Significance of the National Insurance Act 1911 - Report Example

The short term significance of the National Insurance Act 1911 Before the 20th century, the British government, like many others in Europe maintained a fundamentally laissez faire approach in respect to social problems such as ill health and poverty. Conversely, at the turn of the century, the state begun to take an active interest in the provision of basic welfare service it had hitherto neglected especially education, employment and healthcare. One of the causative factors for this paradigm shift was the election of a new liberal government which was determined to elevate the common man/woman from plights previous administrations had largely ignored. The period between 1906 and 1914 saw a series of policy law and directives which accompanied the shift by the government from a non- intervention to a more collectivist approach to social welfare. Retrospectively, assistance for the poor in the country was provide primarily by charities and church organizations, this was until the liberal government came to power and radical changes were made in the poor law principle with significant steps being taken by the state to help get disadvantaged citizens back on their feet. The act was originally proposed in 1908 by David Llyod George, who was the Exchequer’s counsellor for the Herbert Asquith’s led liberal government1; it was the first of its kind in the country and gave the British workmen and women and opportunity to make contributions to protect themselves from illness and employment. This paper is directed towards the discussion of the 1911 National Insurance Act with particular attention to the immediate short-term impacts of its institution to the British people and the state that brought it to bear. Background David Llyod who was the main proponent of the insurance act had visited Germany in 1908 and discovered they had been providing health insurance since 18842; he argued that England should focus on placing itself at the same level as Germany and argued that since were emulating them in armament, they should be willing to do so in social welfare. Some of the opponents to the act opposed it on the basis that the liberal government was not actually interested in the fate of the poor but only competing with other European nation in fear of appearing diminutive. Nonetheless, its intentions notwithstanding it were generally successful in launching the project. The act was introduced on a backdrop of other constitutional changes all directed towards social welfare, in fact it has often been trivialized by some historian owing to the fact that it was sandwiched between two major reform the Parliament and the Home rule act. The liberal government paid great attention to the sick, unemployed, elderly and the young and between 1906 and 1914, several acts were passed in their interest. In 1906, local authorities were required to provide free school meals for poor schoolchildren and they also institute medical inspection and free medical treatment although the last one was never implemented until 1912. The old age pension act in 1908 required that individuals over the age of 70 who were earning less than £21 a year would be given 25 pence per week while those earning over £31.5 would get a smaller amount, then there was the National Insurance Act of 1911, which cared for the sick, and unemployed. National Insurance Act 1911 Part 1 Health The scheme provided medical benefits for all employer workers; those earning less than £160 per year were required to pay 4 pence per week into the scheme, their boss paid 3 pence and 2 pence was gotten form the general taxation. As a consequence, workers could afford to take sick leaves and still expect to be paid 10 shillings weekly for the first 13 week and should they remain at home, 5 shillings weekly for another 13 weeks; in addition they had access to free medical care for diseases such as tuberculosis from the panel doctor. Later on the act also provided for maternity benefits owing to the insistence of the co-operative women’s federation. However in parts of the country such as Scotland where the inhabitants were largely subsistent farmers the system could not be applied and in 1913 the stare came up with a medical service for the crofting counties on without contributions. Part 2 unemployment This was limited to a certain industries where the nature of employment was cyclic or seasonal such as shipbuilding and construction. Like the previous system one would pay 2.5 pence a week when they were working and the employer contributed a similar amount, the taxpayer would then contribute 3 pence. Therefore, when one lost their job they would be entitled to 7 shilling which would be dispersed one week after they lost their job from the labour exchange for 15 months.3 To comprehend and appreciate the significance of the 1911 act, there is the best literature to examine is that which was published around the period postdating the act. Shepard James4 claims that the year 1911 will stand out as one of the most important periods in British history owing to the radial constitutional changes only comparable to the 1689 and 1832. According to him the act of parliament surpassed and dwarfed much of the parliamentary legislation, predating it for much session, but why, one asks is the act so important. The first reason that comes to most people mind when face with this question is the fact that barely two years after its inception, the act provided unemployment insurance for over 2.3 million people and a staggering 15 million with heath care. This was staggering especially in view of the fact that it exceeded the number s for Germany, which had not only a higher population but had been running it medical insurance scheme 20 years in advance of Britain. Given the high rate of unemployment and poverty even among those with jobs, the act provide great deal of respite especially to the poor and low working class who previously had to struggle to provide the basis especially for their families when out of work.5 Many of the effects of the unemployment scheme transcend the short run since for one it was the first such scheme in the world and it can be considered the forerunner for all unemployment schemes that followed it. The health insurance scheme also provides the blueprints on which the National Health Service act or 1946 would be formed. However, the despite the obvious benefits, there was a myriad of challenges in the implementation and reception of the program especially by the upper class who were required to pay insurance for their servants. One of the reasons it was opposed was the requirement that employer must have a card on which they should affix health insurance stamps for their employees, this could at times amount to a great deal of paper work and the act was dubbed the “stamp licking act” which was a mark of the displeasure employers exhibited against it. There was even resistance among some of the employees who were supposed to benefit from it, in 1912, 12,000 dock works went in protest in Liverpool and Birkenhead refusing to register for the compulsory program. Apart from the workers reluctance to allow their pay to be “taxed” the act was unpopular as many as a political gimmick by Lloyd George with undelaying sinister intentions saw it. The opposition was reflected in the popular media with cartoonist depicting the fallout from the scheme with drawings in which Mistresses are depicted attending to their ill servants rather than pay “health tax” for them and men scheming in how to steal from the system.6 As is often the case that whenever medical insurance is introduced in a country, doctors tend to bear the blunt of it, especially private practitioners since they either lose their patients or are forced to treat them at prices dictated by the state. Therefore, it hardly comes as surprise that looking back, they offered most vocal professional opposition for the scheme in Britain emanated from practitioners, and this was laid bare by a near unanimous declaration of dissatisfaction by 20,147 out of 20,712 physicians concerning the scheme.7 They felt that the 160 pound a year was too low a threshold and demanded that the state reduce the figure given that most of their patient qualified and were therefore eligible for free care from the state . In essence it would appear that the unemployment part of the Act may have applied to doctors in a rather literal and ironic sense given that it threatened to render some of them unemployed. Another professional group that the act potentially affected was the insurance companies which would stand to suffer heavy losses since the government was in a sense competing with them. However, the industry was quick to act to protect its interests and no sooner had the act been constituted than they went about, with considerable success, making themselves the most important administrators of the heath scheme. A common historical and scholarly misconception about their aggressive participation in the scheme was that they saw the state as the enemy and rival in business. Despite the fact that this was theoretically plausible, ergo the misconception, the companies actually felt threatened by the friendly agencies that had been selected to administrate the insurance scheme by registering member and collecting funds and other such activities. 8 The insurance companies actually saw the scheme as an opportunity not a threat and they sought not to keep the state form their traditional area of operation but to take over the administration of the health insurance. The companies were in a unique position to carry out this take over granted that they had been in the business for quite a while they had resources and networks through which insurance services could be channelled. Therefore as opposed to forcing themselves into the act, they availed their extensive distribution channels making themselves indispensable and ultimately taking over from the friendly societies. At the end of the day, their strategic manoeuvring and expediency say the national health system absorb and include industrial life insurance companies in their activities gradually excluding the friendly societies.9 This move however brought about a great deal of opposition, critics argued that the insurance companies were only concerned about making money and the health of the members was to them merely a secondary concern.10 The insurance companies however stayed put for several years until in 1947, after the NHS was formed that the state bowed to the pressure exerted by the critics and eject the companies from the scheme. The 1911 act was also very influential albeit in an indirect and covert way to the changes in the historical understanding of big corporates within and without England more so in America with the effect of this evident even today11. The insurance companies running the schemes were not ejected based entirely on their ineffectiveness in the discharging of their duties, in fact several of them were quiet effective, and however most of the opposition came from the claim that they were materialistic and “soulless” therefore should not be entrusted with the welfare of citizens. This awakened other organisations to the importance of creating positive public image and appearing to care about more than just the bottom line. In fact, it speculated that the reaction of the public towards private insurance companies in Britain laid the foundation for a culture of social corporate responsibility, which is one of the tenets of modern organizations. They involve themselves in numerous works of charity and other public concerns and spend millions to build up their corporate image and avoid being viewed as monopolistic and impersonal since they came to appreciate that competence alone is not enough and people need to feel they can trust their service providers to think past the money. Bibliography Alborn, T. "Senses of Belonging: The Politics of Working-Class Insurance in Britain, 1880-1914." The Journal of Modern History 73.3: 561-602. 2001.. Bentley B. “The British National Insurance Act of 1911 and the Commercial Insurance Lobby”. Journal of British Studies, Vol. 4, No. 2, pp. 127-148. 1965. Chalupnícek, P, and Lukás D. "Health Insurance before the Welfare State: The Destruction of Self-Help by State Intervention." The Independent Review 13.3 367-87.2009: Dawson, W. H. Social Insurance in Germany 1883-1911: Its History, Operation, Results. London: T. Fisher Unwin. 1912 Gault, Hugh. "The National Insurance Act 1911: Three Perspectives, One Policy." Historian.116: 24-7. 2012. Heller M. The National Insurance Acts1911–1947, the Approved Societies and the Prudential Assurance Company. Oxford University Press. pp 1- 28. 2007. Heller, M. "The National Insurance Acts 1911-1947, the Approved Societies and the Prudential Assurance Company."20 Century British History 19.1: 1-28. 2008. Holland, E.. THE 1911 National Insurance Act. 2012.  Viewed on 15 Feb. 2014 ,http://www.edwardianpromenade.com/politics/the-1911-national-insurance-act/ Powell, M. and Hewitt, M. Welfare State and Welfare Change, Buckingham: Open University Press.2002. Shepard, W, J. “The British National Insurance Act”. The American Political Science Review, Vol. 6, No. 2, pp. 229-234 .1912. Read More