National Insurance Act 1911
In 1911 the Liberal Government passed the National Insurance Act. This act was aimed at removing the stigma of the Poor Law and designed to help workers. The Act introduced sick pay and unemployment insurance. The National Insurance Act had first been suggested by David Lloyd George in his budget speech of 1909. It’s passage through parliament did not begin until after constitutional changes and the re-election of the Liberal Party.
National Insurance provided welfare provision for workers (but not their families). It was based partly on a scheme that was operated in Germany. The act provided for sick pay and unemployment in some industries. Workers would receive 10 shillings per week for the first 13 weeks of sickness. They would receive 5 shillings a week for a further 13 weeks in the case of longer absences.
Workers in some industries where work was irregular or cyclical could claim unemployment benefit. They would receive 7 shillings per week for up to 15 weeks in any financial year.
Funding National Insurance came from the worker, employer and through general taxation. For the health related aspect of National Insurance the worker paid 4d per week into the insurance fund; the employer 3d per week and taxation contributed 2d per week. Insurance was collected by Approved Societies who then forwarded it to the National Insurance Fund.
The Unemployment aspect was not universal. It applied to specific industries. They were mainly ones in which work was not constant over the year. In these industries it was common for parts of the workforce to be laid off for periods of time. To fund this element of National Insurance the worker and employer both contributed 2.5d per week to the fund and taxation 3d.
Workers were able to choose which Approved Society they paid their contributions to. Many Societies provided private schemes in addition to the National Insurance Scheme.
The National Insurance Act was initially opposed by some of the Approved Societies as it was seen as a threat to their profits. However the way in which the administration of the scheme was to be implemented ensured the support of the societies and most Trade Unions.
National Insurance was important in overcoming the stigma of the Poor Law. Gradually the Poor Law Unions became less important and were totally disbanded in 1929. It also included free healthcare provision for Tuberculosis, free access to a panel doctor and maternity benefits.
The act was extended in 1920 to cover additional industries for the unemployment aspects. The introduction of the National Health Service in 1946 and surrounding legislation incorporated National Insurance payments and benefits into a new, centralised, system.