Interwar poverty in Britain

Interwar unemployment and poverty in the United Kingdom describes a period of poverty in Interwar Britain between the end of World War I in 1918 and the start of World War II in 1939. Unemployment was the dominant issue of British society during the interwar years Unemployment levels rarely dipped below 1 million and reached a peak of more than 3 million in 1933, a figure which represented more than 20% of the working population. The unemployment rate was even higher in areas including South Wales and Liverpool. The Government deployed unemployment insurance schemes in 1920 to alleviate unemployment.

There were several reasons for the decline in industry after the First World War. The end of World War I brought a postwar boom. In the Shipping industry businesses expanded rapidly in order to take advantage in the increase in business. However the boom was short lived and this rapid expansion caused a slump from oversupply. Structural weaknesses in the British economy meant a disproportionate number of jobs were in the traditional industries. A lack of pre-war technological developments and post war competition damaged the economy and the new industries which emerged employed fewer people. At the same time Britain began to lose her overseas markets due to strong foreign competition. Some have argued than an overly generous unemployment insurance system worsened the state of the economy. The Wall Street Crash in 1929 was responsible for a worldwide downturn in trade and led to the Great Depression.

Apart from the major pockets of unemployment, Britain was generally prosperous. Historian Piers Brendon writes:

As the Government had funded World War I largely through borrowing, Britain had run up a large national debt. A boom in the economy occurred in 1919 causing unemployment rates to decrease. The boom stopped in 1920 when unemployment began to increase, by the time that the Liberals lost power in 1922 the unemployment rate had reached 2.5 million. A committee on unemployment was set up in 1920 and recommended public works schemes to ease unemployment, this led to the establishment of the Unemployment Grants Committee. As unemployment was not uniform across Britain it was decided to concentrate schemes in areas of the country that were particularly affected by the downturn. However the government wished, also, to return to the gold standard, a move which would have required cuts in public spending. The Unemployment Insurance Act 1920 extended unemployment benefits to cover all workers who earned less than £250. The "Seeking Work Test" was introduced in 1921, it stated to receive full unemployment benefit there had to be evidence the recipient was looking for work.

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