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War Economy

New and Increased Social Security Benefits

New and Increased Social Security Benefits

Massive redistributions of income through the social security scheme have been one of the most significant influences on the economy since the war. Though most income was liable for the flat rate of Social Security charge, the general tendency was for the scheme to transfer money from saving to spending groups, so helping to prolong the effects of the post-war backlog of unsatisfied demand.

Much of the framework of social security benefits had been introduced before the war,3 but the more significant increases in expenditure occurred after the war. The most costly benefit,4 the page 545 universal family benefit, started in 1946. At the same time the social security charge was raised to 1s. 6d. in the £ of income.1 Further large increases in costs after the war were added by the universal superannuation benefit, which had started at a nominal amount in 1940, but was designed to increase year by year until it matched the age benefit in value.2

black and white photograph of government housing

revival of state house construction
October 1944. As defence construction decreased, the State housing programme was accelerated

black and white photograph of disabled men working

Disabled ex-soldiers making surgical boots for other wounded men

black and white photograph of army vehicles for sale

war assets realisation
Surplus trucks for disposal

black and white photograph of dam construction

post-war power development
The giant Maraetai hydro-electric power scheme. Its completion in 1952 helped materially to overcome North Island power shortages

black and white photograph of timber production

exotic forests
The source of a major post-war industry

black and white photograph of beef cattle

beef production
New markets for beef boosted post-war export earnings

black and white photograph of air cargo

rail-air service between north and south islands
Fast loading to speed goods and parcels transport

black and white photograph of ferry

roll-on ferry
Fast, efficient inter-island link for heavy goods

An innovation in 1958 was the provision for capitalisation of family benefits up to a total advance of £1000, to assist in purchasing, altering or paying off a home.3

Chart 82 shows changes in the cost of social security benefits and pensions as a percentage of national income.

chart of social security statistics

Chart 82

The cost of social security benefits and pensions4 was £22 million in the last year of the war, but had reached £41 million by page 546 1946–47, after which it increased steadily, to pass the £100 million mark early in 1959–60. The cost as a percentage of national income increased considerably between 1944–45 and 1946–47, but, though there were fluctuations when benefits were changed, it tended to fall slowly until 1958. Some of the benefits were not being adjusted for changes in the value of the £. Changes after 1958 raised the percentage to approximately the 1946–47 level.

3 See also p. 10.

4 10s. per child under 16, without means test. Raised to 15s. per week from 1958. The benefit is payable up to the age of 18 for children still at school.

1 Still 1s. 6d. in the £ in 1964, but from 1962 the first £2 a week of income was exempted from the tax and from income tax.

2 The age benefit is payable, subject to means test, from age 60; universal superannuation, without means test, from age 65. Universal superannuation was originally £10 a year, increasing by £2 10s. each year to reach the £78 payable under the age benefit, but several modifications have since been made in both rates of benefit. In 1963 the age benefit and the universal superannuation benefit were both £260 a year for unmarried persons and £234 each a year for married persons. In 1962–63, 70 per cent of all expenditure on monetary and medical benefits was paid without means test.

3 The scheme became effective in April 1959. See also p. 565, note 1.

4 All social security benefits are included here, not just the cash benefits.