By the 1910s, public health services were provided through an unevenly distributed and decentralised system of charitable voluntary hospitals, workhouses and hospitals, administered under the Poor Law through the Local Government Board. The board was also responsible for sanitation and environmental health. The majority of wage earners received medical care from general practitioners who were paid a capitation fee per patient treated. This was funded by worker contributions to 'approved' societies, which could be insurance companies, friendly societies, trade unions or other associations.
In 1917, Christopher Addison, the Minister of Munitions (and later Reconstruction), and Lord Rhondda, President of the Local Government Board, were in favour of removing the health function from the Board and Poor Law administration. Rhondda introduced his ideas about a Ministry of Health to Cabinet in April 1917, and later produced a draft Ministry of Health Bill.
The question of transferring Poor Law health functions to the new ministry was politically controversial. Following the replacement of Lord Rhondda by H.A.L Fisher, members of the Local Government Board resisted the establishment of a Ministry of Health because they feared the break up of the Poor Law administration if the health function was removed. The Ministry of Health Act of 1919 was a compromise. The Ministry of Health took over the functions of the Local Government Board and National Health Insurance administration. If the Poor Law was revised later, its non-health functions would be removed from the Ministry.
The inheritance of varied Local Government Board duties meant that the ministry devoted a limited time to health service administration. Nevertheless, the Dawson Interim Report on the Future Provision of Medical and Allied Services of 1920 provided a blueprint for a comprehensive and free national health service. It recommended a wide range of services, including domiciliary services, primary health centres, secondary health centres for specialist diagnosis and treatment, teaching hospitals and research, and the transfer of all services to a unitary authority.
Although the poor state of hospitals required immediate action, little was achieved during the inter-war years. The Cave Committee of 1921 made provision for public funding of hospitals, but only on a temporary basis because it might undermine the charitable funding of voluntary hospitals. Further reform was achieved through Neville Chamberlain's Local Government Act of 1929, which transferred the responsibilities of the Poor Law Board of Guardians to local authorities, enabling them to provide hospital and health services.
In 1939, fearing many casualties from bombing, the government established the Emergency Medical Service to coordinate treatment. The Ministry of Health was now able to direct voluntary and local authority hospitals.