Paying for Welfare in the Twentieth Century

Abstract

Welfare is taken here in a broad sense to mean provision of health care, education, and social services plus income in unemployment, sickness and old age. A significant part of this is provided without being financed — most obviously, the ‘informal’ care of the sick, disabled and elderly by relatives who receive little or no recompense for their services. But it is the ‘formal’ sector of welfare which is concentrated upon here, where finance has to be found to pay either for provision of services (for example health care) or income at a time of loss or impairment of earning power or the occurrence of some expensive event, such as maternity. Such provision can be financed by charity, by individuals (for example via health insurance or private pensions), and by corporations (by occupational benefits for those who work for them). In all three cases tax exemptions may be given, or in other words, financial assistance from the general body of tax payers. This complex mix of tax breaks and occupational welfare has long been identified as a significant aspect of British welfare provision, to be put alongside the traditional focus on the directly government-financed components (Titmuss, 1958; see also Sinfield, 1978, Pond, 1980). Some further brief comments on the growth and significance of this ‘private’ welfare provision is offered below, but in practice we know very much less about it than we know about the ‘welfare state’ as traditionally defined, financed by general taxation or quasi-taxes like national insurance. Most of this chapter will focus on the financing of that traditional welfare state, which is undoubtedly the larger part of the story, but the incompleteness of that picture should always be kept in mind.