CHAPTER 9: THE HOUSEHOLD MEANS TEST: (1) EARNINGS The determination of need Section 38 of the 1934 Act made

a somewhat confusing distinction between the determination of need and the assessment of needs. The assessment of needs - the subject of chapter 8 - involved calculating the weekly amount of money required by the applicant and his or her dependants. The determination of need, which is the subject of this chapter and the next, meant deciding to what extent those needs should be met by the board, taking into account the resources of the whole household, not just those of the applicant and his or her dependants. Rules for the treatment of capital resources and certain types of income - sick pay from a friendly society, national health insurance benefits, wounds or disability pensions and weekly payments of workmens compensation - were laid down in the Act. For the most important form of household resources, earnings from work, the board had to devise its own rules. Section 38(3), however, specified that, in taking account of the resources of any members of the household, due regard must be had to the personal requirements of those members. The significance of this provision had been noted by Harold Macmillan during the committee stage of the bill (see chapter 5, page 3). It gave the board wide powers to disregard either a fixed amount or a proportion of the earnings (or other income) of any member of the household. To put the figures in this chapter in context, it should be borne in mind that average male industrial earnings were around 60s. a week, adult men in low-paid jobs would earn around 40s. and the earnings of women and young men were even lower. Applicants earnings The board had little difficulty in deciding how applicants own earnings should be treated. Since they were by definition unemployed, their earnings would be small, but they needed an incentive to take any available part-time or casual work. The preliminary draft of the regulations, in May 1934, provided for a personal requirements deduction of one-sixth of the applicants earnings, but in the draft which Reid submitted to Strohmenger at the end of June this had become one-sixth or 5s., whichever is the greater. Given that an applicant would be unlikely to earn as much as 30s. in any week, it would have amounted to a straight disregard of the first 5s. of earnings. Subsequent drafts contained minor variations on this rule, which by the end of September 1934 had taken the less generous form (which eventually appeared in the regulations) of an allowance of 5s. or half the applicants earnings, whichever was less. In other words, half the applicants earnings up to 10s. a week (representing, in most cases, at least a days work) would be disregarded; and, if the earnings exceeded 10s., the first 5s. would be disregarded. The same rule was adopted for the earnings of the applicants wife or husband.
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Household earnings The treatment of earnings of members of an applicants household was a matter of fundamental importance, both because they were likely to be the commonest and most valuable form of household income and because of the risk of families being broken up if the burdens placed on earning members were too great - as, it was often alleged, had happened to many families as a result of the transitional payments means test (the extent to which families were, in fact, broken up by the means test will be discussed in chapter 28). Although the board was bound by the principle of the household means test, its members differed in their approach to its practical implications. Bettertons point of view was that of the politician: The only practicable kind of means test, he told the board, was one that public opinion would tolerate. Reynard wanted to protect the young wage earner on relatively low wages, who resented his inability to take part in the ordinary life of his mates by having to contribute so much of his earnings to the maintenance of other grown-up members. Strohmenger, however, objected to putting more money into young peoples pockets, arguing that the real case was for giving the grown man who regarded himself as not attached to his family in the same way as the boy, the most generous treatment possible.
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Violet Markham returned from her tour of northern cities in midSeptember 1934 with yet another priority: the need to distinguish between the temporarily unemployed and those who might never work again. She wrote: The point was well put to me by one experienced social worker the reasons of the mans unemployment is a failure in the economic structure of the State: why should the burthen of that failure be saddled indefinitely on the shoulders of his family? Granted that the principle of family responsibility is still accepted, I ask the Board to consider whether that responsibility should not be assessed on a sliding scale, and that as time goes on the burthen on the family should diminish automatically and that of the State increase.
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That proposal was noted (Strohmenger suggesting that it was of very doubtful legality) but not acted on.
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Another factor in the boards deliberations, which was to figure much more prominently in the subsequent negotiations with the minister and the cabinet, was the degree of relationship between the applicant and the earner. We noted in chapter 5 Bettertons claim that the bill had been deliberately drafted to enable this to be taken into account. At the boards second meeting in July 1934, he cited it as an important illustration of the kind of elasticity he thought necessary in the Boards administration.
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Much of the preliminary thinking about the household means test had been done by Reid. In April 1932, in the context of transitional
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payments, he had suggested that the head of a family (where the applicant was not the head) should be allowed to retain the whole of the first 5s. of weekly earnings for personal requirements, while other members of the household would be allowed one-third of their earnings or 5s., whichever was more. Similar rules, which Reid may have drafted, were adopted by the Durham commissioners a few months later, members of the household being allowed to keep one-quarter of their earnings with a minimum of 5s. (the minimum was later increased to 7s.6d. where there was only one wage earner).
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The draft regulations submitted to the board in July 1934 proposed a personal requirements allowance of one-quarter of earnings, taking no account of the earners relationship to the applicant. The covering memorandum, while admitting that a man can be reasonably expected to do more for his son than for, say, his brother-in-law who is living in the same household, argued that with a basic allowance of as much as one-quarter there was less need for such distinctions. Board members were not wholly convinced. The subject was raised again after the summer break and the discussion revealed the depth of disagreement between the boards officials and deputy chairman, on the one hand, and its more liberal-minded members, in particular Violet Markham, on the other. Towards the end of the meeting, Markham raised the issue of principle as to the degree of burden which the means test ought to put upon the wage-earning members of a family. She questioned the officials view that public opinion would expect a son earning 40s. a week (a typical wage for an unskilled worker) to keep his parents without assistance from the state. Eady replied - and his words are recorded at unusual length in the minutes of the meeting - that in the past there would have been no question that a son earning 40s. would be expected to maintain his parents, but unemployment benefit, extended far beyond the period of contractual entitlement, had tended to break down the idea of family and household solidarity. In recent years, he added, income tax had been extended to cover a large number of wage earners, and this was due, at least in part, to the cost of unemployment insurance. The more the Board let off the applicants family, the more they transferred the liability to taxpayers many of whom were no better off than some applicants. Strohmenger followed up Eadys lecture with a further homily on the damaging social and industrial consequences of any unnecessary weakening of the conception of the household as a real entity.
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Reaching an agreed compromise was far from easy. In the boards debates on the scale rates, there were clear points of reference: the unemployment benefit rates, public assistance practice and the wages of low-paid workers. The debate on the household means test was not confined within parameters of this kind. There was room for wide divergences of view as to the division of responsibility between the state and the family. In the first half of October, with the deadline for submission of draft regulations to the minister fast approaching, the board was presented with a confused array of proposals and counterproposals which kept it in almost continuous session.
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Much of the confusion was due to a new suggestion put forward by Betterton. So far, it had been assumed that wage earners, other than the applicant and his or her dependants, should have their basic needs assessed at the levels prescribed in the boards scale (10s. for a man, 8s. for a woman, and less if under 21), and that the only question to be decided was how much of their earnings in excess of those amounts they should be allowed to keep for personal requirements. Betterton now argued that the basic needs of earning members of the household should be assessed at a higher level, leaving a smaller proportion of their earnings available for the needs of the applicant and his or her dependants. The idea was taken up enthusiastically by Reynard who suggested that, instead of only 8s. or 10s., the first 15s. of earnings might be regarded as meeting the earners basic needs, before going on to consider how much should be allowed for personal requirements. Hallsworth and Markham added their support, the latter remarking that she had never in her own mind accepted the one-quarter rule, which was quite inadequate and likely to have lamentable repercussions throughout the country, and that it would be an immense simplification if the first 15s. of earnings could be ignored altogether. Jones was more doubtful about such lenient treatment of young earners, while Strohmenger reiterated his view that it would be socially wrong to suggest that the young wage earner should not contribute to his familys support. In the absence of agreement, Reynard, Hallsworth and Markham spent the afternoon with the officials considering the various options. The one they favoured was a cheaper variant of Reynards proposal, allowing one-and-a-quarter times the scale rate (i.e. 12s.6d. for a man over 21 and 10s. for a woman) for basic needs. But when the board reconvened later that day, they failed to reach agreement, Strohmenger objecting to both the cost of the latest proposal (about 1 million per year, the board was told later) and the benefit to young wage-earners.
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The following week, after an unsuccessful attempt by the officials to persuade Betterton that the proposed concession should be limited to earners aged under 21 - a proposal which would have been strongly condemned by Strohmenger - Eady proposed yet another variant of the Reynard rule, combining a fixed maintenance allowance of 15s. with a less generous allowance for personal requirements. This would reduce the cost while offering the presentational advantage of a 15s. basic disregard of earnings. Strohmenger protested that two young wageearners in a family, each earning 15s. a week, would not be expected to contribute a penny towards the needs of the rest of the household. He suggested instead that the amount allowed for an earners basic needs should be the scale rate plus 50 per cent: 15s. for an adult man but less for women and those under 21. This led to a new compromise formula, based on Strohmengers proposal but allowing the 15s. rate for adults of both sexes. To add to the confusion, Betterton put forward yet another idea: to make the rule more generous to adult earners, they should be allowed 14s. for maintenance and one-third of their earnings above that level for personal requirements.
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The board now found itself bitterly divided over the issue of sex discrimination. Strohmenger complained that equal treatment of mens and womens earnings was illogical, since the boards scale already conceded the point that a mans needs were greater than a womans. Worse still, it might be used in the House of Commons as an argument for removing sex discrimination from the scale and treating women applicants, as well as women earners, in the same way as men. Strohmengers persistent objections to each new proposal had by then brought his colleagues on the board to a state of bewildered exasperation. His insistence that sex discrimination should be deliberately reintroduced provoked an angry response from Violet Markham, who wrote to Jones:
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I should have thought sex differentiation was amply recognised in the scale. I agree that a woman should be paid a lesser maintenance allowance because science (despised when science doesnt suit us!) says she wants less calories than a man. I agree that for a variety of quite adequate reasons her wages rate should be lower. But it beats me when she has earned her miserable bit of money that the State should step in and say at that point there must be further discrimination between her and the man. And I am frankly bewildered when I am told that in objecting to the suggested discrimination I am bringing in a revolution by a side wind. Nothing was further from my thoughts.
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Betterton took a similar view: criticism of the means test would be gravely accentuated if it could be said to discriminate against women. Hallsworth and Jones, however, felt that logic was on Strohmengers side. There was even talk of reporting the disagreement to the minister and leaving it to the cabinet to sort out. Eady was horrified and he too wrote to Jones, appealing to him to help resolve the deadlock: The split in the Board mustnt go on! It is too silly to think of running off to Ministers to ask them to make up the Boards mind. For several weeks we have had sex differentiation and no one discussed it. Then when we removed it yesterday Strohmenger suddenly finds it and demands its instant renewal, and Betterton having accepted it for weeks demands its instant abolition. He suggested that either Betterton or Jones should recommend as a compromise the proposal made earlier that week to allow the earner to retain the first 15s. of earnings and a quarter of the excess, which, he argued, gave each member of the board at least part of what he or she wanted.
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Whether agreement could have been reached on this basis remains an open question. When the board met the following week, it was at last able to agree on yet another formula proposed by the officials, restoring the distinction between maintenance needs and personal requirements which the preceding debate had increasingly obscured. The scale rates would be assumed to cover maintenance, as originally envisaged, despite the sex discrimination inherent in them. The additional allowance for personal requirements was to be one-third of weekly
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earnings up to 20s. and a quarter of the excess. The formula would apply without regard to relationship, the preferential treatment of inlaws (agreed at an earlier stage in the discussions) being dropped. If anyone had cause for satisfaction at the outcome, it was perhaps Reid, since the agreed formula differed from his original proposal only in allowing a third of the first 20s. of earnings instead of a quarter, making a difference of at most 1s.8d. per week. Reynard, while regretting the loss of the first 15s. free slogan, admitted that he had been getting a little alarmed at the generosity of some of the earlier proposals for households with several young earners. Markham regretted that they could not be more generous but accepted the need for compromise. Jones and Hallsworth welcomed the new formula. Strohmenger accepted it grudgingly. With twelve days to go before the deadline for getting draft regulations to the minister, agreement had come none too soon.
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Earnings and discretion In addition to the arithmetical formula, the draft regulations provided for discretionary increases in the amounts allowed for the earners personal requirements where there were special circumstances, and in particular where special expenditure is necessarily incurred in connection with a persons employment. The Durham commissioners had disregarded an increased proportion of the earnings of, for example, school teachers and clerks who had a special standard to keep up, and an earlier draft of the boards regulations had included an allowance against earnings for the cost of maintaining a special standard of appearance; but when this was criticised by Sir Arthur Lowry of the Ministry of Health as singling out the embryo bourgeois for favourable consideration, the less specific form of words was adopted. Similarly, a proposal to allow deductions from earnings for debt repayments and court orders was dropped in the light of Lowrys comment that it would be a direct inducement to the adult son or daughter to incur debt by buying things on the instalment system or otherwise.
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Another aspect of the means test which was left to be dealt with on a discretionary basis was the situation of an unemployed father who, if the means test were applied strictly, might be left wholly dependent on the earning members of his family. Violet Markham was particularly struck by this consequence of the means test during her northern tour in September 1934: Take the case of a respectable artizan who has been in regular work all his life till caught by the recent economic blast. He has a good home and has brought up his children well. His family - often thanks to his past sacrifices - are in work. The wage they bring in lifts the household above the scale of any public relief. The position of the father is humiliating in the extreme. He has not one penny in his pocket except what he owes to the alms of his

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family. He cant buy a stamp or a paper nor a cigarette or pay for a tram fare unless he begs the money from his children. ... Wherever I went there was but one opinion that this evil called for redress and that some small pocket money allowance should be paid the unemployed man living in a household apart from Means Test or Needs Test. The Durham commissioners, she noted, paid a man in this situation 3s. a week if living with a parent, child, brother or sister, and 10s. if living with more distant relatives.
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When the question was discussed by the board, Strohmenger suggested that the grievance would largely disappear if the treatment of earnings were regarded as reasonably generous. Betterton was in favour of paying an allowance of, say, 3s. a week, in cases where there was only a small excess of resources over needs, especially where the applicant was the father. No such provision, however, was included in the draft regulations. It would, in fact, have been difficult to find a legally defensible way of providing for the payment of an allowance in circumstances where, according to the boards standards, no actual need existed. The question of dignity money, therefore, was left to be dealt with, in due course, in the boards instructions on the use of discretion - but too late to prevent it from becoming one of the many grounds of complaint which the board had to face in the early weeks of 1935.
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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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