The Old Age Pensions Act, 1908
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THE Old AGE PENSioNS Act, 1908 A hundred years ago this year, H. H. Asquith’s Liberal government legislated to introduce state pensions. The Old Age Pensions Act, 1908, has rightly been seen as one of the foundation-stones of the modern British welfare state. It was just one of a series of remarkably enduring institutions initiated by the post-1906 Liberal governments, which created a decisive break between the deterrent and stigmatising Poor Law principles of state social welfare ld age pensions twenty-one should be compelled were continu- to contribute in order to provide and serious attempts ously debated in old age pensions for the lower- at more humane and Britain from 1878. paid.2 They were first Blackley had spent twenty- positive forms of Oplaced on the political agenda three years in rural parishes in by Canon William Blackley,1 southern England and discovered provision. Pat Thane who proposed, in an article in the extent of poverty in old age. examines the story of Nineteenth Century, that every- He noted that Friendly Societies, the 1908 Act. one aged between eighteen and the voluntary mutual savings 4 Journal of Liberal History 60 Autumn 2008 THE Old AGE PENSioNS Act, 1908 institutions, which supported Committee on National Provi- give rise to international debate most skilled urban workers in dent Insurance in 1885–87. and, in Britain, a succession of sickness and old age, provided This made clear that very many further official investigations less assistance in the countryside. younger people, especially which offered more evidence For this he blamed the financial women, did not earn enough of the scale of the problem. In instability of the societies. In to save, and also that prevailing 1889 Bismarck introduced in reality the greater problem was interest rates were unlikely to Germany the first-ever state the difficulty of low-paid rural yield the level of benefits Black- pensions. Blackley was con- workers and their wives afford- ley had envisaged, even when he vinced that he had inspired this ing the required regular con- cut back his proposals to include innovation, though there is no tributions. Blackley believed, pensions only. But evidence to evidence to support this. Bis- however, that the one stage of the Select Committee made marck’s scheme formed part of life at which all workers could clear that the problem of poverty a pioneering contributory social save was when they were young, in old age was real. The only insurance system which the Ger- in their first years of work before publicly funded ‘welfare’ avail- man government had initiated in they faced the costs of marriage able was the long-established 1884. In return for regular con- and parenthood. He also felt that Poor Law, which was structured tributions, workers were entitled young workers wasted money to stigmatise and deter appli- to a pension at age seventy, or that they should be encouraged cants. Those most likely to be sooner if they became incapaci- to save, citing ‘instances as I can deterred were those who had tated for work. The weakness of give from my personal knowl- led respectable, hard-working the system was that it covered edge, of young labourers by lives, avoiding the shame of poor only regularly and better-paid, the dozen, without a change of relief, but never earning enough mainly male, industrial work- decent clothes, continually and to save for old age. Most of them ers, thus excluding many of brutally drinking, living almost were women, who earned least those at greatest risk of poverty like savages while earning fully during working life but lived in old age: women and low-paid £1 a week’3. He proposed that longer than men. The Poor casual and agricultural work- all young people should contrib- Law insisted that children had ers. Bismarck was concerned to ute a maximum of £10 which an obligation to support their win the electoral support of the would accumulate in a savings ageing parents – but, at a time male trade unionists in the bet- fund, controlled and invested of high infant mortality, many ter-paid trades and to stimulate by the state. This would deliver older people had no surviving economic growth by increasing to all ‘wage-earners’ (as distinct children. Or they might have the security of workers in devel- from wage-payers and leisured migrated far away (perhaps to oping industries.5 In Britain, by and salary earners, who would Canada or Australia) in search contrast, the debate about pen- contribute but not benefit), a of security; or they might them- sions focused upon how best to weekly sickness payment until selves be too poor to help. There support the very poor, who had age seventy, and four shillings is every sign that close relatives fewest opportunities to save dur- per week pension thereafter. did help older people when they ing their working life. The type This elegantly logical pro- could.4 Left: one of the of better-paid worker who ben- posal was widely debated and The issue of aged poverty was original old age efited from the German scheme then investigated by a Select prominent enough at this time to pension books. was normally covered in Britain Journal of Liberal History 60 Autumn 2008 5 thE old agE PENSioNS act, 1908 for sickness and old age by vol- During the He had strong support for this in approached social policy cau- untary, mutual benefit socie- the growing labour movement, tiously during their first two ties: Friendly Societies and trade 1906 election but his proposal was widely years in office. One reason was unions.6 campaign criticised on grounds of cost. the large Conservative majority Nevertheless, from around Partly in consequence, he modi- in the House of Lords, which 1890, Joseph Chamberlain, fifty-nine fied his proposal, suggesting in threatened to reject ‘advanced’ who had been impressed by the 1899 a pension age of seventy, legislation and did reject an German scheme, became inter- per cent but a pension of seven shillings Education Bill in November ested in the issue and sought to per week, since his research 1906. At least as important was devise a ‘practical programme’ of Liberal now suggested that five shillings the problem the Liberals inher- of social reform, including pen- candidates would not provide enough for a ited from their predecessors, sions. For a while he took the pensioner to live on.7 that government revenue could lead in the public debate on the supported barely keep pace with grow- issue. He was reluctant to aban- ing government expenditure, don the contributory insur- pensions in The Liberals in office – still less fund new ventures, ance approach, on the grounds planning pensions despite cuts in defence spend- that fully tax-funded pensions their election The problem of helping the aged ing. An urgent task for Asquith, would encourage dependency addresses. poor continued to be investigated as Chancellor of the Exchequer, and discourage self-help. Yet he by commissions and commit- was to review the taxation sys- opposed compulsion and rec- tees established by Conservative tem in order to increase gov- ognised that the poorest people governments,8 though the costs ernment income. Liberal fiscal could not afford contributions, of the Boer War (1899–1902) policy was constrained by their yet still survived to old age. further diminished any likeli- opposition to tariffs and strong Chamberlain proposed a state- hood of an expensive pension commitment to free trade. Their subsidised voluntary insurance scheme.9 It was still an active, only realistic means to increase scheme for the low-paid, but unresolved issue by the time revenue was to increase direct came to recognise that this could of the general election of 1906. taxation, which was unlikely not help those in greatest need During the election campaign to be electorally popular and so in the foreseeable future. In the fifty-nine per cent of Liberal had to be approached with cau- 1890s he came to believe that candidates supported pensions tion. The social legislation of the only a non-contributory pen- in their election addresses. This Liberals’ first two years in office sion targeted at the respectable was less prominent than free was notable for either placing aged poor could begin to solve trade, which Liberals supported the burden of cost on local rate- the problem. Schemes of this almost universally, amendment payers (such as the introduction kind were introduced in Den- of the Education Act or reform of free school meals in 1906 and mark in 1891, New Zealand in of the government of Ireland, medical inspection in schools in 1898, New South Wales in 1900 but Liberal support was still sub- 1907) or for costing the taxpayer and Victoria in 1901. stantial. Eighty-one per cent of nothing (such as the Miners’ The businessman and poverty Labour Representation Com- Eight Hours Act, 1908).11 researcher Charles Booth reached mittee (LRC, the forerunner Nevertheless, within a year similar conclusions. His research of the Labour Party) candidates of the election, Asquith asked a on poverty in London and else- pledged themselves to pensions, Treasury civil servant, Roderick where helped to expose the which came a close fourth in Meiklejohn, to investigate the extent of poverty in old age and their preferences after increased practicability of a state pension convinced him that the poorest working-class representation, scheme. It was highly unusual could not afford contributions. reform of the trade union law for the Treasury, which regarded He was also convinced that tar- and provision for the unem- its role as control of departmen- geted, means-tested schemes ployed.