Some welfare history.

Guaranteed minimum income.
Alison Marshall, August 2017.

Guaranteed Minimum Income (GMI) systems often use means testing. The Unconditional Basic Income (UBI) doesn’t. It is not unusual to fail to distinguish between GMI and UBI, label them both Basic Income, and blame one of them for the faults of the other.

The Speenhamland system in England in the early 19th century was a GMI, not a UBI. In some parishes it involved means testing with high effective tax rates. After an uprising in 1830, a Royal Commission blamed the Speenhamland system, and it was replaced in 1834.

“Critics of Speenhamland acquired towering authority, with everyone from left to right condemning it as a failure. Eminent thinkers including Jeremy Bentham, Alexis de Tocqueville, John Stuart Mill, Friedrich Hayek, and, above all, Karl Polanyi denounced it. It became the textbook example of government intervention that, despite the best intentions, paved the road to hell. . . In the 1960s and 1970s, historians . . . discovered . . . the Royal Commission Report was a fabrication, riven with bias and flawed methodology.” ( ).

The Speenhamland System.
Marjie Bloy, Ph. D., Senior Research Fellow, the Victorian Web, November 2002.

The 1601 Elizabethan Poor Law provided for each parish to raise a rate for the relief of poverty within its own jurisdiction; in 1662 the Settlement Laws restricted the obligation of the parish to looking after persons who had a permanent settlement there. In 1723 the Workhouse Test Act (Knatchbull’s Act) obliged the poor to enter workhouses in order to obtain relief; Gilbert’s Act (1782) excluded the able-bodied poor from the workhouse and forced parishes to provide either work or outdoor relief for this group of people. Indoor relief was confined specifically to caring for the old, sick, inform and dependent children.

In 1793 Britain became involved in the French Wars (1793-1815). This made the import of foodstuffs from Europe increasingly difficult and the price of bread increased rapidly. Concurrently, there were food shortages because of a series of poor harvests.

. . . to prevent potential disturbances, the magistrates of the Berkshire village of Speen . . . decided to bring in an allowance scale whereby a labourer would have his income supplemented to subsistence level by the parish, according to the price of bread and the number of children in his family.

. . . The idea spread rapidly in the south of England and it is thought that the system saved many families from starvation. . . One of the effects of the Speenhamland System was that ratepayers often found themselves subsidising the owners of large estates who paid poor wages. It was not unknown for landowners to demolish empty houses in order to reduce the population on their lands and also to prevent the return of those who had left. At the same time, they would employ labourers from neighbouring parishes: these people could be laid off without warning but would not increase the rates in the parish where they worked.

. . . There were a number of variations to the Speenhamland System

-the giving of allowances without further ado
-the roundsman system: paupers would be sent to work for farmers in turn, and their wages were made up from the poor rates
-work schemes: those claiming poor relief were put to work on (for example) road mending schemes. They were paid from the highway rate fund. However the contributors to this fund were the same people as those who financed the poor rates.
-the labour rate: this was a separate rate levied on occupiers of the land. Employers could either pay their share of the rate or use their contribution to employ labourers who had a ‘settlement’, at the going wage rate.

. . . The total labour bill for the parish was worked out by multiplying the number of settled able-bodied labourers by their ‘supposed’ market value and requiring each employer to hire a quantity of labour based on his rateable value or acreage. Those refusing to hire their quota of workers paid the difference in value into the poor rates.

The labour rate was preferred to the ‘demoralising’ roundsman system by both landowners and tenant farmers who employed lots of men.

Some welfare history.
Alison Marshall, December 1987.

. . .There is a lot of talk at present about targeting social welfare, as it is thought that both taxation and social welfare spending must be cut back. But it is misleading to look at either taxation or welfare spending separately. . . . The current system for single taxpayers and beneficiaries is similar to a social dividend system combined with a proportional tax (i.e. the same rate of tax on all income.) The net revenue is the same and the redistributive effects are similar, but the levels of taxation and welfare spending are quite different. . . .

It is likely that the world economy at present is near the most depressed point of a long-term Kondratieff cycle (7, 8). As in the 1930s, at the same stage in the last cycle, what seems expensive now may be more easily acceptable in a few years time (9). The long-term economic cycles may be amplified by fluctuating birth rates (10), or by concentration of wealth (8), so they might be damped down in future with more effective taxation of wealth and economic independence for women. I believe that the cycles are related to changes in birthrates, which have a delayed feedback of about 25 years, or one generation. The population explosion of the British industrial revolution peaked between 1800 and 1820, during the upwave of the first Kondratieff cycle (11). In the OECD countries this century the birth rate was highest during the upwaves of the last two cycles, before 1920 and in the 1950s. (12). . . . According to the U.S. Development Council this year, “some experts believe the economic climate is about to turn propitious for welfare reform. The competition for jobs that resulted when the baby boom generation reached working age is a thing of the past. In the 1990s fewer people – those born during the baby bust, the period of low birth rates that began in 1965 – will be looking for jobs.” (16). But there may be a depression for up to 10 years before the good times come again, according to some cycle experts. . . .

Historian David Thomson of Massey University finds that the “welfare generation”, born between 1920 and 1950, have failed to pass on the benefits of the welfare state to their children (17). Housing assistance, employment and wages, family benefits and tax rebates are all less generously available for young people today than they were 25 years ago. . . .There have been cyclical oscillations between collective or individual responsibility in the welfare practices of European societies, rather than steady progress towards the welfare state (20).

There was a guaranteed minimum income system in England from the 1790s to 1834, the Speenhamland system. It was abandoned for the same reasons that the guaranteed minimum family income is unpopular now – many people got as much money from the dole as they got for working, and they could be forced to work for low wages. In effect they were paying 100% taxes on their earnings, and a good welfare system failed because tax rates weren’t evenly distributed. The Speenhamland system was also blamed for the population explosion, which had actually started before the Speenhamland system, and was as bad in other parts of Britain as it was in the “Speenhamland counties” (21).

In the middle of the 19th century in England at least two-thirds of all elderly people (in their late sixties or older) were Poor Law pensioners, receiving regular weekly cash allowances which were far more generous than state pensions are today, and sometimes daughters were paid by parish authorities to nurse sick parents. The Poor Law system, established in 1601, was funded from a rate on property, and was organised on a parish basis. Dr. Thomson has found that in Britain for some centuries there has been a high degree of collective commitment to individual welfare, but in colonial New Zealand it has been strikingly absent. . . .

7. “The coming depression”, W. Rosenberg, Caxton Press, 1978.
8. Christchurch Press, 6 August 1987, “Economist predicts second depression.”
9. Brian Easton, Australian & N.Z. Journal of Sociology, 16, 3, 1980.
10. R. Tomes, N.Z. Statistician, Vol. 14, June 1979, “Major economic factors in the N.Z. economy.”
11. C. Harvie, in “History of Britain, 1789–1983”, ed. K.O.Morgan, Sphere 1985.
12. “Demographic Trends, 1950 – 1990”, OECD, Paris, 1979.
16. Time, 16 February 1987.
17. “Bidding Farewell To The Welfare State”, Dominion Sunday Times, 1 November 1987.
20. “A Question of Responsibility – Rewriting the History of Social Welfare”, Dr. David Thomson, Replay Radio, Wellington, November 1987.
21. “A Shortened History of England”, G.M. Trevelyan, Pelican 1942.


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