In addition, like everyone else, they received "cradle-to-grave" social security protection. Everyone who paid their compulsory contributions became entitled to a basic state pension, unemployment benefit and other non-means-tested payments. The price for all this was a significant transfer of resources, through taxes of all kinds, from the better off to the less well off. The figures are a little ambiguous, but it seems in crude terms that it is those on the lower end of the class scale who have benefited most.
Since 1945 class distinctions have blurred and the country has become much wealthier. The middle class, still benefiting from the welfare state, has expanded vastly. Yet change has not all been for the good: the spread of incomes from high to low is at its widest for at least 50 years and middle-class earners face job insecurity as never before. The question now is how the system can adapt to these new conditions.
What follows looks at the welfare state today: who gets what and how it is paid for in the four key areas.
Total budget: pounds 85bn. Share of government spending: 31 per cent. Paid for by employees' national insurance contributions (19 per cent), employers' contributions (23 per cent) and general taxation (57 per cent).
Basic retirement pension: 10.1 million recipients. Cost: pounds 29bn. Weekly rate: single person pounds 58.85; couple pounds 94.10.
The biggest single item in the benefit bill. Non-means tested but dependent on having paid national insurance contributions. Numbers and costs rising but more slowly than in the recent past. About 1.4 million recipients who have no other income have to be "topped up" with means-tested income support, while a further 167,000 pensioners rely entirely on income support.
Christmas bonus: 13 million recipients, chiefly pensioners. Cost pounds 133m. Rate pounds 10.
Arguably the silliest part of the social security system. Introduced in 1972 when weekly pension was only pounds 6.75. If increased in line with prices would be worth more than pounds 70 today. All politicians judge it would be political suicide to kill it off.
War pensions: 312,000 recipients. Cost pounds 1.2bn.
Unemployment benefit: 445,000 recipients. Cost pounds 1.26bn. Rate: pounds 46.45 a week for singles, pounds 75.10 for couples.
Non-means tested and paid for up to a year, but depends on national insurance contributions. Unlike Income Support, allows spouse to go on working while recipient is job hunting. To be merged with income support into a new Jobseekers' Allowance in October next year which will provide non-means- tested benefit for only six months. Change will increase numbers unemployed but save an estimated pounds 300m over three years.
Income support: 5,899,000 recipients. Cost pounds 16bn. Weekly rate: complex, depends on age and family circumstances. Rates range from single person under 24, pounds 36.80 a week to pounds 73 for a couple aged over 18. Additions for children vary by age - pounds 15.95 for a child under 11 to pounds 36.80 for an 18- year-old. Premiums added for circumstances: pounds 10.25 for families; single pensioners receive pounds 65.10, couples pounds 103.95 in total - more than basic state pension, and with higher, different, premiums for those over 75 and over 80, taking the payment for a single person over 80 to pounds 80.70. In addition, a range of premiums on top of adult rates for long-term sick and disabled.
Means tested and most hated part of system. Recipients include 2.25 million unemployed, more than 1 million lone parents and 758,000 sick and disabled. Numbers reliant on it have more than doubled since 1979.
Housing benefit: Provides rent rebates for 2.98 million council tenants and rent allowances for 1.8 million private tenants. Cost pounds 10.25bn. Weekly rate depends on rent and income.
Means tested. Paid to people both in and out of work. Bill has doubled in five years as the Government has cut subsidies for council housing and to housing associations and pushed up rents. Withdrawn as earnings rise. Contributes to poverty trap as loss of housing benefit and council tax benefit, combined with payment of tax and national insurance, can see people in low-paid work lose almost pounds 1 for every extra pounds 1 they earn.
Council tax benefit: 5,641,000 recipients. Cost pounds 2bn. Weekly rate: amount varies by income and level of council tax.
Means tested and paid to people both in and out of work. Withdrawn as earnings rise.
Child benefit: Paid for all 12,685,000 children. Cost pounds 6.1bn. Rate: pounds 10.45 for eldest child, pounds 8.45 for others.
Famously goes to children of everyone from dustmen to the Duke of Westminster. Tax free. Tories pledged to keep it for this Parliament. Labour's Social Justice Commission recommended taxing it for better off. A litmus test for some on commitment to an all-inclusive welfare state. Off-set against children's rates in income support. But being non-means tested, it helps make it worthwhile for families to get back into low-paid work.
Family credit: Almost 600,000 recipients. Cost pounds 1.48bn. Paid to families and lone parents in work. Amount depends on income, savings and number and age of children. People with an income after tax of less than pounds 73 get a pounds 45.10 credit, plus extra for children. Withdrawn as earnings rise. Similar scheme operates for disabled called disability working allowance helping 5,000 at a cost of pounds 13m.
A means-tested benefit that pays people to work, rather than paying them not to. Numbers taking advantage rising. Govern- ment to experiment next year with similar scheme for those without children. Possible way forward for social security.
One-parent benefit: 938,000 recipients. Cost pounds 289m. Rate pounds 6.30.
Tax-free. Non-means tested. Paid to lone parents for eldest child only.
Statutory maternity pay: Paid by employers for 18 weeks to those with earnings above lower limit for paying national insurance. Cost: pounds 443m paid in compensation to employers.
Maternity allowance: paid to some who do not qualify for statutory maternity pay. 15,000 recipients. Cost pounds 33m. Two rates: pounds 52.50 and pounds 45.55. People on means-tested benefits may qualify for pounds 100 maternity grant from Social Fund, though amount reduced for those with more than pounds 500 savings. Awards 221,000. Cost pounds 22m.
Disability living allowance:1,420,000 recipients. Cost pounds 3.1bn. As name implies, helps disabled meet higher costs. Tax-free and non-means tested. Can be claimed only by those under 65 who have needed help before 65th birthday. Three rates, depending on level of care needed, ranging from pounds 12.40 to pounds 46.70 a week. Two rates to cover mobility needs: pounds 12.40 and pounds 32.62 a week.
Attendance allowance:1,084,000 recipients. Cost pounds 1.9bn. Tax-free. Non- means tested unless in residential home. Paid to over 65s needing help. Two rates: pounds 31.20 for those who need help during the day or the night. pounds 46.70 for those needing both.
Invalidity benefit: Paid to those below retirement age who are unable to work. 1.7 million recipients. Cost: more than pounds 7bn. Rate: personal benefit pounds 58.85, plus increases for dependence, plus additions depending on when incapacity began.
One of fastest growing benefits, numbers more than doubling since 1979 as those entering it have found it harder to get off and back to work. Being replaced from this April by new incapacity benefit which has tougher medical tests and is expected to cut numbers claiming by 200,000 or more.
Residential and nursing homes: 294,000 recipients. Cost: pounds 2.4bn.
Means-tested help with care home fees. Reducing numbers who still have preserved social security rights as the cost of paying for care in such homes is transferred to local authorities under care in the community.
Others: In addition there is a string of benefits covering widows, industrial injuries, a guardian's allowance, special schemes for some diseases such as pneumoconiosis, statutory sick pay and the Social Fund, which costs pounds 218m and pays out interest-free loans and some grants towards community care and funerals.
Of the pounds 85bn benefit bill, pounds 38bn is spent on the elderly, pounds 19bn on the long-term sick and disabled, almost pounds 16bn on families, more than pounds 9bn on the unemployed, pounds 1.8bn on widows and pounds 820m on the short-term sick.
Total budget pounds 37.9bn. Almost 13 per cent of government expenditure. 83 per cent of the funds come from general taxation, 13 per cent from national insurance contributions and 3.5 per cent from prescription and other charges. Beneficiaries: potentially everyone at some stage in their lives. Private spending has been rising, with 11 per cent of population now covered by private health insurance. But in general, more people are covered privately for less, as insurers have tended to limit the scale of pay-out or the choice of hospital to keep premiums down. Private health insurance covers only the curable - not treatment for chronic conditions, and some policies provide cover only against specified illnesses.
In addition, a smaller proportion of people - around 12 per cent in 1992 against 28 per cent in 1981 - pay for private operations out of their own pocket. Insurance has thus to some extent been substituted for direct payment. Private spending in NHS pay beds, independent hospitals and private nursing homes rose from 6.2 per cent of all health care spending in 1986 to only 7.6 per cent by 1994. None the less one in five "waiting list" type operations is now paid for privately - and more than one in four of certain procedures such as hip replacements. After years of decline, the NHS is expanding its pay bed provision, taking business away from private hospitals.
Shared with local government and covers everything from residential homes to child care, day centres, meals-on-wheels, part of community care for the mentally ill and other forms of social work. Central government budget pounds 8.5bn, less than 3 per cent of government spending. Local government also contributes from council tax. The part of the welfare state that is probably under most immediate pressure. Increasing charges and growing means testing for services have produced a chaotic and inequitable pattern of charges, according to a recent National Consumer Council report. A third of long-term care of the elderly in residential and nursing homes is now paid for privately. Another third is provided in the independent sector but paid for by public funds. The remaining third is publicly financed and provided in NHS and local authority homes.
Total budget pounds 35.1bn. Almost 12 per cent of central government spending. Very little private provision at university level - although student loans mean students themselves are now contributing more to the cost of their education. The percentage of schoolchildren educated privately - and who, unlike people who take private health care, tend to have left the state system entirely - rose from 6 per cent in 1979 to a peak of 7.9 per cent in 1990 before falling back to nearer 7 per cent as the recession hit. Pre-school there is considerable private spending and it is an area set to grow as the Government's voucher plans for pre-school education take effect. Most state schools are still financed by local councils but central government finances a growing number that opt out of council control and become grant-maintained. Universities get their money from a mixture of central government grants, fees (paid on students' behalfs by local authorities) and, increasingly, private funding for research and consultancy.Reuse content