CHAPTER 3: CHAMBERLAINS CONVERSION The birth of an idea By October 1932, with the defects of the transitional payments scheme

increasingly visible, the need to replace it with more permanent arrangements was becoming urgent. That payments to the long-term unemployed would remain means-tested was not in doubt, but there were differing views as to whether the administration of the means test should remain the responsibility of the local authorities, possibly subject to some form of central direction, or be taken over by a central department (presumably the Ministry of Labour). The Treasury strongly favoured leaving it to the local authorities. As Sir Richard Hopkins told the Chancellor of the Exchequer, Neville Chamberlain, ... we regard administration by the Ministry of Labour as intrinsically incapable of securing economical management.
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Treasury officials had been following closely the deliberations of the Royal Commission on Unemployment Insurance, which was about to produce its final report and which, apart from its two Labour members, had at first seemed likely to recommend the local authority option. By April 1932, however, the commission was showing serious signs of going off the rails, inviting the Ministry of Labours comments on four possible arrangements, each of which would involve that ministry in either administering means-tested payments or exercising some degree of control over the local authorities. The chairman, Holman Gregory, was believed to favour direct administration by the Ministry of Labour. The permanent secretary of the ministry, Floud, was authorised, with Chamberlains approval, to explain to Gregory that even scheme 4, involving relief under the poor law subject to the general direction of the ministry, was open to great objection. This diplomatic initiative, however, was a failure. Hopkins told Chamberlain two weeks later:
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Sir Francis [Floud] thinks that there is nothing more that can usefully be done, and that we must now leave the Commission to make what mess it likes. He despairs of getting any recommendation in favour of local responsibility. ... it seems to me that the best hope now is that the Commission makes a report so impracticable as to be easily capable of refutation by reference to the budget situation.
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What the Royal Commission actually recommended, going considerably beyond scheme 4, was that the public assistance authorities should set up separate unemployment assistance committees, each making its own rules for the assessment of needs and the treatment of resources, but with the Minister of Labour having power to impose standards, including relief scales, nationally or for particular areas. The recommendation, doubtless intended as a compromise, was anathema to the Treasury. The separation of the unemployed from other public
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assistance recipients would perpetuate the view that they were a privileged class, while the involvement of the Ministry of Labour would ensure that even those local authorities which wished to confine themselves to the relief of destitution would not be allowed to do so. Ministry of Labour officials were less hostile to the Royal Commissions approach. They favoured the separation of the unemployed from other recipients of outdoor relief but did not want the responsibility for central direction of local relief committees to fall directly on their minister. George Reid, assistant secretary under Eady in the transitional payments department, had argued in a lengthy note dated 21 April 1932 that uniformity of administration could be achieved only by making the local authorities subject to legally binding directions, covering such matters as the scale of needs, the treatment of earnings and other resources, and the power to adjust allowances in the light of any special circumstances; but the body issuing the directions must be removed as far as possible from political influences. The minister, he proposed, should not interfere in matters of detail but would have a right of veto. The idea does not seem to have had much impact at the time, but the Royal Commissions recommendation for direction-making powers to be placed in the hands of the minister was strongly opposed by the ministry officials in a series of minutes dated 4 October 1932, including a characteristically forceful note by Bowers, asserting that the administration of the means test had gone extraordinarily well on the whole, the savings had been far greater than might have been expected and the local authorities had been splendid shock-absorbers for the Government, and warning that, if the minister were given power to issue directions, he would be under constant pressure from dissatisfied groups. An alternative on the lines of Reids proposal was submitted to the parliamentary secretary, Robert Hudson, the following day: the ministers direction-making power would be limited to directions recommended by a statutory commission consisting mainly of local authority representatives.
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Meanwhile, the Treasury was pursuing its own agenda. On 3 October, Sir Ernest Strohmenger, the principal assistant secretary who had followed Chamberlain from the Ministry of Health, suggested an interdepartmental committee to advise on a new system of grants to local authorities so that, as soon as the Royal Commission had reported, the Treasury could press for its preferred solution: requiring the local authorities to apply outdoor relief rules to the unemployed and strengthening the powers of the Ministry of Health inspectors to ensure compliance. Hopkins passed the suggestion on to Chamberlain on 5 October, reiterating the Treasurys objectives: the unemployed should be treated in the same way as other public assistance applicants, the principles governing public assistance should be reaffirmed, the powers of the inspectors reinforced, and the system of exchequer grants should leave the whole burden of any waste or extravagance in administration upon the [local] Authorities.
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Chamberlain, it seems, spent the crucial weekend October 8-9 reconsidering those aims and decided to pursue a quite different policy. On the Sunday he wrote, in reply to Strohmengers suggestion, Before the Committee is set up I should like to discuss the proposal with Sir R. Hopkins. On Monday evening, 10 October, he told Betterton that he now believed the solution lay not in handing over the transitional payments class to the public assistance authorities but in entrusting the relief of the able-bodied unemployed to a specially created statutory commission. And so, Bowers wrote to Eady the following day, tumbled a house of cards!
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The best account of Chamberlains thinking is a letter he wrote to his sister Hilda on 15 October: Trouble is also working up over the Means Test and it is clear that my original plan of putting the able-bodied unemployed on to the local authorities is hopelessly prejudiced by the delay and the transitional arrangement and above all by the hopeless failure of the Royal Commission. In these circumstances I have conceived a bolder plan which I have imparted to the Minister of Labour and upon which the permanent officials are now working. It is nothing less than taking the whole relief of the able-bodied away from local authorities and Ministers and putting it outside party politics by entrusting it to a Statutory Commission. It rather takes peoples breath away at first and I have not yet communicated it to the P.M. or to S[tanley] B[aldwin] but it is the sort of plan that might properly be introduced by a National Government and I cant help thinking that it might command the support of a good many of the sounder working men. Until it is worked out I cant say what the immediate financial effect would be but I am sure that it would save money in the long run because it would avoid the danger of the relief being put up to auction by the parties. Moreover I conceive that the Commissioners might be entrusted with the duty of providing some interest in life for the large numbers of men who are never likely to get work. I am convinced that no return to prosperity is going to swallow up more than a proportion of those now unemployed and that we must regard our problem for the rest like that of dealing with the permanently disabled after the war. How is life to be made tolerable for them? They must be given organised recreation, physical exercise and where possible a bit of ground and if it were part of the Commissioners duty to study the question I believe they would with the means at their disposal find ways of enlisting voluntary effort. Their own work would be more interesting and inspiring than if they were only concerned to give the least amount of relief necessary.
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Precisely how Chamberlain came to adopt the statutory commission idea may never be known. John D Millett, in a remarkable study of the

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UAB written before any of the government files or cabinet papers were open to public inspection, cites a memorandum submitted to the Royal Commission by Sir William Beveridge on 31 March 1931, in which he argued that those who had exhausted their insurance benefit should be treated as an industrial rather than a social problem, by a central rather than a local authority, either by the Ministry of Labour or (preferably) a statutory commission supervised by the Ministry. ... The relief of these men should be a matter, not of contractual right enforced by quasi-legal process before an Umpire, but of need, judged by the administering authority, and would be subject to conditions imposed by the authority; the necessity of side-tracking detailed Parliamentary scrutiny of the action taken in individual cases makes it desirable that this authority should be a commission with statutory powers, and not a Minister directly responsible to Parliament.
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But there is no evidence that Chamberlain was directly influenced by Beveridge, whose biographer notes that Beveridge himself was doubtful whether his proposals had been at all influential. There had been other suggestions, of some of which Chamberlain was no doubt aware, for a statutory commission which would in some way protect assistance to the unemployed from political pressures. The Royal Commission itself proposed a statutory commission outside the immediate political arena (it was duly set up, as the Unemployment Insurance Statutory Committee, with Beveridge as chairman), mainly to advise on the finances of unemployment insurance but also to keep a watch over the arrangements outside insurance and be consulted about any directions or regulations to be issued by the Minister of Labour on the administration of the means test or the standard of payments.
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The idea of a non-political statutory commission was, therefore, in the air and it is not particularly surprising that Chamberlain, looking around for an alternative solution, adopted it. His conversion to the idea of national rather than local administration, making the commission an executive rather than merely advisory or direction-giving body, was far more significant. Having succeeded, as Minister of Health, in replacing the boards of guardians with the new public assistance committees, he would naturally have assumed that they were the right bodies to administer relief to the unemployed. As Chancellor of the Exchequer, he would also have been inclined to accept the Treasurys arguments in favour of using the public assistance machinery. These arguments, however, were overridden by the experience of transitional payments, the failure of the Royal Commission to recommend an effective system of financial control of the local authorities and, not least, the demands of the local authorities themselves to be relieved of the task. The means test had become a major issue in local government elections. As Chamberlain put it, in defence of his proposals, Local Government was being debauched; standards were being lowered, and the trouble was spreading like a contagious disease. A different kind of body was needed, having neither the disadvantages of the local authorities nor
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those of a central ministry: a statutory commission, removed from the pressures of electoral and party politics. The precise timing of Chamberlains conversion is more difficult to explain. If he did not get the idea of an assistance scheme administered by a statutory commission from Beveridge, did he arrive at it independently, or did somebody else advise him during that crucial weekend? We simply do not know. A suggestion that he was probably inspired by an idea of Horace Wilsons is not supported by any known documentary evidence (Wilson, a former permanent secretary of the Ministry of Labour and later head of the civil service, was one of Chamberlains closest advisers). Apart from this, there is an intriguing but probably misleading clue in a letter written by a Ministry of Labour official in August 1933:
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... I think that everyone in this Ministry is agreed that, at any rate, so far as the financial side of the thing is concerned it would have been much better if we could have retained the Local Authorities and, in fact, proceeded somewhat on the lines which the Royal Commission recommended. Unfortunately, neither the Treasury nor the Ministry of Health agreed with us, and Strohmengers first monstrosity was produced.
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It is tempting to imagine that Sir Ernest Strohmenger, who was to be the UABs first deputy chairman, was at least partly responsible for Chamberlains proposal, but as we know that only a few days before Strohmenger had proposed an interdepartmental committee to forward the Treasurys existing policy, it is more likely that Strohmengers monstrosity was an early draft of the statutory commission scheme, produced after rather than before Chamberlain had adopted the idea in principle. At all events, it is clear that when Chamberlain put the idea to Betterton on 10 October it was far from being a detailed plan worked up by his officials and that, whoever may have advised him, he regarded the idea as his own. His letters to his sisters in the ensuing months refer repeatedly to my statutory commission. We need not have too much hesitation, therefore, in conceding to Chamberlain personally the paternity of the Unemployment Assistance Board.
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First reactions A week later, on 17 October 1932, at a cabinet committee meeting to discuss the governments programme for the coming parliamentary session, Chamberlain unveiled his bold and revolutionary plan based on the removal of the whole question out of the realm of party politics and out of the Parliamentary arena. He explained why reliance on the public assistance authorities no longer seemed a practicable policy and stressed the dangers of transferring responsibility to the Minister of Labour: The question would constitute a perpetual source of bidding between the Parties at Elections and might ultimately endanger the credit and financial position of the country as in 1930-1931. He stressed the role the commission could play in providing occupational,

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training, educational and recreative facilities as well as doling out relief.

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The proposal, Chamberlain wrote to his sister Ida the following weekend, has been so heartily welcomed by the majority of the Cabinet (no one has opposed it) that I feel pretty sure that it will emerge as part of our programme for next Session. But the welcome, if hearty, was not unanimous. MacDonald expressed complete agreement, but Betterton was more wary. Was it suggested, he asked, that the commission should preside over the spending of 50-60 million per annum while remaining outside parliamentary criticism and control? This, Chamberlain agreed, would need very careful consideration, but it was fundamental that the commission should be kept outside party politics.
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The question of parliamentary control and ministerial responsibility was crucial. At the Ministry of Labour, Bowers compared the proposed commission with the equally unaccountable Poor Law Commission of 1834, which survived thirteen years of unpopularity before being replaced by a board answerable to parliament. Even the 1834 commissions functions, he noted, had been limited to giving directions for the spending of local money. A commission which was itself empowered to spend more than 50 million of the taxpayers money annually would be unthinkable unless headed by a minister responsible to Parliament. Eady agreed. It was, he wrote, exceedingly unlikely that any party would agree to putting the treatment of the unemployed, one of the most acute political controversies of the time, in the hands of a commission which could not be criticised by the ordinary method of attacking a Minister or his Department.
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Reactions at the Ministry of Health were more positive. I havent seen Robinson, Chamberlain wrote to his sister, but Sir E Strohmenger ... tells me that it has been received there with great enthusiasm. The attractions of the statutory commission from the Ministry of Healths point of view were obvious. The ministrys inability to introduce any semblance of order into the administration of outdoor relief and transitional payments was a continual embarrassment. The local authorities themselves were asking to be relieved of the task. Chamberlains plan offered a means of doing this without placing the unwanted burden on the equally unwilling backs of ministers. Even if the commission were to do no more than take over the transitional payments class, it would make life a great deal easier for the Ministry of Health; but why stop there? A commission which would also be responsible for outdoor relief under the poor law was a much more alluring prize.
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Chamberlain, from the start, relied on the Ministry of Health to work out detailed proposals. Given his own Ministry of Health background and continuing links with officials, it was a natural choice. Besides, he had little respect for Betterton, and the Treasury officials did not have a high opinion of their Ministry of Labour colleagues. The Ministry of Labour

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was not even admitted as an equal partner in the planning process. It is, for example, somewhat curious to find Strohmenger reporting, after a visit by the Ministry of Labours permanent secretary on 13 October: I outlined to him the kind of plan we had in mind and told him that the Ministry of Health were considering whether it could be made practicable from the point of view of public assistance. This was three days after Chamberlain had told Betterton of his plan and one might have expected that by then the Ministry of Labour would have been fully informed of what was going on. It is equally curious that the memorandum sent by Hilton Young to Chamberlain on 4 November, giving the first detailed outline worked out by officials at a series of meetings chaired by Young himself, was not officially sent to the Ministry of Labour until five days later, with a covering note explaining that Young would be discussing it with Chamberlain in the first instance. But this was only the beginning of a process that was to drag on for a year, and the scheme which finally emerged bore the stamp of the Ministry of Labour, not the Ministry of Health.
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Reinventing the dole: a history of the Unemployment Assistance Board 1934-1940 by Tony Lynes is licensed under the Creative Commons Attribution 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by/3.0/ or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA.

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