Assumption A.    Children’s Allowances

410. The first of three assumptions underlying the Plan for Social Security is a general scheme of children’s allowances.   This means that direct provision (or the maintenance of dependent children will be made by payment   of allowances to those responsible for the care of those children.   The assumption rests on two connected arguments.

411. First, it is unreasonable to seek to guarantee an income sufficient for subsistence, while earnings are interrupted by-unemployment or disability, without ensuring sufficient income during earning. Social insurance should be part of a policy of a national minimum.    But a national minimum for families of every size cannot in practice be secured by a wage system, which must be based on the product of a man’s labour and not on the size of his family.   The social surveys of Britain between the two wars show that in the first thirty years of this century real wages rose by about one-third without reducing want to insignificance, and that the want which remained was almost wholly due to two causes—interruption or loss of earning power and large families.

412. Second, it is dangerous to allow benefit during unemployment or disability to equal or exceed earnings during work.   But, without allowances for children, during earning and not-earning alike, this danger cannot be avoided.    It has been experienced in an appreciable number of cases under unemployment benefit and unemployment assistance in the past.   The maintenance of employment—last and most important of the three assumptions of social security—will be impossible, without greater fluidity of labour and other resources in the aftermath of war than has been achieved in the past. To secure this, the gap between income during earning and during interruption of earning should be as large as possible for every man.    It cannot be kept large for men with large families, except either by making their benefit in unemployment and disability inadequate, or by giving allowances for children in time of earning and not-earning alike.

413. In addition to these two arguments, arising directly from considerations of social security, there are arguments arising from consideration of numbers of population and care of children.   With its present rate of reproduction, the British race cannot continue; means of reversing the recent course of the birth rate must be found.   It is not likely that allowances for children or any other economic incentives will, by themselves, provide that means and lead parents who do not desire children to rear children for gain.   But children’s allowances can help to restore the birth rate, both by making it possible for parents who desire more children to bring them into the world without damaging the chances of those already born, and as a signal of the national interest in children, setting the tone of public opinion.    As regards care of children, whatever possibilities the future may hold of larger families than now, the small families of to-day make it necessary that every living child should receive the best care that can be given to it.   The foundations of a healthy life must be laid in childhood.    Children’s allowances should be regarded both as a help to parents in meeting their responsibilities, and as an acceptance of new responsibilities by the community.

414.     The general principle of children’s allowances can by now be taken as accepted.   But it is desirable to make suggestions as to the practical form of such allowances from the standpoint of social security.    The main points to be settled relate to the source from which allowances should be paid, to the sale of allowances, to the children in respect of whom they should be paid, and to the authority which should administer them.

415. As to the source of children’s allowances, the view taken here is that they should be non-contributory, provided wholly out of taxation, and not to any extent out of insurance contributions.   The considerations leading to this view are practical.    First, the flat rate of contribution required for purposes which should be contributory is about as high as it seems right to propose ;  flat insurance contributions are either a poll-tax or a tax on employ­ment, justifiable up to certain limits, but not capable of indefinite expansion. Second, the provision for children should clearly be made to some extent in kind.   Though, on the view taken here, children’s allowances should be given mainly in cash, the amount of cash at any time must be adjusted to the provision in kind and this adjustment can probably be made more easily, if the cost of allowances is provided from the State than if it forms part of a contributory system.    Both these are practical grounds.    On principle, it is possible to argue either way.   It can be said, on the one hand, that children’s allowances should be regarded as an expression of the community’s direct interest in children; it can be argued on the other hand that children are a contingency for which all men should prepare by contributions to an insurance fund. As it is possible to argue on each side in principle, it might be provided in practice that the cost of allowances should be shared.  It is in fact proposed below that the first child in each family should be omitted from allowances, while the responsible parent is earning, so that the financial burden of every family is shared between the State and the parents.   This involves providing an allowance for the first child whenever the responsible parent is not earning, that is to say providing an allowance for the first child, to be added to unemployment, disability and guardian benefits.    Even if the other allowances are provided wholly by the State, the cost of allowances for the first child might well be charged to the Social Insurance Fund, as the cost of the children’s allowances now given in unemployment insurance are charged to the Un­employment Fund.   On the whole, it appears better to put the whole cost of children’s allowances, both when the parent is earning and when he is not earning, upon the National Exchequer, that is to say to make children’s allowances   non-contributory.     The   allowances,   though   non-contributory, may be administered by the Ministry of Social Security.   The cost of them should be provided, not from the Social Insurance Fund, but by special Exchequer grant.

416. As to the scale of children’s allowances, in  paras.  226-228   the allowances required to meet in full the needs of children of various ages for food, clothing, fuel and light are put at figures yielding an average over children of all ages of 7/- a week at 1938 prices.   In para. 232, allowing on the one hand for an increase of prices after the war, and, on the other hand, for the provision already being made for children through school meals and supply of free or cheap milk, an average rate of allowance of 8/- per week per child in addition to existing provision is suggested.    It does not follow that a cash allowance on this scale should be paid in respect of every child.   Two con­siderations may be urged against such an inference.

417. First, it can be argued that the allowances for children should be regarded only as a help to parents and not as relieving them entirely of financial responsibility.    There is substance in this argument.    To give full subsistence allowances for all the children of a man or woman at work may be described as wasteful and certainly cannot be described as a measure indispensable for the abolition of poverty;   very few men’s wages are insufficient to cover at least two adults and one child.    When the responsible parent  (that is to say the parent on whom the children depend) is earning, there is no need to aim at allowances relieving the parent of the whole cost of the children.    On the view taken here, it would be wrong to do so—an unnecessary and undesirable inroad on the responsibilities of parents. That is to say, in any system of children’s allowances, the cost of maintaining children should be shared between their parents and the community. This can be done in two ways—either by making an allowance for each child which is less than the cost of maintenance, or by making no allowance for one child in each family and a larger or full allowance for each of the other children. The second way is the better and is adopted here, as making a large reduction in the cost of allowances to the community with no hardship to parents, and as increasing the proportion of the total cost borne by the community as the size of the family increases; this makes the allowances more effective in preventing want and increases whatever influence they may have in encouraging large families.

418.    Second, it can be argued that, whatever experts may say, every mother of six knows that six children do not cost six times as much as one child to feed, clothe and warm.    Admitting that one child for these purposes will need 7/-at 1938 prices (say 9/- at provisional post-war rates), 42/- for a family of six (54/- at post-war rates) may appear excessive.    It is not easy, indeed, to see in the foregoing calculations just where substantial reduction of cost per head for a number of children can be justified.    Out of the 7/— pre-war average, 5/11 is for food according to a personal dietary; there may be less waste in a large family, but the 5/11 includes nothing for waste or inefficiency in buying. The 3d. for fuel has been reached as one-sixth of the recorded  difference between  two-person  and  eight-person  households.    The   10d. for clothing offers a real but small field for economy in large families, by passing clothing from one to another.    But against this, the 7/~ average takes no account of rent.    If having many children makes it possible to reduce slightly the cost of food, clothing and fuel for each child, it can hardly fail to add to the rent. It is probably true that few, if any, parents of large families spend four times as much on essentials for four children as they spend for one, or six times as much on six children as they spend for one.  But that may be because very few people are able to afford to do so out of incomes which are in no way related to the number of children.

419. The first of these two arguments, accordingly, is accepted here and the second is rejected. It is proposed, on the one hand, that there should be no allowance for the first child in each family when the responsible parent is earning. It is proposed, on the other hand, that for each of the other children, and for the first child also when the responsible parent is on benefit or pension, there should be an allowance additional to the present provision in kind at the average rate of 8/- a week. The practical effect of this will be that when the parent is earning there will be no allowance in a family with one child only and that, as the size of the family increases, the average allowance for each child will increase in accordance with the following scale :—

No. of children     Weekly allowance     Average weekly
in family                per family        allowance per child

1                                       Nil                               Nil

2                                         8/-                           4/-

3                                       16/-                           5/4

4                                       24/-                          6/-

5                                       32/-                          6/5

6                                       40/-                          6/8

420. Assuming an allowance of 8/- a week per child, omission of one child when the parent is earning reduces the total cost of allowances by nearly £ 100,000,000 a year, as compared with the cost of including all children at all times. It would be possible to carry this method of sharing the total cost of the family between the community and the parents a stage further, either by omitting the second child as well as the first, or by giving less than the full allowance for the second child. To give 4/- a week in place of 8/- for the second child when the responsible parent was earning would save a further £23,000,000 a year in the cost of the allowances. But, apart from the un-desirability of decreasing the provision for children, this plan is open to the objection that it narrows still further the gap between   earnings and income during interruption of earnings. It would mean that a man with two children or more would receive 12/- in respect of those children when on benefit or pension, which he would not be receiving when earning, so that, unless his wages were at least that amount above’ his benefit or pension, he would not be better off when earning than when unemployed or sick.

421.     The allowance proposed for the second and subsequent children when the responsible parent is earning, and for all children when the responsible parent is not earning, has been put at an average of 8/- a week at provisional post-war rates, in addition to existing provision in kind.    In practice, the allowances should not be uniform but graded by age, since the needs of children increase rapidly with age.    In practice, also, the sum to be given in cash at each age must have regard to the provision in kind at each age.    On the view taken here, it would not be desirable to attempt to replace cash allowances for children wholly or even largely by provision in kind.    The principle of social policy should not be to remove all responsibilities from parents, but to help them to understand and to meet their responsibilities.    But there may prove to be good reasons for a considerable extension of provision in kind, and this may affect differently the cash allowance required at different ages. It is not possible here to do more than indicate at 8/- per week the average additional allowance proposed in cash or in kind.

422.     As to the children in respect of whom allowances should be paid, – the simplest plan is to make them universal, subject to the omission of the first child when the parent is earning. Little money can be saved by any reasonable income limit. In so far as it appears that children’s allowances to all families irrespective of their means would mean giving money to prosperous people without need, this can be corrected by an adjustment of the rebates of income tax now allowed for children. This does not mean that children’s allowances should replace tax rebates. The problems of taxation and of allowance are distinct and involve different considerations.

423. The allowances should continue so long as the child is in approved full time education, up to the age of 16.   The suggestion sometimes made that allowances should continue during the first six months or year of earning, on the ground that the initial earnings may be insufficient, is open to the objection that it involves a subsidy to juvenile wages and would tend to keep them down.   With the growing shortage of juvenile labour in relation to adult labour the wages of the former are likely to rise and should need no subsidy.

424. As to the administration of children’s allowances,   however the allowances are actually paid—weekly or monthly, by post or in person—there must be some Department with offices in every locality prepared to receive claims and authorise them and to control the payment. The Ministry of Social Security proposed in this Report appears the obvious organ for this purpose, even if the allowances are universal.    If they are limited to children after the first, so that allowance for the first child must be added to benefits in unemployment or disability, the case for using the Ministry of Social Security is strengthened.   The only alternative appears to be to use the agencies for dealing with childhood—welfare centres for those under five and the schools for the school-children. Cash Allowances for children would thus become part of the system for care of youth. In principle there is something to be said in favour of this. But it is not clear that the administrative machinery for such a plan will be available. The natural plan is to leave the cash payments to the Ministry of Social Security and the care and supervision of children to the authorities concerned with health and education, with arrangements for central and local co-operation between them.

425.   The practical conclusions emerging from this discussion are: (1) Financial provision should be made for children’s allowances at the cost of the Exchequer in respect of all children other than the first child when the parent is earning, and of the first child in addition during interruption of earning.

(2) The average amount of such allowances should be 8/- a week in addition to the existing provision in kind. The actual allowance should be graduated according to the age of the child. In so far as provision in kind is extended beyond its present scale, the cash allowances should be reduced.

(3) The cash allowances should be administered by the Ministry of Social Security.

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