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This Took People Into The Area Of The National Assistance Board And Onto ...

This took people into the area of the National Assistance Board and onto Means Tested Benefits.
If we now return to the arguments of Deacon, it is necessary to look at the reason for the failure to implement the key Beveridge policy of providing subsistence benefits. Deacon suggests that this is a question of economics, and has gone so far as to imply a fundamental flaw in the plan from the outset. According to Deacon:
There were two main reasons why the subsistence principle was rejected. The first was the problem of rent. The level of rents varied considerably from one region to another, and so it would have been impossible to meet the subsistence needs of individual claimants by the means of a flat rate benefit. More fundamental, however, was the fact that the scheme was to be financed by flat rate contributions. This meant that the employees' contribution had to be fixed at a level which the lowest paid worker could afford, the so called ‘convoy effect.' Both the wartime coalition and the Labour Government believed that the rates necessary to finance the subsistence benefits would be politically unacceptable, but neither was prepared to increase the burden falling on the exchequer or the employers.(5)
Deacon is not the first writer to suggest that there was a flaw in the Beveridge plan of flat rate contributions and benefits because of differentiation in rents. Beveridge proposed this system in order to avoid landlords taking advantage of the system by putting up rents. But this argument falls down when you consider that in those cases, people would fall into the net provided by the Assistance Board, and onto Means Tested benefits. Maybe we do have the benefit of hindsight, but it does suggest a certain naivety on the part of Beveridge.
In our earlier discussion regarding opposition to the Beveridge Report, reference was made to Government opposition, particularly from the Treasury. Reference was made to the implications this may have had upon the implementation of the Beveridge proposals, and here seems an appropriate place to discuss these points. There is substantial evidence to suggest a tension between Beveridge and the Treasury based upon their perceptions of the likely cost of the scheme. Indeed, Beveridge made reference to attempts to placate the Treasury in ‘Power and Influence.'
Beveridge himself wrote of a deal with Keynes which was confirmed in August 1942. The gist of the deal was that Keynes promised to support my Report if I would keep the additional burden on the Treasury down to £100 million a year for the first five years; after that he said the Treasury should have no difficulty in meeting those charges. I found myself able to satisfy Keynes' condition for support, provided that I spread the introduction of adequate contributory pensions over a substantial period of transition.


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