Benefits, or tax credits, have become a crucial lifeline to millions of people across Britain, providing a level of support throughout somebody’s life.  But how useful are they, and how have they changed since originally being introduced after World War II? Knowing the history of how the UK came to have state benefits is key to understanding how they have changed since originally introduced. The idea of welfare benefits was first investigated in a report instigated back in 1942. On the back of this report, the government set about introducing a range of benefits to help those in need across Great Britain immediately following the conclusion of the war.

Introduction of Welfare Benefits

Following the culmination of World War II in 1945, Liberal politician William Beveridge identified a series of social and economic issues that needed to be tackled.  It was obvious that many people in the UK were poor and deprived, requiring help to survive and get by. The five main areas of concern to come from Beveridge’s report were those to be addressed following the war.  It led to the introduction of the free National Health Service (NHS), social security, free education, council housing and full employment. These made up what was known as the Welfare State, a vision that the labour government would try to implement in the years that followed. The benefits would offer a cradle-to-grave insurance for citizens of Britain, ensuring welfare was available for all people regardless of income.

The benefits introduced & how they helped

Several of today’s benefits were initially introduced by this labour government in the 1940s. They included:
  • Family Allowances: The Family Allowances Act (1945) allowed for a payment of five shillings a week for each child in a family after the first.
  • National Insurance: The introduction of National Insurance saw citizens who were unemployed become eligible for benefits for six months and sickness payments for as long as required.
  • National Assistance Act: This was introduced in 1948 to aid in the way of benefits to those in need.
  • 1944 Education Act: A benefit to the nation was the introduction of free secondary school education.
  • Council Housing: Councils became required to provide good housing and care for those children deprived of a normal home life.

How benefits have changed since the war

Many of those original benefits still exist in one form or another today. In fact, the divide between the middle class and the poor in the UK is said to be widening, meaning the importance of benefits today is as high as it has ever been in some instances. Some of the top accountants in Birmingham and London are now finding themselves employed to identify which welfare benefits people may be eligible to claim. Today the benefits are known as tax credits and cover the same areas as the original welfare benefits of 1945. The main four tax credits today are:
  • Child Benefit : Child Benefit is the modern-day name for what was originally Family Allowances. Parents can claim a child benefit regardless of the amount of income they receive. As long they are responsible for a child aged 16 or under, then they are eligible to receive Child Benefits in the UK. The parents do not have to be in full-time work to be eligible to receive child benefit. There may be a tax charge to pay if receiving Child Benefit when you or your partner’s income exceeds £50,000 per year.
  • Child Tax Credit : Unlike Child Benefit, the Child Tax Credit is a means-tested form of benefit. This means that eligibility will depend on the amount of income parent(s) are receiving. Today, parents may be eligible to claim tax credits for their children if they meet certain eligibility criteria.  These include the child being aged 21 or under, or under the age of 20 if they are in qualifying education or training.
  • Working Tax Credits : If you’re earning below a certain income threshold, are aged 16-24 with children, or aged 16-24 with a qualifying disability, then you may be available for working tax credits. While thresholds and value of the working tax credits have changed since they were initially introduced after the war, the idea and theory behind them remain the same. This is like the original National Assistance Act which today falls across several credit areas.
  • Carer and Disability Benefits : There is a range of benefits available to those living with a qualifying disability, or who are the appointed carer for someone with a disability. Allowances are generally available to those carers who are looking after someone for at least 35 hours per week.
  • Heating & Housing Benefits : True to William Beveridge’s original recommendations in 1945, support is still available today for those people who need assistance when it comes to housing. Council housing is still available for those who qualify, while the UK government now provides grants and support to help with heating bills and upgrades to housing to assist with heating and energy upgrades for those in need.

How benefits today affect UK residents

Today’s benefits system still provides a lifeline to millions of people across Great Britain.  There are more benefits available today than following the war, and more people eligible to receive them.  However, budgets for welfare are being cut all the time due to the economic climate, and in 2015 a staggering £12billion was wiped off the annual budget for welfare in the UK. There are also questions about how benefits are distributed, with many vulnerable people, specifically the elderly and those in care and caring for others, still struggling and finding it hard to make ends meet.  There are regular reports throughout winter months of the elderly living in cold and damp homes, children starving and people in a position of care having little time or money to support themselves. It is vital that residents who may be struggling take the time to evaluate what welfare benefits or tax credits they may be able to claim.  To make sure you are getting all the benefits you are entitled to, make sure you speak to our qualified team of tax accountants to get the full picture.


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