National Insurance Act 1911

• Illness of the main breadwinner was a major cause of poverty. In the early 1900s, between 6 and 7 million people were insured against sickness, but many poorer people struggled to keep up with payments and in times of financial stress, insurance payments were the first to go.
• Impressed with Germany's social insurance scheme, David Lloyd George sent senior civil servant W.J. Braithwaite to Germany in 1910 to discover how it worked in detail. The British system followed the German example insofar as the principle of compulsion was concerned and in making the system nationwide. However, unlike Germany, Britain had a wide range of institutions and organisations providing similar support.
• To avoid institutions and organisations like Friendly Societies from derailing Lloyd George's plans, they were mollified by being designated approved societies through which payments were to be made.
• Part 1 of the act was an attempt to support for the poor when ill-health struck the main breadwinner:

  • applied to all workers earning less than £160 per year and all manual workers aged 16-60
  • employees contributed 4d, employers 3d and state 2d per week into the state insurance scheme
  • insured people received 10s a week for up to 13 weeks, and then 5s a week for a further 13 weeks in any one year
  • maternity care provided (one-off 30s)
  • free treatment by a medical practitioner and all drugs/medicine were free
• Although during part 1 was £1.5 million set aside for the treatment of TB, this was only available for contributors to the scheme; none of the benefits were available for their families.
• Most workers resented having to pay 4d from their wages and because payments were a flat rate, the poorer workers were hit the hardest. Many regarded it as a wage cut as there was no guarantee that they were going to be ill and benefit from the scheme.
• By 1913, 13 million workers had been insured in the scheme.
• Part 2 dealt with insurance against unemployment:

  • employers, employees and the state each contributed 2 1/2d
  • workers could claim unemployment benefit of 7s a week for up to 15 weeks in any one year
  • no claim could be paid if unemployment resulted from a person being dismissed for misconduct
• Part 2 first applied to a small group of trades where people were generally well paid, but which were prone to seasonal unemployment (shipbuilding, vehicle construction etc). Insurance was compulsory and 2.25 million men were insured by the end of 1912.
• However, it wasn't really possible to evaluate the scheme before WW1 broke out in 1914.