Unemployment 1918-39

• The most pressing problem for interwar governments was unemployment, this was never below one million between the end of 1920 and mid-1940 and peaked at over three million in the early 1930s
• Interwar governments wanted to support the unemployed, but also balance the books
• A self-funding national insurance scheme, with benefits paid from a fund generated by members contributions whilst employed, seen as the ideal solution and was implemented by the 1911 National Insurance Act
• The war undermined the national insurance scheme because many of the 3.5 million returning troops were not eligible for the benefits it provided
• The wartime coalition realised that a difficult situation was developing but people couldn't be left to rely on the old Poor Law so the only alternative would be to hand out dole money
• As dole money would be paid out of general taxation with no link to contributions, it was feared that it would upset the budget, divert funds from more productive use and encourage reliance on unearned income
• The short-term solution was to issue dole money known as the 'out-of-work' donation from 1918-20, the govt accepted a duty to adequately support the unemployed and it provided more money for family dependants