National Insurance Act 1911
Encyclopedia
The National Insurance Act 1911 is an Act
of Parliament
of the United Kingdom
. The Act is often regarded as one of the foundations of modern social welfare in the United Kingdom and forms part of the wider social welfare reforms of the Liberal
Government of 1906-1914. The increasing influence of the Labour Party among the population had put the Liberals under pressure to enact social legislation.
had provided compulsory national insurance against sickness from 1884. After visiting Germany in 1908, the Chancellor of the Exchequer, David Lloyd George
said in his 1909 Budget Speech, that the United Kingdom should aim to be "putting ourselves in this field on a level with Germany; We should not emulate them only in armaments." In 1908 David Lloyd George, the Chancellor of the Exchequer in the Liberal government led by Herbert Asquith proposed the 1911 National Insurance Act. This measure gave the British working classes the first contributory system of insurance against illness and unemployment.
Sections of the Conservative party opposed the Act considering that it was not for taxpayers to pay for such benefits. Some trade union
s who operated their own insurance schemes and friendly societies were also opposed. The Act was important as it removed the need for unemployed workers, who were insured under the scheme, to rely on the stigmatised social welfare provisions of the Poor Law
. This led to the end of the primacy of the Poor Law as a social welfare provider, resulting in the Poor Law finally being abolished in 1926.
Key figures in the implementation of the Act included Robert Laurie Morant
, and William Braithwaite.
The National Insurance Act Part I provided for a National Insurance
scheme with provision of medical benefits. Every worker who earned under £160/year had to insure themself by paying 4 pence, the employer paid 3 pence, and general taxation paid 2 pence (Lloyd George called it the ninepence for fourpence). As a result, workers could take sick leave and be paid 10 shillings/week for the first 13 weeks and 5 shillings/week for the next 13 weeks. Workers also gained access to free treatment for tuberculosis and the sick were eligible for treatment by a panel doctor.
principles and it was planned that it would be funded by a fixed amount each from workers, employers, and taxpayers. The scheme from Part II was restricted to particular industries, cyclical/seasonal industries like construction of ships, and neither made any provision for dependants. Part II worked in a similar way to Part I. The worker gave 2.5 pence/week when employed, the employer 2.5 pence, and the taxpayer 3 pence. After one week of unemployment, the worker would be eligible of receiving 7 shillings/week for up to 15 weeks in a year. The money would be collected from labour exchanges.
By 1913, 2.3 million were insured under the scheme for unemployment benefit and almost 15 million insured for sickness benefit.
A key assumption of the Act was an unemployment rate of 4.6%. At the time the Act was passed unemployment was at 3% and the fund was expected to quickly build a surplus. Under the Act, employees contributions to the scheme were to be compulsory and taken by the employer before the workers salary was paid.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of Parliament
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. The Act is often regarded as one of the foundations of modern social welfare in the United Kingdom and forms part of the wider social welfare reforms of the Liberal
Liberal Party (UK)
The Liberal Party was one of the two major political parties of the United Kingdom during the 19th and early 20th centuries. It was a third party of negligible importance throughout the latter half of the 20th Century, before merging with the Social Democratic Party in 1988 to form the present day...
Government of 1906-1914. The increasing influence of the Labour Party among the population had put the Liberals under pressure to enact social legislation.
Background
Britain was not the first country to provide insured benefits. GermanyGermany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
had provided compulsory national insurance against sickness from 1884. After visiting Germany in 1908, the Chancellor of the Exchequer, David Lloyd George
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor OM, PC was a British Liberal politician and statesman...
said in his 1909 Budget Speech, that the United Kingdom should aim to be "putting ourselves in this field on a level with Germany; We should not emulate them only in armaments." In 1908 David Lloyd George, the Chancellor of the Exchequer in the Liberal government led by Herbert Asquith proposed the 1911 National Insurance Act. This measure gave the British working classes the first contributory system of insurance against illness and unemployment.
Sections of the Conservative party opposed the Act considering that it was not for taxpayers to pay for such benefits. Some trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s who operated their own insurance schemes and friendly societies were also opposed. The Act was important as it removed the need for unemployed workers, who were insured under the scheme, to rely on the stigmatised social welfare provisions of the Poor Law
Poor Law
The English Poor Laws were a system of poor relief which existed in England and Wales that developed out of late-medieval and Tudor-era laws before being codified in 1587–98...
. This led to the end of the primacy of the Poor Law as a social welfare provider, resulting in the Poor Law finally being abolished in 1926.
Key figures in the implementation of the Act included Robert Laurie Morant
Robert Laurie Morant
Sir Robert Laurie Morant was an English administrator and educationalist He was educated at Winchester College and New College, Oxford....
, and William Braithwaite.
Part I, Health
National Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
scheme with provision of medical benefits. Every worker who earned under £160/year had to insure themself by paying 4 pence, the employer paid 3 pence, and general taxation paid 2 pence (Lloyd George called it the ninepence for fourpence). As a result, workers could take sick leave and be paid 10 shillings/week for the first 13 weeks and 5 shillings/week for the next 13 weeks. Workers also gained access to free treatment for tuberculosis and the sick were eligible for treatment by a panel doctor.
Part II, Unemployment
National Insurance Act Part II provided for time-limited unemployment benefit. The scheme was to be based on actuarialActuary
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide expert assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms ....
principles and it was planned that it would be funded by a fixed amount each from workers, employers, and taxpayers. The scheme from Part II was restricted to particular industries, cyclical/seasonal industries like construction of ships, and neither made any provision for dependants. Part II worked in a similar way to Part I. The worker gave 2.5 pence/week when employed, the employer 2.5 pence, and the taxpayer 3 pence. After one week of unemployment, the worker would be eligible of receiving 7 shillings/week for up to 15 weeks in a year. The money would be collected from labour exchanges.
By 1913, 2.3 million were insured under the scheme for unemployment benefit and almost 15 million insured for sickness benefit.
A key assumption of the Act was an unemployment rate of 4.6%. At the time the Act was passed unemployment was at 3% and the fund was expected to quickly build a surplus. Under the Act, employees contributions to the scheme were to be compulsory and taken by the employer before the workers salary was paid.
See also
- Old Age Pensions Act 1908
- United Kingdom general election, 1910United Kingdom general election, 1910There were two general elections held in the United Kingdom in 1910:*United Kingdom general election, January 1910 was held from 15 January – 10 February 1910....
- Beveridge Report 1942Beveridge ReportThe Report of the Inter-Departmental Committee on Social Insurance and Allied Services, known commonly as the Beveridge Report was an influential document in the founding of the Welfare State in the United Kingdom...
- National Health Service Act 1946National Health Service Act 1946The National Health Service Act 1946 came into effect on 5 July 1948 and created the National Health Service in England and Wales. Though the title 'National Health Service' implies one health service for the United Kingdom, in reality a separate NHS was created for England and Wales accountable to...
- Universal health careUniversal health careUniversal health care is a term referring to organized health care systems built around the principle of universal coverage for all members of society, combining mechanisms for health financing and service provision.-History:...