 and 16 and an income of 1,100 pounds a year or more, their value (i.e., family allowances) is reduced by more than a third; and for a family who is liable to the surtax, by very much more, since family allowances are taxed at a rate applicable to earned income.

In 1966 nearly 4 million families received family allowances. The allowance applicable during this period was 8 shillings for the second child and 10 shillings for subsequent children. Of these families, 59.5 percent had two children; 24.8 percent had three children; 9.6 percent had four children; and 6.1 percent had five or more children. For the fiscal year ending March 31, 1966, 146 million pounds were paid in allowances 48 million pounds to families with two children, 45 million pounds to families with three children, 26.5 million pounds to families with four children, and 26.5 million pounds to families with five or more children. 6

However, family allowances, when related to gross national product and personal income, have declined in importance over the last decade. They have been increased three times since they were introduced by the Family Allowance Act of 1945-in 1952, 1956, and 1968. Expenditures on family allowances as a proportion of total social service expenditures has decreased from 4.2 percent in 1948 to 2.5 percent in 1966.

5 Churchill, himself, opposed the Beveridge plan. "It is because I do not want to deceive the people by false hopes and airy visions of El Dorado and Utopia," he observed, "that I have refrained so far from making promises about the future."

Ministry of Social Security, Annual Report for 1966, London: Her Majesty's Stationery Office, Cmnd., 3338, p. 15.

The family allowance, when compared to the French family allowance, is of considerably less importance as a source of financial support to families with children. For the average French family with three children of less than 6 years of age, the family allowance represented 31.3 percent of income; in Great Britain for a family in the same situation, the family allowance represented 6.2 percent of income."

SUPPLEMENTARY BENEFITS

A convenient measure of the extent of poverty in Great Britain was provided by the National Assistance Board scales which were laid down and periodically revised by the Minister of Pensions and National Insurance with the approval of Parliament. These scales listed the amounts necessary to meet the essential needs of adults and children, and the National Assistance Board allowances actually paid were calculated wth reference to them. National assistance benefits were paid to certain categories of persons not in full-time work, such as the aged, infirm, and unemployed, whose incomes did not come up to a prescribed level which, expressed in terms of a weekly rate, ranged from 3 pounds, 16 shillings for a single person, to 6 pounds, 5 shillings for a married couple. If children were included, the rate ranged from 1 pound, 2 shillings, 6 pence per child for children under 5, to 2 pounds, 11 shillings per child for dependent children over 18.

The following example gives an indication of the level of national assistance payments. A family with two children aged between 5 and 11 and with no income of their own except the family allowance of 8 shillings would have received a national assistance grant sufficient to bring their income, including family allowance, up to 8 pounds, 19 shillings, 6 pence plus an addition to meet the cost of rent.

In June and July 1966, the Ministry of Pensions and the National Assistance Board carried out a survey of families with two or more children. The report, "Circumstances of Families," indicated that out of 3,900,000 families with two or more children, 280,000 had resources which were less than their basic requirements as measured by reference to the national assistance scales which were current at the time of the survey. The 280,000 families had 910,000 children.

The Ministry of Social Security Act of 1966 established a new scheme to provide noncontributory benefits for people whose resources are less than minimum standard requirements established by the act. This scheme of supplementary benefits replaced as of November 1966 the benefits that were available under the national assistance scheme.

Supplementary benefits are of two types: supplementary pensions for persons over pension age who have ceased full-time work and need to have their incomes brought up to a guaranteed weekly level; and supplementary allowances for the sick, disabled, unemployed, widows, mothers left alone with young children, and others aged 16 or more but under pension age who are not in full-time employment, and whose resources fall short of income requirements. The rationale of supplementary benefits is the provision of a minimum income stand

7 British family allowances relative to personal income are far lower than any of the Common Market countries. The 6.2 percent for the family with three children can be compared with 26.5 percent in Belgium, 15.2 percent in Holland, and 10.9 percent in West Germany.

8 Ministry of Social Security, "Circumstances of Families," London: Her Majesty's Stationery Office, 1967.