How Thatcher Encouraged Welfare Dependency

How Thatcher boosted Welfarism

James Clarke describes how Thatcherism, despite all the talk about ‘standing on your own two feet’, has actually encouraged the growth of a non-working underclass. Life for the unemployed was made a great deal less stressful than it was in the 1960s or 1970s.

The ‘welfarism’ which the Tories have been condemning in recent years is not an inheritance from Labour Governments, or from Tory Governments of the era before Thatcher. It is an inheritance from Thatcher’s first term of office.

The Beveridge Report was insistent that life for the unemployed in the welfare state should be kept almost as unpleasant as it was under the Poor Law. Otherwise the incentive to work in low-paid and depressing jobs would be sapped.

The post-war Labour Government set up the National Assistance system on the lines recommended by Beveridge. And it operated the system in a miserly spirit, as did all Governments until 1979. There was an entitlement to the bare means of life, but you had to endure a great amount of aggravation in the course of getting it

There was also a sort of entitlement to ‘special payments’. But you never knew what this entitlement was. The regulations governing them were not published. And they were virtually kept secret from the staff of the National Assistance offices. Only the Manager had a complete set of these regulations, and payments under them were made at his discretion. You had to be very expert and very persistent to get a special payment. (I never succeeded in getting any, but I knew people who did.)

I first drew unemployment and National Assistance around 1960. You then had to sign on as unemployed twice a week. And the Labour Exchange employed a large staff to keep tabs on you.

Every few weeks you were called in for an interview. And if you could not show that you were actively seeking work by your own efforts, you were sent out with a blue card to one of the jobs registered at the Labour Exchange. And if you did not get the job, you had to bring the card back to the Labour Exchange signed by the employer confirming that you had tried to get it.

Unemployment was then running at about a third of a million. But the rhetorical left was making more noise about it than they did when it grew to ten times that size. And that is one of the reasons why Thatcherism was possible.

A sensible employer would naturally prefer an applicant for a job who had come of his own free will over one who had been sent by the Labour Exchange. But a third of a million unemployed in an economy the size of Britain’s was in real terms a labour shortage, so employers were not in the position of being able to pick and choose.

Because I was totally unskilled, and was the most common commodity on the labour market, I often spent a couple of months on the dole between jobs. I lived as cheaply as possible, topping up the dole with savings, and put no effort of my own into getting a job until I was flat broke.

At one point in the late 1960s, after I had been unemployed for four or five months, I was required to attend the Labour Exchange for an interview every day, and be sent out every day for a job. My handler at the Exchange made it clear that he disliked me so in retaliation I set about frustrating his efforts to put me to work. For a couple of months I succeeded in not getting a job every day without doing it in a way that would disqualify me for the dole. Then I was sent to a Rehabilitation Centre.

Rehabilitation Centres were pseudo-factories. You were given fares in addition to your dole and had to tum up every morning at 8 as if for work and stay until 4 o’clock going through the motions of working. I spent a couple of months at the Rehabilitation Centre at Whitechapel trying to saw sheets of wood into six inch squares. I had no aptitude for carpentry and no interest in it and I wasted an awful lot of wood. The supervisor was an elderly tradesman and was resigned to the futility of the whole business. I don’t think I cut a single exact square during the whole time I was there. I made a point of asking what they would have been used for if I had cut them and the supervisor didn’t bother to tell me. The function of the place was to punish the long-term unemployed.

At mid-day a canteen was opened and we were given a set lunch in an atmosphere close to prison conditions.

But in such institutions there are always ways around things. As in the Army under conscription, you developed social skills which are the contrary of those which the institution is trying to instil in you. And I usually managed to filch a couple of hours a day for myself.

When I decided to leave I asked what my little six inch squares would have been used for if I had produced them. They would have been made into little boxes, with a hole in the top, for holding balls of string and paying it out at National Assistance offices and Labour Exchanges all over the country.

Unemployment benefit was not enough to live on even in the most meagre way. It had to be topped up with National Assistance. The National Assistance office was separate from the Labour Exchange. The physical atmosphere was dismal. The staff were sealed off from the public, even though assaults on them by the public were then all but unknown. They communicated with you through shutters after making you wait a very long time. Their attitude was contemptuous. When they had quizzed you the shutter was banged down. And when they conceded that you were theoretically entitled to payment an order for payment was not made until you had a ‘home visit’.

Home visits were conducted by very unpleasant individuals, supposedly for the purpose of ascertaining that your circumstances were as you claimed. But they also had a deterrent purpose if, as was very often the case, you lived in a rented room in a house inhabited by the landlord and his family.

Such was the welfare state in the good old days.

Then Mrs Thatcher came in and enacted a welfare revolution. In the early eighties ‘signing on’ was once a fortnight instead of twice a week. The practice of being summoned for interviews to account for yourself every few weeks was abandoned. National Assistance (now called Supplementary Benefit) was in effect merged with unemployment benefit. The two were still kept separate behind the scenes, but it became the practice to hand out Supplementary Benefit forms at the Labour Exchanges, along with addressed and post-paid envelopes. You filled out the form, posted it, and your Supplementary Benefit usually came through at the Labour Exchange within a couple of weeks. Home visits were done away with.

The system was revolutionised. The last vestiges of the Poor Law disappeared. And the attitude of the staff became helpful, where previously it had been designed to hinder and harass.

By the mid-eighties, signing on seemed to be made monthly on the slightest excuse. And I know from personal experience one case where there was six months between signing on. The Labour Exchange virtually shut down. It posted up a phone number which you rang to register unemployed, and the whole transaction of getting benefit was done by post.

But the centrepiece of Thatcher’s welfare revolution was Reg Prentice’s systematisation and publication of the regulations for special payments.

Prentice was deselected by his constituency militants in east London. When the Party leadership would not back him he joined the Thatcher Tories, held his seat, and became Secretary of State for the social welfare services in Thatcher’s first government.

The regulations governing National Assistance (later Supplementary Benefit, and now Income Support) were confidential and were covered by the Official Secrets Act. Labour and Tory governments – and Labour Governments more than Tory – had assumed that the welfare state would undermine the willingness to work in badly paid jobs if entitlements were generally known and if administration of the system was humane. And the Labour left of those times – of which Michael Foot was typical – were in tacit practical agreement with that view even though they indulged in platform rhetoric which suggested the contrary view.

Reg Prentice, as Thatcher’s Secretary of State, did what the Labour Left advocated but would never have done. He took all the regulations for special payments from under the counter, simplified them, and published them as a cheap official publication. Special payments became ‘single payments’. For a couple of pounds anybody could get to know the full range of what was available as well as the administrative staff of the system did

Unemployment Benefit topped up by Supplementary Benefit came in effect to be the normal cost of weekly living, with the cost of clothing and household equipment being met by single payments.

In the 1970s, the idea was broached that people should be entitled to a minimum wage simply for living. Work would then become a means of improving one’s position, instead of, as hitherto, being the means of acquiring the bare necessities of life. It was treated as a Utopian proposal. But it became the actual state of affairs under Thatcher’s first Government.

I don’t know if the Cabinet knew what it was doing, or ever gave any thought to the general implications of particular measures. It might be that the more humane administration of the system resulted from cost cutting in Labour Exchange and Supplementary Benefit Offices. Harassment of the unemployed is labour intensive.

Or it might be that the Cabinet deliberately bought social peace in a period of high unemployment by increasing welfare entitlements and cutting out the hassle. But that would have been in contradiction with the declared policy of cutting wage costs through increasing competition among the unemployed for jobs.

It is most likely that they did a number of particular things without any thought for the general consequences of those things. Thatcherism never got its act together. It created the illusion of purpose in a period of Labour disarray, but it has not been concentrated and

purposeful in pursuit of its aims. Thatcher thrashed around with great gusto amidst a welter of self-contradictions, and all her victories have been Pyrrhic ones. Attlee and Bevin transformed Britain in five years. In nearly twelve years without effective opposition Thatcher has left it pretty much as she found it.

Her main achievements have been to raise money by spurious privatisation in order to cut taxes; and to create in her first term the ‘welfare dependency’ which she is trying to reduce in her third term

But it is as well that people should understand what Michael Meacher is not going to tell them – that Reg Prentice would never have been allowed by a Labour Government to do for the poor what Thatcher allowed him to do, and that the ending of his ‘single payments’ system two years ago is only a partial return to a state of affairs which Labour would never have altered. And likewise with the new ‘actively seeking work’ regulations.

It would have been interesting if Thatcher had had the courage to base herself on the state of affairs she had brought about in the mid-eighties, in which the incentive to work would have been ambition and social instinct. She didn’t. So in her last term she has been attempting to undo her welfare revolution, and to return the welfare state to Labour in the miserly condition in which she inherited it.


This article appeared in January 1991, in Issue 21 of Labour and Trade Union Review, now Labour Affairs.  You can find more from the era at